----

----

| x      | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |   |
|--------|-----------------------------------------------------------------------------------------|--------|
|   | For the quarterly period ended March 31, 2011                                           |   |

| o      | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |   |
|--------|------------------------------------------------------------------------------------------|--------|
|   | For the transition period from ________ to _______                                       |   |

| VIRGINIA                                                       |   | 54-1265373                           |
|----------------------------------------------------------------|--------|--------------------------------------|
| (State or other jurisdiction of incorporation or organization) |   | (I.R.S. Employer Identification No.) |

|   | Large accelerated filer o                                            | Accelerated filer o         |   |
|--------|----------------------------------------------------------------------|-----------------------------|--------|
|   |                                                                 |                        |   |
|   | Non-accelerated filer o(Do not check if a smaller reporting company) | Smaller reporting company x |   |

----

----

----

INDEX

|                        |                                                                                                              |   | Page   |
|-----------------------------|-------------------------------------------------------------------------------------------------------------------|--------|--------|
|                        |                                                                                                              |   |   |
| Item 1                      | Financial Statements                                                                                              |   | 1      |
|                        |                                                                                                              |   |   |
|                        | Consolidated Balance Sheets March 31, 2011 (unaudited) and December 31, 2010                                      |   | 1      |
|                        |                                                                                                              |   |   |
|                        | Consolidated Statements of Operations Three months ended March 31, 2011 and 2010 (unaudited)                      |   | 2      |
|                        |                                                                                                              |   |   |
|                        | Consolidated Statements of Changes in Stockholders' Equity Three months ended March 31, 2011 and 2010 (unaudited) |   | 3      |
|                        |                                                                                                              |   |   |
|                        | Consolidated Statements of Cash Flows Three months ended March 31, 2011 and 2010 (unaudited)                      |   | 4      |
|                        |                                                                                                              |   |   |
|                        | Notes to Consolidated Financial Statements (unaudited)                                                            |   | 5      |
|                        |                                                                                                              |   |   |
| Item 2.                     | Management's Discussion and Analysis of Financial Condition and Results of Operations                             |   | 23     |
|                        |                                                                                                              |   |   |
| Item 3.                     | Quantitative and Qualitative Disclosures About Market Risk                                                        |   | 31     |
|                        |                                                                                                              |   |   |
| Item 4.                     | Controls and Procedures                                                                                           |   | 32     |
|                        |                                                                                                              |   |   |
| PART II - OTHER INFORMATION |
|                        |                                                                                                              |   |   |
| Item 1.                     | Legal Proceedings                                                                                                 |   | 33     |
|                        |                                                                                                              |   |   |
| Item 1A.                    | Risk Factors                                                                                                      |   | 33     |
|                        |                                                                                                              |   |   |
| Item 2.                     | Unregistered Sales of Equity Securities and Use of Proceeds                                                       |   | 33     |
|                        |                                                                                                              |   |   |
| Item 3.                     | Defaults Upon Senior Securities                                                                                   |   | 33     |
|                        |                                                                                                              |   |   |
| Item 4.                     | [Removed and Reserved]                                                                                            |   | 33     |
|                        |                                                                                                              |   |   |
| Item 5.                     | Other Information                                                                                                 |   | 33     |
|                        |                                                                                                              |   |   |
| Item 6.                     | Exhibits                                                                                                          |   | 34     |

----

Index

Item 1.  Financial Statements.

Consolidated Balance Sheets

|                                                                                                            |   | March 31,   |        |   | December 31, |   |
|-----------------------------------------------------------------------------------------------------------------|--------|-------------|-------------|--------|--------------|--------|
|                                                                                                            |   | 2011        |        |   | 2010         |   |
|                                                                                                            |   | (unaudited) |        |   |         |   |
| Assets                                                                                                          |   |        |        |   |         |   |
|                                                                                                            |   |        |        |   |         |   |
| Cash and due from banks                                                                                         |   | $           | 13,377,085  |   |         | $      | 15,603,331 |   |
| Federal funds sold                                                                                              |   |        | 20,511,724  |   |         |   | 12,827,818 |   |
| Cash and cash equivalents                                                                                       |   |        | 33,888,809  |   |         |   | 28,431,149 |   |
| Securities available-for-sale, at fair value                                                                    |   |        | 195,509,022 |   |         |   | 206,091,712 |   |
| Securities held-to-maturity (fair value approximates $2,450,506 and $1,956,720)                                 |   |        | 2,452,000   |   |         |   | 1,952,000 |   |
| Restricted securities                                                                                           |   |        | 4,319,600   |   |         |   | 4,319,600 |   |
| Loans, net of allowance for loan losses of $10,284,063 and $13,227,791                                          |   |        | 554,028,929 |   |         |   | 573,390,522 |   |
| Premises and equipment, net                                                                                     |   |        | 29,545,481  |   |         |   | 29,615,688 |   |
| Bank owned life insurance                                                                                       |   |        | 18,221,447  |   |         |   | 18,019,727 |   |
| Foreclosed assets, net of valuation allowance of $1,786,500 and $2,123,930                                      |   |        | 11,163,890  |   |         |   | 11,447,794 |   |
| Other assets                                                                                                    |   |        | 13,115,041  |   |         |   | 13,573,303 |   |
|                                                                                                            |   | $           | 862,244,219 |   |         | $      | 886,841,495 |   |
|                                                                                                            |   |        |        |   |         |   |   |   |
| Liabilities & Stockholders' Equity                                                                          |   |        |        |   |         |   |   |   |
|                                                                                                            |   |        |        |   |         |   |   |   |
| Deposits:                                                                                                       |   |        |        |   |         |   |   |   |
| Noninterest-bearing deposits                                                                                    |   | $           | 139,665,267 |   |         | $      | 129,207,887 |   |
| Savings deposits                                                                                                |   |        | 228,429,065 |   |         |   | 225,209,590 |   |
| Time deposits                                                                                                   |   |        | 317,555,690 |   |         |   | 324,796,068 |   |
| Total deposits                                                                                                  |   |        | 685,650,022 |   |         |   | 679,213,545 |   |
| Federal funds purchased and other borrowings                                                                    |   |        | 713,913     |   |         |   | 731,332 |   |
| Overnight repurchase agreements                                                                                 |   |        | 37,420,811  |   |         |   | 50,757,247 |   |
| Term repurchase agreements                                                                                      |   |        | 20,699,546  |   |         |   | 38,959,359 |   |
| Federal Home Loan Bank advances                                                                                 |   |        | 35,000,000  |   |         |   | 35,000,000 |   |
| Accrued expenses and other liabilities                                                                          |   |        | 1,338,611   |   |         |   | 1,228,363 |   |
| Total liabilities                                                                                               |   |        | 780,822,903 |   |         |   | 805,889,846 |   |
|                                                                                                            |   |        |        |   |         |   |   |   |
| Commitments and contingencies                                                                                   |   |        |        |   |         |   |   |   |
|                                                                                                            |   |        |        |   |         |   |   |   |
| Stockholders' equity:                                                                                           |   |        |        |   |         |   |   |   |
| Common stock, $5 par value, 10,000,000 shares authorized; 4,953,384 and 4,936,989 shares issued and outstanding |   |        | 24,766,920  |   |         |   | 24,684,945 |   |
| Additional paid-in capital                                                                                      |   |        | 16,183,359  |   |         |   | 16,026,062 |   |
| Retained earnings                                                                                               |   |        | 42,907,612  |   |         |   | 42,809,769 |   |
| Accumulated other comprehensive loss, net                                                                       |   |        | (2,436,575  | )      |         |   | (2,569,127 | ) |
| Total stockholders' equity                                                                                      |   |        | 81,421,316  |   |         |   | 80,951,649 |   |
| Total liabilities and stockholders' equity                                                                      |   | $           | 862,244,219 |   |         | $      | 886,841,495 |   |

----

Index

Consolidated Statements of Operations

|                                                                                                     |   | Three Months Ended |      |
|----------------------------------------------------------------------------------------------------------|--------|--------------------|-----------|
|                                                                                                     |   | March 31,          |      |
|                                                                                                     |   | 2011               |      |   | 2010 |   |
|                                                                                                     |   | (unaudited)        |      |
| Interest and Dividend Income:                                                                            |   |               |      |   |   |   |
| Interest and fees on loans                                                                               |   | $                  | 8,402,407 |   |   | $ | 9,486,216 |   |
| Interest on federal funds sold                                                                           |   |               | 8,245     |   |   |   | 20,346 |   |
| Interest on securities:                                                                                  |   |               |      |   |   |   |   |   |
| Taxable                                                                                                  |   |               | 902,718   |   |   |   | 804,256 |   |
| Tax-exempt                                                                                               |   |               | 39,334    |   |   |   | 93,883 |   |
| Dividends and interest on all other securities                                                           |   |               | 12,211    |   |   |   | 10,786 |   |
| Total interest and dividend income                                                                       |   |               | 9,364,915 |   |   |   | 10,415,487 |   |
|                                                                                                     |   |               |      |   |   |   |   |   |
| Interest Expense:                                                                                        |   |               |      |   |   |   |   |   |
| Interest on savings deposits                                                                             |   |               | 105,187   |   |   |   | 94,979 |   |
| Interest on time deposits                                                                                |   |               | 1,265,965 |   |   |   | 1,860,927 |   |
| Interest on federal funds purchased, securities sold under agreements to repurchase and other borrowings |   |               | 53,112    |   |   |   | 178,325 |   |
| Interest on Federal Home Loan Bank advances                                                              |   |               | 420,375   |   |   |   | 829,625 |   |
| Total interest expense                                                                                   |   |               | 1,844,639 |   |   |   | 2,963,856 |   |
| Net interest income                                                                                      |   |               | 7,520,276 |   |   |   | 7,451,631 |   |
| Provision for loan losses                                                                                |   |               | 1,800,000 |   |   |   | 4,700,000 |   |
| Net interest income, after provision for loan losses                                                     |   |               | 5,720,276 |   |   |   | 2,751,631 |   |
|                                                                                                     |   |               |      |   |   |   |   |   |
| Noninterest Income:                                                                                      |   |               |      |   |   |   |   |   |
| Income from fiduciary activities                                                                         |   |               | 770,972   |   |   |   | 820,885 |   |
| Service charges on deposit accounts                                                                      |   |               | 1,011,578 |   |   |   | 1,314,677 |   |
| Other service charges, commissions and fees                                                              |   |               | 737,844   |   |   |   | 690,817 |   |
| Income from bank owned life insurance                                                                    |   |               | 201,720   |   |   |   | 388,845 |   |
| Gain on sale of available-for-sale securities, net                                                       |   |               | 0         |   |   |   | 76 |   |
| Other operating income                                                                                   |   |               | 83,128    |   |   |   | 82,548 |   |
| Total noninterest income                                                                                 |   |               | 2,805,242 |   |   |   | 3,297,848 |   |
|                                                                                                     |   |               |      |   |   |   |   |   |
| Noninterest Expense:                                                                                     |   |               |      |   |   |   |   |   |
| Salaries and employee benefits                                                                           |   |               | 4,629,803 |   |   |   | 4,531,082 |   |
| Occupancy and equipment                                                                                  |   |               | 1,085,506 |   |   |   | 1,099,383 |   |
| FDIC insurance                                                                                           |   |               | 405,182   |   |   |   | 329,276 |   |
| Data processing                                                                                          |   |               | 327,603   |   |   |   | 296,655 |   |
| Customer development                                                                                     |   |               | 221,636   |   |   |   | 222,299 |   |
| Advertising                                                                                              |   |               | 144,159   |   |   |   | 175,985 |   |
| Loan expenses                                                                                            |   |               | 187,647   |   |   |   | 122,290 |   |
| Other outside service fees                                                                               |   |               | 143,716   |   |   |   | 91,847 |   |
| Employee professional development                                                                        |   |               | 133,311   |   |   |   | 142,900 |   |
| Postage and courier expense                                                                              |   |               | 123,305   |   |   |   | 135,621 |   |
| Legal and audit expenses                                                                                 |   |               | 143,399   |   |   |   | 105,131 |   |
| Loss (gain) on write-down/sale of foreclosed assets                                                      |   |               | 188,955   |   |   |   | (46,260 | ) |
| Other operating expenses                                                                                 |   |               | 432,847   |   |   |   | 528,404 |   |
| Total noninterest expense                                                                                |   |               | 8,167,069 |   |   |   | 7,734,613 |   |
| Income (loss) before income taxes                                                                        |   |               | 358,449   |   |   |   | (1,685,134 | ) |
| Income tax expense (benefit)                                                                             |   |               | 13,756    |   |   |   | (739,507 | ) |
| Net income (loss)                                                                                        |   | $                  | 344,693   |   |   | $ | (945,627 | ) |
|                                                                                                     |   |               |      |   |   |   |   |   |
| Basic Earnings (Loss) per Share:                                                                         |   |               |      |   |   |   |   |   |
| Average shares outstanding                                                                               |   |               | 4,937,353 |   |   |   | 4,920,108 |   |
| Net income (loss) per share of common stock                                                              |   | $                  | 0.07      |   |   | $ | (0.19 | ) |
|                                                                                                     |   |               |      |   |   |   |   |   |
| Diluted Earnings (Loss) per Share:                                                                       |   |               |      |   |   |   |   |   |
| Average shares outstanding                                                                               |   |               | 4,937,353 |   |   |   | 4,933,582 |   |
| Net income (loss) per share of common stock                                                              |   | $                  | 0.07      |   |   | $ | (0.19 | ) |

