----

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|                                                        |
|--------------------------------------------------------|
|                                                   |
| David A. BochnowskiChairman andChief Executive Officer |

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----

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|   | Sincerely,                           |
|--------|--------------------------------------|
|   |                                 |
|   |                                      |
|   | David A. Bochnowski                  |
|   | Chairman and Chief Executive Officer |

----

----

----

| Fiscal Year Ended             |   | December 31, |   |   | December 31, |   |   | December 31, |   |   | December 31, |   |   | December 31, |   |   | December 31, |   |
|-------------------------------|--------|-------------------|--------|--------|-------------------|--------|--------|-------------------|--------|--------|-------------------|--------|--------|-------------------|--------|--------|-------------------|--------|
|                |   | 2010              |   |   | 2009              |   |   | 2008              |   |   | 2007              |   |   | 2006              |   |   | 2005              |   |
| Statement of Income:          |   |              |   |   |              |   |   |              |   |   |              |   |   |              |   |   |              |   |
| Total interest income         |   | $                 | 30,086 |   |              | $      | 32,189 |              |   | $      | 35,167            |   |   | $                 | 35,768 |   |              | $      | 34,979 |   |   | $ | 30,024 |   |
| Total interest expense        |   |              | 4,989  |   |              |   | 8,841  |              |   |   | 12,933            |   |   |              | 17,882 |   |              |   | 15,738 |   |   |   | 9,758 |   |
| Net interest income           |   |              | 25,097 |   |              |   | 23,348 |              |   |   | 22,234            |   |   |              | 17,886 |   |              |   | 19,241 |   |   |   | 20,266 |   |
| Provision for loan losses     |   |              | 5,570  |   |              |   | 8,540  |              |   |   | 2,388             |   |   |              | 552    |   |              |   | 15 |   |   |   | 245 |   |
| Net interest income after     |   |              |   |   |              |   |   |              |   |   |              |   |   |              |   |   |              |   |   |   |   |   |   |   |
| provision for loan losses     |   |              | 19,527 |   |              |   | 14,808 |              |   |   | 19,846            |   |   |              | 17,334 |   |              |   | 19,226 |   |   |   | 20,021 |   |
| Noninterest income            |   |              | 5,790  |   |              |   | 5,602  |              |   |   | 4,528             |   |   |              | 4,431  |   |              |   | 4,219 |   |   |   | 3,540 |   |
| Noninterest expense           |   |              | 19,341 |   |              |   | 18,735 |              |   |   | 16,999            |   |   |              | 14,525 |   |              |   | 14,296 |   |   |   | 13,771 |   |
| Net noninterest expense       |   |              | 13,551 |   |              |   | 13,133 |              |   |   | 12,471            |   |   |              | 10,094 |   |              |   | 10,077 |   |   |   | 10,231 |   |
| Income tax expenses/(benefit) |   |              | 797    |   |              |   | (813   | )                 |   |   | 1,445             |   |   |              | 1,651  |   |              |   | 2,674 |   |   |   | 3,118 |   |
| Net income                    |   | $                 | 5,179  |   |              | $      | 2,488  |              |   | $      | 5,930             |   |   | $                 | 5,589  |   |              | $      | 6,475 |   |   | $ | 6,672 |   |
| Basic earnings                |   |              |   |   |              |   |   |              |   |   |              |   |   |              |   |   |              |   |   |   |   |   |   |   |
| per common share              |   | $                 | 1.83   |   |              | $      | 0.88   |              |   | $      | 2.11              |   |   | $                 | 1.99   |   |              | $      | 2.32 |   |   | $ | 2.40 |   |
| Diluted earnings              |   |              |   |   |              |   |   |              |   |   |              |   |   |              |   |   |              |   |   |   |   |   |   |   |
| per common share              |   | $                 | 1.83   |   |              | $      | 0.88   |              |   | $      | 2.10              |   |   | $                 | 1.98   |   |              | $      | 2.30 |   |   | $ | 2.37 |   |
| Cash dividends declared       |   |              |   |   |              |   |   |              |   |   |              |   |   |              |   |   |              |   |   |   |   |   |   |   |
| per common share              |   | $                 | 0.72   |   |              | $      | 1.21   |              |   | $      | 1.44              |   |   | $                 | 1.44   |   |              | $      | 1.40 |   |   | $ | 1.32 |   |

|                             |   | December 31, |    |   | December 31, |   |    | December 31, |   |   | December 31, |   |   | December 31, |    |   | December 31, |   |
|----------------------------------|--------|-------------------|---------|--------|-------------------|--------|---------|-------------------|--------|--------|-------------------|--------|--------|-------------------|---------|--------|-------------------|--------|
|                             |   | 2010              |    |   | 2009              |   |    | 2008              |   |   | 2007              |   |   | 2006              |    |   | 2005              |   |
| Balance Sheet:                   |   |              |    |   |              |   |    |              |   |   |              |   |   |              |    |   |              |   |
| Total assets                     |   | $                 | 631,053 |   |              | $      | 661,806 |              |   | $      | 664,732           |   |   | $                 | 628,718 |   |              | $      | 618,982 |   |   | $ | 627,439 |   |
| Loans receivable                 |   |              | 418,233 |   |              |   | 458,245 |              |   |   | 489,509           |   |   |              | 468,459 |   |              |   | 471,716 |   |   |   | 469,043 |   |
| Investment securities            |   |              | 160,452 |   |              |   | 144,333 |              |   |   | 126,722           |   |   |              | 114,644 |   |              |   | 99,012 |   |   |   | 90,093 |   |
| Deposits                         |   |              | 520,271 |   |              |   | 540,527 |              |   |   | 528,148           |   |   |              | 493,384 |   |              |   | 512,931 |   |   |   | 525,731 |   |
| Borrowed funds                   |   |              | 48,618  |   |              |   | 63,022  |              |   |   | 74,795            |   |   |              | 76,930  |   |              |   | 51,501 |   |   |   | 51,152 |   |
| Total stockholders’ equity |   |              | 56,089  |   |              |   | 53,078  |              |   |   | 52,773            |   |   |              | 52,733  |   |              |   | 50,010 |   |   |   | 46,433 |   |

|                                |   | December 31, |   |   | December 31, |   |   | December 31, |   |   | December 31, |   |   | December 31, |   |   | December 31, |   |
|-------------------------------------|--------|-------------------|--------|--------|-------------------|--------|--------|-------------------|--------|--------|-------------------|--------|--------|-------------------|--------|--------|-------------------|--------|
|                                |   | 2010              |   |   | 2009              |   |   | 2008              |   |   | 2007              |   |   | 2006              |   |   | 2005              |   |
| Interest Rate Spread During Period: |   |              |   |   |              |   |   |              |   |   |              |   |   |              |   |   |              |   |
| Average effective yield on loans    |   |              |   |   |              |   |   |              |   |   |              |   |   |              |   |   |              |   |   |   |   |   |   |   |
| and investment securities           |   |              | 4.84   | %      |              |   | 5.16   | %                 |   |   | 5.78              | %      |   |              | 6.21   | %      |              |   | 6.02 | % |   |   | 5.50 | % |
| Average effective cost of deposits  |   |              |   |   |              |   |   |              |   |   |              |   |   |              |   |   |              |   |   |   |   |   |   |   |
| and borrowings                      |   |              | 0.82   | %      |              |   | 1.45   | %                 |   |   | 2.19              | %      |   |              | 3.18   | %      |              |   | 2.77 | % |   |   | 1.82 | % |
| Interest rate spread                |   |              | 4.02   | %      |              |   | 3.71   | %                 |   |   | 3.59              | %      |   |              | 3.03   | %      |              |   | 3.25 | % |   |   | 3.68 | % |
| Net interest margin                 |   |              | 4.04   | %      |              |   | 3.74   | %                 |   |   | 3.65              | %      |   |              | 3.10   | %      |              |   | 3.31 | % |   |   | 3.71 | % |
| Return on average assets            |   |              | 0.77   | %      |              |   | 0.37   | %                 |   |   | 0.91              | %      |   |              | 0.91   | %      |              |   | 1.04 | % |   |   | 1.14 | % |
| Return on average equity            |   |              | 9.03   | %      |              |   | 4.55   | %                 |   |   | 10.96             | %      |   |              | 10.78  | %      |              |   | 13.42 | % |   |   | 14.67 | % |

|                                              |   | December 31, |   |   | December 31, |   |   | December 31, |   |   | December 31, |   |   | December 31, |   |   | December 31, |   |
|---------------------------------------------------|--------|-------------------|--------|--------|-------------------|--------|--------|-------------------|--------|--------|-------------------|--------|--------|-------------------|--------|--------|-------------------|--------|
|                                              |   | 2010              |   |   | 2009              |   |   | 2008              |   |   | 2007              |   |   | 2006              |   |   | 2005              |   |
| Total capital to risk-weighted assets             |   |              | 12.9   | %      |              |   | 11.5   | %                 |   |   | 12.0              | %      |   |              | 12.0   | %      |              |   | 12.0 | % |   |   | 11.6 | % |
| Tier 1 capital to risk-weighted assets            |   |              | 11.7   | %      |              |   | 10.3   | %                 |   |   | 10.8              | %      |   |              | 11.0   | %      |              |   | 11.1 | % |   |   | 10.7 | % |
| Tier 1 capital to adjusted average assets         |   |              | 8.5    | %      |              |   | 7.8    | %                 |   |   | 8.2               | %      |   |              | 8.3    | %      |              |   | 8.0 | % |   |   | 7.9 | % |
| Allowance for loan losses to total loans          |   |              | 2.18   | %      |              |   | 1.33   | %                 |   |   | 1.19              | %      |   |              | 0.98   | %      |              |   | 0.90 | % |   |   | 0.89 | % |
| Allowance for loan losses to non-performing loans |   |              | 42.26  | %      |              |   | 32.93  | %                 |   |   | 46.97             | %      |   |              | 53.16  | %      |              |   | 153.95 | % |   |   | 198.00 | % |
| Non-performing loans to total loans               |   |              | 5.77   | %      |              |   | 4.05   | %                 |   |   | 2.54              | %      |   |              | 1.84   | %      |              |   | 0.58 | % |   |   | 0.45 | % |
| Total loan accounts                               |   |              | 4,594  |   |              |   | 4,846  |              |   |   | 5,193             |   |   |              | 5,268  |   |              |   | 5,392 |   |   |   | 5,422 |   |
| Total deposit accounts                            |   |              | 28,912 |   |              |   | 32,616 |              |   |   | 33,692            |   |   |              | 30,760 |   |              |   | 32,435 |   |   |   | 33,963 |   |
| Total Banking Centers (all full service)          |   |              | 12     |   |              |   | 11     |              |   |   | 10                |   |   |              | 9      |   |              |   | 8 |   |   |   | 8 |   |

----

| December 31, |   |   | December 31, |   |   | December 31, |   |   | December 31, |   |
|-------------------|--------|--------|-------------------|--------|--------|-------------------|--------|--------|-------------------|--------|
| 2004              |   |   | 2003              |   |   | 2002              |   |   | 2001              |   |
|              |   |   |              |   |   |              |   |   |              |   |
| $                 | 26,614 |   |              | $      | 26,357 |              |   | $      | 27,781            |   |   | $ | 28,425 |   |
|              | 6,858  |   |              |   | 7,521  |              |   |   | 10,107            |   |   |   | 13,222 |   |
|              | 19,756 |   |              |   | 18,836 |              |   |   | 17,674            |   |   |   | 15,203 |   |
|              | 385    |   |              |   | 420    |              |   |   | 720               |   |   |   | 230 |   |
|              |   |   |              |   |   |              |   |   |              |   |   |   |   |   |
|              | 19,371 |   |              |   | 18,416 |              |   |   | 16,954            |   |   |   | 14,973 |   |
|              | 3,312  |   |              |   | 2,968  |              |   |   | 2,675             |   |   |   | 2,402 |   |
|              | 13,174 |   |              |   | 12,037 |              |   |   | 10,859            |   |   |   | 9,911 |   |
|              | 9,862  |   |              |   | 9,069  |              |   |   | 8,184             |   |   |   | 7,509 |   |
|              | 3,219  |   |              |   | 3,411  |              |   |   | 3,277             |   |   |   | 2,754 |   |
| $                 | 6,290  |   |              | $      | 5,936  |              |   | $      | 5,493             |   |   | $ | 4,710 |   |
| $                 | 2.28   |   |              | $      | 2.16   |              |   | $      | 2.01              |   |   | $ | 1.73 |   |
| $                 | 2.24   |   |              | $      | 2.13   |              |   | $      | 1.99              |   |   | $ | 1.71 |   |
| $                 | 1.24   |   |              | $      | 1.20   |              |   | $      | 1.12              |   |   | $ | 1.04 |   |

| December 31, |    |   | December 31, |   |    | December 31, |   |   | December 31, |   |
|-------------------|---------|--------|-------------------|--------|---------|-------------------|--------|--------|-------------------|--------|
| 2004              |    |   | 2003              |   |    | 2002              |   |   | 2001              |   |
|              |    |   |              |   |    |              |   |   |              |   |
| $                 | 557,393 |   |              | $      | 508,775 |              |   | $      | 488,002           |   |   | $ | 440,710 |   |
|              | 433,790 |   |              |   | 409,808 |              |   |   | 380,428           |   |   |   | 342,642 |   |
|              | 79,979  |   |              |   | 63,733  |              |   |   | 56,571            |   |   |   | 67,260 |   |
|              | 451,573 |   |              |   | 421,640 |              |   |   | 406,673           |   |   |   | 355,215 |   |
|              | 57,201  |   |              |   | 40,895  |              |   |   | 36,065            |   |   |   | 44,989 |   |
|              | 44,097  |   |              |   | 41,554  |              |   |   | 39,148            |   |   |   | 35,882 |   |

| December 31, |   |   | December 31, |   |   | December 31, |   |   | December 31, |   |
|-------------------|--------|--------|-------------------|--------|--------|-------------------|--------|--------|-------------------|--------|
| 2004              |   |   | 2003              |   |   | 2002              |   |   | 2001              |   |
|              |   |   |              |   |   |              |   |   |              |   |
|              | 5.31   | %      |              |   | 5.65   | %                 |   |   | 6.26              | %      |   |   | 7.29 | % |
|              | 1.40   | %      |              |   | 1.67   | %                 |   |   | 2.38              | %      |   |   | 3.55 | % |
|              | 3.91   | %      |              |   | 3.98   | %                 |   |   | 3.88              | %      |   |   | 3.74 | % |
|              | 3.94   | %      |              |   | 4.04   | %                 |   |   | 3.99              | %      |   |   | 3.90 | % |
|              | 1.17   | %      |              |   | 1.20   | %                 |   |   | 1.18              | %      |   |   | 1.15 | % |
|              | 14.64  | %      |              |   | 14.65  | %                 |   |   | 14.58             | %      |   |   | 13.49 | % |

| December 31, |   |   | December 31, |   |   | December 31, |   |   | December 31, |   |
|-------------------|--------|--------|-------------------|--------|--------|-------------------|--------|--------|-------------------|--------|
| 2004              |   |   | 2003              |   |   | 2002              |   |   | 2001              |   |
|              | 12.2   | %      |              |   | 12.5   | %                 |   |   | 13.1              | %      |   |   | 13.6 | % |
|              | 11.2   | %      |              |   | 11.5   | %                 |   |   | 11.9              | %      |   |   | 12.5 | % |
|              | 8.0    | %      |              |   | 8.0    | %                 |   |   | 7.6               | %      |   |   | 8.3 | % |
|              | 0.90   | %      |              |   | 0.92   | %                 |   |   | 0.96              | %      |   |   | 0.92 | % |
|              | 371.00 | %      |              |   | 220.31 | %                 |   |   | 152.43            | %      |   |   | 108.64 | % |
|              | 0.24   | %      |              |   | 0.42   | %                 |   |   | 0.63              | %      |   |   | 0.85 | % |
|              | 5,370  |   |              |   | 5,213  |              |   |   | 5,049             |   |   |   | 4,964 |   |
|              | 32,866 |   |              |   | 32,502 |              |   |   | 31,385            |   |   |   | 30,433 |   |
|              | 8      |   |              |   | 8      |              |   |   | 8                 |   |   |   | 8 |   |

