##### Table of Contents





UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549





FORM 10-Q







|x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ---------------------------------------------------------------------------------------

For the Quarterly period ended March 31, 2009

OR



| ̈ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ----------------------------------------------------------------------------------------

For the transition period from              to

Commission file number 33-22224-B





Beverly National Corporation

(Name of registrant as specified in its charter)







|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Massachusetts                                                  |  | 04-2832201                          
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification No.)
|                                                               | 
|240 Cabot Street Beverly, Massachusetts                        |  | 01915                               
|(Address of principal executive offices)                       |  | (Zip Code)                          

Registrants telephone number, including area code (978) 922-2100





Indicate by check mark whether registrant (l) has filed all reports required to be filed by Section l3 or l5(d) of the Securities Exchange Act of 1934 during the preceding l2 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No   ̈

Indicate by check mark whether the registrant has
submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such
shorter period that the registrant was required to submit and post such files).    Yes   ̈    No   ̈

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company (as defined in
Rule 12b-2 of the Exchange Act).



|                        |  |   |  |                           |  |  
|----------------------- |  | - |  | ------------------------- |  | -
|Large accelerated filer |  |  ̈ |  | Accelerated filer         |  |  ̈
|                        |  |   | 
|Non-accelerated filer   |  |  ̈ |  | Smaller reporting company |  | x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange
Act).    Yes   ̈    No  x

Indicate the number of shares outstanding of each of the issuers classes of common stock, as of May 4, 2009: 2,663,545.









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##### Table of Contents

BEVERLY NATIONAL CORPORATION

INDEX



|                                                                                                              |  |   
|------------------------------------------------------------------------------------------------------------- |  | --
|PART I. FINANCIAL INFORMATION                                                                                 |  |   
|                                                                                                              | 
|Item 1. Financial Statements                                                                                  |  |   
|                                                                                                              | 
|Condensed Consolidated Balance Sheets at March 31, 2009 (Unaudited) and December 31, 2008                     |  | 3 
|                                                                                                              | 
|Condensed Consolidated Statements of Income for the Three Months EndedMarch 31, 2009 and 2008 (Unaudited)     |  | 4 
|                                                                                                              | 
|Condensed Consolidated Statements of Cash Flows for the Three Months EndedMarch 31, 2009 and 2008
(Unaudited) |  | 5 
|                                                                                                              | 
|Notes to Condensed Consolidated Financial Statements (Unaudited)                                              |  | 6 
|                                                                                                              | 
|Item 2. Managements Discussion and Analysis of Financial Condition and Results of
Operations                 |  | 10
|                                                                                                              | 
|Item 3. Quantitative and Qualitative Disclosures About Market Risk                                            |  | 16
|                                                                                                              | 
|Item 4T. Controls and Procedures                                                                              |  | 17
|                                                                                                              | 
|PART II. OTHER INFORMATION                                                                                    |  |   
|                                                                                                              | 
|Item 1. Legal Proceedings                                                                                     |  | 18
|                                                                                                              | 
|Item 2. Unregistered Sales of Equity Securities and Use of Proceeds                                           |  | 18
|                                                                                                              | 
|Item 3. Defaults Upon Senior Securities                                                                       |  | 18
|                                                                                                              | 
|Item 4. Submission of Matters to a Vote of Security Holders                                                   |  | 18
|                                                                                                              | 
|Item 5. Other Information                                                                                     |  | 18
|                                                                                                              | 
|Item 6. Exhibits                                                                                              |  | 18
|                                                                                                              | 
|Signatures                                                                                                    |  | 19



2



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PART I - FINANCIAL INFORMATION



|ITEM 1. | FINANCIAL STATEMENTS.
|------- | ---------------------

BEVERLY
NATIONAL CORPORATION AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share data)

(unaudited)