----

Index

Consolidated Statements of Changes in Stockholders' Equity

|                                                                                                       |   |        |      |   |   |   |       |       |   |   |       |   |   | Accumulated   |       |   |   |   |
|------------------------------------------------------------------------------------------------------------|--------|-------------|-----------|--------|--------|--------|------------|------------|--------|--------|------------|--------|--------|---------------|------------|--------|--------|--------|
|                                                                                                       |   | Shares of   |      |   |   |   |       | Additional |   |   |       |   |   | Other         |       |   |   |   |
|                                                                                                       |   | Common      |      |   | Common |   |       | Paid-in    |   |   | Retained   |   |   | Comprehensive |       |   |   |   |
|                                                                                                       |   | Stock       |      |   | Stock  |   |       | Capital    |   |   | Earnings   |   |   | Loss          |       |   | Total  |   |
|                                                                                                       |   | (unaudited) |      |
| FOR THE THREE MONTHS ENDED MARCH 31, 2011                                                                  |   |        |      |   |   |   |       |       |   |   |       |   |   |          |       |   |   |   |
|                                                                                                       |   |        |      |   |   |   |       |       |   |   |       |   |   |          |       |   |   |   |
| Balance at beginning of period                                                                             |   |        | 4,936,989 |   |   | $      | 24,684,945 |       |   | $      | 16,026,062 |   |   | $             | 42,809,769 |   |   | $      | (2,569,127 | ) |   | $ | 80,951,649 |   |
| Comprehensive income:                                                                                      |   |        |      |   |   |   |       |       |   |   |       |   |   |          |       |   |   |   |   |   |   |   |   |   |
| Net income                                                                                                 |   |        | 0         |   |   |   | 0          |       |   |   | 0          |   |   |          | 344,693    |   |   |   | 0 |   |   |   | 344,693 |   |
| Unrealized holding gains arising during the period (net of tax, $68,284, and reclassification adjustment)  |   |        | 0         |   |   |   | 0          |       |   |   | 0          |   |   |          | 0          |   |   |   | 132,552 |   |   |   | 132,552 |   |
| Total comprehensive income                                                                                 |   |        | 0         |   |   |   | 0          |       |   |   | 0          |   |   |          | 344,693    |   |   |   | 132,552 |   |   |   | 477,245 |   |
| Exercise of stock options                                                                                  |   |        | 16,395    |   |   |   | 81,975     |       |   |   | 129,630    |   |   |          | 0          |   |   |   | 0 |   |   |   | 211,605 |   |
| Stock compensation expense                                                                                 |   |        | 0         |   |   |   | 0          |       |   |   | 27,667     |   |   |          | 0          |   |   |   | 0 |   |   |   | 27,667 |   |
| Cash dividends ($0.05 per share)                                                                           |   |        | 0         |   |   |   | 0          |       |   |   | 0          |   |   |          | (246,850   | )      |   |   | 0 |   |   |   | (246,850 | ) |
|                                                                                                       |   |        |      |   |   |   |       |       |   |   |       |   |   |          |       |   |   |   |   |   |   |   |   |   |
| Balance at end of period                                                                                   |   |        | 4,953,384 |   |   | $      | 24,766,920 |       |   | $      | 16,183,359 |   |   | $             | 42,907,612 |   |   | $      | (2,436,575 | ) |   | $ | 81,421,316 |   |
|                                                                                                       |   |        |      |   |   |   |       |       |   |   |       |   |   |          |       |   |   |   |   |   |   |   |   |   |
| FOR THE THREE MONTHS ENDED MARCH 31, 2010                                                                  |   |        |      |   |   |   |       |       |   |   |       |   |   |          |       |   |   |   |   |   |   |   |   |   |
|                                                                                                       |   |        |      |   |   |   |       |       |   |   |       |   |   |          |       |   |   |   |   |   |   |   |   |   |
| Balance at beginning of period                                                                             |   |        | 4,916,535 |   |   | $      | 24,582,675 |       |   | $      | 15,768,840 |   |   | $             | 42,518,889 |   |   | $      | (1,261,951 | ) |   | $ | 81,608,453 |   |
| Comprehensive loss:                                                                                        |   |        |      |   |   |   |       |       |   |   |       |   |   |          |       |   |   |   |   |   |   |   |   |   |
| Net loss                                                                                                   |   |        | 0         |   |   |   | 0          |       |   |   | 0          |   |   |          | (945,627   | )      |   |   | 0 |   |   |   | (945,627 | ) |
| Unrealized holding gains arising during the period (net of tax, $103,538, and reclassification adjustment) |   |        | 0         |   |   |   | 0          |       |   |   | 0          |   |   |          | 0          |   |   |   | 200,985 |   |   |   | 200,985 |   |
| Total comprehensive loss                                                                                   |   |        | 0         |   |   |   | 0          |       |   |   | 0          |   |   |          | (945,627   | )      |   |   | 200,985 |   |   |   | (744,642 | ) |
| Tax benefit from disqualification of stock options                                                         |   |        | 0         |   |   |   | 0          |       |   |   | 10,503     |   |   |          | 0          |   |   |   | 0 |   |   |   | 10,503 |   |
| Exercise of stock options                                                                                  |   |        | 9,375     |   |   |   | 46,875     |       |   |   | 56,725     |   |   |          | 0          |   |   |   | 0 |   |   |   | 103,600 |   |
| Stock compensation expense                                                                                 |   |        | 0         |   |   |   | 0          |       |   |   | 28,436     |   |   |          | 0          |   |   |   | 0 |   |   |   | 28,436 |   |
| Cash dividends ($0.10 per share)                                                                           |   |        | 0         |   |   |   | 0          |       |   |   | 0          |   |   |          | (492,215   | )      |   |   | 0 |   |   |   | (492,215 | ) |
|                                                                                                       |   |        |      |   |   |   |       |       |   |   |       |   |   |          |       |   |   |   |   |   |   |   |   |   |
| Balance at end of period                                                                                   |   |        | 4,925,910 |   |   | $      | 24,629,550 |       |   | $      | 15,864,504 |   |   | $             | 41,081,047 |   |   | $      | (1,060,966 | ) |   | $ | 80,514,135 |   |