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|   | • | We expect to face increased regulation of our industry, particularly in connection with the regulatory overhaul provisions of the Dodd-Frank Act. Compliance with such regulation may increase our costs and limit our ability to pursue business opportunities. |
|--------|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | Our ability to assess the creditworthiness of our customers may be impaired if the models and approaches we use to select, manage and underwrite our customers become less predictive of future behaviors. |
|--------|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | The process we use to estimate losses inherent in our credit exposure requires difficult, subjective and complex judgments, including forecasts of economic conditions and how these economic predictions might impair the ability of our borrowers to repay their loans, which may no longer be capable of accurate estimation which may, in turn, impact the reliability of the process |
|--------|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | Our ability to borrow from other financial institutions on favorable terms or at all could be adversely affected by disruptions in the capital markets or other events, including actions by rating agencies and deteriorating investor expectations. |
|--------|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | Competition in our industry could intensify as a result of the increasing consolidation of financial services companies in connection with current market conditions. |
|--------|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | We may be required to pay significantly higher deposit insurance premiums because market developments have significantly depleted the insurance fund of the Federal Deposit Insurance Corporation (FDIC) and reduced the ratio of reserves to insured deposits. |
|--------|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| At December 31, 2010                      |   | Actual |   |   | Minimum Required forAdequacy Purposes |   |   | MinimumRequired To BeWell CapitalizedUnder PromptCorrective ActionRegulations |   |
|-------------------------------------------|--------|--------|--------|--------|---------------------------------------|--------|--------|-------------------------------------------------------------------------------|--------|
|                                      |   | Amount |   |   | Ratio                                 |   |   | Amount                                                                        |   |   | Ratio |   |   | Amount |   |   | Ratio |   |
|                                      |   |   |   |   |                                  |   |   |                                                                          |   |   |   |   |   |   |   |   |   |   |
| Total capital to risk-weighted assets     |   | $      | 61,500 |   |                                  |   | 12.9   | %                                                                             |   | $ | 38,000 |   |   |   | 8.0 | % |   | $ | 47,600 |   |   |   | 10.0 | % |
| Tier 1 capital to risk-weighted assets    |   | $      | 55,500 |   |                                  |   | 11.7   | %                                                                             |   | $ | 19,000 |   |   |   | 4.0 | % |   | $ | 28,500 |   |   |   | 6.0 | % |
| Tier 1 capital to adjusted average assets |   | $      | 55,500 |   |                                  |   | 8.5    | %                                                                             |   | $ | 19,500 |   |   |   | 3.0 | % |   | $ | 32,600 |   |   |   | 5.0 | % |

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|                          |
|--------------------------|
| Plante & Moran, PLLC |

----

|                                                                |   | December 31, |    |
|---------------------------------------------------------------------|--------|-------------------|---------|
|                                                                |   | 2010              |    |   | 2009 |   |
|                                                                |   |              |    |   |   |   |
| ASSETS                                                              |   |              |    |   |   |   |
|                                                                |   |              |    |   |   |   |
| Cash and non-interest bearing balances in financial institutions    |   | $                 | 7,427   |   |   | $ | 8,705 |   |
| Interest bearing balances in financial institutions                 |   |              | 90      |   |   |   | 447 |   |
| Federal funds sold                                                  |   |              | 3,421   |   |   |   | 4,070 |   |
|                                                                |   |              |    |   |   |   |   |   |
| Total cash and cash equivalents                                     |   |              | 10,938  |   |   |   | 13,222 |   |
|                                                                |   |              |    |   |   |   |   |   |
| Securities available-for-sale                                       |   |              | 142,055 |   |   |   | 124,776 |   |
| Securities held-to-maturity                                         |   |              | 18,397  |   |   |   | 19,557 |   |
| Loans held-for-sale                                                 |   |              | 422     |   |   |   | 1,025 |   |
| Loans receivable                                                    |   |              | 418,233 |   |   |   | 458,245 |   |
| Less: allowance for loan losses                                     |   |              | (9,121  | ) |   |   | (6,114 | ) |
| Net loans receivable                                                |   |              | 409,112 |   |   |   | 452,131 |   |
| Federal Home Loan Bank stock                                        |   |              | 3,381   |   |   |   | 3,650 |   |
| Accrued interest receivable                                         |   |              | 2,591   |   |   |   | 2,878 |   |
| Premises and equipment                                              |   |              | 19,293  |   |   |   | 19,590 |   |
| Foreclosed real estate                                              |   |              | 3,298   |   |   |   | 3,747 |   |
| Cash value of bank owned life insurance                             |   |              | 12,452  |   |   |   | 12,049 |   |
| Prepaid FDIC insurance premium                                      |   |              | 2,425   |   |   |   | 3,282 |   |
| Other assets                                                        |   |              | 6,689   |   |   |   | 5,899 |   |
|                                                                |   |              |    |   |   |   |   |   |
| Total assets                                                        |   | $                 | 631,053 |   |   | $ | 661,806 |   |
|                                                                |   |              |    |   |   |   |   |   |
| LIABILITIES AND STOCKHOLDERS’ EQUITY                          |   |              |    |   |   |   |   |   |
|                                                                |   |              |    |   |   |   |   |   |
| Deposits:                                                           |   |              |    |   |   |   |   |   |
| Non-interest bearing                                                |   | $                 | 50,712  |   |   | $ | 42,390 |   |
| Interest bearing                                                    |   |              | 469,559 |   |   |   | 498,137 |   |
| Total                                                               |   |              | 520,271 |   |   |   | 540,527 |   |
| Repurchase agreements                                               |   |              | 16,074  |   |   |   | 15,893 |   |
| Borrowed funds                                                      |   |              | 32,544  |   |   |   | 47,129 |   |
| Accrued expenses and other liabilities                              |   |              | 6,075   |   |   |   | 5,179 |   |
|                                                                |   |              |    |   |   |   |   |   |
| Total liabilities                                                   |   |              | 574,964 |   |   |   | 608,728 |   |
|                                                                |   |              |    |   |   |   |   |   |
| Stockholders’ Equity:                                         |   |              |    |   |   |   |   |   |
| Preferred stock, no par or stated value;                            |   |              |    |   |   |   |   |   |
| 10,000,000 shares authorized, none outstanding                      |   |              | – |   |   |   | – |   |
| Common stock, no par or stated value; 10,000,000 shares authorized; |   |              |    |   |   |   |   |   |
| shares issued: December 31, 2010 - 2,888,902                        |   |              |    |   |   |   |   |   |
|   December 31, 2009 - 2,889,452                           |   |              |    |   |   |   |   |   |
| shares outstanding: December 31, 2010 - 2,826,796                   |   |              |    |   |   |   |   |   |
|    December 31, 2009 - 2,818,578 361                      |   |              | 361     |   |   |   |   |   |
| Additional paid-in capital                                          |   |              | 5,140   |   |   |   | 5,104 |   |
| Accumulated other comprehensive income/(loss)                       |   |              | (492    | ) |   |   | (170 | ) |
| Retained earnings                                                   |   |              | 52,398  |   |   |   | 49,312 |   |
| Treasury stock, common shares at cost: December 31, 2010 - 62,106   |   |              |    |   |   |   |   |   |
|    December 31, 2009 - 70,874                        |   |              | (1,318  | ) |   |   | (1,529 | )  |
|                                                                |   |              |    |   |   |   |   |   |
| Total stockholders’ equity                                    |   |              | 56,089  |   |   |   | 53,078 |   |
|                                                                |   |              |    |   |   |   |   |   |
| Total liabilities and stockholders’ equity                    |   | $                 | 631,053 |   |   | $ | 661,806 |   |

----

|                                                                |   | Year ended December 31, |   |
|---------------------------------------------------------------------|--------|----------------------------------------|--------|
|                                                                |   | 2010                                   |   |   | 2009 |   |
|                                                                |   |                                   |   |   |   |   |
| Interest income:                                                    |   |                                   |   |   |   |   |
| Loans receivable                                                    |   |                                   |   |   |   |   |
| Real estate loans                                                   |   | $                                      | 19,759 |   |   | $ | 22,046 |   |
| Commercial loans                                                    |   |                                   | 4,216  |   |   |   | 3,822 |   |
| Consumer loans                                                      |   |                                   | 76     |   |   |   | 121 |   |
| Total loan interest                                                 |   |                                   | 24,051 |   |   |   | 25,989 |   |
| Securities                                                          |   |                                   | 6,006  |   |   |   | 6,185 |   |
| Other interest earning assets                                       |   |                                   | 29     |   |   |   | 15 |   |
|                                                                |   |                                   |   |   |   |   |   |   |
| Total interest income                                               |   |                                   | 30,086 |   |   |   | 32,189 |   |
|                                                                |   |                                   |   |   |   |   |   |   |
| Interest expense:                                                   |   |                                   |   |   |   |   |   |   |
| Deposits                                                            |   |                                   | 3,914  |   |   |   | 7,083 |   |
| Repurchase agreements                                               |   |                                   | 178    |   |   |   | 290 |   |
| Borrowed funds                                                      |   |                                   | 897    |   |   |   | 1,468 |   |
|                                                                |   |                                   |   |   |   |   |   |   |
| Total interest expense                                              |   |                                   | 4,989  |   |   |   | 8,841 |   |
|                                                                |   |                                   |   |   |   |   |   |   |
| Net interest income                                                 |   |                                   | 25,097 |   |   |   | 23,348 |   |
| Provision for loan losses                                           |   |                                   | 5,570  |   |   |   | 8,540 |   |
|                                                                |   |                                   |   |   |   |   |   |   |
| Net interest income after provision for loan losses                 |   |                                   | 19,527 |   |   |   | 14,808 |   |
|                                                                |   |                                   |   |   |   |   |   |   |
| Noninterest income:                                                 |   |                                   |   |   |   |   |   |   |
| Fees and service charges                                            |   |                                   | 2,538  |   |   |   | 2,661 |   |
| Gain on sale of loans, net                                          |   |                                   | 1,263  |   |   |   | 1,139 |   |
| Wealth management operations                                        |   |                                   | 1,165  |   |   |   | 933 |   |
| Gain on sales of securities, net                                    |   |                                   | 913    |   |   |   | 736 |   |
| Increase in cash value of bank owned life insurance                 |   |                                   | 403    |   |   |   | 407 |   |
| Loss on sale of foreclosed real estate                              |   |                                   | (381   | ) |   |   | (161 | ) |
| Other-than-temporary credit loss impairment of debt securities      |   |                                   | (157   | ) |   |   | (523 | ) |
| Net credit portion of gain recognized in other comprehensive income |   |                                   | 29     |   |   |   | 387 |   |
| Other                                                               |   |                                   | 17     |   |   |   | 23 |   |
|                                                                |   |                                   |   |   |   |   |   |   |
| Total noninterest income                                            |   |                                   | 5,790  |   |   |   | 5,602 |   |
|                                                                |   |                                   |   |   |   |   |   |   |
| Noninterest expense:                                                |   |                                   |   |   |   |   |   |   |
| Compensation and benefits                                           |   |                                   | 9,599  |   |   |   | 9,346 |   |
| Occupancy and equipment                                             |   |                                   | 3,010  |   |   |   | 2,893 |   |
| Federal deposit insurance premiums                                  |   |                                   | 950    |   |   |   | 1,227 |   |
| Data processing                                                     |   |                                   | 941    |   |   |   | 871 |   |
| Marketing                                                           |   |                                   | 485    |   |   |   | 469 |   |
| Statement and check processing                                      |   |                                   | 307    |   |   |   | 325 |   |
| Professional services                                               |   |                                   | 336    |   |   |   | 338 |   |
| Other                                                               |   |                                   | 3,713  |   |   |   | 3,266 |   |
|                                                                |   |                                   |   |   |   |   |   |   |
| Total noninterest expense                                           |   |                                   | 19,341 |   |   |   | 18,735 |   |
|                                                                |   |                                   |   |   |   |   |   |   |
| Income before income tax expenses                                   |   |                                   | 5,976  |   |   |   | 1,675 |   |
| Income tax expenses (benefits)                                      |   |                                   | 797    |   |   |   | (813 | ) |
|                                                                |   |                                   |   |   |   |   |   |   |
| Net income                                                          |   | $                                      | 5,179  |   |   | $ | 2,488 |   |
|                                                                |   |                                   |   |   |   |   |   |   |
| Earnings per common share:                                          |   |                                   |   |   |   |   |   |   |
| Basic                                                               |   | $                                      | 1.83   |   |   | $ | 0.88 |   |
| Diluted                                                             |   | $                                      | 1.83   |   |   | $ | 0.88 |   |
| Dividends declared per common share                                 |   | $                                      | 0.72   |   |   | $ | 1.21 |   |