|                                                                                                                                                                                                                   |  |                |         |   |                   |   |         |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | -------------- | ------- | - | ----------------- | - | ------- | -
|                                                                                                                                                                                                                   |  | March 31, 2009 |         |   | December 31, 2008 |  
|ASSETS                                                                                                                                                                                                             |  |                |         |   |                   |   |         |  
|Cash and due from banks                                                                                                                                                                                            |  | $              | 8,820   |   |                   | $ | 9,628   |  
|Federal funds sold                                                                                                                                                                                                 |  |                | 5,926   |   |                   |   | 6,550   |  
|Interest-bearing demand deposits with other banks                                                                                                                                                                  |  |                | 59      |   |                   |   | 9       |  
|Short-term investments                                                                                                                                                                                             |  |                | 363     |   |                   |   | 363     |  
|                                                                                                                                                                                                                   |  |                |         |   |                   |   |         |  
|Cash and cash equivalents                                                                                                                                                                                          |  |                | 15,168  |   |                   |   | 16,550  |  
|Investments in available-for-sale securities (at fair value)                                                                                                                                                       |  |                | 106,085 |   |                   |   | 103,623 |  
|Federal Home Loan Bank stock, at cost                                                                                                                                                                              |  |                | 4,171   |   |                   |   | 4,086   |  
|Federal Reserve Bank stock, at cost                                                                                                                                                                                |  |                | 554     |   |                   |   | 553     |  
|Loans, net of the allowance for loan losses of $4,385 and $4,127, respectively                                                                                                                                     |  |                | 332,927 |   |                   |   | 334,639 |  
|Premises and equipment                                                                                                                                                                                             |  |                | 8,404   |   |                   |   | 8,386   |  
|Bank owned life insurance                                                                                                                                                                                          |  |                | 7,021   |   |                   |   | 6,950   |  
|Accrued interest receivable                                                                                                                                                                                        |  |                | 1,790   |   |                   |   | 1,769   |  
|Other assets                                                                                                                                                                                                       |  |                | 8,588   |   |                   |   | 8,949   |  
|                                                                                                                                                                                                                   |  |                |         |   |                   |   |         |  
|Total assets                                                                                                                                                                                                       |  | $              | 484,708 |   |                   | $ | 485,505 |  
|                                                                                                                                                                                                                   |  |                |         |   |                   |   |         |  
|                                                                                                                                                                                                                   |  |               
|LIABILITIES AND STOCKHOLDERS EQUITY                                                                                                                                                                               |  |                |         |   |                   |   |         |  
|Deposits:                                                                                                                                                                                                          |  |                |         |   |                   |   |         |  
|Noninterest-bearing                                                                                                                                                                                                |  | $              | 73,110  |   |                   | $ | 74,872  |  
|Interest-bearing                                                                                                                                                                                                   |  |                | 276,559 |   |                   |   | 264,661 |  
|                                                                                                                                                                                                                   |  |                |         |   |                   |   |         |  
|Total deposits                                                                                                                                                                                                     |  |                | 349,669 |   |                   |   | 339,533 |  
|Federal Home Loan Bank advances                                                                                                                                                                                    |  |                | 58,062  |   |                   |   | 84,425  |  
|Securities sold under agreements to repurchase                                                                                                                                                                     |  |                | 27,956  |   |                   |   | 13,289  |  
|Other liabilities                                                                                                                                                                                                  |  |                | 7,269   |   |                   |   | 7,220   |  
|                                                                                                                                                                                                                   |  |                |         |   |                   |   |         |  
|Total liabilities                                                                                                                                                                                                  |  |                | 442,956 |   |                   |   | 444,467 |  
|                                                                                                                                                                                                                   |  |                |         |   |                   |   |         |  
|Stockholders equity:                                                                                                                                                                                              |  |                |         |   |                   |   |         |  
|Preferred stock, $1.00 par value per share; 300,000 shares authorized; issued and outstanding none                                                                                                                 |  |                |        |   |                   |   |        |  
|Common stock, $2.50 par value per share; 5,000,000 shares authorized; issued 2,912,437 shares as of March 31, 2009 and December 31,
2008; outstanding, 2,663,545 shares as of March 31, 2009 and December 31, 2008 |  |                | 7,281   |   |                   |   | 7,281   |  
|Paid-in capital                                                                                                                                                                                                    |  |                | 22,918  |   |                   |   | 22,917  |  
|Retained earnings                                                                                                                                                                                                  |  |                | 18,852  |   |                   |   | 18,459  |  
|Treasury stock, at cost (248,892 shares as of March 31, 2009 and December 31, 2008)                                                                                                                                |  |                | (4,370  | ) |                   |   | (4,370  | )
|Unearned shares, Restricted Stock Plan (13,705 shares as of March 31, 2009 and 15,755 shares as of December 31,
2008)                                                                                              |  |                | (283    | ) |                   |   | (323    | )
|Accumulated other comprehensive loss                                                                                                                                                                               |  |                | (2,646  | ) |                   |   | (2,926  | )
|                                                                                                                                                                                                                   |  |                |         |   |                   |   |         |  
|Total stockholders equity                                                                                                                                                                                         |  |                | 41,752  |   |                   |   | 41,038  |  
|                                                                                                                                                                                                                   |  |                |         |   |                   |   |         |  
|Total liabilities and stockholders equity                                                                                                                                                                         |  | $              | 484,708 |   |                   | $ | 485,505 |  
|                                                                                                                                                                                                                   |  |                |         |   |                   |   |         |  
|                                                                                                                                                                                                                   |  |               
|Book value per share                                                                                                                                                                                               |  | $              | 15.68   |   |                   | $ | 15.41   |  
|                                                                                                                                                                                                                   |  |                |         |   |                   |   |         |  

The accompanying notes are an integral part of these condensed consolidated financial statements.