----

Index

Consolidated Statements of Cash Flows

|                                                                                       |   | Three Months Ended |        |
|--------------------------------------------------------------------------------------------|--------|--------------------|-------------|
|                                                                                       |   | March 31,          |        |
|                                                                                       |   | 2011               |        |   | 2010 |   |
|                                                                                       |   | (unaudited)        |        |
| CASH FLOWS FROM OPERATING ACTIVITIES                                                       |   |               |        |   |   |   |
| Net income (loss)                                                                          |   | $                  | 344,693     |   |   | $ | (945,627 | ) |
| Adjustments to reconcile net income (loss) to net cash provided by operating activities:   |   |               |        |   |   |   |   |   |
| Depreciation and amortization                                                              |   |               | 463,560     |   |   |   | 500,371 |   |
| Provision for loan losses                                                                  |   |               | 1,800,000   |   |   |   | 4,700,000 |   |
| Net gain on sale of available-for-sale securities                                          |   |               | 0           |   |   |   | (76 | ) |
| Net amortization of securities                                                             |   |               | 47,419      |   |   |   | 4,625 |   |
| Net loss on disposal of premises and equipment                                             |   |               | 0           |   |   |   | 207 |   |
| Net (gain) loss on write-down/sale of foreclosed assets                                    |   |               | 188,955     |   |   |   | (46,260 | ) |
| Income from bank owned life insurance                                                      |   |               | (201,720    | ) |   |   | (388,845 | ) |
| Stock compensation expense                                                                 |   |               | 27,667      |   |   |   | 28,436 |   |
| Deferred tax (benefit) expense                                                             |   |               | (371        | ) |   |   | 14,025 |   |
| (Increase) decrease in other assets                                                        |   |               | 155,684     |   |   |   | (551,533 | ) |
| Increase in other liabilities                                                              |   |               | 110,248     |   |   |   | 157,567 |   |
| Net cash provided by operating activities                                                  |   |               | 2,936,135   |   |   |   | 3,472,890 |   |
|                                                                                       |   |               |        |   |   |   |   |   |
| CASH FLOWS FROM INVESTING ACTIVITIES                                                       |   |               |        |   |   |   |   |   |
| Purchases of available-for-sale securities                                                 |   |               | (11,167,549 | ) |   |   | (58,478,191 | ) |
| Purchases of held-to-maturity securities                                                   |   |               | (800,000    | ) |   |   | (1,200,000 | ) |
| Proceeds from maturities and calls of securities                                           |   |               | 20,583,655  |   |   |   | 37,273,195 |   |
| Proceeds from sales of available-for-sale securities                                       |   |               | 1,620,000   |   |   |   | 6,687,000 |   |
| Decrease in loans made to customers                                                        |   |               | 17,561,593  |   |   |   | 1,914,333 |   |
| Proceeds from sales of foreclosed assets                                                   |   |               | 329,615     |   |   |   | 536,260 |   |
| Purchases of premises and equipment                                                        |   |               | (393,353    | ) |   |   | (375,837 | ) |
| Net cash provided by (used in) investing activities                                        |   |               | 27,733,961  |   |   |   | (13,643,240 | ) |
|                                                                                       |   |               |        |   |   |   |   |   |
| CASH FLOWS FROM FINANCING ACTIVITIES                                                       |   |               |        |   |   |   |   |   |
| Increase in noninterest-bearing deposits                                                   |   |               | 10,457,380  |   |   |   | 11,251,551 |   |
| Increase in savings deposits                                                               |   |               | 3,219,475   |   |   |   | 1,105,082 |   |
| Increase (decrease) in time deposits                                                       |   |               | (7,240,378  | ) |   |   | 11,617,665 |   |
| Increase (decrease) in federal funds purchased, repurchase agreements and other borrowings |   |               | (31,613,668 | ) |   |   | 7,404,118 |   |
| Proceeds from exercise of stock options                                                    |   |               | 211,605     |   |   |   | 103,600 |   |
| Tax benefit from disqualification of stock options                                         |   |               | 0           |   |   |   | 10,503 |   |
| Cash dividends paid on common stock                                                        |   |               | (246,850    | ) |   |   | (492,215 | ) |
| Net cash provided by (used in) financing activities                                        |   |               | (25,212,436 | ) |   |   | 31,000,304 |   |
|                                                                                       |   |               |        |   |   |   |   |   |
| Net increase in cash and cash equivalents                                                  |   |               | 5,457,660   |   |   |   | 20,829,954 |   |
| Cash and cash equivalents at beginning of period                                           |   |               | 28,431,149  |   |   |   | 47,635,998 |   |
| Cash and cash equivalents at end of period                                                 |   | $                  | 33,888,809  |   |   | $ | 68,465,952 |   |
|                                                                                       |   |               |        |   |   |   |   |   |
| SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION                                          |   |               |        |   |   |   |   |   |
| Cash payments for:                                                                         |   |               |        |   |   |   |   |   |
| Interest                                                                                   |   | $                  | 1,947,945   |   |   | $ | 3,030,651 |   |
|                                                                                       |   |               |        |   |   |   |   |   |
| SUPPLEMENTAL SCHEDULE OF NONCASH TRANSACTIONS                                              |   |               |        |   |   |   |   |   |
| Unrealized gain on investment securities                                                   |   | $                  | 200,836     |   |   | $ | 304,523 |   |
| Loans transferred to foreclosed assets                                                     |   | $                  | 1,244,210   |   |   | $ | 437,000 |   |

----

Index

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

|                                               |   |           |   |   | Gross      |   |   | Gross      |   |   |   |   |
|----------------------------------------------------|--------|----------------|--------|--------|------------|--------|--------|------------|--------|--------|--------|--------|
|                                               |   | Amortized      |   |   | Unrealized |   |   | Unrealized |   |   | Fair   |   |
|                                               |   | Cost           |   |   | Gains      |   |   | Losses     |   |   | Value  |   |
|                                               |   | (in thousands) |   |
| March 31, 2011                                     |   |           |   |   |       |   |   |       |   |   |   |   |
| Obligations of  U.S. Government agencies |   | $              | 2,170  |   |       | $      | 4      |       |   | $      | (11    | )      |   | $ | 2,163 |   |
| Obligations of state and political subdivisions    |   |           | 282    |   |       |   | 6      |       |   |   | 0      |   |   |   | 288 |   |
| Total                                              |   | $              | 2,452  |   |       | $      | 10     |       |   | $      | (11    | )      |   | $ | 2,451 |   |
|                                               |   |           |   |   |       |   |   |       |   |   |   |   |   |   |   |   |
| December 31, 2010                                  |   |           |   |   |       |   |   |       |   |   |   |   |   |   |   |   |
| Obligations of  U.S. Government agencies |   | $              | 1,670  |   |       | $      | 4      |       |   | $      | (7     | )      |   | $ | 1,667 |   |
| Obligations of state and political subdivisions    |   |           | 282    |   |       |   | 8      |       |   |   | 0      |   |   |   | 290 |   |
| Total                                              |   | $              | 1,952  |   |       | $      | 12     |       |   | $      | (7     | )      |   | $ | 1,957 |   |

----

Index

|                                               |   |           |    |   | Gross      |   |   | Gross      |   |   |   |   |
|----------------------------------------------------|--------|----------------|---------|--------|------------|--------|--------|------------|--------|--------|--------|--------|
|                                               |   | Amortized      |    |   | Unrealized |   |   | Unrealized |   |   | Fair   |   |
|                                               |   | Cost           |    |   | Gains      |   |   | Losses     |   |   | Value  |   |
|                                               |   | (in thousands) |    |
| March 31, 2011                                     |   |           |    |   |       |   |   |       |   |   |   |   |
| U.S. Treasury securities                           |   | $              | 600     |   |       | $      | 0      |       |   | $      | 0      |   |   | $ | 600 |   |
| Obligations of  U.S. Government agencies |   |           | 191,554 |   |       |   | 377    |       |   |   | (1,662 | )      |   |   | 190,269 |   |
| Obligations of state and political subdivisions    |   |           | 2,909   |   |       |   | 76     |       |   |   | 0      |   |   |   | 2,985 |   |
| Mortgage-backed securities                         |   |           | 284     |   |       |   | 6      |       |   |   | 0      |   |   |   | 290 |   |
| Money market investments                           |   |           | 1,365   |   |       |   | 0      |       |   |   | 0      |   |   |   | 1,365 |   |
| Total                                              |   | $              | 196,712 |   |       | $      | 459    |       |   | $      | (1,662 | )      |   | $ | 195,509 |   |
|                                               |   |           |    |   |       |   |   |       |   |   |   |   |   |   |   |   |
| December 31, 2010                                  |   |           |    |   |       |   |   |       |   |   |   |   |   |   |   |   |
| U.S. Treasury securities                           |   | $              | 600     |   |       | $      | 0      |       |   | $      | 0      |   |   | $ | 600 |   |
| Obligations of  U.S. Government agencies |   |           | 201,601 |   |       |   | 513    |       |   |   | (1,993 | )      |   |   | 200,121 |   |
| Obligations of state and political subdivisions    |   |           | 3,103   |   |       |   | 69     |       |   |   | 0      |   |   |   | 3,172 |   |
| Mortgage-backed securities                         |   |           | 374     |   |       |   | 8      |       |   |   | 0      |   |   |   | 382 |   |
| Money market investments                           |   |           | 1,817   |   |       |   | 0      |       |   |   | 0      |   |   |   | 1,817 |   |
| Total                                              |   | $              | 207,495 |   |       | $      | 590    |       |   | $      | (1,993 | )      |   | $ | 206,092 |   |

|                                    |   | March 31, 2011          |   |
|-----------------------------------------|--------|-------------------------|--------|
|                                    |   | Less Than Twelve Months |   |   | More Than Twelve Months |   |   | Total |   |
|                                    |   | Gross                   |   |   |   |   |   | Gross |   |   |   |   |   | Gross |   |   |   |   |
|                                    |   | Unrealized              |   |   | Fair |   |   | Unrealized |   |   | Fair |   |   | Unrealized |   |   | Fair |   |
|                                    |   | Losses                  |   |   | Value |   |   | Losses |   |   | Value |   |   | Losses |   |   | Value |   |
|                                    |   | (in thousands)          |   |
| Securities Available-for-Sale           |   |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Obligations of U.S. Government agencies |   | $                       | 1,662  |   |   | $ | 143,664 |   |   | $ | 0 |   |   | $ | 0 |   |   | $ | 1,662 |   |   | $ | 143,664 |   |
|                                    |   |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Securities Held-to-Maturity             |   |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Obligations of U.S. Government agencies |   | $                       | 11     |   |   | $ | 1,558 |   |   | $ | 0 |   |   | $ | 0 |   |   | $ | 11 |   |   | $ | 1,558 |   |
|                                    |   |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                                   |   | $                       | 1,673  |   |   | $ | 145,222 |   |   | $ | 0 |   |   | $ | 0 |   |   | $ | 1,673 |   |   | $ | 145,222 |   |

----

Index

|                                     |   | December 31, 2010  |   |
|------------------------------------------|--------|-------------------------|--------|
|                                     |   | Less Than Twelve Months |   |   | More Than Twelve Months |   |   | Total |   |
|                                     |   | Gross                   |   |   |   |   |   | Gross |   |   |   |   |   | Gross |   |   |   |   |
|                                     |   | Unrealized              |   |   | Fair |   |   | Unrealized |   |   | Fair |   |   | Unrealized |   |   | Fair |   |
|                                     |   | Losses                  |   |   | Value |   |   | Losses |   |   | Value |   |   | Losses |   |   | Value |   |
|                                     |   | (in thousands)          |   |
| Securities Available-for-Sale            |   |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Obligations of U. S. Government agencies |   | $                       | 1,993  |   |   | $ | 128,362 |   |   | $ | 0 |   |   | $ | 0 |   |   | $ | 1,993 |   |   | $ | 128,362 |   |
|                                     |   |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Securities Held-to-Maturity              |   |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Obligations of U. S. Government agencies |   | $                       | 7      |   |   | $ | 762 |   |   | $ | 0 |   |   | $ | 0 |   |   | $ | 7 |   |   | $ | 762 |   |
|                                     |   |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                                    |   | $                       | 2,000  |   |   | $ | 129,124 |   |   | $ | 0 |   |   | $ | 0 |   |   | $ | 2,000 |   |   | $ | 129,124 |   |