----

|                                                                                                                                                  |   |   |    |   |       |   |    | Accumulated   |   |   |     |   |   |     |    |   |   |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|---------|--------|------------|--------|---------|---------------|--------|--------|----------|--------|--------|----------|---------|--------|--------|--------|
|                                                                                                                                                  |   |   |    |   | Additional |   |    | Other         |   |   |     |   |   |     |    |   |   |   |
|                                                                                                                                                  |   | Common |    |   | Paid-in    |   |    | Comprehensive |   |   | Retained |   |   | Treasury |    |   | Total  |   |
| (Dollars in thousands, except per share data)                                                                                                         |   | Stock  |    |   | Capital    |   |    | Income (Loss) |   |   | Earnings |   |   | Stock    |    |   | Equity |   |
|                                                                                                                                                  |   |   |    |   |       |   |    |          |   |   |     |   |   |     |    |   |   |   |
| Balance at January 1, 2009                                                                                                                            |   | $      | 361     |   |       | $      | 5,064   |          |   | $      | (1,289   | )      |   | $        | 50,365  |   |   | $      | (1,728 | ) |   | $ | 52,773 |   |
|                                                                                                                                                  |   |   |    |   |       |   |    |          |   |   |     |   |   |     |    |   |   |   |   |   |   |   |   |   |
| Comprehensive income:                                                                                                                                 |   |   |    |   |       |   |    |          |   |   |     |   |   |     |    |   |   |   |   |   |   |   |   |   |
| Net income                                                                                                                                            |   |   | – |   |       |   | – |          |   |   | –  |   |   |     | 2,488   |   |   |   | – |   |   |   | 2,488 |   |
| Net unrealized gain/(loss) on securities available-for-sale, net of reclassification and tax effects                                                  |   |   | – |   |       |   | – |          |   |   | 1,128    |   |   |     | – |   |   |   | – |   |   |   | 1,128 |   |
| Change in unrealized gain on post retirement benefit, net of reclassification and tax effects                                                         |   |   | – |   |       |   | – |          |   |   | (9       | )      |   |     | – |   |   |   | – |   |   |   | (9 | ) |
| Comprehensive income                                                                                                                                  |   |   | – |   |       |   | – |          |   |   | –  |   |   |     | – |   |   |   | – |   |   |   | 3,607 |   |
| Issuance of 9,503 shares of common stock at  $18.50 - $20.50 per share, under stock-based compensation plans, including related tax effects |   |   | – |   |       |   | 6       |          |   |   | –  |   |   |     | – |   |   |   | – |   |   |   | 6 |   |
| Stock-based compensation expense                                                                                                                      |   |   | – |   |       |   | 40      |          |   |   | –  |   |   |     | – |   |   |   | – |   |   |   | 40 |   |
| Sale of treasury stock                                                                                                                                |   |   | – |   |       |   | (6      | )             |   |   | –  |   |   |     | (52     | )      |   |   | 199 |   |   |   | 141 |   |
| Adjustments to retained earnings for split-dollar life insurance arrangements                                                                         |   |   | – |   |       |   | – |          |   |   | –  |   |   |     | (84     | )      |   |   | – |   |   |   | (84 | ) |
| Cash dividends, $1.21 per share                                                                                                                       |   |   | – |   |       |   | – |          |   |   | –  |   |   |     | (3,405  | )      |   |   | – |   |   |   | (3,405 | ) |
|                                                                                                                                                  |   |   |    |   |       |   |    |          |   |   |     |   |   |     |    |   |   |   |   |   |   |   |   |   |
| Balance at December 31, 2009                                                                                                                          |   | $      | 361     |   |       | $      | 5,104   |          |   | $      | (170     | )      |   | $        | 49,312  |   |   | $      | (1,529 | ) |   | $ | 53,078 |   |
|                                                                                                                                                  |   |   |    |   |       |   |    |          |   |   |     |   |   |     |    |   |   |   |   |   |   |   |   |   |
| Comprehensive income:                                                                                                                                 |   |   |    |   |       |   |    |          |   |   |     |   |   |     |    |   |   |   |   |   |   |   |   |   |
| Net income                                                                                                                                            |   |   | – |   |       |   | – |          |   |   | –  |   |   |     | 5,179   |   |   |   | – |   |   |   | 5,179 |   |
| Net unrealized gain/(loss) on securities available-for-sale, net of reclassification and tax effects                                                  |   |   | – |   |       |   | – |          |   |   | (314     | )      |   |     | – |   |   |   | – |   |   |   | (314 | ) |
| Change in unrealized gain on post retirement benefit, net of reclassification and tax effects                                                         |   |   | – |   |       |   | – |          |   |   | (8       | )      |   |     | – |   |   |   | – |   |   |   | (8 | ) |
| Comprehensive income                                                                                                                                  |   |   | – |   |       |   | – |          |   |   | –  |   |   |     | – |   |   |   | – |   |   |   | 4,857 |   |
| Stock-based compensation expense                                                                                                                      |   |   | – |   |       |   | 36      |          |   |   | –  |   |   |     | – |   |   |   | – |   |   |   | 36 |   |
| Sale of treasury stock                                                                                                                                |   |   | – |   |       |   | – |          |   |   | –  |   |   |     | (60     | )      |   |   | 211 |   |   |   | 151 |   |
| Cash dividends, $0.72 per share                                                                                                                       |   |   | – |   |       |   | – |          |   |   | –  |   |   |     | (2,033  | )      |   |   | – |   |   |   | (2,033 | ) |
|                                                                                                                                                  |   |   |    |   |       |   |    |          |   |   |     |   |   |     |    |   |   |   |   |   |   |   |   |   |
| Balance at December 31, 2010                                                                                                                          |   | $      | 361     |   |       | $      | 5,140   |          |   | $      | (492     | )      |   | $        | 52,398  |   |   | $      | (1,318 | ) |   | $ | 56,089 |   |

----

|                                                                              |   | Year Ended December 31, |    |
|-----------------------------------------------------------------------------------|--------|-------------------------|---------|
| (Dollars in thousands)                                                            |   | 2010                    |    |   | 2009 |   |
| CASH FLOWS FROM OPERATING ACTIVITIES:                                             |   |                    |    |   |   |   |
| Net income                                                                        |   | $                       | 5,179   |   |   | $ | 2,488 |   |
| Adjustments to reconcile net income to net cash provided by operating activities: |   |                    |    |   |   |   |   |   |
| Origination of loans for sale                                                     |   |                    | (34,846 | ) |   |   | (49,670 | ) |
| Sale of loans originated for sale                                                 |   |                    | 36,303  |   |   |   | 49,449 |   |
| Depreciation and amortization, net of accretion                                   |   |                    | 2,034   |   |   |   | 1,457 |   |
| Deferred tax benefit                                                              |   |                    | (988    | ) |   |   | (454 | ) |
| Impairment of land held for future expansion                                      |   |                    | 190     |   |   |   | – |   |
| Amortization of mortgage servicing rights                                         |   |                    | 113     |   |   |   | 144 |   |
| Equity in loss on investment in limited partnership, net of interest received     |   |                    | 151     |   |   |   | 151 |   |
| Stock-based compensation expense                                                  |   |                    | 36      |   |   |   | 40 |   |
| Net gains on sales and calls of securities                                        |   |                    | (913    | ) |   |   | (736 | ) |
| Net gains on sale of loans                                                        |   |                    | (1,263  | ) |   |   | (1,139 | ) |
| Net losses due to other-than-temporary impairment of securities                   |   |                    | 128     |   |   |   | 136 |   |
| Net losses on foreclosed real estate                                              |   |                    | 381     |   |   |   | 161 |   |
| Provision for loan losses                                                         |   |                    | 5,570   |   |   |   | 8,540 |   |
| Net change in:                                                                    |   |                    |    |   |   |   |   |   |
| Interest receivable                                                               |   |                    | 287     |   |   |   | 282 |   |
| Other assets                                                                      |   |                    | 1,459   |   |   |   | (4,485 | ) |
| Cash value of bank owned life insurance                                           |   |                    | (403    | ) |   |   | (407 | ) |
| Accrued expenses and other liabilities                                            |   |                    | 1,063   |   |   |   | (4,710 | ) |
| Total adjustments                                                                 |   |                    | 9,302   |   |   |   | (1,241 | ) |
| Net cash – operating activities                                             |   |                    | 14,481  |   |   |   | 1,247 |   |
|                                                                              |   |                    |    |   |   |   |   |   |
| CASH FLOWS FROM INVESTING ACTIVITIES:                                             |   |                    |    |   |   |   |   |   |
| Proceeds from maturities and paydowns of securities available-for-sale            |   |                    | 33,376  |   |   |   | 21,178 |   |
| Proceeds from sales of securities available-for-sale                              |   |                    | 18,951  |   |   |   | 29,933 |   |
| Purchase of securities available-for-sale                                         |   |                    | (69,832 | ) |   |   | (64,566 | ) |
| Purchase of securities held-to-maturity                                           |   |                    | – |   |   |   | (3,860 | ) |
| Proceeds from maturities and paydowns of securities held-to-maturity              |   |                    | 1,135   |   |   |   | 2,790 |   |
| Proceeds from sale of loans transferred to held-for-sale                          |   |                    | 5,356.. |   |   |   | 10,651. |   |
| Loan participations purchased                                                     |   |                    | (967    | ) |   |   | – |   |
| Net change in loans receivable                                                    |   |                    | 29,368  |   |   |   | 8,744 |   |
| Proceeds from sale of Federal Home Loan Bank stock                                |   |                    | 269     |   |   |   | – |   |
| Purchase of premises and equipment, net                                           |   |                    | (1,702  | ) |   |   | (1,929 | ) |
| Proceeds from sale of foreclosed real estate, net                                 |   |                    | 3,990   |   |   |   | 390 |   |
| Net cash – investing activities                                             |   |                    | 19,944  |   |   |   | 3,331 |   |
|                                                                              |   |                    |    |   |   |   |   |   |
| CASH FLOWS FROM FINANCING ACTIVITIES:                                             |   |                    |    |   |   |   |   |   |
| Change in deposits                                                                |   |                    | (20,256 | ) |   |   | 12,379 |   |
| Proceeds from FHLB advances                                                       |   |                    | 13,000  |   |   |   | 8,000 |   |
| Repayment of FHLB advances                                                        |   |                    | (22,000 | ) |   |   | (16,000 | ) |
| Change in other borrowed funds                                                    |   |                    | (5,404  | ) |   |   | (3,773 | ) |
| Proceeds from issuance of common stock                                            |   |                    | – |   |   |   | 6 |   |
| Proceeds from sale of treasury stock                                              |   |                    | 151     |   |   |   | 141 |   |
| Dividends paid                                                                    |   |                    | (2,200  | ) |   |   | (3,405 | ) |
| Net cash – financing activities                                             |   |                    | (36,709 | ) |   |   | (2,652 | ) |
| Net change in cash and cash equivalents                                           |   |                    | (2,284  | ) |   |   | 1,926 |   |
| Cash and cash equivalents at beginning of period                                  |   |                    | 13,222  |   |   |   | 11,296 |   |
| Cash and cash equivalents at end of period                                        |   | $                       | 10,938  |   |   | $ | 13,222 |   |
|                                                                              |   |                    |    |   |   |   |   |   |
| SUPPLEMENTAL CASH FLOW INFORMATION:                                               |   |                    |    |   |   |   |   |   |
| Cash paid during the period for:                                                  |   |                    |    |   |   |   |   |   |
| Interest                                                                          |   | $                       | 5,058   |   |   | $ | 8,947 |   |
| Income taxes                                                                      |   | $                       | 1,753   |   |   | $ | 990 |   |
| SUPPLEMENTAL NONCASH INFORMATION:                                                 |   |                    |    |   |   |   |   |   |
| Transfers from loans to foreclosed real estate                                    |   | $                       | 3,922   |   |   | $ | 3,763 |   |
| Transfers from loans to loans held-for-sale                                       |   | $                       | 5,126   |   |   | $ | 10,497 |   |
| Transfers from premises and equipment to other assets                             |   | $                       | 340     |   |   | $ | – |   |

----

----

----

----

|                                           |   | (Dollars in thousands) |    |
|------------------------------------------------|--------|------------------------|---------|
|                                           |   |                   |    |   | Gross |   |   | Gross |   |   | Estimated |   |
|                                           |   | Cost                   |    |   | Unrealized |   |   | Unrealized |   |   | Fair |   |
|                                           |   | Basis                  |    |   | Gains |   |   | Losses |   |   | Value |   |
| December 31, 2010                              |   |                   |    |   |   |   |   |   |   |   |   |   |
| U.S. government sponsored entities             |   | $                      | 4,172   |   |   | $ | – |   |   | $ | (3 | ) |   | $ | 4,169 |   |
| CMO and residential mortgage-backed securities |   |                   | 94,930  |   |   |   | 2,372 |   |   |   | (160 | ) |   |   | 97,142 |   |
| Municipal securities                           |   |                   | 38,549  |   |   |   | 1,027 |   |   |   | (211 | ) |   |   | 39,365 |   |
| Collateralized debt obligations                |   |                   | 5,215   |   |   |   | – |   |   |   | (3,836 | ) |   |   | 1,379 |   |
| Total securities available-for-sale            |   | $                      | 142,866 |   |   | $ | 3,399 |   |   | $ | (4,210 | ) |   | $ | 142,055 |   |
|                                           |   |                   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| December 31, 2009                              |   |                   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| U.S. government sponsored entities             |   | $                      | 1,993   |   |   | $ | 52 |   |   | $ | – |   |   | $ | 2,045 |   |
| CMO and residential mortgage-backed securities |   |                   | 61,095  |   |   |   | 2,302 |   |   |   | (82 | ) |   |   | 63,315 |   |
| Municipal securities                           |   |                   | 34,151  |   |   |   | 1,516 |   |   |   | (94 | ) |   |   | 35,573 |   |
| CMO government sponsored entities              |   |                   | 22,534  |   |   |   | 168 |   |   |   | (209 | ) |   |   | 22,493 |   |
| Collateralized debt obligations                |   |                   | 5,343   |   |   |   | – |   |   |   | (3,993 | ) |   |   | 1,350 |   |
| Total securities available-for-sale            |   | $                      | 125,116 |   |   | $ | 4,038 |   |   | $ | (4,378 | ) |   | $ | 124,776 |   |

|                                   |   | (Dollars in thousands) |   |
|----------------------------------------|--------|------------------------|--------|
|                                   |   |                   |   |   | Gross |   |   | Gross |   |   | Estimated |   |
|                                   |   | Cost                   |   |   | Unrecognized |   |   | Unrecognized |   |   | Fair |   |
|                                   |   | Basis                  |   |   | Gains |   |   | Losses |   |   | Value |   |
| December 31, 2010                      |   |                   |   |   |   |   |   |   |   |   |   |   |
| Municipal securities                   |   | $                      | 17,573 |   |   | $ | 613 |   |   | $ | – |   |   | $ | 18,186 |   |
| Residential mortgage-backed securities |   |                   | 824    |   |   |   | 29 |   |   |   | (1 | ) |   |   | 852 |   |
| Total securities held-to-maturity      |   | $                      | 18,397 |   |   | $ | 642 |   |   | $ | (1 | ) |   | $ | 19,038 |   |
| December 31, 2009                      |   |                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Municipal securities                   |   | $                      | 18,539 |   |   | $ | 724 |   |   | $ | – |   |   | $ | 19,263 |   |
| Residential mortgage-backed securities |   |                   | 1,018  |   |   |   | 28 |   |   |   | (6 | ) |   |   | 1,040 |   |
| Total securities held-to-maturity      |   | $                      | 19,557 |   |   | $ | 752 |   |   | $ | (6 | ) |   | $ | 20,303 |   |