3



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##### Table of Contents

BEVERLY NATIONAL CORPORATION AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF INCOME

(In
thousands, except share and per share data)

(unaudited)



|                                                                 |  |                    |           |                |   |          
|---------------------------------------------------------------- |  | ------------------ | --------- | -------------- | - | ---------
|                                                                 |  | Three Months Ended
|                                                                 |  | March 31, 2009     |           | March 31, 2008
|Interest and dividend income:                                    |  |                    |           |                |   |          
|Interest and fees on loans                                       |  | $                  | 4,834     |                | $ | 5,128    
|Interest on debt securities:                                     |  |                    |           |                |   |          
|Taxable                                                          |  |                    | 1,111     |                |   | 1,122    
|Tax-exempt                                                       |  |                    | 124       |                |   | 120      
|Dividends on marketable equity securities                        |  |                    | 201       |                |   | 249      
|Other interest                                                   |  |                    | 10        |                |   | 89       
|                                                                 |  |                    |           |                |   |          
|Total interest and dividend income                               |  |                    | 6,280     |                |   | 6,708    
|                                                                 |  |                    |           |                |   |          
|Interest expense:                                                |  |                    |           |                |   |          
|Interest on deposits                                             |  |                    | 1,016     |                |   | 1,932    
|Interest on other borrowed funds                                 |  |                    | 551       |                |   | 695      
|                                                                 |  |                    |           |                |   |          
|Total interest expense                                           |  |                    | 1,567     |                |   | 2,627    
|                                                                 |  |                    |           |                |   |          
|Net interest and dividend income                                 |  |                    | 4,713     |                |   | 4,081    
|Provision for loan losses                                        |  |                    | 225       |                |   | 128      
|                                                                 |  |                    |           |                |   |          
|Net interest and dividend income after provision for loan losses |  |                    | 4,488     |                |   | 3,953    
|                                                                 |  |                    |           |                |   |          
|Noninterest income:                                              |  |                    |           |                |   |          
|Income from fiduciary activities                                 |  |                    | 385       |                |   | 474      
|Fees from sale of non-deposit products                           |  |                    | 24        |                |   | 50       
|Service charges on deposit accounts                              |  |                    | 151       |                |   | 159      
|Other deposit fees                                               |  |                    | 182       |                |   | 226      
|Income on cash surrender value of life insurance                 |  |                    | 74        |                |   | 73       
|Other income                                                     |  |                    | 148       |                |   | 200      
|                                                                 |  |                    |           |                |   |          
|Total noninterest income                                         |  |                    | 964       |                |   | 1,182    
|                                                                 |  |                    |           |                |   |          
|Noninterest expense:                                             |  |                    |           |                |   |          
|Salaries and employee benefits                                   |  |                    | 2,211     |                |   | 2,216    
|Director fees                                                    |  |                    | 87        |                |   | 77       
|Occupancy expense                                                |  |                    | 494       |                |   | 465      
|Equipment expense                                                |  |                    | 178       |                |   | 246      
|Data processing fees                                             |  |                    | 352       |                |   | 289      
|Marketing and public relations                                   |  |                    | 101       |                |   | 105      
|Professional fees                                                |  |                    | 218       |                |   | 167      
|FDIC insurance assessments                                       |  |                    | 135       |                |   | 10       
|Other expense                                                    |  |                    | 384       |                |   | 367      
|                                                                 |  |                    |           |                |   |          
|Total noninterest expense                                        |  |                    | 4,160     |                |   | 3,942    
|                                                                 |  |                    |           |                |   |          
|Income before income taxes                                       |  |                    | 1,292     |                |   | 1,193    
|Income taxes                                                     |  |                    | 367       |                |   | 283      
|                                                                 |  |                    |           |                |   |          
|Net income                                                       |  | $                  | 925       |                | $ | 910      
|                                                                 |  |                    |           |                |   |          
|                                                                 |  |                   
|Comprehensive income                                             |  | $                  | 1,205     |                | $ | 1,013    
|                                                                 |  |                    |           |                |   |          
|Earning per share:                                               |  |                    |           |                |   |          
|Weighted average shares outstanding                              |  |                    | 2,663,545 |                |   | 2,653,074
|                                                                 |  |                    |           |                |   |          
|Weighted average diluted shares outstanding                      |  |                    | 2,663,821 |                |   | 2,656,952
|                                                                 |  |                    |           |                |   |          
|                                                                 |  |                   
|Earnings per common share                                        |  | $                  | 0.35      |                | $ | 0.34     
|Earnings per common share, assuming dilution                     |  | $                  | 0.35      |                | $ | 0.34     
|Dividends per share                                              |  | $                  | 0.20      |                | $ | 0.20     