----

Index

|                                      |   | March 31,      |    |   | December 31, |   |
|-------------------------------------------|--------|----------------|---------|--------|--------------|--------|
|                                      |   | 2011           |    |   | 2010         |   |
|                                      |   | (in thousands) |    |
| Mortgage loans on real estate:            |   |           |    |   |         |   |
| Residential 1-4 family                    |   | $              | 85,843  |   |         | $      | 89,690 |   |
| Commercial                                |   |           | 330,352 |   |         |   | 344,347 |   |
| Construction                              |   |           | 21,118  |   |         |   | 19,206 |   |
| Second mortgages                          |   |           | 15,513  |   |         |   | 16,105 |   |
| Equity lines of credit                    |   |           | 38,265  |   |         |   | 39,048 |   |
| Total mortgage loans on real estate       |   |           | 491,091 |   |         |   | 508,396 |   |
| Commercial loans                          |   |           | 35,642  |   |         |   | 36,053 |   |
| Consumer loans                            |   |           | 21,747  |   |         |   | 24,389 |   |
| Other                                     |   |           | 15,833  |   |         |   | 17,781 |   |
| Total loans                               |   |           | 564,313 |   |         |   | 586,619 |   |
| Less: Allowance for loan losses           |   |           | (10,284 | )      |         |   | (13,228 | ) |
| Loans, net of allowance and deferred fees |   | $              | 554,029 |   |         | $      | 573,391 |   |

----

Index

|   | · | Pass: Loans are of acceptable risk |
|--------|--------|------------------------------------|

|   | · | Other Assets Especially Mentioned (OAEM): Loans have potential weaknesses that deserve management’s close attention. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------|

|   | · | Substandard: Loans reflect significant deficiencies due to several adverse trends of a financial, economic, or managerial nature. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------|

|   | · | Doubtful: Loans have all the weaknesses inherent in a substandard loan with added characteristics that make collection or liquidation in full based on currently existing facts, conditions and values highly questionable or improbable. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Loss: Loans have been charged off because they are considered uncollectible and of such little value that their continuance as bankable assets is not warranted. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Credit Quality Information          |   |
|-------------------------------------|--------|
| As of March 31, 2011                |   |
| (in thousands)                      |   |
|                                |   | Pass |   |   | OAEM |   |   | Substandard |   |   | Doubtful |   |   | Total |   |
| Mortgage loans on real estate:      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Residential 1-4 family              |   | $ | 71,669 |   |   | $ | 5,783 |   |   | $ | 8,391 |   |   | $ | 0 |   |   | $ | 85,843 |   |
| Commercial                          |   |   | 283,578 |   |   |   | 12,951 |   |   |   | 33,823 |   |   |   | 0 |   |   |   | 330,352 |   |
| Construction                        |   |   | 18,944 |   |   |   | 1,561 |   |   |   | 613 |   |   |   | 0 |   |   |   | 21,118 |   |
| Second mortgages                    |   |   | 14,662 |   |   |   | 0 |   |   |   | 851 |   |   |   | 0 |   |   |   | 15,513 |   |
| Equity lines of credit              |   |   | 35,985 |   |   |   | 1,564 |   |   |   | 716 |   |   |   | 0 |   |   |   | 38,265 |   |
| Total mortgage loans on real estate |   |   | 424,838 |   |   |   | 21,859 |   |   |   | 44,394 |   |   |   | 0 |   |   |   | 491,091 |   |
| Commercial loans                    |   |   | 33,806 |   |   |   | 1,386 |   |   |   | 450 |   |   |   | 0 |   |   |   | 35,642 |   |
| Consumer loans                      |   |   | 21,557 |   |   |   | 1 |   |   |   | 189 |   |   |   | 0 |   |   |   | 21,747 |   |
| Other                               |   |   | 15,833 |   |   |   | 0 |   |   |   | 0 |   |   |   | 0 |   |   |   | 15,833 |   |
| Total                               |   | $ | 496,034 |   |   | $ | 23,246 |   |   | $ | 45,033 |   |   | $ | 0 |   |   | $ | 564,313 |   |

| Credit Quality Information          |   |
|-------------------------------------|--------|
| As of December 31, 2010             |   |
| (in thousands)                      |   |
|                                |   | Pass |   |   | OAEM |   |   | Substandard |   |   | Doubtful |   |   | Total |   |
| Mortgage loans on real estate:      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Residential 1-4 family              |   | $ | 75,803 |   |   | $ | 2,383 |   |   | $ | 11,504 |   |   | $ | 0 |   |   | $ | 89,690 |   |
| Commercial                          |   |   | 287,551 |   |   |   | 23,969 |   |   |   | 30,000 |   |   |   | 2,827 |   |   |   | 344,347 |   |
| Construction                        |   |   | 18,052 |   |   |   | 0 |   |   |   | 1,154 |   |   |   | 0 |   |   |   | 19,206 |   |
| Second mortgages                    |   |   | 15,010 |   |   |   | 0 |   |   |   | 1,095 |   |   |   | 0 |   |   |   | 16,105 |   |
| Equity lines of credit              |   |   | 37,206 |   |   |   | 1,109 |   |   |   | 733 |   |   |   | 0 |   |   |   | 39,048 |   |
| Total mortgage loans on real estate |   |   | 433,622 |   |   |   | 27,461 |   |   |   | 44,486 |   |   |   | 2,827 |   |   |   | 508,396 |   |
| Commercial loans                    |   |   | 33,275 |   |   |   | 2,179 |   |   |   | 599 |   |   |   | 0 |   |   |   | 36,053 |   |
| Consumer loans                      |   |   | 23,981 |   |   |   | 1 |   |   |   | 407 |   |   |   | 0 |   |   |   | 24,389 |   |
| Other                               |   |   | 17,693 |   |   |   | 87 |   |   |   | 1 |   |   |   | 0 |   |   |   | 17,781 |   |
| Total                               |   | $ | 508,571 |   |   | $ | 29,728 |   |   | $ | 45,493 |   |   | $ | 2,827 |   |   | $ | 586,619 |   |

----

Index

|                                |   | 30 - 59 Days Past Due |   |   | 60 - 89 Days Past Due |   |   | 90 or More Days Past Due |   |   | Total Past Due |   |   | Total Current Loans (1) |   |   | TotalLoans |   |    | Recorded Investment > 90 Days Past Due and Accruing |   |
|-------------------------------------|--------|-----------------------|--------|--------|-----------------------|--------|--------|--------------------------|--------|--------|----------------|--------|--------|-------------------------|--------|--------|------------|--------|---------|--------------------------------------------------------|--------|
|                                |   | (in thousands)        |   |
| Mortgage loans on real estate:      |   |                  |   |   |                  |   |   |                     |   |   |           |   |   |                    |   |   |       |   |    |                                                   |   |
| Residential 1-4 family              |   | $                     | 1,117  |   |                  | $      | 361    |                     |   | $      | 885            |   |   | $                       | 2,363  |   |       | $      | 83,480  |                                                   |   | $ | 85,843 |   |   | $ | 117 |   |
| Commercial                          |   |                  | 982    |   |                  |   | 5,828  |                     |   |   | 7,673          |   |   |                    | 14,483 |   |       |   | 315,869 |                                                   |   |   | 330,352 |   |   |   | 0 |   |
| Construction                        |   |                  | 0      |   |                  |   | 0      |                     |   |   | 0              |   |   |                    | 0      |   |       |   | 21,118  |                                                   |   |   | 21,118 |   |   |   | 0 |   |
| Second mortgages                    |   |                  | 628    |   |                  |   | 74     |                     |   |   | 127            |   |   |                    | 829    |   |       |   | 14,684  |                                                   |   |   | 15,513 |   |   |   | 0 |   |
| Equity lines of credit              |   |                  | 940    |   |                  |   | 0      |                     |   |   | 0              |   |   |                    | 940    |   |       |   | 37,325  |                                                   |   |   | 38,265 |   |   |   | 0 |   |
| Total mortgage loans on real estate |   |                  | 3,667  |   |                  |   | 6,263  |                     |   |   | 8,685          |   |   |                    | 18,615 |   |       |   | 472,476 |                                                   |   |   | 491,091 |   |   |   | 117 |   |
| Commercial loans                    |   |                  | 255    |   |                  |   | 0      |                     |   |   | 0              |   |   |                    | 255    |   |       |   | 35,387  |                                                   |   |   | 35,642 |   |   |   | 0 |   |
| Consumer loans                      |   |                  | 145    |   |                  |   | 75     |                     |   |   | 9              |   |   |                    | 229    |   |       |   | 21,518  |                                                   |   |   | 21,747 |   |   |   | 9 |   |
| Other                               |   |                  | 33     |   |                  |   | 0      |                     |   |   | 3              |   |   |                    | 36     |   |       |   | 15,797  |                                                   |   |   | 15,833 |   |   |   | 3 |   |
| Total                               |   | $                     | 4,100  |   |                  | $      | 6,338  |                     |   | $      | 8,697          |   |   | $                       | 19,135 |   |       | $      | 545,178 |                                                   |   | $ | 564,313 |   |   | $ | 129 |   |

|                                |   | 30 - 59 Days Past Due |   |   | 60 - 89 Days Past Due |   |   | 90 or More Days Past Due |   |   | Total Past Due |   |   | Total Current Loans (1) |   |   | TotalLoans |   |    | Recorded Investment > 90 Days Past Due and Accruing |   |
|-------------------------------------|--------|-----------------------|--------|--------|-----------------------|--------|--------|--------------------------|--------|--------|----------------|--------|--------|-------------------------|--------|--------|------------|--------|---------|--------------------------------------------------------|--------|
|                                |   | (in thousands)        |   |
| Mortgage loans on real estate:      |   |                  |   |   |                  |   |   |                     |   |   |           |   |   |                    |   |   |       |   |    |                                                   |   |
| Residential 1-4 family              |   | $                     | 1,550  |   |                  | $      | 85     |                     |   | $      | 1,641          |   |   | $                       | 3,276  |   |       | $      | 86,414  |                                                   |   | $ | 89,690 |   |   | $ | 0 |   |
| Commercial                          |   |                  | 240    |   |                  |   | 617    |                     |   |   | 10,555         |   |   |                    | 11,412 |   |       |   | 332,935 |                                                   |   |   | 344,347 |   |   |   | 0 |   |
| Construction                        |   |                  | 0      |   |                  |   | 0      |                     |   |   | 16             |   |   |                    | 16     |   |       |   | 19,190  |                                                   |   |   | 19,206 |   |   |   | 16 |   |
| Second mortgages                    |   |                  | 475    |   |                  |   | 0      |                     |   |   | 187            |   |   |                    | 662    |   |       |   | 15,443  |                                                   |   |   | 16,105 |   |   |   | 33 |   |
| Equity lines of credit              |   |                  | 597    |   |                  |   | 0      |                     |   |   | 22             |   |   |                    | 619    |   |       |   | 38,429  |                                                   |   |   | 39,048 |   |   |   | 0 |   |
| Total mortgage loans on real estate |   |                  | 2,862  |   |                  |   | 702    |                     |   |   | 12,421         |   |   |                    | 15,985 |   |       |   | 492,411 |                                                   |   |   | 508,396 |   |   |   | 49 |   |
| Commercial loans                    |   |                  | 78     |   |                  |   | 11     |                     |   |   | 0              |   |   |                    | 89     |   |       |   | 35,964  |                                                   |   |   | 36,053 |   |   |   | 0 |   |
| Consumer loans                      |   |                  | 297    |   |                  |   | 49     |                     |   |   | 69             |   |   |                    | 415    |   |       |   | 23,974  |                                                   |   |   | 24,389 |   |   |   | 23 |   |
| Other                               |   |                  | 79     |   |                  |   | 0      |                     |   |   | 1              |   |   |                    | 80     |   |       |   | 17,701  |                                                   |   |   | 17,781 |   |   |   | 1 |   |
| Total                               |   | $                     | 3,316  |   |                  | $      | 762    |                     |   | $      | 12,491         |   |   | $                       | 16,569 |   |       | $      | 570,050 |                                                   |   | $ | 586,619 |   |   | $ | 73 |   |