----

|                                           |   | (Dollars in thousands) |    |
|------------------------------------------------|--------|------------------------|---------|
|                                           |   | Available-for-sale     |    |   | Held-to-maturity |   |
|                                           |   | Estimated              |    |   |   |   |   |   |   |   | Estimated |   |   |   |   |
|                                           |   | Fair                   |    |   | Tax-Equivalent |   |   | Carrying |   |   | Fair |   |   | Tax-Equivalent |   |
|                                           |   | Value                  |    |   | Yield % |   |   | Amount |   |   | Value |   |   | Yield % |   |
| Due in one year or less                        |   | $                      | 191     |   |   |   | 7.07 |   |   | $ | – |   |   | $ | – |   |   |   | – |   |
| Due from one to five years                     |   |                   | 5,268   |   |   |   | 2.67 |   |   |   | 1,876 |   |   |   | 1,988 |   |   |   | 6.34 |   |
| Due from five years to ten years               |   |                   | 9,159   |   |   |   | 5.82 |   |   |   | 15,697 |   |   |   | 11,825 |   |   |   | 6.03 |   |
| Due over ten years                             |   |                   | 30,295  |   |   |   | 5.96 |   |   |   | – |   |   |   | 4,373 |   |   |   | 6.00 |   |
| CMO and residential mortgage-backed securities |   |                   | 97,142  |   |   |   | 4.04 |   |   |   | 824 |   |   |   | 852 |   |   |   | 4.59 |   |
| Total                                          |   | $                      | 142,055 |   |   |   | 4.52 |   |   | $ | 18,397 |   |   | $ | 19,038 |   |   |   | 5.99 |   |

|         |   | (Dollars in thousands) |    |
|--------------|--------|------------------------|---------|
|         |   | 2010                   |    |   | 2009 |   |
| Proceeds     |   | $                      | 18,951  |   |   | $ | 29,933 |   |
| Gross gains  |   |                   | 913     |   |   |   | 736 |   |
| Gross losses |   |                   | – |   |   |   | – |   |

|                                           |   | (Dollars in thousands) |    |
|------------------------------------------------|--------|------------------------|---------|
|                                           |   | Less than              |    |   | 12 months |   |   |   |   |   |   |   |
|                                           |   | 12 months              |    |   | or longer |   |   | Total |   |
|                                           |   | Fair                   |    |   | Unrealized |   |   | Fair |   |   | Unrealized |   |   | Fair |   |   | Unrealized |   |
|                                           |   | Value                  |    |   | Losses |   |   | Value |   |   | Losses |   |   | Value |   |   | Losses |   |
| December 31, 2010                              |   |                   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Description of Securities:                     |   |                   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| U.S. government sponsored entities             |   | $                      | 2,513   |   |   | $ | (3 | ) |   | $ | – |   |   | $ | – |   |   | $ | 2,513 |   |   | $ | (3 | ) |
| CMO and residential mortgage-backed securities |   |                   | 13,767  |   |   |   | (161 | ) |   |   | – |   |   |   | – |   |   |   | 13,767 |   |   |   | (161 | ) |
| Municipal securities                           |   |                   | 7,496   |   |   |   | (194 | ) |   |   | 398 |   |   |   | (17 | ) |   |   | 7,894 |   |   |   | (211 | ) |
| Collateralized debt obligations                |   |                   | – |   |   |   | – |   |   |   | 1,379 |   |   |   | (3,836 | ) |   |   | 1,379 |   |   |   | (3,836 | ) |
| Total temporarily impaired                     |   | $                      | 23,776  |   |   | $ | (358 | ) |   | $ | 1,777 |   |   | $ | (3,853 | ) |   | $ | 25,553 |   |   | $ | (4,211 | ) |
| Number of securities                           |   |                   |    |   |   |   | 27 |   |   |   |   |   |   |   | 5 |   |   |   |   |   |   |   | 32 |   |

|                                           |   | (Dollars in thousands) |    |
|------------------------------------------------|--------|------------------------|---------|
|                                           |   | Less than              |    |   | 12 months |   |   |   |   |
|                                           |   | 12 months              |    |   | or longer |   |   | Total |   |
|                                           |   | Fair                   |    |   | Unrealized |   |   | Fair |   |   | Unrealized |   |   | Fair |   |   | Unrealized |   |
|                                           |   | Value                  |    |   | Losses |   |   | Value |   |   | Losses |   |   | Value |   |   | Losses |   |
| December 31, 2009                              |   |                   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Description of Securities:                     |   |                   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| U.S. government sponsored entities             |   | $                      | – |   |   | $ | – |   |   | $ | – |   |   | $ | – |   |   | $ | – |   |   | $ | – |   |
| CMO and residential mortgage-backed securities |   |                   | 15,604  |   |   |   | (297 | ) |   |   | 13 |   |   |   | – |   |   |   | 15,617 |   |   |   | (297 | ) |
| Municipal securities                           |   |                   | 2,443   |   |   |   | (15 | ) |   |   | 1,476 |   |   |   | (79 | ) |   |   | 3,919 |   |   |   | (94 | ) |
| Collateralized debt obligations                |   |                   | – |   |   |   | – |   |   |   | 1,350 |   |   |   | (3,993 | ) |   |   | 1,350 |   |   |   | (3,993 | ) |
| Total temporarily impaired                     |   | $                      | 18,047  |   |   | $ | (312 | ) |   | $ | 2,839 |   |   | $ | (4,072 | ) |   | $ | 20,886 |   |   | $ | (4,384 | ) |
| Number of securities                           |   |                   |    |   |   |   | 16 |   |   |   |   |   |   |   | 7 |   |   |   |   |   |   |   | 23 |   |

|                                      |   | (Dollars in thousands) |    |
|-------------------------------------------|--------|------------------------|---------|
|                                      |   | 2010                   |    |   | 2009 |   |
| Loans secured by real estate:             |   |                   |    |   |   |   |
| Construction and land development         |   | $                      | 46,371  |   |   | $ | 53,288 |   |
| Residential, including home equity        |   |                   | 153,150 |   |   |   | 184,730 |   |
| Commercial real estate and other dwelling |   |                   | 146,111 |   |   |   | 141,443 |   |
| Total loans secured by real estate        |   |                   | 345,632 |   |   |   | 379,461 |   |
| Consumer loans                            |   |                   | 765     |   |   |   | 1,505 |   |
| Commercial business                       |   |                   | 61,837  |   |   |   | 63,145 |   |
| Government and other                      |   |                   | 10,380  |   |   |   | 14,474 |   |
| Subtotal                                  |   |                   | 418,614 |   |   |   | 458,585 |   |
| Less:                                     |   |                   |    |   |   |   |   |   |
| Net deferred loan origination fees        |   |                   | (273    | ) |   |   | (285 | ) |
| Undisbursed loan funds                    |   |                   | (108    | ) |   |   | (55 | ) |
| Loans receivable                          |   | $                      | 418,233 |   |   | $ | 458,245 |   |

----

|                                                                       |   | (Dollars in thousands) |    |
|----------------------------------------------------------------------------|--------|------------------------|---------|
|                                                                       |   |                   |    |   |   |   |   | Commercial |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                       |   |                   |    |   |   |   |   | Real Estate, |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                       |   | Residential            |    |   |   |   |   | Construction |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                       |   | Real Estate,      |    |   |   |   |   | & Land |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                       |   | Including              |    |   |   |   |   | Development |   |   | Commercial |   |   | Commercial |   |   |   |   |   |   |   |
|                                                                       |   | Home                   |    |   | Consumer |   |   | and Other |   |   | Participations |   |   | Business |   |   |   |   |   |   |   |
|                                                                       |   | Equity                 |    |   | Loans |   |   | Dwellings |   |   | Purchased |   |   | Loans |   |   | Government |   |   | Total |   |
| 2010                                                                       |   |                   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Allowance for Loan Losses                                                  |   |                   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Beginning Balance                                                          |   | $                      | 536     |   |   | $ | 51 |   |   | $ | 813 |   |   | $ | 4,131 |   |   | $ | 583 |   |   | $ | – |   |   | $ | 6,114 |   |
| Charge-offs                                                                |   |                   | (764    | ) |   |   | (35 | ) |   |   | (900 | ) |   |   | (987 | ) |   |   | (182 | ) |   |   | – |   |   |   | (2,868 | ) |
| Recoveries                                                                 |   |                   | 38      |   |   |   | 9 |   |   |   | – |   |   |   | 248 |   |   |   | 10 |   |   |   | – |   |   |   | 305 |   |
| Provisions                                                                 |   |                   | 1,184   |   |   |   | 5 |   |   |   | 2,860 |   |   |   | 1,312 |   |   |   | 209 |   |   |   | – |   |   |   | 5,570 |   |
| Ending Balance                                                             |   | $                      | 994     |   |   | $ | 30 |   |   | $ | 2,773 |   |   | $ | 4,704 |   |   | $ | 620 |   |   | $ | – |   |   | $ | 9,121 |   |
|                                                                       |   |                   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Ending balance: individually evaluated for impairment                      |   | $                      | 1       |   |   | $ | – |   |   | $ | 875 |   |   | $ | 1,897 |   |   | $ | 21 |   |   | $ | – |   |   | $ | 2,794 |   |
|                                                                       |   |                   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Ending balance: collectively evaluated for impairment                      |   | $                      | 993     |   |   | $ | 30 |   |   | $ | 1,898 |   |   | $ | 2,807 |   |   | $ | 599 |   |   | $ | – |   |   | $ | 6,327 |   |
|                                                                       |   |                   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Ending balance: loans acquired with deteriorated credit quality            |   | $                      | – |   |   | $ | – |   |   | $ | – |   |   | $ | – |   |   | $ | – |   |   | $ | – |   |   | $ | – |   |
|                                                                       |   |                   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| FINANCING RECEIVABLES                                                      |   |                   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Ending balance                                                             |   | $                      | 152,881 |   |   | $ | 874 |   |   | $ | 163,616 |   |   | $ | 28,866 |   |   | $ | 61,726 |   |   | $ | 10,270 |   |   | $ | 418,233 |   |
|                                                                       |   |                   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Ending balance: individually evaluated for impairment                      |   | $                      | 64      |   |   | $ | – |   |   | $ | 10,974 |   |   | $ | 14,493 |   |   | $ | 482 |   |   | $ | – |   |   | $ | 26,013 |   |
|                                                                       |   |                   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Ending balance: collectively evaluated for impairment                      |   | $                      | 152,817 |   |   | $ | 874 |   |   | $ | 152,642 |   |   | $ | 14,373 |   |   | $ | 61,244 |   |   | $ | 10,270 |   |   | $ | 392,220 |   |
|                                                                       |   |                   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Ending balance: loans acquired  with deteriorated credit quality |   | $                      | – |   |   | $ | – |   |   | $ | – |   |   | $ | – |   |   | $ | – |   |   | $ | – |   |   | $ | – |   |
|                                                                       |   |                   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 2009                                                                       |   |                   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Allowance for Loan Losses                                                  |   |                   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Beginning Balance                                                          |   | $                      | 394     |   |   | $ | 68 |   |   | $ | 2,081 |   |   | $ | 1,853 |   |   | $ | 1,434 |   |   | $ | – |   |   | $ | 5,830 |   |
| Charge-offs                                                                |   |                   | (489    | ) |   |   | (11 | ) |   |   | (645 | ) |   |   | (7,133 | ) |   |   | (162 | ) |   |   | – |   |   |   | (8,440 | ) |
| Recoveries                                                                 |   |                   | 1       |   |   |   | 7 |   |   |   | 16 |   |   |   | 45 |   |   |   | 115 |   |   |   | – |   |   |   | 184 |   |
| Provisions                                                                 |   |                   | 630     |   |   |   | (13 | ) |   |   | (639 | ) |   |   | 9,366 |   |   |   | (804 | ) |   |   | – |   |   |   | 8,540 |   |
| Ending Balance                                                             |   | $                      | 536     |   |   | $ | 51 |   |   | $ | 813 |   |   | $ | 4,131 |   |   | $ | 583 |   |   | $ | – |   |   | $ | 6,114 |   |
|                                                                       |   |                   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Ending balance: individually evaluated for impairment                      |   | $                      | – |   |   | $ | – |   |   | $ | 239 |   |   | $ | 908 |   |   | $ | 32 |   |   | $ | – |   |   | $ | 1,179 |   |
|                                                                       |   |                   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Ending balance: collectively evaluated for impairment                      |   | $                      | 536     |   |   | $ | 51 |   |   | $ | 574 |   |   | $ | 3,223 |   |   | $ | 551 |   |   | $ | – |   |   | $ | 4,935 |   |
|                                                                       |   |                   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Ending balance: loans acquired with deteriorated credit quality            |   | $                      | – |   |   | $ | – |   |   | $ | – |   |   | $ | – |   |   | $ | – |   |   | $ | – |   |   | $ | – |   |
|                                                                       |   |                   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| FINANCING RECEIVABLES                                                 |   |                   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Ending balance                                                             |   | $                      | 184,438 |   |   | $ | 1,593 |   |   | $ | 162,454 |   |   | $ | 32,277 |   |   | $ | 63,099 |   |   | $ | 14,384 |   |   | $ | 458,245 |   |
|                                                                       |   |                   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Ending balance: individually evaluated for impairment                      |   | $                      | 64      |   |   | $ | – |   |   | $ | 2,022 |   |   | $ | 11,872 |   |   | $ | 3,007 |   |   | $ | – |   |   | $ | 16,965 |   |
|                                                                       |   |                   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Ending balance: collectively evaluated for impairment                      |   | $                      | 184,374 |   |   | $ | 1,593 |   |   | $ | 160,432 |   |   | $ | 20,405 |   |   | $ | 60,092 |   |   | $ | 14,384 |   |   | $ | 441,280 |   |
|                                                                       |   |                   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Ending balance: loans acquired  with deteriorated credit quality |   | $                      | – |   |   | $ | – |   |   | $ | – |   |   | $ | – |   |   | $ | – |   |   | $ | – |   |   | $ | – |   |