The accompanying notes are an integral part of these condensed consolidated financial statements.



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BEVERLY NATIONAL CORPORATION AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In
thousands)

(unaudited)



|                                                                                         |  |                    |         |   |                |   |         |  
|---------------------------------------------------------------------------------------- |  | ------------------ | ------- | - | -------------- | - | ------- | -
|                                                                                         |  | Three Months Ended |        
|                                                                                         |  | March 31, 2009     |         |   | March 31, 2008 |  
|Cash flows from operating activities:                                                    |  |                    |         |   |                |   |         |  
|Net income                                                                               |  | $                  | 925     |   |                | $ | 910     |  
|Adjustments to reconcile net income to net cash (used) provided by operating activities: |  |                    |         |   |                |   |         |  
|Amortization of securities, net                                                          |  |                    | (61     | ) |                |   | (8      | )
|Provision for loan losses                                                                |  |                    | 225     |   |                |   | 128     |  
|Change in deferred loan costs, net                                                       |  |                    | 15      |   |                |   | (6      | )
|Depreciation and amortization                                                            |  |                    | 194     |   |                |   | 148     |  
|Increase in cash surrender value of life insurance                                       |  |                    | (73     | ) |                |   | (73     | )
|Increase in interest receivable                                                          |  |                    | (21     | ) |                |   | (120    | )
|Decrease (increase) in prepaid expenses                                                  |  |                    | 50      |   |                |   | (143    | )
|Decrease in RABBI Trust trading securities                                               |  |                    | 36      |   |                |   | 33      |  
|Decrease in taxes receivable                                                             |  |                    | 134     |   |                |   | 257     |  
|Deferred tax benefit                                                                     |  |                    | 1       |   |                |   |        |  
|Decrease in mortgage servicing rights                                                    |  |                    | 5       |   |                |   | 5       |  
|(Increase) decrease in other assets                                                      |  |                    | (16     | ) |                |   | 228     |  
|Increase (decrease) in accrued expenses                                                  |  |                    | 9       |   |                |   | (510    | )
|Decrease in interest payable                                                             |  |                    | (61     | ) |                |   | (82     | )
|Increase in taxes payable                                                                |  |                    | 65      |   |                |   |        |  
|Increase (decrease) in other liabilities                                                 |  |                    | 76      |   |                |   | (83     | )
|Stock-based compensation                                                                 |  |                    | 1       |   |                |   | 3       |  
|                                                                                         |  |                    |         |   |                |   |         |  
|                                                                                         |  |                   
|Net cash provided by operating activities                                                |  |                    | 1,504   |   |                |   | 687     |  
|                                                                                         |  |                    |         |   |                |   |         |  
|                                                                                         |  |                   
|Cash flows from investing activities:                                                    |  |                    |         |   |                |   |         |  
|Purchases of available-for-sale securities                                               |  |                    | (8,704  | ) |                |   | (15,630 | )
|Proceeds from maturities of available-for-sale securities                                |  |                    | 6,736   |   |                |   | 8,564   |  
|Purchases of Federal Home Loan Bank stock                                                |  |                    | (85     | ) |                |   | (169    | )
|Purchases of Federal Reserve Bank stock                                                  |  |                    | (1      | ) |                |   |        |  
|Loan originations and principal collections, net                                         |  |                    | 1,438   |   |                |   | (12,442 | )
|Recoveries of loans previously charged off                                               |  |                    | 34      |   |                |   |        |  
|Capital expenditures                                                                     |  |                    | (212    | ) |                |   | (195    | )
|                                                                                         |  |                    |         |   |                |   |         |  
|                                                                                         |  |                   
|Net cash used in investing activities                                                    |  |                    | (794    | ) |                |   | (19,872 | )
|                                                                                         |  |                    |         |   |                |   |         |  
|                                                                                         |  |                   
|Cash flows from financing activities:                                                    |  |                    |         |   |                |   |         |  
|Net increase in demand deposits, NOW, money market and savings accounts                  |  |                    | 7,135   |   |                |   | 8,868   |  
|Net increase (decrease) in time deposits                                                 |  |                    | 3,001   |   |                |   | (6      | )
|Advances from Federal Home Loan Bank                                                     |  |                    | 12,000  |   |                |   | 18,000  |  
|Payments on Federal Home Loan Bank advances                                              |  |                    | (6,463  | ) |                |   | (571    | )
|Net decrease in short term Federal Home Loan Bank advances                               |  |                    | (31,900 | ) |                |   | (9,330  | )
|Increase (decrease) in securities sold under agreements to repurchase                    |  |                    | 14,667  |   |                |   | (1,892  | )
|Proceeds from exercise of stock options                                                  |  |                    |        |   |                |   | 198     |  
|Dividends paid                                                                           |  |                    | (532    | ) |                |   | (517    | )
|                                                                                         |  |                    |         |   |                |   |         |  
|                                                                                         |  |                   
|Net cash (used in) provided by financing activities                                      |  |                    | (2,092  | ) |                |   | 14,750  |  
|                                                                                         |  |                    |         |   |                |   |         |  
|                                                                                         |  |                   
|Net decrease in cash and cash equivalents                                                |  |                    | (1,382  | ) |                |   | (4,435  | )
|Cash and cash equivalents at beginning of period                                         |  |                    | 16,550  |   |                |   | 15,495  |  
|                                                                                         |  |                    |         |   |                |   |         |  
|Cash and cash equivalents at end of period                                               |  | $                  | 15,168  |   |                | $ | 11,060  |  
|                                                                                         |  |                    |         |   |                |   |         |  
|                                                                                         |  |                   
|Supplemental disclosures:                                                                |  |                    |         |   |                |   |         |  
|Interest paid                                                                            |  | $                  | 1,628   |   |                | $ | 2,710   |  
|Income taxes paid                                                                        |  |                    | 168     |   |                |   | 26      |  