----

Index

| Nonaccrual Loans by Class           |   |
|-------------------------------------|--------|
| (in thousands)                      |   |
|                                |   | March 31, 2011 |   |   | December 31, 2010 |   |
|                                |   |   |   |   |   |   |
| Mortgage loans on real estate:      |   |   |   |   |   |   |
| Residential 1-4 family              |   | $ | 5,320 |   |   | $ | 6,302 |   |
| Commercial                          |   |   | 15,681 |   |   |   | 13,281 |   |
| Construction                        |   |   | 0 |   |   |   | 37 |   |
| Second mortgages                    |   |   | 499 |   |   |   | 540 |   |
| Equity lines of credit              |   |   | 404 |   |   |   | 427 |   |
| Total mortgage loans on real estate |   |   | 21,904 |   |   |   | 20,587 |   |
| Commercial loans                    |   |   | 138 |   |   |   | 178 |   |
| Consumer loans                      |   |   | 16 |   |   |   | 116 |   |
| Other                               |   |   | 0 |   |   |   | 0 |   |
| Total                               |   | $ | 22,058 |   |   | $ | 20,881 |   |

|                                                                    |   | March 31, 2011 |   |
|-------------------------------------------------------------------------|--------|--------------------------|--------|
|                                                                    |   | (in thousands)           |   |
| Interest income that would have been recorded under original loan terms |   | $                        | 395    |   |
| Actual interest income recorded for the period                          |   |                     | 80     |   |
| Reduction in interest income on nonaccrual loans                        |   | $                        | 315    |   |

----

Index

| Impaired Loans by Class             |
|-------------------------------------|
| (in thousands)                      |
|                                |   | As of March 31, 2011 |   |   | Quarter Ended March 31, 2011 |   |
|                                |   |   |   |   | Recorded Investment |   |   |   |   |   |   |   |   |   |   |
|                                |   | Unpaid Principal Balance |   |   | Without Valuation Allowance |   |   | With Valuation Allowance |   |   | Associated Allowance |   |   | Average Recorded Investment |   |   | Interest Income Recognized |   |
| Mortgage loans on real estate:      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Residential 1-4 family              |   | $ | 5,291 |   |   | $ | 4,091 |   |   | $ | 1,163 |   |   | $ | 155 |   |   | $ | 5,613 |   |   | $ | 39 |   |
| Commercial                          |   |   | 15,236 |   |   |   | 14,733 |   |   |   | 419 |   |   |   | 11 |   |   |   | 14,621 |   |   |   | (5 | ) |
| Construction                        |   |   | 0 |   |   |   | 0 |   |   |   | 0 |   |   |   | 0 |   |   |   | 0 |   |   |   | 0 |   |
| Second mortgages                    |   |   | 504 |   |   |   | 98 |   |   |   | 401 |   |   |   | 58 |   |   |   | 502 |   |   |   | 6 |   |
| Equity lines of credit              |   |   | 403 |   |   |   | 261 |   |   |   | 142 |   |   |   | 11 |   |   |   | 403 |   |   |   | 7 |   |
| Total mortgage loans on real estate |   | $ | 21,434 |   |   | $ | 19,183 |   |   | $ | 2,125 |   |   | $ | 235 |   |   | $ | 21,139 |   |   | $ | 47 |   |
| Commercial loans                    |   |   | 144 |   |   |   | 13 |   |   |   | 125 |   |   |   | 61 |   |   |   | 143 |   |   |   | 2 |   |
| Total                               |   | $ | 21,578 |   |   | $ | 19,196 |   |   | $ | 2,250 |   |   | $ | 296 |   |   | $ | 21,282 |   |   | $ | 49 |   |

| Impaired Loans by Class             |
|-------------------------------------|
| (in thousands)                      |
|                                |   | As of December 31, 2010 |   |   | Year Ended December 31, 2010 |   |
|                                |   |   |   |   | Recorded Investment |   |   |   |   |   |   |   |   |   |   |
|                                |   | Unpaid Principal Balance |   |   | Without Valuation Allowance |   |   | With Valuation Allowance |   |   | Associated Allowance |   |   | Average Recorded Investment |   |   | Interest Income Recognized |   |
| Mortgage loans on real estate:      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Residential 1-4 family              |   | $ | 5,850 |   |   | $ | 5,008 |   |   | $ | 810 |   |   | $ | 70 |   |   | $ | 4,298 |   |   | $ | 320 |   |
| Commercial                          |   |   | 13,319 |   |   |   | 3,798 |   |   |   | 9,400 |   |   |   | 2,827 |   |   |   | 14,320 |   |   |   | 593 |   |
| Construction                        |   |   | 0 |   |   |   | 0 |   |   |   | 0 |   |   |   | 0 |   |   |   | 194 |   |   |   | 5 |   |
| Second mortgages                    |   |   | 508 |   |   |   | 100 |   |   |   | 404 |   |   |   | 62 |   |   |   | 377 |   |   |   | 33 |   |
| Equity lines of credit              |   |   | 405 |   |   |   | 262 |   |   |   | 143 |   |   |   | 11 |   |   |   | 300 |   |   |   | 24 |   |
| Total mortgage loans on real estate |   | $ | 20,082 |   |   | $ | 9,168 |   |   | $ | 10,757 |   |   | $ | 2,970 |   |   | $ | 19,489 |   |   | $ | 975 |   |
| Commercial loans                    |   |   | 184 |   |   |   | 178 |   |   |   | 0 |   |   |   | 0 |   |   |   | 73 |   |   |   | 13 |   |
| Total                               |   | $ | 20,266 |   |   | $ | 9,346 |   |   | $ | 10,757 |   |   | $ | 2,970 |   |   | $ | 19,562 |   |   | $ | 988 |   |

----

Index

|   | · | Commercial: Commercial loans carry risks associated with the successful operation of a business or project, in addition to other risks associated with the ownership of a business. The repayment of these loans may be dependent upon the profitability and cash flows of the business.  In addition, there is risk associated with the value of collateral other than real estate which may depreciate over time and cannot be appraised with as much precision. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Real estate-construction: Construction loans carry risks that the project will not be finished according to schedule, the project will not be finished according to budget and the value of the collateral may at any point in time be less than the principal amount of the loan. Construction loans also bear the risk that the general contractor, who may or may not be the loan customer, may be unable to finish the construction project as planned because of financial pressure unrelated to the project. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Real estate-mortgage: Residential mortgage loans and equity lines of credit carry risks associated with the continued credit-worthiness of the borrower and changes in the value of the collateral. Commercial real estate loans carry risks associated with the successful operation of a business if owner occupied. If non-owner occupied, the repayment of these loans may be dependent upon the profitability and cash flow from rent receipts. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Consumer loans: Consumer loans carry risks associated with the continued credit-worthiness of the borrowers and the value of the collateral.  Consumer loans are more likely than real estate loans to be immediately adversely affected by job loss, divorce, illness or personal bankruptcy. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Other loans: Other loans are loans to mortgage companies, loans for purchasing or carrying securities, loans to insurance, investment and finance companies.  These loans carry risks associated with the successful operation of a business.  In addition, there is risk associated with the value of collateral other than real estate which may depreciate over time, may depend on interest rates or may fluctuate in active trading markets. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

Index

| ALLOWANCE FOR LOAN LOSSES AND RECORDED INVESTMENT IN LOANS |
|------------------------------------------------------------|
| (in thousands)                                             |
| March 31, 2011                                             |   | Commercial |   |   | Real Estate - Construction |   |   | Real Estate - Mortgage |   |   | Consumer |   |   | Other |   |   | Total |   |
| Allowance for Loan Losses:                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance at the beginning of period                         |   | $ | 799 |   |   | $ | 441 |   |   | $ | 11,498 |   |   | $ | 357 |   |   | $ | 133 |   |   | $ | 13,228 |   |
| Charge-offs                                                |   |   | (700 | ) |   |   | 0 |   |   |   | (4,051 | ) |   |   | (106 | ) |   |   | (90 | ) |   |   | (4,947 | ) |
| Recoveries                                                 |   |   | 7 |   |   |   | 0 |   |   |   | 135 |   |   |   | 54 |   |   |   | 7 |   |   |   | 203 |   |
| Provision for loan losses                                  |   |   | 850 |   |   |   | (70 | ) |   |   | 698 |   |   |   | 175 |   |   |   | 147 |   |   |   | 1,800 |   |
| Ending balance                                             |   | $ | 956 |   |   | $ | 371 |   |   | $ | 8,280 |   |   | $ | 480 |   |   | $ | 197 |   |   | $ | 10,284 |   |
| Ending balance individually evaluated for impairment       |   | $ | 61 |   |   | $ | 0 |   |   | $ | 235 |   |   | $ | 0 |   |   | $ | 0 |   |   | $ | 296 |   |
| Ending balance collectively evaluated for impairment       |   |   | 895 |   |   |   | 371 |   |   |   | 8,045 |   |   |   | 480 |   |   |   | 197 |   |   |   | 9,988 |   |
| Ending balance                                             |   | $ | 956 |   |   | $ | 371 |   |   | $ | 8,280 |   |   | $ | 480 |   |   | $ | 197 |   |   | $ | 10,284 |   |
| Loan Balances:                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Ending balance individually evaluated for impairment       |   | $ | 138 |   |   | $ | 0 |   |   | $ | 21,308 |   |   | $ | 0 |   |   | $ | 0 |   |   | $ | 21,446 |   |
| Ending balance collectively evaluated for impairment       |   |   | 35,504 |   |   |   | 21,118 |   |   |   | 448,665 |   |   |   | 21,747 |   |   |   | 15,833 |   |   |   | 542,867 |   |
| Ending balance                                             |   | $ | 35,642 |   |   | $ | 21,118 |   |   | $ | 469,973 |   |   | $ | 21,747 |   |   | $ | 15,833 |   |   | $ | 564,313 |   |