----

|                      |   | (Dollars in thousands)                                                                                            |    |
|---------------------------|--------|-----------------------------------------------------------------------------------------------------------------------------|---------|
|                      |   | Corporate Credit Exposure - Credit Risk Portfolio By Creditworthiness Category |    |
|                      |   | Commercial Real Estate, Construction &                                                              |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                      |   | Land Development and Other Dwellings                                                                    |    |   | Commercial Participations Purchased |   |   | Commercial Business Loans |   |   | Government |   |
| Loan Grades               |   | 2010                                                                                                                        |    |   | 2009 |   |   | 2010 |   |   | 2009 |   |   | 2010 |   |   | 2009 |   |   | 2010 |   |   | 2009 |   |
| 2 Modest Risk             |   | $                                                                                                                           | 31      |   |   | $ | 42 |   |   | $ | – |   |   | $ | – |   |   | $ | 4,724 |   |   | $ | 1,624 |   |   | $ | – |   |   | $ | – |   |
| 3 Acceptable Risk         |   |                                                                                                                        | 63,330  |   |   |   | 63,285 |   |   |   | 1,473 |   |   |   | 559 |   |   |   | 30,549 |   |   |   | 26,240 |   |   |   | 10,270 |   |   |   | 14,384 |   |
| 4 Pass/monitor            |   |                                                                                                                        | 78,758  |   |   |   | 75,500 |   |   |   | 6,482 |   |   |   | 19,815 |   |   |   | 21,131 |   |   |   | 29,656 |   |   |   | – |   |   |   | – |   |
| 5 Special mention (watch) |   |                                                                                                                        | 9,817   |   |   |   | 20,626 |   |   |   | 6,419 |   |   |   | 30 |   |   |   | 2,517 |   |   |   | 3,832 |   |   |   | – |   |   |   | – |   |
| 6 Substandard             |   |                                                                                                                        | 11,680  |   |   |   | 451 |   |   |   | 14,492 |   |   |   | 11,873 |   |   |   | 2,805 |   |   |   | 1,747 |   |   |   | – |   |   |   | – |   |
| 7 Doubtful                |   |                                                                                                                        | – |   |   |   | 2,550 |   |   |   | – |   |   |   | – |   |   |   | – |   |   |   | – |   |   |   | – |   |   |   | – |   |
| Total                     |   | $                                                                                                                           | 163,616 |   |   | $ | 162,454 |   |   | $ | 28,866 |   |   | $ | 32,277 |   |   | $ | 61,726 |   |   | $ | 63,099 |   |   | $ | 10,270 |   |   | $ | 14,384 |   |

|           |   | (Dollars in thousands)                                                                                           |    |
|----------------|--------|----------------------------------------------------------------------------------------------------------------------------|---------|
|           |   | Consumer Credit Exposure - Credit Risk Profile based On Payment Activity |    |
|           |   | Residential Real Estate,                                                                                         |    |   |   |   |   |   |   |
|           |   | Including Home Equity                                                                                            |    |   | Consumer Loans |   |
|           |   | 2010                                                                                                                       |    |   | 2009 |   |   | 2010 |   |   | 2009 |   |
| Performing     |   | $                                                                                                                          | 149,892 |   |   | $ | 180,163 |   |   | $ | 871 |   |   | $ | 1,587 |   |
| Non-performing |   |                                                                                                                       | 2,989   |   |   |   | 4,275 |   |   |   | 3 |   |   |   | 6 |   |
| Total          |   | $                                                                                                                          | 152,881 |   |   | $ | 184,438 |   |   | $ | 874 |   |   | $ | 1,593 |   |

----

|                                                                            |   | (Dollars in thousands) |    |
|---------------------------------------------------------------------------------|--------|------------------------|---------|
|                                                                            |   |                   |    |   | Unpaid |   |   |   |   |   | Average |   |   | Interest |   |
|                                                                            |   | Recorded               |    |   | Principal |   |   | Related |   |   | Recorded |   |   | Income |   |
|                                                                            |   | Investment             |    |   | Balance |   |   | Allowance |   |   | Investment |   |   | Recognized |   |
| 2010                                                                            |   |                   |    |   |   |   |   |   |   |   |   |   |   |   |   |
| With no related allowance recorded                                              |   |                   |    |   |   |   |   |   |   |   |   |   |   |   |   |
| Residential real estate, including home equity                                  |   | $                      | 64      |   |   | $ | 103 |   |   | $ | – |   |   | $ | 28 |   |   | $ | – |   |
| Commercial real estate, construction & land development and other dwellings |   |                   | 1,054   |   |   |   | 1,345 |   |   |   | – |   |   |   | 2,181 |   |   |   | 19 |   |
| Commercial participations purchased                                             |   |                   | 2,696   |   |   |   | 8,140 |   |   |   | – |   |   |   | 397 |   |   |   | 92 |   |
| Commercial business loans                                                       |   |                   | 354     |   |   |   | 354 |   |   |   | – |   |   |   | 414 |   |   |   | 1 |   |
| With an allowance recorded:                                                     |   |                   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Residential real estate, including home equity                                  |   |                   | – |   |   |   | – |   |   |   | 1 |   |   |   | – |   |   |   | – |   |
| Commercial real estate, construction & land development and other dwellings |   |                   | 9,920   |   |   |   | 10,361 |   |   |   | 875 |   |   |   | 3,181 |   |   |   | 305 |   |
| Commercial participations purchased                                             |   |                   | 11,797  |   |   |   | 11,797 |   |   |   | 1,897 |   |   |   | 16,098 |   |   |   | 216 |   |
| Commercial business loans                                                       |   |                   | 128     |   |   |   | 128 |   |   |   | 21 |   |   |   | 113 |   |   |   | 4 |   |
| Total:                                                                          |   |                   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Residential real estate, including home equity                                  |   | $                      | 64      |   |   | $ | 103 |   |   | $ | 1 |   |   | $ | 28 |   |   | $ | – |   |
| Commercial real estate, construction & land development and other dwellings |   | $                      | 10,974  |   |   | $ | 11,706 |   |   | $ | 875 |   |   | $ | 5,362 |   |   | $ | 324 |   |
| Commercial participations purchased                                             |   | $                      | 14,493  |   |   | $ | 19,937 |   |   | $ | 1,897 |   |   | $ | 16,495 |   |   | $ | 308 |   |
| Commercial business loans                                                       |   | $                      | 482     |   |   | $ | 482 |   |   | $ | 21 |   |   | $ | 527 |   |   | $ | 5 |   |

|                                                                            |   | (Dollars in thousands) |    |
|---------------------------------------------------------------------------------|--------|----------------------------------|---------|
|                                                                            |   |                             |    |   | Unpaid |   |   |   |   |   | Average |   |   | Interest |   |
|                                                                            |   | Recorded                         |    |   | Principal |   |   | Related |   |   | Recorded |   |   | Income |   |
|                                                                            |   | Investment                       |    |   | Balance |   |   | Allowance |   |   | Investment |   |   | Recognized |   |
| 2009                                                                            |   |                             |    |   |   |   |   |   |   |   |   |   |   |   |   |
| With no related allowance recorded                                              |   |                             |    |   |   |   |   |   |   |   |   |   |   |   |   |
| Residential real estate, including home equity                                  |   | $                                | 64      |   |   | $ | 64 |   |   | $ | – |   |   | $ | 13 |   |   | $ | – |   |
| Commercial real estate, construction & land development and other dwellings |   |                             | 1,005   |   |   |   | 1,019 |   |   |   | – |   |   |   | 1,299 |   |   |   | 1 |   |
| Commercial participations purchased                                             |   |                             | 1,601   |   |   |   | 5,121 |   |   |   | – |   |   |   | – |   |   |   | 20 |   |
| Commercial business loans                                                       |   |                             | 2,906   |   |   |   | 2,956 |   |   |   | – |   |   |   | 192 |   |   |   | 9 |   |
| With an allowance recorded:                                                     |   |                             |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Residential real estate, including home equity                                  |   |                             | – |   |   |   | – |   |   |   | – |   |   |   | – |   |   |   | – |   |
| Commercial real estate, construction & land development and other dwellings |   |                             | 1,017   |   |   |   | 1,017 |   |   |   | 239 |   |   |   | 1,630 |   |   |   | 23 |   |
| Commercial participations purchased                                             |   |                             | 10,271  |   |   |   | 11,632 |   |   |   | 908 |   |   |   | 9,501 |   |   |   | 51 |   |
| Commercial business loans                                                       |   |                             | 101     |   |   |   | 101 |   |   |   | 32 |   |   |   | 185 |   |   |   | 1 |   |
| Total:                                                                          |   |                             |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Residential real estate, including home equity                                  |   | $                                | 64      |   |   | $ | 64 |   |   | $ | – |   |   | $ | 13 |   |   | $ | – |   |
| Commercial real estate, construction & land development and other dwellings |   | $                                | 2.022   |   |   | $ | 2,036 |   |   | $ | 239 |   |   | $ | 2,929 |   |   | $ | 24 |   |
| Commercial participations purchased                                             |   | $                                | 11,872  |   |   | $ | 16,753 |   |   | $ | 908 |   |   | $ | 9,501 |   |   | $ | 71 |   |
| Commercial business loans                                                       |   | $                                | 3,007   |   |   | $ | 3,057 |   |   | $ | 32 |   |   | $ | 377 |   |   | $ | 10 |   |

----

|                                                                            |   | (Dollars in thousands) |    |
|---------------------------------------------------------------------------------|--------|----------------------------------|---------|
|                                                                            |   |                             |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                            |   |                             |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | Recorded |   |
|                                                                            |   |                             |    |   |   |   |   |   |   |   |   |   |   |   |   |   | Total |   |   | Investments | > |
|                                                                            |   | 30- 59 Days            |    |   | 60 - 89 Days |   |   | Greater Than |   |   | Total Past |   |   |   |   |   | Receivables |   |   | 90 Days and |
|                                                                            |   | Past Due                    |    |   | Past Due |   |   | 90 Days |   |   | Due |   |   | Current |   |   | Financing |   |   | Accruing |   |
| 2010                                                                            |   |                             |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Residential real estate, including home equity                                  |   | $                                | 5,832   |   |   | $ | 2,423 |   |   | $ | 2,859 |   |   | $ | 11,114 |   |   | $ | 141,767 |   |   | $ | 152,881 |   |   | $ | 145 |   |
| Consumer loans                                                                  |   |                             | 29      |   |   |   | – |   |   |   | 3 |   |   |   | 32 |   |   |   | 842 |   |   |   | 874 |   |   |   | 3 |   |
| Commercial real estate, construction & land development and other dwellings |   |                             | 410     |   |   |   | 2,573 |   |   |   | 3,747 |   |   |   | 6,730 |   |   |   | 156,886 |   |   |   | 163,616 |   |   |   | – |   |
| Commercial participations purchased                                             |   |                             | – |   |   |   | – |   |   |   | 14,492 |   |   |   | 14,492 |   |   |   | 14,374 |   |   |   | 28,866 |   |   |   | – |   |
| Commercial business loans                                                       |   |                             | 408     |   |   |   | 18 |   |   |   | 354 |   |   |   | 780 |   |   |   | 60,946 |   |   |   | 61,726 |   |   |   | – |   |
| Government                                                                      |   |                             | – |   |   |   | – |   |   |   | – |   |   |   | – |   |   |   | 10,270 |   |   |   | 10,270 |   |   |   | – |   |
| Total                                                                           |   | $                                | 6,679   |   |   | $ | 5,014 |   |   | $ | 21,455 |   |   | $ | 33,148 |   |   | $ | 385,085 |   |   | $ | 418,233 |   |   | $ | 148 |   |
|                                                                            |   |                             |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 2009                                                                            |   |                             |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Residential real estate, including home equity                                  |   | $                                | 3,771   |   |   | $ | 2,804 |   |   | $ | 4,184 |   |   | $ | 10,759 |   |   | $ | 173,679 |   |   | $ | 184,438 |   |   | $ | 1,485 |   |
| Consumer loans                                                                  |   |                             | 41      |   |   |   | – |   |   |   | 6 |   |   |   | 47 |   |   |   | 1,546 |   |   |   | 1,593 |   |   |   | 6 |   |
| Commercial real estate, construction & land development and other dwellings |   |                             | 1,531   |   |   |   | 425 |   |   |   | 1,997 |   |   |   | 3,953 |   |   |   | 158,501 |   |   |   | 162,454 |   |   |   | – |   |
| Commercial participations purchased                                             |   |                             | 3,333   |   |   |   | 327 |   |   |   | 8,212 |   |   |   | 11,872 |   |   |   | 20,405 |   |   |   | 32,277 |   |   |   | – |   |
| Commercial business loans                                                       |   |                             | 560     |   |   |   | 153 |   |   |   | 339 |   |   |   | 1,052 |   |   |   | 62,047 |   |   |   | 63,099 |   |   |   | – |   |
| Government                                                                      |   |                             | – |   |   |   | – |   |   |   | – |   |   |   | – |   |   |   | 14,384 |   |   |   | 14,384 |   |   |   | – |   |
| Total                                                                           |   | $                                | 9,236   |   |   | $ | 3,709 |   |   | $ | 14,738 |   |   | $ | 27,683 |   |   | $ | 430,562 |   |   | $ | 458,245 |   |   | $ | 1,491 |   |

|                                                                            |   | (Dollars in thousands) |    |
|---------------------------------------------------------------------------------|--------|----------------------------------|---------|
|                                                                            |   | 2010                             |    |   | 2009 |   |
| Residential real estate, including home equity                                  |   | $                                | 2,843   |   |   | $ | 2,789 |   |
| Consumer loans                                                                  |   |                             | – |   |   |   | – |   |
| Commercial real estate, construction & land development and other dwellings |   |                             | 6,150   |   |   |   | 2,055 |   |
| Commercial participations purchased                                             |   |                             | 14,492  |   |   |   | 11,872 |   |
| Commercial business loans                                                       |   |                             | 482     |   |   |   | 358 |   |
| Government                                                                      |   |                             | – |   |   |   | – |   |
| Total                                                                           |   | $                                | 23,967  |   |   | $ | 17,074 |   |