The accompanying notes are an integral part of these condensed consolidated financial statements.



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BEVERLY NATIONAL CORPORATION AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)



|1. | BASIS OF PRESENTATION
|-- | ---------------------

The interim condensed consolidated
financial statements contained herein are unaudited but, in the opinion of management, include all adjustments that are necessary to make the financial statements not misleading. All such adjustments are of a normal recurring nature. The results of
operations for any interim period are not necessarily indicative of results that may be expected for the year ended December 31, 2009.

The year-end condensed consolidated balance sheet data was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America.



|2. | EARNINGS PER SHARE
|-- | ------------------

Earnings per share (EPS)
calculations are based on the weighted-average number of common shares outstanding during the period.

Basic EPS excludes dilution and is
computed by dividing income available to common stockholders by the weighted-average number of common shares outstanding for the period. Diluted EPS reflects the potential dilution that could occur if the securities or other contracts to issue
common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the entity.



|3. | RECLASSIFICATION
|-- | ----------------

Certain amounts for prior periods have
been reclassified to be consistent with the current statement presentation.



|4. | IMPACT OF NEW ACCOUNTING STANDARDS
|-- | ----------------------------------

In June 2006, the
Financial Accounting Standards Board (FASB) issued Interpretation No. 48, Accounting for Uncertainty in Income Taxes - an interpretation of FASB Statement 109 (FIN 48). FIN 48 prescribes a recognition threshold and measurement
attribute for the financial statement recognition and measurement of a tax position taken, or expected to be taken, in a tax return and provides guidance on derecognition, classification, interest and penalties, accounting in interim periods,
disclosure and transition. FIN 48 is effective for fiscal years beginning after December 15, 2007. The adoption of FIN 48 did not have a material impact on the Companys financial statements.

In September 2006, the FASB ratified the consensus reached by the Emerging Issues Task Force (EITF) on Issue No. 06-4 Accounting
for Deferred Compensation and Postretirement Benefit Aspects of Endorsement Split-Dollar Life Insurance Arrangements, (EITF Issue 06-4). EITF 06-4 requires companies with an endorsement split-dollar life insurance arrangement to recognize a
liability for future postretirement benefits. The effective date is for fiscal years beginning after December 15, 2007, with earlier application permitted. The Company should recognize the effects of applying this issue through either
(a) a change in accounting principle through a cumulative effect adjustment to retained earnings or (b) a change in accounting principle through retrospective application to all periods. The adoption of the new issue did not have a
material impact on the Companys financial position, results of operations or cash flows.