| December 31, 2010                                    |   | Commercial |   |   | Real Estate - Construction |   |   | Real Estate - Mortgage |   |   | Consumer |   |   | Other  |   |   | Total  |   |
|------------------------------------------------------|--------|------------|--------|--------|----------------------------|--------|--------|------------------------|--------|--------|----------|--------|--------|--------|--------|--------|--------|--------|
| Allowance for Loan Losses:                           |   |       |   |   |                       |   |   |                   |   |   |     |   |   |   |   |   |   |   |
| Balance at the beginning of period                   |   | $          | 935    |   |                       | $      | 354    |                   |   | $      | 5,552    |   |   | $      | 672    |   |   | $      | 351 |   |   | $ | 7,864 |   |
| Charge-offs                                          |   |       | (556   | )      |                       |   | (126   | )                      |   |   | (2,971   | )      |   |   | (655   | )      |   |   | (180 | ) |   |   | (4,488 | ) |
| Recoveries                                           |   |       | 192    |   |                       |   | 0      |                   |   |   | 636      |   |   |   | 155    |   |   |   | 69 |   |   |   | 1,052 |   |
| Provision for loan losses                            |   |       | 228    |   |                       |   | 213    |                   |   |   | 8,281    |   |   |   | 185    |   |   |   | (107 | ) |   |   | 8,800 |   |
| Ending balance                                       |   | $          | 799    |   |                       | $      | 441    |                   |   | $      | 11,498   |   |   | $      | 357    |   |   | $      | 133 |   |   | $ | 13,228 |   |
| Ending balance individually evaluated for impairment |   | $          | 0      |   |                       | $      | 0      |                   |   | $      | 2,970    |   |   | $      | 0      |   |   | $      | 0 |   |   | $ | 2,970 |   |
| Ending balance collectively evaluated for impairment |   |       | 799    |   |                       |   | 441    |                   |   |   | 8,528    |   |   |   | 357    |   |   |   | 133 |   |   |   | 10,258 |   |
| Ending balance                                       |   | $          | 799    |   |                       | $      | 441    |                   |   | $      | 11,498   |   |   | $      | 357    |   |   | $      | 133 |   |   | $ | 13,228 |   |
| Loan Balances:                                       |   |       |   |   |                       |   |   |                   |   |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Ending balance individually evaluated for impairment |   | $          | 178    |   |                       | $      | 0      |                   |   | $      | 19,925   |   |   | $      | 0      |   |   | $      | 0 |   |   | $ | 20,103 |   |
| Ending balance collectively evaluated for impairment |   |       | 35,875 |   |                       |   | 19,206 |                   |   |   | 469,265  |   |   |   | 24,389 |   |   |   | 17,781 |   |   |   | 566,516 |   |
| Ending balance                                       |   | $          | 36,053 |   |                       | $      | 19,206 |                   |   | $      | 489,190  |   |   | $      | 24,389 |   |   | $      | 17,781 |   |   | $ | 586,619 |   |

----

Index

|                                 |   |   |     |   |   |   | Weighted    |   |   |   |           |   |
|--------------------------------------|--------|--------|----------|--------|--------|--------|-------------|--------|--------|--------|----------------|--------|
|                                 |   |   |     |   |   |   | Average     |   |   |   |           |   |
|                                 |   |   | Weighted |   |   |   | Remaining   |   |   |   | Aggregate      |   |
|                                 |   |   | Average  |   |   |   | Contractual |   |   |   | Intrinsic      |   |
|                                 |   |   | Exercise |   |   |   | Life        |   |   |   | Value          |   |
|                                 | Shares |   | Price    |   |   |   | (in years)  |   |   |   | (in thousands) |   |
| Options outstanding, January 1, 2011 |   |   | 225,127  |   |   | $      | 19.62       |   |   |   |           |   |   |   |   |   |
| Granted                              |   |   | 0        |   |   |   | 0           |   |   |   |           |   |   |   |   |   |
| Exercised                            |   |   | (16,395  | )      |   |   | 12.91       |   |   |   |           |   |   |   |   |   |
| Canceled or expired                  |   |   | (6,562   | )      |   |   | 18.07       |   |   |   |           |   |   |   |   |   |
| Options outstanding, March 31, 2011  |   |   | 202,170  |   |   | $      | 20.22       |   |   |   | 4.43           |   |   | $   |                     0 |   |
| Options exercisable, March 31, 2011  |   |   | 162,686  |   |   | $      | 20.26       |   |   |   | 3.92           |   |   | $   |                     0 |   |

| Three months ended March 31,   |   | 2011             |     |   | 2010   |   |
|--------------------------------|--------|------------------|----------|--------|--------|--------|
|                           |   |             |     |   |   |   |
|                           |   | Pension Benefits |     |
| Interest cost                  |   | $                | 76,032   |   |   | $      | 78,431 |   |
| Expected return on plan assets |   |             | (104,964 | )      |   |   | (97,295 | ) |
| Amortization of net loss       |   |             | 42,585   |   |   |   | 31,702 |   |
| Net periodic pension plan cost |   | $                | 13,653   |   |   | $      | 12,838 |   |

----

Index

----

Index

|   | Level 1 –   | Valuation is based on quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. Level 1 assets and liabilities generally include debt and equity securities that are traded in an active exchange market. Valuations are obtained from readily available pricing sources for market transactions involving identical assets or liabilities.                                 |
|--------|-----------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                        |                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|   | Level 2 –             | Valuation is based on inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. The valuation may be based on quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the asset or liability.                          |
|   |                        |                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|   | Level 3 –             | Valuation is based on unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Level 3 assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which determination of fair value requires significant management judgment or estimation. |

----

Index

----

Index

|                                         |   | March 31, 2011 |    |   | December 31, 2010 |   |
|----------------------------------------------|--------|----------------|---------|--------|-------------------|--------|
|                                         |   |           |    |   |              |   |   |   |   |   |   |   |
|                                         |   | Carrying       |    |   | Fair              |   |   | Carrying |   |   | Fair |   |
|                                         |   | Amount         |    |   | Value             |   |   | Amount |   |   | Value |   |
|                                         |   | (in thousands) |    |
| Financial assets:                            |   |           |    |   |              |   |   |   |   |   |   |   |
| Cash and cash equivalents                    |   | $              | 33,889  |   |              | $      | 33,889 |   |   | $ | 28,431 |   |   | $ | 28,431 |   |
| Securities available-for-sale                |   |           | 195,509 |   |              |   | 195,509 |   |   |   | 206,092 |   |   |   | 206,092 |   |
| Securities held-to-maturity                  |   |           | 2,452   |   |              |   | 2,451 |   |   |   | 1,952 |   |   |   | 1,957 |   |
| Restricted securities                        |   |           | 4,320   |   |              |   | 4,320 |   |   |   | 4,320 |   |   |   | 4,320 |   |
| Loans, net of allowances for loan losses     |   |           | 554,029 |   |              |   | 552,370 |   |   |   | 573,391 |   |   |   | 571,906 |   |
| Bank owned life insurance                    |   |           | 18,221  |   |              |   | 18,221 |   |   |   | 18,020 |   |   |   | 18,020 |   |
| Accrued interest receivable                  |   |           | 2,618   |   |              |   | 2,618 |   |   |   | 2,652 |   |   |   | 2,652 |   |
|                                         |   |           |    |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Financial liabilities:                       |   |           |    |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Deposits                                     |   |           | 685,650 |   |              |   | 684,828 |   |   |   | 679,214 |   |   |   | 682,001 |   |
| Federal funds purchased and other borrowings |   |           | 714     |   |              |   | 714 |   |   |   | 731 |   |   |   | 731 |   |
| Overnight repurchase agreements              |   |           | 37,421  |   |              |   | 37,421 |   |   |   | 50,757 |   |   |   | 50,757 |   |
| Term repurchase agreements                   |   |           | 20,700  |   |              |   | 20,699 |   |   |   | 38,959 |   |   |   | 38,955 |   |
| Federal Home Loan Bank advances              |   |           | 35,000  |   |              |   | 38,814 |   |   |   | 35,000 |   |   |   | 39,260 |   |
| Accrued interest payable                     |   |           | 721     |   |              |   | 721 |   |   |   | 824 |   |   |   | 824 |   |

----

Index

|                                               |   |    |    |   | Fair Value Measurements at March 31, 2011 Using               |
|----------------------------------------------------|--------|---------|---------|--------|---------------------------------------------------------------|
|                                               |   |    |    |   | (in thousands)                                                |   |
|                                               |   |    |    |   |                                                          |   |
|                                               |   |    |    |   | Quoted Prices in Active Markets for Identical Assets(Level 1) |   |   | Significant Other Observable Inputs(Level 2) |   |   | Significant Unobservable Inputs(Level 3) |   |
|                                               |   |    |    |
| Description                                        |   | Balance |    |
| Available-for-sale securities                      |   |    |    |   |                                                          |   |   |   |   |   |   |   |
| U.S. Treasury securities                           |   | $       | 600     |   |                                                          | $ | 0 |   |   | $ | 600 |   |   | $ | 0 |   |
| Obligations of  U.S. Government agencies |   |    | 190,269 |   |                                                          |   | 0 |   |   |   | 190,269 |   |   |   | 0 |   |
| Obligations of state and political subdivisions    |   |    | 2,985   |   |                                                          |   | 0 |   |   |   | 2,985 |   |   |   | 0 |   |
| Mortgage-backed securities                         |   |    | 290     |   |                                                          |   | 0 |   |   |   | 290 |   |   |   | 0 |   |
| Money market investments                           |   |    | 1,365   |   |                                                          |   | 0 |   |   |   | 1,365 |   |   |   | 0 |   |
| Total available-for-sale securities                |   | $       | 195,509 |   |                                                          | $ | 0 |   |   | $ | 195,509 |   |   | $ | 0 |   |

|                                               |   |           |    |   | Fair Value Measurements at December 31, 2010 Using            |
|----------------------------------------------------|--------|----------------|---------|--------|---------------------------------------------------------------|
|                                               |   |           |    |   | (in thousands)                                                |   |
|                                               |   |           |    |   |                                                          |   |
| Description                                        |   |   Balance |    |   | Quoted Prices in Active Markets for Identical Assets(Level 1) |   |   | Significant Other Observable Inputs(Level 2) |   |   | Significant Unobservable Inputs(Level 3) |   |
| Available-for-sale securities                      |   |           |    |   |                                                          |   |   |   |   |   |   |   |
| U.S. Treasury securities                           |   | $              | 600     |   |                                                          | $ | 0 |   |   | $ | 600 |   |   | $ | 0 |   |
| Obligations of  U.S. Government agencies |   |           | 200,121 |   |                                                          |   | 0 |   |   |   | 200,121 |   |   |   | 0 |   |
| Obligations of state and political subdivisions    |   |           | 3,172   |   |                                                          |   | 0 |   |   |   | 3,172 |   |   |   | 0 |   |
| Mortgage-backed securities                         |   |           | 382     |   |                                                          |   | 0 |   |   |   | 382 |   |   |   | 0 |   |
| Money market investments                           |   |           | 1,817   |   |                                                          |   | 0 |   |   |   | 1,817 |   |   |   | 0 |   |
| Total available-for-sale securities                |   | $              | 206,092 |   |                                                          | $ | 0 |   |   | $ | 206,092 |   |   | $ | 0 |   |