----

|                                        |   | (Dollars in thousands) |   |
|---------------------------------------------|--------|----------------------------------|--------|
|                                        |   | 2010                             |   |   | 2009 |   |
| Mortgage loan portfolios serviced for FHLMC |   | $                                | 58,944 |   |   | $ | 51,512 |   |

|                 |   | (Dollars in thousands) |   |
|----------------------|--------|----------------------------------|--------|
|                 |   | 2010                             |   |   | 2009 |   |
| Servicing rights:    |   |                             |   |   |   |   |
| Beginning of year    |   | $                                | 309    |   |   | $ | 276 |   |
| Additions            |   |                             | 179    |   |   |   | 177 |   |
| Amortized to expense |   |                             | (113   | ) |   |   | (144 | ) |
| End of year          |   | $                                | 375    |   |   | $ | 309 |   |

|                          |   | (Dollars in thousands) |    |
|-------------------------------|--------|----------------------------------|---------|
|                          |   | 2010                             |    |   | 2009 |   |
| Cost:                         |   |                             |    |   |   |   |
| Land                          |   | $                                | 4,540   |   |   | $ | 5,069 |   |
| Buildings and improvements    |   |                             | 19,083  |   |   |   | 17,939 |   |
| Furniture and equipment       |   |                             | 10,751  |   |   |   | 10,194 |   |
| Total cost                    |   |                             | 34,374  |   |   |   | 33,202 |   |
| Less accumulated depreciation |   |                             | (15,081 | ) |   |   | (13,612 | ) |
| Premises and equipment, net   |   | $                                | 19,293  |   |   | $ | 19,590 |   |

|                                       |   | (Dollars in thousands) |   |
|--------------------------------------------|--------|----------------------------------|--------|
|                                       |   | 2010                             |   |   | 2009 |   |
| Commercial real estate and other dwellings |   | $                                | 563    |   |   | $ | 1,897 |   |
| Residential real estate                    |   |                             | 931    |   |   |   | 1,082 |   |
| Construction and land development          |   |                             | 1,804  |   |   |   | 768 |   |
| Total                                      |   | $                                | 3,298  |   |   | $ | 3,747 |   |

|                         |   | (Dollars in thousands) |   |
|------------------------------|--------|----------------------------------|--------|
|                         |   | 2010                             |   |   | 2009 |   |
| Federal:                     |   |                             |   |   |   |   |
| Current                      |   | $                                | 1,771  |   |   | $ | (365 | ) |
| Deferred                     |   |                             | (757   | ) |   |   | (134 | ) |
| State:                       |   |                             |   |   |   |   |   |   |
| Current                      |   |                             | 14     |   |   |   | 6 |   |
| Deferred                     |   |                             | (231   | ) |   |   | (320 | ) |
| Income tax expense (benefit) |   | $                                | 797    |   |   | $ | (813 | ) |

|                               |   | (Dollars in thousands) |   |
|------------------------------------|--------|----------------------------------|--------|
|                               |   | 2010                             |   |   | 2009 |   |
| Federal statutory rate             |   |                             | 34     | % |   |   | 34 | % |
| Tax expense at statutory rate      |   | $                                | 2,032  |   |   | $ | 569 |   |
| State tax, net of federal effect   |   |                             | (143   | ) |   |   | (201 | ) |
| Tax exempt income                  |   |                             | (907   | ) |   |   | (937 | ) |
| Bank owned life insurance          |   |                             | (137   | ) |   |   | (138 | ) |
| Tax credits                        |   |                             | (76    | ) |   |   | (112 | ) |
| Other                              |   |                             | 28     |   |   |   | 6 |   |
| Total income tax expense (benefit) |   | $                                | 797    |   |   | $ | (813 | ) |

|                                                                     |   | (Dollars in thousands) |   |
|--------------------------------------------------------------------------|--------|----------------------------------|--------|
|                                                                     |   | 2010                             |   |   | 2009 |   |
| Deferred tax assets:                                                     |   |                             |   |   |   |   |
| Bad debts                                                                |   | $                                | 3,582  |   |   | $ | 2,404 |   |
| Deferred loan fees                                                       |   |                             | 107    |   |   |   | 112 |   |
| Deferred compensation                                                    |   |                             | 647    |   |   |   | 636 |   |
| Unrealized depreciation on securities  available-for-sale, net |   |                             | 249    |   |   |   | 92 |   |
| Net operating loss                                                       |   |                             | 727    |   |   |   | 709 |   |
| Tax credits                                                              |   |                             | 46     |   |   |   | 269 |   |
| Nonaccrual loan interest income                                          |   |                             | 22     |   |   |   | 79 |   |
| Restricted stock awards                                                  |   |                             | 56     |   |   |   | 39 |   |
| REO writedowns                                                           |   |                             | 22     |   |   |   | 66 |   |
| Unqualified DCP                                                          |   |                             | 43     |   |   |   | 42 |   |
| Post retirement benefit                                                  |   |                             | 67     |   |   |   | 65 |   |
| Other-than-temporary impairment                                          |   |                             | 90     |   |   |   | 46. |   |
| Other                                                                    |   |                             | 21     |   |   |   | 6 |   |
| Total deferred tax assets                                                |   |                             | 5,679  |   |   |   | 4,565 |   |
|                                                                     |   |                             |   |   |   |   |   |   |
| Deferred tax liabilities:                                                |   |                             |   |   |   |   |   |   |
| Depreciation                                                             |   |                             | (1,063 | ) |   |   | (1,137 | ) |
| Prepaids                                                                 |   |                             | (207   | ) |   |   | (198 | ) |
| Mortgage servicing rights                                                |   |                             | (147   | ) |   |   | (121 | ) |
| Deferred stock dividends                                                 |   |                             | (115   | ) |   |   | (115 | ) |
| Post retirement unrealized gain                                          |   |                             | (50    | ) |   |   | (56 | ) |
| Other                                                                    |   |                             | (13    | ) |   |   | (18 | ) |
| Total deferred tax liabilities                                           |   |                             | (1,595 | ) |   |   | (1,645 | ) |
| Valuation allowance                                                      |   |                             | (387   | ) |   |   | (376 | ) |
| Net deferred tax assets                                                  |   | $                                | 3,697  |   |   | $ | 2,544 |   |

----

|   |   | (Dollars in thousands) |    |
|--------|--------|----------------------------------|---------|
| 2011   |   | $                                | 172,573 |   |
| 2012   |   |                             | 25,344  |   |
| 2013   |   |                             | 380     |   |
| 2014   |   |                             | 149     |   |
| Total  |   | $                                | 198,446 |   |

|                              |   | (Dollars in thousands) |   |
|-----------------------------------|--------|----------------------------------|--------|
|                              |   | 2010                             |   |   | 2009 |   |
| Fixed rate advances from the FHLB |   | $                                | 24,000 |   |   | $ | 33,000 |   |
| Putable advances from the FHLB    |   |                             | 5,000  |   |   |   | 5,000 |   |
| Line of credit from the FHLB      |   |                             | 3,248  |   |   |   | 8,464 |   |
| Other                             |   |                             | 296    |   |   |   | 665 |   |
| Total                             |   | $                                | 32,544 |   |   | $ | 47,129 |   |

|                                              |   | (Dollars in thousands) |   |
|---------------------------------------------------|--------|------------------------|--------|
|                                              |   | 2010                   |   |   | 2009 |   |
| Ending balance                                    |   | $                      | 16,074 |   |   | $ | 15,893 |   |
| Average balance during the year                   |   |                   | 19,469 |   |   |   | 21,333 |   |
| Maximum month-end balance during the year         |   |                   | 22,369 |   |   |   | 23,451 |   |
| Securities underlying the agreements at year end: |   |                   |   |   |   |   |   |   |
| Carrying value                                    |   |                   | 24,484 |   |   |   | 27,394 |   |
| Fair value                                        |   |                   | 24,915 |   |   |   | 27,829 |   |
| Average interest rate during the year             |   |                   | 0.92   | % |   |   | 1.36 | % |
| Average interest rate at year end                 |   |                   | 0.70   | % |   |   | 1.34 | % |

|                                                                                                                                |   | (Dollars in thousands) |   |
|-------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------|--------|
|                                                                                                                                |   | 2010                   |   |   | 2009 |   |
|                                                                                                                                |   |                   |   |   |   |   |
| Fixed rate advances, maturing March 2011 through August 2015, at rates from 1.84% to 3.59% average rate: 2010 - 2.47%; 2009 - 2.98% |   | $                      | 24,000 |   |   | $ | 33,000 |   |
| Putable advances, maturing February 2013 at a rate of 2.62%, average rate: 2010 - 2.62%; 2009 - 2.62%                               |   |                   | 5,000  |   |   |   | 5,000 |   |

|   |   | (Dollars in thousands) |   |
|--------|--------|----------------------------------|--------|
| 2011   |   | $                                | 6,544  |   |
| 2012   |   |                             | 5,000  |   |
| 2013   |   |                             | 11,000 |   |
| 2014   |   |                             | 6,000  |   |
| 2015   |   |                             | 4,000  |   |
| Total  |   | $                                | 32,544 |   |

----

----

|                                      |   |   |   |   |                   |   |   |                    |   |   |              |   |   | Minimum                  |   |
|-------------------------------------------|--------|--------|--------|--------|------------------------|--------|--------|-------------------------|--------|--------|-------------------|--------|--------|--------------------------|--------|
|                                      |   |   |   |   |                   |   |   |                    |   |   |              |   |   | Required To Be |   |
|                                      |   |   |   |   |                   |   |   |                    |   |   |              |   |   | Well Capitalized    |   |
|                                      |   |   |   |   |                   |   |   | Minimum Required   |   |   | Under Prompt |   |
|                                      |   |   |   |   |                   |   |   | for Capital        |   |   | Corrective        |   |
|                                      |   | Actual |   |   | Adequacy Purposes |   |   | Action Regulations |   |
| (Dollars in millions)           |   | Amount |   |   | Ratio                  |   |   | Amount                  |   |   | Ratio             |   |   | Amount                   |   |   | Ratio |   |
| 2010                                      |   |   |   |   |                   |   |   |                    |   |   |              |   |   |                     |   |   |   |   |
| Total capital to risk-weighted assets     |   | $      | 61.5   |   |                   |   | 12.9   | %                       |   | $      | 38.0              |   |   |                     | 8.0    | % |   | $ | 47.6 |   |   |   | 10.0 | % |
| Tier 1 capital to risk-weighted assets    |   | $      | 55.5   |   |                   |   | 11.7   | %                       |   | $      | 19.0              |   |   |                     | 4.0    | % |   | $ | 28.5 |   |   |   | 6.0 | % |
| Tier 1 capital to adjusted average assets |   | $      | 55.5   |   |                   |   | 8.5    | %                       |   | $      | 19.5              |   |   |                     | 3.0    | % |   | $ | 32.6 |   |   |   | 5.0 | % |
| 2009                                      |   |   |   |   |                   |   |   |                    |   |   |              |   |   |                     |   |   |   |   |   |   |   |   |   |   |
| Total capital to risk-weighted assets     |   | $      | 58.7   |   |                   |   | 11.5   | %                       |   | $      | 40.8              |   |   |                     | 8.0    | % |   | $ | 51.0 |   |   |   | 10.0 | % |
| Tier 1 capital to risk-weighted assets    |   | $      | 52.6   |   |                   |   | 10.3   | %                       |   | $      | 20.4              |   |   |                     | 4.0    | % |   | $ | 30.6 |   |   |   | 6.0 | % |
| Tier 1 capital to adjusted average assets |   | $      | 52.6   |   |                   |   | 7.8    | %                       |   | $      | 20.1              |   |   |                     | 3.0    | % |   | $ | 33.5 |   |   |   | 5.0 | % |