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##### Table of Contents

In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements (SFAS 157).
SFAS No. 157 defines fair value, establishes a framework for measuring fair value under generally accepted accounting principles (GAAP) and expands disclosures about fair value measurements. The FASBs FSP FAS 157-2, Effective Date
of FASB Statement No. 157, defers until January 1, 2009, the application of SFAS 157 to nonfinancial assets and nonfinancial liabilities not recognized or disclosed at least annually at fair value. This includes nonfinancial assets
and nonfinancial liabilities initially measured at fair value in a business combination or other new basis event, but not measured at fair value in subsequent periods. The Company adopted this statement on January 1, 2008.

In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial LiabilitiesIncluding an
amendment of FASB Statement No. 115 (SFAS 159). SFAS 159 permits entities, at specified election dates, to choose to measure certain financial instruments at fair value that are not currently required to be measured at fair value. The
fair value option is applied on an instrument-by-instrument basis, is irrevocable and can only be applied to an entire instrument and not to specified risks, specific cash flows, or portions of that instrument. Unrealized gains and losses on items
for which the fair value option has been elected will be reported in earnings at each subsequent reporting date and upfront fees and costs related to those items will be recognized in earnings as incurred and not deferred. SFAS No. 159 is
effective in fiscal years beginning after November 15, 2007 and may not be applied retrospectively. The adoption of the new standard did not have a material impact on the Companys financial position, results of operations or cash flows.

In December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements and Amendment of
ARB No. 51 (SFAS No. 160). The pronouncement requires all entities to report noncontrolling (minority) interests in subsidiaries as a component of stockholders equity. SFAS No. 160 is effective for fiscal years
beginning after December 15, 2008. Management does not anticipate that this statement will have a material impact on the Companys financial condition and results of operations.

In December 2007, the FASB issued SFAS No. 141 (Revised 2007), Business Combinations (SFAS 141(R)). SFAS 141(R) significantly changes the
accounting for business combinations. Under SFAS 141(R), an acquiring entity is required to recognize all the assets acquired and liabilities assumed in a transaction at the acquisition-date fair value with limited exceptions. It also amends the
accounting treatment for certain specific items including acquisition costs and non controlling minority interests and includes a substantial number of new disclosure requirements. SFAS 141(R) applies prospectively to business combinations for which
the acquisition date is on or after January 1, 2009. The Company does not expect the adoption of this statement to have a material impact on its financial condition and results of operations.

In February 2008, the FASB issued FSP FAS 140-3, Accounting for Transfers of Financial Assets and Repurchase Financing Transactions. This FSP
provides guidance on how the transferor and transferee should separately account for a transfer of a financial asset and a related repurchase financing if certain criteria are met. This guidance became effective January 1, 2009. The adoption of
this new FSP is not expected to have a material effect on the Companys results of operations or financial position.

In March 2008,
the FASB issued SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities-an amendment of FASB Statement No. 133 (SFAS 161). SFAS 161 changes the disclosure requirements for derivative instruments and
hedging activities. Entities are required to provide enhanced disclosures about (a) how and why an entity uses derivative instruments, (b) how derivative instruments and related hedged items are accounted for under Statement 133 and its
related interpretations, and (c) how derivative instruments and related hedged items affect an entitys financial position, financial performance, and cash flows. The guidance in SFAS 161 is effective for financial statements issued for
fiscal years and interim periods beginning after November 15, 2008. This statement encourages, but does not require, comparative disclosures for earlier periods at initial adoption. The Company does not expect the adoption of this statement to
have a material impact on its financial condition and results of operations.



7



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##### Table of Contents

In April 2008, the FASB issued FSP FAS 142-3, Determination of the Useful Life of Intangible
Assets. This FSP provides guidance as to factors considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under SFAS 142, Goodwill and Other Intangible Assets.
This guidance will be effective January 1, 2009. The adoption is not expected to have a material effect on the Companys results of operations or financial position.

In May 2008, the FASB issued SFAS No. 162, The Hierarchy of Generally Accepted Accounting Principles. This standard formalizes minor
changes in prioritizing accounting principles used in the preparation of financial statements that are presented in conformity with GAAP. This standard became effective November 15, 2008.

In April 2009, the FASB issued FASB Staff Position 157-4, Determining Fair Value When the Volume and Level of Activity for the Asset or Liability
Have Significantly Decreased and Identifying Transactions That Are Not Orderly (FSP FAS 157-4). FSP FAS 157-4 provides additional guidance for estimating fair value measurements in accordance with FASB Statement No. 157, Fair Value
Measurements, when the volume and level of activity for the asset or liability have significantly decreased. FSP FAS 157-4 is effective for interim and annual reporting periods ending after June 15, 2009 with early adoption permitted for
periods ending after March 15, 2009. The Company is currently evaluating the impact of the adoption of this FSP on its financial condition and results of operations.