----

Index

|              |   |       |   |   | Carrying Value at March 31, 2011                              |   |
|-------------------|--------|------------|--------|--------|---------------------------------------------------------------|--------|
|              |   |       |   |   | (in thousands)                                                |   |
| Description       |   | Fair Value |   |   | Quoted Prices in Active Markets for Identical Assets(Level 1) |   | Significant Other Observable Inputs(Level 2) |   | Significant Unobservable Inputs(Level 3) |   |
| Assets:           |   |       |   |   |                                                          |   |   |   |   |   |   |   |
| Impaired loans    |   | $          | 1,954  |   |                                                          | $      | 0 |   |   | $ | 978 |   |   | $ | 976 |   |
| Foreclosed assets |   | $          | 11,164 |   |                                                          | $      | 0 |   |   | $ | 11,164 |   |   | $ | 0 |   |

|              |   |       |   |   | Carrying Value at December 31, 2010                           |   |
|-------------------|--------|------------|--------|--------|---------------------------------------------------------------|--------|
|              |   |       |   |   | (in thousands)                                                |   |
| Description       |   | Fair Value |   |   | Quoted Prices in Active Markets for Identical Assets(Level 1) |   | Significant Other Observable Inputs(Level 2) |   | Significant Unobservable Inputs(Level 3) |   |
| Assets:           |   |       |   |   |                                                          |   |   |   |   |   |   |   |
| Impaired loans    |   | $          | 7,787  |   |                                                          | $      | 523 |   |   | $ | 6,182 |   |   | $ | 1,082 |   |
| Foreclosed assets |   | $          | 11,448 |   |                                                          | $      | 0 |   |   | $ | 11,448 |   |   | $ | 0 |   |

----

Index

|                             |   | Three Months Ended March 31, 2011 |        |
|----------------------------------|--------|-----------------------------------|-------------|
|                             |   |   Unconsolidated        |        |
|                             |   | Bank                              |        |   | Trust |   |   | Parent |   |   | Eliminations |   |   | Consolidated |   |
| Revenues                         |   |                              |        |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest and dividend income     |   | $                                 | 9,354,297   |   |   | $ | 9,713 |   |   | $ | 415,558 |   |   | $ | (414,653 | ) |   | $ | 9,364,915 |   |
| Income from fiduciary activities |   |                              | 0           |   |   |   | 770,972 |   |   |   | 0 |   |   |   | 0 |   |   |   | 770,972 |   |
| Other income                     |   |                              | 1,948,297   |   |   |   | 101,349 |   |   |   | 75,000 |   |   |   | (90,376 | ) |   |   | 2,034,270 |   |
| Total operating income           |   |                              | 11,302,594  |   |   |   | 882,034 |   |   |   | 490,558 |   |   |   | (505,029 | ) |   |   | 12,170,157 |   |
|                             |   |                              |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Expenses                         |   |                              |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest expense                 |   |                              | 1,844,909   |   |   |   | 0 |   |   |   | 3,055 |   |   |   | (3,325 | ) |   |   | 1,844,639 |   |
| Provision for loan losses        |   |                              | 1,800,000   |   |   |   | 0 |   |   |   | 0 |   |   |   | 0 |   |   |   | 1,800,000 |   |
| Salaries and employee benefits   |   |                              | 4,016,154   |   |   |   | 481,331 |   |   |   | 132,318 |   |   |   | 0 |   |   |   | 4,629,803 |   |
| Other expenses                   |   |                              | 3,365,315   |   |   |   | 226,765 |   |   |   | 35,562 |   |   |   | (90,376 | ) |   |   | 3,537,266 |   |
| Total operating expenses         |   |                              | 11,026,378  |   |   |   | 708,096 |   |   |   | 170,935 |   |   |   | (93,701 | ) |   |   | 11,811,708 |   |
|                             |   |                              |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Income before taxes              |   |                              | 276,216     |   |   |   | 173,938 |   |   |   | 319,623 |   |   |   | (411,328 | ) |   |   | 358,449 |   |
|                             |   |                              |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Income tax expense (benefit)     |   |                              | (20,313     | ) |   |   | 59,139 |   |   |   | (25,070 | ) |   |   | 0 |   |   |   | 13,756 |   |
|                             |   |                              |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net income                       |   | $                                 | 296,529     |   |   | $ | 114,799 |   |   | $ | 344,693 |   |   | $ | (411,328 | ) |   | $ | 344,693 |   |
|                             |   |                              |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total assets                     |   | $                                 | 857,716,906 |   |   | $ | 4,916,680 |   |   | $ | 81,668,918 |   |   | $ | (82,058,285 | ) |   | $ | 862,244,219 |   |

|                             |   | Three Months Ended March 31, 2010 |        |
|----------------------------------|--------|-----------------------------------|-------------|
|                             |   |   Unconsolidated        |        |
|                             |   | Bank                              |        |   | Trust |   |   |  Parent |   |   | Eliminations |   |   | Consolidated |   |
| Revenues                         |   |                              |        |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest and dividend income     |   | $                                 | 10,402,460  |   |   | $ | 13,108 |   |   | $ | (875,669 | ) |   | $ | 875,588 |   |   | $ | 10,415,487 |   |
| Income from fiduciary activities |   |                              | 0           |   |   |   | 820,885 |   |   |   | 0 |   |   |   | 0 |   |   |   | 820,885 |   |
| Other income                     |   |                              | 2,370,784   |   |   |   | 117,517 |   |   |   | 78,038 |   |   |   | (89,376 | ) |   |   | 2,476,963 |   |
| Total operating income           |   |                              | 12,773,244  |   |   |   | 951,510 |   |   |   | (797,631 | ) |   |   | 786,212 |   |   |   | 13,713,335 |   |
|                             |   |                              |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Expenses                         |   |                              |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest expense                 |   |                              | 2,967,062   |   |   |   | 0 |   |   |   | 3,055 |   |   |   | (6,261 | ) |   |   | 2,963,856 |   |
| Provision for loan losses        |   |                              | 4,700,000   |   |   |   | 0 |   |   |   | 0 |   |   |   | 0 |   |   |   | 4,700,000 |   |
| Salaries and employee benefits   |   |                              | 3,894,078   |   |   |   | 502,448 |   |   |   | 134,556 |   |   |   | 0 |   |   |   | 4,531,082 |   |
| Other expenses                   |   |                              | 3,035,572   |   |   |   | 222,730 |   |   |   | 34,605 |   |   |   | (89,376 | ) |   |   | 3,203,531 |   |
| Total operating expenses         |   |                              | 14,596,712  |   |   |   | 725,178 |   |   |   | 172,216 |   |   |   | (95,637 | ) |   |   | 15,398,469 |   |
|                             |   |                              |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Income (loss) before taxes       |   |                              | (1,823,468  | ) |   |   | 226,332 |   |   |   | (969,847 | ) |   |   | 881,849 |   |   |   | (1,685,134 | ) |
|                             |   |                              |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Income tax expense (benefit)     |   |                              | (792,240    | ) |   |   | 76,953 |   |   |   | (24,220 | ) |   |   | 0 |   |   |   | (739,507 | ) |
|                             |   |                              |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net income (loss)                |   | $                                 | (1,031,228  | ) |   | $ | 149,379 |   |   | $ | (945,627 | ) |   | $ | 881,849 |   |   | $ | (945,627 | ) |
|                             |   |                              |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total assets                     |   | $                                 | 947,254,649 |   |   | $ | 5,058,191 |   |   | $ | 80,762,362 |   |   | $ | (81,211,296 | ) |   | $ | 951,863,906 |   |

----

Index

Item 2.  Management's Discussion and Analysis of Financial Condition and Results of Operations.