----

|                             |   |   |    |   |     |   |    | Weighted    |   |   |      |   |
|----------------------------------|--------|--------|---------|--------|----------|--------|---------|-------------|--------|--------|-----------|--------|
|                             |   |   |    |   | Weighted |   |    | Average     |   |   |      |   |
|                             |   |   |    |   | Average  |   |    | Remaining   |   |   | Aggregate |   |
|                             |   |   |    |   | Exercise |   |    | Contractual |   |   | Value     |   |
|                             |   | Shares |    |   | Price    |   |    | Term        |   |   | Intrinsic |   |
| Outstanding at January 1, 2009   |   |   | 70,597  |   |     | $      | 23.56   |        |   |   |      |   |   |   |
| Granted                          |   |   | – |   |     |   | – |        |   |   |      |   |   |   |
| Exercised                        |   |   | (200    | )      |     |   | 20.50   |        |   |   |      |   |   |   |
| Forfeited or expired             |   |   | (4,650  | )      |     |   | 21.73   |        |   |   |      |   |   |   |
| Outstanding at end of year       |   |   | 65,747  |   |     | $      | 23.69   |        |   |   | 2.2       |   |   | $ | – |   |
| Vested or expected to vest       |   |   | 65,747  |   |     | $      | 23.69   |        |   |   | 2.2       |   |   | $ | – |   |
| Exercisable at December 31, 2009 |   |   | 64,747  |   |     | $      | 23.62   |        |   |   | 2.1       |   |   | $ | – |   |
|                             |   |   |    |   |     |   |    |        |   |   |      |   |   |   |   |   |
| Outstanding at January 1, 2010   |   |   | 65,747  |   |     | $      | 23.69   |        |   |   | 2.2       |   |   | $ | – |   |
| Granted                          |   |   | – |   |     |   | – |        |   |   |      |   |   |   |   |   |
| Exercised                        |   |   | – |   |     |   | – |        |   |   |      |   |   |   |   |   |
| Forfeited or expired             |   |   | (16,500 | )      |     |   | 21.98   |        |   |   |      |   |   |   |   |   |
| Outstanding at end of year       |   |   | 49,247  |   |     | $      | 24.27   |        |   |   | 1.7       |   |   | $ | – |   |
| Vested or expected to vest       |   |   | 49,247  |   |     | $      | 24.27   |        |   |   | 1.7       |   |   | $ | – |   |
| Exercisable at December 31, 2010 |   |   | 48,247  |   |     | $      | 24.18   |        |   |   | 1.6       |   |   | $ | – |   |

|                           |   |   |   |   | Weighted        |   |
|--------------------------------|--------|--------|--------|--------|-----------------|--------|
|                           |   |   |   |   | Average         |   |
|                           |   |   |   |   | Grant Date |   |
| Nonvested Shares          |   | Shares |   |   | Fair Value |   |
| Nonvested at January 1, 2009   |   |   | 7,550  |   |            | $      | 30.14 |   |
| Granted                        |   |   | 2,500  |   |            |   | 18.95 |   |
| Vested                         |   |   | (1,800 | )      |            |   | 30.50 |   |
| Forfeited                      |   |   | (700   | )      |            |   | 27.93 |   |
| Nonvested at December 31, 2009 |   |   | 7,550  |   |            | $      | 26.55 |   |
|                           |   |   |   |   |            |   |   |   |
| Granted                        |   |   | 300    |   |            |   | 16.75 |   |
| Vested                         |   |   | (250   | )      |            |   | 35.50 |   |
| Forfeited                      |   |   | (850   | )      |            |   | 26.76 |   |
| Nonvested at December 31, 2010 |   |   | 6,750  |   |            | $      | 25.72 |   |

|                                                                        |   | 2010   |      |   | 2009   |   |
|-----------------------------------------------------------------------------|--------|--------|-----------|--------|--------|--------|
| Basic earnings per common share:                                            |   |   |      |   |   |   |
| Net income available to common stockholders                                 |   | $      | 5,178,547 |   |   | $      | 2,487,851 |   |
| Weighted-average common shares outstanding                                  |   |   | 2,823,599 |   |   |   | 2,814,488 |   |
| Basic earnings per common share                                             |   | $      | 1.83      |   |   | $      | 0.88 |   |
| Diluted earnings per common share:                                          |   |   |      |   |   |   |   |   |
| Net income available to common stockholders                                 |   | $      | 5,178,547 |   |   | $      | 2,487,851 |   |
| Weighted-average common shares outstanding                                  |   |   | 2,823,599 |   |   |   | 2,814,488 |   |
| Add: dilutive effect of assumed stock option exercises and restricted stock |   |   | –   |   |   |   | – |   |
| Weighted-average common and dilutive potential common shares outstanding    |   |   | 2,823,599 |   |   |   | 2,814,488 |   |
| Diluted earnings per common share                                           |   | $      | 1.83      |   |   | $      | 0.88 |   |

|                                           |   | (Dollars in thousands) |   |
|------------------------------------------------|--------|----------------------------------|--------|
| Aggregate balance at the beginning of the year |   | $                                | 9,825  |   |
| New loans                                      |   |                             | 1,133  |   |
| Repayments                                     |   |                             | (3,007 | ) |
| Aggregate balance at the end of the year       |   | $                                | 7,951  |   |

----

|                          |   |   |    |   | (Dollars in thousands) |   |    |   |   |
|-------------------------------|--------|--------|---------|--------|----------------------------------|--------|---------|--------|--------|
|                          |   | Fixed  |    |   | Variable                         |   |    |   |   |
|                          |   | Rate   |    |   | Rate                             |   |    | Total  |   |
| December 31, 2010:            |   |   |    |   |                             |   |    |   |   |
| Commercial business           |   | $      | 12,073. |   |                             | $      | 26,008  |   |   | $ | 38,081 |   |
| Real estate                   |   |   | 10,894  |   |                             |   | 8,142   |   |   |   | 19,036 |   |
| Consumer loans                |   |   | – |   |                             |   | 15      |   |   |   | 15 |   |
| Unsecured consumer overdrafts |   |   | 10,803  |   |                             |   | – |   |   |   | 10,803 |   |
| Total                         |   | $      | 33,770  |   |                             | $      | 34,165  |   |   | $ | 67,935 |   |
| December 31, 2009:            |   |   |    |   |                             |   |    |   |   |   |   |   |
| Commercial business           |   | $      | 18,267  |   |                             | $      | 26,900  |   |   | $ | 45,167 |   |
| Real estate                   |   |   | 11,716  |   |                             |   | 10,150  |   |   |   | 21,866 |   |
| Consumer loans                |   |   | – |   |                             |   | 20      |   |   |   | 20 |   |
| Unsecured consumer overdrafts |   |   | 10,751  |   |                             |   | – |   |   |   | 10,751 |   |
| Total                         |   | $      | 40,734  |   |                             | $      | 37,070  |   |   | $ | 77,804 |   |

----

|                                |   | (Dollars in thousands)                |   |
|-------------------------------------|--------|---------------------------------------|--------|
|                                |   | Collateralized debtobligations other- |   |
|                                |   | than-temporarily                      |   |
|                                |   | impairment                            |   |
| Ending balance - December 31, 2009  |   | $                                     | 136    |   |
| Additions not previously recognized |   |                                  | 128    |   |
| Ending balance - December 31, 2010  |   | $                                     | 264    |   |

|                                                                     |   | 74073CAC1        |      |   | 74042TAJ0         |   |       | 01449TAB9      |   |   | 01450NAC6        |   |
|--------------------------------------------------------------------------|--------|------------------|-----------|--------|-------------------|--------|------------|----------------|--------|--------|------------------|--------|
| Deal name                                                           |   | PreTSL XXIV |      |   | PreTSL XXVII |   |       | Alesco IX |   |   | Alesco XVII |   |
| Class                                                                    |   |             | B-1       |   |              |   | C-1        |           |   |   | A-2A             |   |   |   | B |   |
| Book value                                                               |   |             | 1,256,972 |   |              |   | 1,296,077  |           |   |   | 1,309,886        |   |   |   | 1,351,903 |   |
| Fair value                                                               |   |             | 262,827   |   |              |   | 220,945    |           |   |   | 637,050          |   |   |   | 257,790 |   |
| Unrealized gains/(losses)                                                |   |             | (994,145  | )      |              |   | (1,075,133 | )              |   |   | (672,836         | )      |   |   | (1,094,113 | ) |
| Lowest credit rating assigned                                            |   | CC               |      |   |              | C      |       |           | BB     |   |             | CCC    |   |
| Number of performing banks                                               |   |             | 47        |   |              |   | 27         |           |   |   | 44               |   |   |   | 36 |   |
| Number of performing insurance companies                                 |   |             | 12        |   |              |   | 7          |           |   |   | 10               |   |   |   | n/a |   |
| Number of issuers in default                                             |   |             | 14        |   |              |   | 6          |           |   |   | 8                |   |   |   | 7 |   |
| Number of issuers in deferral                                            |   |             | 20        |   |              |   | 9          |           |   |   | 14               |   |   |   | 13 |   |
| Defaults & deferrals as a % of performing collateral                 |   |             | 59.84     | %      |              |   | 37.12      | %              |   |   | 46.63            | %      |   |   | 63.27 | % |
| Subordination:                                                           |   |             |      |   |              |   |       |           |   |   |             |   |   |   |   |   |
| As a % of performing collateral                                          |   |             | -22.67    | %      |              |   | -21.45     | %              |   |   | 14.91            | %      |   |   | -18.76 | % |
| As a % of performing collateral - adjusted for projected future defaults |   |             | -28.86    | %      |              |   | -28.51     | %              |   |   | 9.86             | %      |   |   | -24.36 | % |
| Other-than-temporary impairment model assumptions:                       |   |             |      |   |              |   |       |           |   |   |             |   |   |   |   |   |
| Defaults:                                                                |   |             |      |   |              |   |       |           |   |   |             |   |   |   |   |   |
| Year 1 - issuer average                                                  |   |             | 2.60      | %      |              |   | 2.70       | %              |   |   | 3.00             | %      |   |   | 2.70 | % |
| Year 2 - issuer average                                                  |   |             | 1.10      | %      |              |   | 1.40       | %              |   |   | 1.30             | %      |   |   | 0.90 | % |
| Year 3 - issuer average                                                  |   |             | 1.10      | %      |              |   | 1.40       | %              |   |   | 1.30             | %      |   |   | 0.90 | % |
| > 3 Years- issuer average                                             |   |             | (1        | )      |              |   | (1         | )              |   |   | (1               | )      |   |   | (1 | ) |
| Discount rate - 3-month LIBOR plus implicit yield spread at purchase     |   |             | 1.48      | %      |              |   | 1.23       | %              |   |   | 1.27             | %      |   |   | 1.44 | % |
| Recovery assumptions                                                     |   |             | (2        | )      |              |   | (2         | )              |   |   | (2               | )      |   |   | (2 | ) |
| Prepayments                                                              |   |             | 0.00      | %      |              |   | 0.00       | %              |   |   | 0.00             | %      |   |   | 0.00 | % |
| Other-than-temporary impairment                                          |   |             | 41,100    |   |              |   | 132,000    |           |   |   | 29,250           |   |   |   | 61,950 |   |

----

|                                                                  |   | (Dollars in thousands)                                                                     |    |
|-----------------------------------------------------------------------|--------|------------------------------------------------------------------------------------------------------|---------|
|                                                                  |   | Estimated Fair Value Measurements at December 31, 2010 Using |    |
|                                                                  |   |                                                                                                 |    |   | Quoted Prices in |   |   | Significant |   |   | Significant |   |
|                                                                  |   |                                                                                                 |    |   | Active Markets for |   |   | Other |   |   | Unobservable |   |
|                                                                  |   | December 31,                                                                                    |    |   | Identical Assets |   |   | Observable Inputs |   |   | Inputs |   |
|                                                                  |   | 2010                                                                                                 |    |   | (Level 1) |   |   | (Level 2) |   |   | (Level 3) |   |
| Assets:                                                               |   |                                                                                                 |    |   |   |   |   |   |   |   |   |   |
| Available-for-sale debt securities U.S. government sponsored entities |   | $                                                                                                    | 4,169   |   |   | $ | – |   |   | $ | 4,169 |   |   | $ | – |   |
| CMO and residential mortgage-backed securities                        |   |                                                                                                 | 97,142  |   |   |   | – |   |   |   | 97,142 |   |   |   | – |   |
| Municipal securities                                                  |   |                                                                                                 | 39,365  |   |   |   | – |   |   |   | 39,365 |   |   |   | – |   |
| Collateralized debt obligations                                       |   |                                                                                                 | 1,379   |   |   |   | – |   |   |   | – |   |   |   | 1,379 |   |
| Total available-for-sale debt securities                              |   | $                                                                                                    | 142,055 |   |   | $ | – |   |   | $ | 140,676 |   |   | $ | 1,379 |   |

|                                                                  |   | (Dollars in thousands)                                                                     |    |
|-----------------------------------------------------------------------|--------|------------------------------------------------------------------------------------------------------|---------|
|                                                                  |   | Estimated Fair Value Measurements at December 31, 2009 Using |    |
|                                                                  |   |                                                                                                 |    |   | Quoted Prices in |   |   | Significant |   |   | Significant |   |
|                                                                  |   |                                                                                                 |    |   | Active Markets for |   |   | Other |   |   | Unobserbable |   |
|                                                                  |   | December 31,                                                                                    |    |   | Identical Assets |   |   | Observable Inputs |   |   | Inputs |   |
|                                                                  |   | 2009                                                                                                 |    |   | (Level 1) |   |   | (Level 2) |   |   | (Level 3) |   |
| Assets:                                                               |   |                                                                                                 |    |   |   |   |   |   |   |   |   |   |
| Available-for-sale debt securities U.S. government sponsored entities |   | $                                                                                                    | 2,045   |   |   | $ | – |   |   | $ | 2,045 |   |   | $ | – |   |
| CMO and residential mortgage-backed securities                        |   |                                                                                                 | 85,808  |   |   |   | – |   |   |   | 85,808 |   |   |   |   |   |
| Municipal securities                                                  |   |                                                                                                 | 35,573  |   |   |   | – |   |   |   | 35,573 |   |   |   | – |   |
| Collateralized debt obligations                                       |   |                                                                                                 | 1,350   |   |   |   | – |   |   |   | – |   |   |   | 1,350 |   |
| Total available-for-sale debt securities                              |   | $                                                                                                    | 124,776 |   |   | $ | – |   |   | $ | 123,426 |   |   | $ | 1,350 |   |