In April 2009, the FASB issued FASB Staff Position 107-1 and Accounting Principles Board Opinion 28-1, Interim Disclosures About Fair Value of Financial Instruments (FSP FAS 107-1 and APB 28-1). FSP FAS
107-1 amends FASB Statement No. 107, Disclosures About Fair Value of Financial Instruments, to require entities to disclose the methods and significant assumptions used to estimate the fair value of financial instruments in both
interim and annual financial statements. APB 28-1 amends APB Opinion No. 28, Interim Financial Reporting to require those disclosures in summarized financial information at interim reporting periods. FSP FAS 107-1 and APB 28-1 are
effective for interim and annual periods ending after June 15, 2009 with early adoption permitted for periods ending after March 15, 2009. An entity may early adopt this FSP only if it also elects to early adopt FSP FAS 157-4. The Company
is currently evaluating the impact of the adoption of this FSP on its financial condition and results of operations.

In April 2009, the
FASB issued FASB Staff Position 115-2 and 124-2, Recognition and Presentation of Other-Than-Temporary Impairments (FSP FAS 115-2 and FAS 124-2). FSP FAS 115-2 and FAS 124-2 amends the other-than-temporary impairment (OTTI) guidance for
debt securities to make the guidance more operational and to improve the presentation and disclosure of OTTI on debt and equity securities in the financial statements. This FSP does not amend existing recognition and measurement guidance related to
OTTI of equity securities. FSP FAS 115-2 and FAS 124-2 are effective for interim and annual reporting periods after June 15, 2009 with early adoption permitted for periods ending after March 15, 2009. The Company is currently evaluating
the impact of the adoption of this FSP on its financial condition and results of operations.



|5. | STOCK BASED COMPENSATION
|-- | ------------------------

At March 31, 2009, the
Company has five stock-based employee compensation plans. The Company accounts for the plans under SFAS No. 123(R) Share-Based Payment. During the three months ended March 31, 2009 and 2008, $1 and $2, respectively, in
stock-based employee compensation was recognized. In addition, $20 and $16 of compensation cost was recognized in the same periods, respectively, for compensation costs related to the 2005 Restricted Stock Plan.



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##### Table of Contents

|6. | PENSION BENEFITS
|-- | ----------------

The following summarizes the net
periodic cost for the three months ended March 31:



|                                    |  |                                     |      |   |      |   |      |  
|----------------------------------- |  | ----------------------------------- | ---- | - | ---- | - | ---- | -
|                                    |  | For the Three MonthsEnded March 31, |     
|                                    |  | 2009                                |      |   | 2008 |  
|                                    |  | (in thousands)                      |     
|Service cost                        |  | $                                   |     |   |      | $ |     |  
|Interest cost on benefit obligation |  |                                     | 126  |   |      |   | 125  |  
|Expected return on plan assets      |  |                                     | (114 | ) |      |   | (161 | )
|Amortization of prior service cost  |  |                                     |     |   |      |   |     |  
|Unrecognized net loss               |  |                                     | 46   |   |      |   |     |  
|                                    |  |                                     |      |   |      |   |      |  
|Net periodic benefit cost           |  | $                                   | 58   |   |      | $ | (36  | )
|                                    |  |                                     |      |   |      |   |      |  

Effective January 1, 2006, the pension plan was suspended so that employees no longer earn
additional defined benefits for future service.



|7. | ASSETS MEASURED AT FAIR VALUE ON A RECURRING BASIS
|-- | --------------------------------------------------

The
following summarizes assets measured at fair value for the period ending March 31, 2009 (in thousands):



|                              |  |                |         |                                                      |   |                                     |  |                                 |        |  |   |      
|----------------------------- |  | -------------- | ------- | ---------------------------------------------------- | - | ----------------------------------- |  | ------------------------------- | ------ |  | - | -----
|                              |  |                |         | Fair Value Measurements at Reporting Date Using:    
|                              |  |                |         | Quoted Prices in Active Markets for Identical Assets |   | Significant Other Observable Inputs |  | Significant Unobservable Inputs
|                              |  |                |        
|                              |  |                |        
|                              |  | March 31, 2009 |         | (Level 1)                                            |   | (Level 2)                           |  | (Level 3)                      
|Available-for-sale securities |  | $              | 106,085 |                                                      | $ | 2,186                               |  | $                               | 95,235 |  | $ | 8,664
|Impaired loans                |  |                | 174     |                                                      |   |                                    |  |                                 | 174    |  |   |     
|Trading securities            |  |                | 314     |                                                      |   | 314                                 |  |                                 |       |  |   |     
|                              |  |                |         |                                                      |   |                                     |  |                                 |        |  |   |      
|Total                         |  | $              | 106,573 |                                                      | $ | 2,500                               |  | $                               | 95,409 |  | $ | 8,664
|                              |  |                |         |                                                      |   |                                     |  |                                 |        |  |   |      