----

Index

----

Index

| AVERAGE BALANCE SHEETS, NET INTEREST INCOME* AND RATES*             |   |
|---------------------------------------------------------------------|--------|
|                                                                |   | For the three months ended March 31, |   |
|                                                                |   | 2011 |   |   | 2010 |   |
|                                                                |   |   |   |   | Interest |   |   |   |   |   |   |   |   | Interest |   |   |   |   |
|                                                                |   | Average |   |   | Income/ |   |   | Yield/ |   |   | Average |   |   | Income/ |   |   | Yield/ |   |
|                                                                |   | Balance |   |   | Expense |   |   | Rate** |   |   | Balance |   |   | Expense |   |   | Rate** |   |
|                                                                |   |   |   |   |   |   |   | (in thousands) |   |   |   |   |   |   |   |   |   |   |
|                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| ASSETS                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loans*                                                              |   | $ | 572,714 |   |   | $ | 8,418 |   |   |   | 5.88 | % |   | $ | 632,585 |   |   | $ | 9,502 |   |   |   | 6.01 | % |
| Investment securities:                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Taxable                                                             |   |   | 205,044 |   |   |   | 903 |   |   |   | 1.76 | % |   |   | 171,106 |   |   |   | 804 |   |   |   | 1.88 | % |
| Tax-exempt*                                                         |   |   | 3,350 |   |   |   | 60 |   |   |   | 7.16 | % |   |   | 7,902 |   |   |   | 142 |   |   |   | 7.19 | % |
| Total investment securities                                         |   |   | 208,394 |   |   |   | 963 |   |   |   | 1.85 | % |   |   | 179,008 |   |   |   | 946 |   |   |   | 2.11 | % |
| Federal funds sold                                                  |   |   | 17,677 |   |   |   | 8 |   |   |   | 0.18 | % |   |   | 38,750 |   |   |   | 20 |   |   |   | 0.21 | % |
| Other investments                                                   |   |   | 5,747 |   |   |   | 12 |   |   |   | 0.84 | % |   |   | 6,366 |   |   |   | 11 |   |   |   | 0.69 | % |
| Total earning assets                                                |   |   | 804,532 |   |   | $ | 9,401 |   |   |   | 4.67 | % |   |   | 856,709 |   |   | $ | 10,479 |   |   |   | 4.89 | % |
| Allowance for loan losses                                           |   |   | (11,883 | ) |   |   |   |   |   |   |   |   |   |   | (8,083 | ) |   |   |   |   |   |   |   |   |
| Other nonearning assets                                             |   |   | 84,217 |   |   |   |   |   |   |   |   |   |   |   | 77,467 |   |   |   |   |   |   |   |   |   |
| Total assets                                                        |   | $ | 876,866 |   |   |   |   |   |   |   |   |   |   | $ | 926,093 |   |   |   |   |   |   |   |   |   |
|                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| LIABILITIES AND STOCKHOLDERS' EQUITY                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Time and savings deposits:                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-bearing transaction accounts                               |   | $ | 12,215 |   |   | $ | 2 |   |   |   | 0.07 | % |   | $ | 10,611 |   |   | $ | 2 |   |   |   | 0.08 | % |
| Money market deposit accounts                                       |   |   | 168,857 |   |   |   | 92 |   |   |   | 0.22 | % |   |   | 150,439 |   |   |   | 81 |   |   |   | 0.22 | % |
| Savings accounts                                                    |   |   | 46,535 |   |   |   | 11 |   |   |   | 0.09 | % |   |   | 43,302 |   |   |   | 12 |   |   |   | 0.11 | % |
| Time deposits, $100,000 or more                                     |   |   | 134,581 |   |   |   | 534 |   |   |   | 1.59 | % |   |   | 198,820 |   |   |   | 711 |   |   |   | 1.43 | % |
| Other time deposits                                                 |   |   | 184,377 |   |   |   | 732 |   |   |   | 1.59 | % |   |   | 147,555 |   |   |   | 1,150 |   |   |   | 3.12 | % |
| Total time and savings deposits                                     |   |   | 546,565 |   |   |   | 1,371 |   |   |   | 1.00 | % |   |   | 550,727 |   |   |   | 1,956 |   |   |   | 1.42 | % |
| Federal funds purchased, repurchase agreements and other borrowings |   |   | 77,915 |   |   |   | 53 |   |   |   | 0.27 | % |   |   | 105,990 |   |   |   | 178 |   |   |   | 0.67 | % |
| Federal Home Loan Bank advances                                     |   |   | 35,000 |   |   |   | 421 |   |   |   | 4.81 | % |   |   | 65,000 |   |   |   | 830 |   |   |   | 5.11 | % |
| Total interest-bearing liabilities                                  |   |   | 659,480 |   |   |   | 1,845 |   |   |   | 1.12 | % |   |   | 721,717 |   |   |   | 2,964 |   |   |   | 1.64 | % |
| Demand deposits                                                     |   |   | 134,857 |   |   |   |   |   |   |   |   |   |   |   | 119,263 |   |   |   |   |   |   |   |   |   |
| Other liabilities                                                   |   |   | 1,622 |   |   |   |   |   |   |   |   |   |   |   | 2,721 |   |   |   |   |   |   |   |   |   |
| Stockholders' equity                                                |   |   | 80,907 |   |   |   |   |   |   |   |   |   |   |   | 82,392 |   |   |   |   |   |   |   |   |   |
| Total liabilities and stockholders' equity                          |   | $ | 876,866 |   |   |   |   |   |   |   |   |   |   | $ | 926,093 |   |   |   |   |   |   |   |   |   |
| Net interest income/yield                                           |   |   |   |   |   | $ | 7,556 |   |   |   | 3.76 | % |   |   |   |   |   | $ | 7,515 |   |   |   | 3.51 | % |
|                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| *Computed on a fully tax-equivalent basis using a 34% rate          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Annualized                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

Index

| NONPERFORMING ASSETS                                                                                                                               |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                                                               |   | March 31, |   |   | December 31, |   |   | Increase |   |
|                                                                                                                                               |   | 2011 |   |   | 2010 |   |   | (Decrease) |   |
|                                                                                                                                               |   | (unaudited) |   |   |   |   |   |   |   |
|                                                                                                                                               |   | (in thousands) |   |
| Nonaccrual loans                                                                                                                                   |   |   |   |   |   |   |   |   |   |
| Commercial                                                                                                                                         |   | $ | 138 |   |   | $ | 178 |   |   | $ | (40 | ) |
| Real estate-construction                                                                                                                           |   |   | 0 |   |   |   | 37 |   |   |   | (37 | ) |
| Real estate-mortgage (1)                                                                                                                           |   |   | 21,904 |   |   |   | 20,550 |   |   |   | 1,354 |   |
| Consumer loans                                                                                                                                     |   |   | 16 |   |   |   | 116 |   |   |   | (100 | ) |
| Total nonaccrual loans                                                                                                                             |   | $ | 22,058 |   |   | $ | 20,881 |   |   | $ | 1,177 |   |
| Loans past due 90 days or more and accruing interest                                                                                               |   |   |   |   |   |   |   |   |   |   |   |   |
| Real estate-construction                                                                                                                           |   | $ | 0 |   |   | $ | 16 |   |   | $ | (16 | ) |
| Real estate-mortgage (1)                                                                                                                           |   |   | 117 |   |   |   | 33 |   |   |   | 84 |   |
| Consumer loans                                                                                                                                     |   |   | 9 |   |   |   | 23 |   |   |   | (14 | ) |
| Other                                                                                                                                              |   |   | 3 |   |   |   | 1 |   |   |   | 2 |   |
| Total loans past due 90 days or more and accruing interest                                                                                         |   | $ | 129 |   |   | $ | 73 |   |   | $ | 56 |   |
| Restructured loans (in compliance with modified terms)                                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |
| Real estate-mortgage (1)                                                                                                                           |   | $ | 259 |   |   | $ | 1,639 |   |   | $ | (1,380 | ) |
| Total restructured loans (in compliance with modified terms)                                                                                       |   | $ | 259 |   |   | $ | 1,639 |   |   | $ | (1,380 | ) |
| Foreclosed assets                                                                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |
| Real estate-construction                                                                                                                           |   | $ | 4,092 |   |   | $ | 4,074 |   |   | $ | 18 |   |
| Real estate-mortgage (1)                                                                                                                           |   |   | 7,072 |   |   |   | 7,374 |   |   |   | (302 | ) |
| Total foreclosed assets                                                                                                                            |   | $ | 11,164 |   |   | $ | 11,448 |   |   | $ | (284 | ) |
| Total nonperforming assets                                                                                                                         |   | $ | 33,610 |   |   | $ | 34,041 |   |   | $ | (431 | ) |
|                                                                                                                                               |   |   |   |   |   |   |   |   |   |   |   |   |
| (1) The real estate-mortgage segment includes residential 1 – 4 family, commercial real estate, second mortgages and equity lines of credit. |   |
|                                                                                                                                               |

----

Index

|   | · | $2.9 million: charge-off that had been provided for in 2010 on the impaired portion of a nonaccrual loan; the non-charged-off balance remained in nonaccrual |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | $361 thousand:  loan restructured during the first quarter; $102 thousand of that loan was charged off, with the remaining balance placed in restructured loans |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | $741 thousand: converted to foreclosed or repossessed assets |
|--------|--------|--------------------------------------------------------------|

|   | · | $793 thousand: moved from nonaccrual to performing status |
|--------|--------|-----------------------------------------------------------|

|   | · | $731 thousand: removed from nonaccrual due to payoffs or paydowns |
|--------|--------|-------------------------------------------------------------------|

|   | 1. | Doubtful–specific identification |
|--------|----|----------------------------------------|

|   | 2. | Substandard–specific identification |
|--------|----|-------------------------------------------|

|   | 3. | Pool–substandard |
|--------|----|------------------------|

|   | 4. | Pool–other assets especially mentioned (rated just above substandard) |
|--------|----|-----------------------------------------------------------------------------|

|   | 5. | Pool–pass loans (all other loans) |
|--------|----|-----------------------------------------|

----

Index

----

Index

| Loans Secured by 1 - 4 Family First Mortgages,      |   |
|-----------------------------------------------------|--------|
| 1 - 4 Family Open-end and 1 - 4 Family Junior Liens |   |
| (in thousands)                                      |   |
|                                                |   |   |   |   |   |   |
|                                                |   | Amount |   |   | Percent |   |
| Subprime                                            |   | $ | 23,624 |   |   |   | 20.6 | % |
| Non-subprime                                        |   |   | 91,059 |   |   |   | 79.4 | % |
|                                                |   | $ | 114,683 |   |   |   | 100.0 | % |
|                                                |   |   |   |   |   |   |   |   |
| Total loans                                         |   | $ | 564,313 |   |   |   |   |   |

| Percentage of Real Estate-Secured Subprime Loans to Total Loans |   |   |   | 4.19 | % |
|-----------------------------------------------------------------|--------|--------|--------|------|---|

----

Index

|            | 2011       |           |
|-----------------|------------|----------------|
|            | Regulatory | March 31, 2011 |
|            | Minimums   |           |
| Tier 1          | 4.00%      | 13.18%         |
| Total Capital   | 8.00%      | 14.44%         |
| Tier 1 Leverage | 4.00%      | 9.56%          |

----

Index

Item 3.  Quantitative and Qualitative Disclosures About Market Risk.

----

Index

Item 4.  Controls and Procedures.

----

Index

Item 1.  Legal Proceedings.

Item 1A.  Risk Factors.

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds.

Item 3.  Defaults Upon Senior Securities.

Item 4.  [Removed and Reserved].

Item 5.  Other Information.

----

Index

Item 6.  Exhibits.

|   | Exhibit No.                 |   | Description                                                                                                                                                                   |
|--------|-----------------------------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | 3.1     |   | Articles of Incorporation of Old Point Financial Corporation, as amended effective June 22, 2000 (incorporated by reference to Exhibit 3.1 to Form 10-K filed March 12, 2009) |
|   |                        |   |                                                                                                                                                                          |
|   | 3.2     |   | Bylaws of Old Point Financial Corporation, as amended and restated March 8, 2011 (incorporated by reference to Exhibit 3.2 to Form 8-K filed March 10, 2011)                  |
|   |                        |   |                                                                                                                                                                          |
|   | 31.1                        |   | Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                                                            |
|   |                        |   |                                                                                                                                                                          |
|   | 31.2                        |   | Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                                                            |
|   |                        |   |                                                                                                                                                                          |
|   | 32.1                        |   | Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002                                                |

----

Index

|         | OLD POINT FINANCIAL CORPORATION                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|--------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| May 13, 2011 | /s/Robert F. Shuford, Sr                                                                         |
|         | Robert F. Shuford, Sr.                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|         | Chairman, President & Chief Executive Officer                                                                                                                                                                                                                                                                                                                                                                                                                        |
|         | (Principal Executive Officer)                                                                                                                                                                                                                                                                                                                                                                                                                                            |

| May 13, 2011  | /s/Laurie D. Grabow                                                                                 |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|               | Laurie D. Grabow                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|               | Chief Financial Officer & Senior Vice President/Finance                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|               | (Principal Financial & Accounting Officer)                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |

----