----

|                                                         |   | (Dollars in thousands)         |    |
|--------------------------------------------------------------|--------|------------------------------------------|---------|
|                                                         |   | Estimated Fair Value           |    |
|                                                         |   | Measurements Using Significant |    |
|                                                         |   | Unobservable Inputs                 |    |
|                                                         |   | (Level 3)                           |    |
|                                                         |   | Available-for-sale securities       |    |
| Total realized/unrealized losses,  January 1, 2009 |   | $                                        | 1,003   |   |
| Included in earnings                                         |   |                                     | (136    | ) |
| Included in other comprehensive income                       |   |                                     | 33      |   |
| Transfers in and/or out of Level 3                           |   |                                     | 450     |   |
| Ending balance - December 31, 2009                           |   |                                     | 1,350   |   |
|                                                         |   |                                     |    |   |
| Total realized/unrealized losses                             |   |                                     |    |   |
| Included in earnings                                         |   |                                     | (128    | ) |
| Included in other comprehensive income                       |   |                                     | 157     |   |
| Transfers in and/or out of Level 3                           |   |                                     | – |   |
| Ending balance - December 31, 2010                           |   | $                                        | 1,379   |   |

|                   |   | (Dollars in thousands)                                                                     |   |
|------------------------|--------|------------------------------------------------------------------------------------------------------|--------|
|                   |   | Estimated Fair Value Measurements at December 31, 2010 Using |   |
|                   |   |                                                                                                 |   |   | Quoted Prices |   |   | Significant |   |   |   |   |
|                   |   |                                                                                                 |   |   | in Active |   |   | Other |   |   | Significant |   |
|                   |   |                                                                                                 |   |   | Markets for |   |   | Observable |   |   | Unobservable |   |
|                   |   | December 31,                                                                                    |   |   | Identical Assets |   |   | Inputs |   |   | Inputs |   |
|                   |   | 2010                                                                                                 |   |   | (Level 1) |   |   | (Level 2) |   |   | (Level 3) |   |
| Assets:                |   |                                                                                                 |   |   |   |   |   |   |   |   |   |   |
| Impaired loans         |   | $                                                                                                    | 22,419 |   |   | $ | – |   |   | $ | – |   |   | $ | 22,419 |   |
| Foreclosed real estate |   |                                                                                                 | 2,920  |   |   |   | – |   |   |   | – |   |   |   | 2,920 |   |

|                   |   | (Dollars in thousands)                                                                     |   |
|------------------------|--------|------------------------------------------------------------------------------------------------------|--------|
|                   |   | Estimated Fair Value Measurements at December 31, 2009 Using |   |
|                   |   |                                                                                                 |   |   | Quoted Prices |   |   | Significant |   |   |   |   |
|                   |   |                                                                                                 |   |   | in Active |   |   | Other |   |   | Significant |   |
|                   |   |                                                                                                 |   |   | Markets for |   |   | Observable |   |   | Unobservable |   |
|                   |   | December 31,                                                                                    |   |   | Identical Assets |   |   | Inputs |   |   | Inputs |   |
|                   |   | 2009                                                                                                 |   |   | (Level 1) |   |   | (Level 2) |   |   | (Level 3) |   |
| Assets:                |   |                                                                                                 |   |   |   |   |   |   |   |   |   |   |
| Impaired loans         |   | $                                                                                                    | 11,933 |   |   | $ | – |   |   | $ | – |   |   | $ | 11,933 |   |
| Foreclosed real estate |   |                                                                                                 | 3,738  |   |   |   | – |   |   |   | – |   |   |   | 3,738 |   |

|                          |   | (Dollars in thousands) |    |
|-------------------------------|--------|----------------------------------|---------|
|                          |   | December 31, 2010      |    |
|                          |   | Carrying                         |    |   | Estimated |   |
|                          |   | Value                            |    |   | Fair Value |   |
| Financial assets              |   |                             |    |   |   |   |
| Cash and cash equivalents     |   | $                                | 10,938  |   |   | $ | 10,938 |   |
| Securities available-for-sale |   |                             | 142,055 |   |   |   | 142,055 |   |
| Securities held-to-maturity   |   |                             | 18,397  |   |   |   | 19,038 |   |
| Loans held-for-sale           |   |                             | 422     |   |   |   | 428 |   |
| Loans receivable, net         |   |                             | 409,112 |   |   |   | 472,307 |   |
| Federal Home Loan Bank stock  |   |                             | 3,381   |   |   |   | 3,381 |   |
| Accrued interest receivable   |   |                             | 2,591   |   |   |   | 2,591 |   |
|                          |   |                             |    |   |   |   |   |   |
| Financial liabilities         |   |                             |    |   |   |   |   |   |
| Demand and savings deposits   |   |                             | 321,825 |   |   |   | 321,825 |   |
| Certificates of deposit       |   |                             | 198,446 |   |   |   | 198,799 |   |
| Repurchase agreements         |   |                             | 16,074  |   |   |   | 14,544 |   |
| Borrowed funds                |   |                             | 32,544  |   |   |   | 32,983 |   |
| Accrued interest payable      |   |                             | 81      |   |   |   | 81 |   |

|                          |   | (Dollars in thousands) |    |
|-------------------------------|--------|----------------------------------|---------|
|                          |   | December 31, 2009      |    |
|                          |   | Carrying                         |    |   | Estimated |   |
|                          |   | Value                            |    |   | Fair Value |   |
| Financial assets              |   |                             |    |   |   |   |
| Cash and cash equivalents     |   | $                                | 13,222  |   |   | $ | 13,222 |   |
| Securities available-for-sale |   |                             | 124,776 |   |   |   | 124,776 |   |
| Securities held-to-maturity   |   |                             | 19,557  |   |   |   | 20,303 |   |
| Loans held-for-sale           |   |                             | 1,025   |   |   |   | 1,025 |   |
| Loans receivable, net         |   |                             | 452,131 |   |   |   | 498,005 |   |
| Federal Home Loan Bank stock  |   |                             | 3,650   |   |   |   | 3,650 |   |
| Accrued interest receivable   |   |                             | 2,878   |   |   |   | 2,878 |   |
|                          |   |                             |    |   |   |   |   |   |
| Financial liabilities         |   |                             |    |   |   |   |   |   |
| Demand and savings deposits   |   |                             | 313,669 |   |   |   | 313,669 |   |
| Certificates of deposit       |   |                             | 226,858 |   |   |   | 227,672 |   |
| Repurchase agreements         |   |                             | 15,893  |   |   |   | 15,525 |   |
| Borrowed funds                |   |                             | 47,129  |   |   |   | 38,932 |   |
| Accrued interest payable      |   |                             | 150     |   |   |   | 150 |   |

----

|                                                                            |   | (Dollars in thousands) |    |
|---------------------------------------------------------------------------------|--------|----------------------------------|---------|
|                                                                            |   | 2010                             |    |   | 2009 |   |
| Net change in net unrealized gains and losses on securities available-for-sale: |   |                             |    |   |   |   |
| Unrealized gains arising during the year                                        |   | $                                | 314     |   |   | $ | 2,325 |   |
| Reclassification adjustment for gains included in net income                    |   |                             | 785     |   |   |   | 600 |   |
| Net securities (loss)/gain during the year                                      |   |                             | (471    | ) |   |   | 1,725 |   |
| Tax effect                                                                      |   |                             | 157     |   |   |   | (597 | ) |
| Net of tax amount                                                               |   |                             | (314    | ) |   |   | 1,128 |   |
|                                                                            |   |                             |    |   |   |   |   |   |
| Net change in unrecognized gain on post retirement benefit:                     |   |                             |    |   |   |   |   |   |
| Net gain on post retirement benefit                                             |   |                             | 5       |   |   |   | 6 |   |
| Amortization of net actuarial gain                                              |   |                             | (13     | ) |   |   | (15 | ) |
| Net (loss) activity during the year                                             |   |                             | (8      | ) |   |   | (9 | ) |
| Tax effect                                                                      |   |                             | – |   |   |   | – |   |
| Net of tax amount                                                               |   |                             | (8      | ) |   |   | (9 | ) |
| Other comprehensive (loss)/income, net of tax                                   |   | $                                | (322    | ) |   | $ | 1,119 |   |

|                                                       |   | (Dollars in thousands) |   |
|------------------------------------------------------------|--------|----------------------------------|--------|
|                                                       |   | Balance at                  |   |   | Current |   |   | Balance at |   |
|                                                       |   | December 31,                |   |   | Period |   |   | December 31, |   |
|                                                       |   | 2009                             |   |   | Change |   |   | 2010 |   |
| Unrealized gains (losses) on securities available-for-sale |   | $                                | (247   | ) |   | $ | (314 | ) |   | $ | (561 | ) |
| Unrealized gain (loss) on pension benefits                 |   |                             | 77     |   |   |   | (8 | ) |   |   | 69 |   |
| Total                                                      |   | $                                | (170   | ) |   | $ | (322 | ) |   | $ | (492 | ) |

|                                             |   | (Dollars in thousands)    |   |
|--------------------------------------------------|--------|-------------------------------------|--------|
|                                             |   | NorthWest Indiana Bancorp |   |
|                                             |   | Condensed Balance Sheets  |   |
|                                             |   | December 31,                   |   |
|                                             |   | 2010                                |   |   | 2009 |   |
| Assets                                           |   |                                |   |   |   |   |
| Cash on deposit with Peoples Bank                |   | $                                   | 1,093  |   |   | $ | 2,691 |   |
| Investment in Peoples Bank                       |   |                                | 55,754 |   |   |   | 52,212 |   |
| Dividends receivable from Peoples Bank           |   |                                | 427    |   |   |   | – |   |
| Other assets                                     |   |                                | 102    |   |   |   | 107 |   |
| Total assets                                     |   | $                                   | 57,376 |   |   | $ | 55,010 |   |
| Liabilities and stockholders’ equity       |   |                                |   |   |   |   |   |   |
| Dividends payable                                |   | $                                   | 427    |   |   | $ | 594 |   |
| Other liabilities                                |   |                                | 860    |   |   |   | 1,338 |   |
| Total liabilities                                |   |                                | 1,287  |   |   |   | 1,932 |   |
|                                             |   |                                |   |   |   |   |   |   |
| Common stock                                     |   |                                | 361    |   |   |   | 361 |   |
| Additional paid in capital                       |   |                                | 5,140  |   |   |   | 5,104 |   |
| Accumulated other comprehensive income (loss)    |   |                                | (492   | ) |   |   | (170 | ) |
| Retained earnings                                |   |                                | 52,398 |   |   |   | 49,312 |   |
| Treasury stock                                   |   |                                | (1,318 | ) |   |   | (1,529 | ) |
| Total stockholders’ equity                 |   |                                | 56,089 |   |   |   | 53,078 |   |
| Total liabilities and stockholders’ equity |   | $                                   | 57,376 |   |   | $ | 55,010 |   |

|                                                                          |   | (Dollars in thousands)       |    |
|-------------------------------------------------------------------------------|--------|----------------------------------------|---------|
|                                                                          |   | NorthWest Indiana Bancorp    |    |
|                                                                          |   | Condensed Statements              |    |
|                                                                          |   | of Income                         |    |
|                                                                          |   | Year Ended December 31, |    |
|                                                                          |   | 2010                                   |    |   | 2009 |   |
| Dividends from Peoples Bank                                                   |   | $                                      | 5,308   |   |   | $ | 2,813 |   |
| Operating expenses                                                            |   |                                   | 201     |   |   |   | 176 |   |
| Income before income taxes and equity in undistributed income of Peoples Bank |   |                                   | 5,107   |   |   |   | 2,637 |   |
| Income tax benefit                                                            |   |                                   | (72     | ) |   |   | (58 | ) |
| Income before equity in undistributed income of Peoples Bank                  |   |                                   | 5,179   |   |   |   | 2,695 |   |
| Equity/(loss) in undistributed income of Peoples Bank                         |   |                                   | – |   |   |   | (207 | ) |
| Net income                                                                    |   | $                                      | 5,179   |   |   | $ | 2,488 |   |

|                                                                      |   | (Dollars in thousands)       |    |
|---------------------------------------------------------------------------|--------|----------------------------------------|---------|
|                                                                      |   | NorthWest Indiana Bancorp    |    |
|                                                                      |   | Condensed Statements              |    |
|                                                                      |   | of Cash Flows                |    |
|                                                                      |   | Year Ended December 31, |    |
|                                                                      |   | 2010                                   |    |   | 2009 |   |
| Cash flows from operating activities:                                     |   |                                   |    |   |   |   |
| Net income                                                                |   | $                                      | 5,179   |   |   | $ | 2,488 |   |
| Adjustments to reconcile net income to net cash from operating activities |   |                                   |    |   |   |   |   |   |
| Equity in undistributed net income of Peoples Bank                        |   |                                   | (3,864  | ) |   |   | 207 |   |
| Stock-based compensation expense                                          |   |                                   | 36      |   |   |   | 40 |   |
| Change in other assets                                                    |   |                                   | (422    | ) |   |   | 1,123 |   |
| Change in other liabilities                                               |   |                                   | (478    | ) |   |   | 224 |   |
| Total adjustments                                                         |   |                                   | 4,728   |   |   |   | 1,594 |   |
| Net cash from operating activities                                        |   |                                   | 451     |   |   |   | 4,082 |   |
|                                                                      |   |                                   |    |   |   |   |   |   |
| Cash flows from investing activities                                      |   |                                   | – |   |   |   | – |   |
|                                                                      |   |                                   |    |   |   |   |   |   |
| Cash flows from financing activities:                                     |   |                                   |    |   |   |   |   |   |
| Dividends paid                                                            |   |                                   | (2,200  | ) |   |   | (3,405 | ) |
| Proceeds from sale of treasury stock                                      |   |                                   | 151     |   |   |   | 141 |   |
| Proceeds from issuance of common stock                                    |   |                                   | – |   |   |   | 6 |   |
| Net cash used in financing activities                                     |   |                                   | (2,049  | ) |   |   | (3,258 | ) |
| Net change in cash                                                        |   |                                   | (1,598  | ) |   |   | 824 |   |
| Cash at beginning of year                                                 |   |                                   | 2,691   |   |   |   | 1,867 |   |
| Cash at end of year                                                       |   | $                                      | 1,093   |   |   | $ | 2,691 |   |

----

|              |        |   |                       |   |   | Dividends         |   |
|-------------------|-------------|--------|----------------------------|--------|--------|-------------------|--------|
|              |        |   | Per Share Prices |   |   | Declared Per |   |
|              |        |   | High                       |   |   | Low               |   |   | Common Share |   |
| Year Ended        |        |   |                       |   |   |              |   |   |   |   |
| December 31, 2010 | 1st Quarter |   | $                          | 18.30  |   |              | $      | 16.50 |   |   | $ | 0.21 |   |
|              | 2nd Quarter |   |                       | 18.00  |   |              |   | 16.50 |   |   |   | 0.21 |   |
|              | 3rd Quarter |   |                       | 18.00  |   |              |   | 16.25 |   |   |   | 0.15 |   |
|              | 4th Quarter |   |                       | 16.30  |   |              |   | 11.30 |   |   |   | 0.15 |   |
|              |        |   |                       |   |   |              |   |   |   |   |   |   |   |
| Year Ended        |        |   |                       |   |   |              |   |   |   |   |   |   |   |
| December 31, 2009 | 1st Quarter |   | $                          | 24.00  |   |              | $      | 16.00 |   |   | $ | 0.36 |   |
|              | 2nd Quarter |   |                       | 20.00  |   |              |   | 18.25 |   |   |   | 0.32 |   |
|              | 3rd Quarter |   |                       | 20.50  |   |              |   | 17.00 |   |   |   | 0.32 |   |
|              | 4th Quarter |   |                       | 19.95  |   |              |   | 17.25 |   |   |   | 0.21 |   |

----

----

----

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