|                                                                                                                                                                                                                |  |                                                                       |       |   |       |   |       |  
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | --------------------------------------------------------------------- | ----- | - | ----- | - | ----- | -
|                                                                                                                                                                                                                |  | Fair Value MeasurementsUsing Significant Unobservable Inputs(Level 3) |      
|                                                                                                                                                                                                                |  | Available-for-saleSecurities                                          |       |   | Total |  
|Beginning balance, January 1, 2009                                                                                                                                                                              |  | $                                                                     | 8,502 |   |       | $ | 8,502 |  
|Total gains or losses (realized/unrealized)                                                                                                                                                                     |  |                                                                       |       |   |       |   |       |  
|Included in earnings (or changes in net assets)                                                                                                                                                                 |  |                                                                       |      |   |       |   |      |  
|Included in other comprehensive income                                                                                                                                                                          |  |                                                                       | 199   |   |       |   | 199   |  
|Amortization of securities, net                                                                                                                                                                                 |  |                                                                       | (21   | ) |       |   | (21   | )
|Transfers in and/or out of Level 3                                                                                                                                                                              |  |                                                                       | (16   | ) |       |   | (16   | )
|                                                                                                                                                                                                                |  |                                                                       |       |   |       |   |       |  
|Ending balance, March 31, 2009                                                                                                                                                                                  |  | $                                                                     | 8,664 |   |       | $ | 8,664 |  
|                                                                                                                                                                                                                |  |                                                                       |       |   |       |   |       |  
|The amount of total gains or losses for the period included in earnings (or changes in net assets) attributable to the change in unrealized
gains or losses relating to assets still held at the reporting date |  | $                                                                     |      |   |       | $ |      |  
|                                                                                                                                                                                                                |  |                                                                       |       |   |       |   |       |  



9



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##### Table of Contents

|ITEM 2. | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
|------- | --------------------------------------------------------------------------------------

Introduction

The following discussion includes Beverly National Corporation (Company) and its
subsidiary, Beverly National Bank (Bank) and the Banks wholly owned subsidiary, Beverly National Security Corporation (BNSC). BNSC was established to buy, sell and hold securities for the Banks investment
portfolios.

Critical Accounting Estimates

In
preparing the Companys financial statements, management selects and applies numerous accounting policies. In applying these policies, management must make estimates and assumptions. The accounting policy that is most susceptible to critical
estimates and assumptions is the allowance for loan losses. The determination of an appropriate provision is based on a determination of the probable amount of credit losses in the loan portfolio. Many factors influence the amount of potential
charge-offs of loans deemed to be uncollectible. These factors include the specific characteristics of the loan portfolio and general economic conditions nationally and locally. While management carefully considers these factors in determining the
amount of the allowance for loan losses, future adjustments may be necessary due to changed conditions, which could have an adverse impact on reported earnings in the future. See Provisions and Allowance for Loan Losses.

Summary

Total assets as of March 31, 2009 were relatively
unchanged at $484.7 million, compared to $485.5 million at December 31, 2008. Loans, net of the allowance for loan losses, totaled $332.9 million, a decrease of $1.7 million, or 0.5%, from $334.6 million at December 31, 2008. Investments
in available-for-sale securities increased to $106.1 million from $103.6 million at December 31, 2008. Deposits increased $10.1 million, or 3.0%, and Federal Home Loan Bank advances decreased $26.3 million, or 31.2%, from $84.4 million at
December 31, 2008. Securities sold under agreements to repurchase increased $14.7 million, or 110.4%, from $13.3 million at December 31, 2008. Total stockholders equity was $41.8 million, or 8.62% of total assets, and the book value
increased from $15.41 at December 31, 2008 to $15.68 at March 31, 2009, a result of the Companys increase in net income and the decrease in unrealized losses on available-for-sale securities. The Companys growth rate has slowed
as a result of the continuation of managements shift in strategy during the third quarter of 2008, necessitated by troubling economic developments and projections that asset values could continue to fall. The loan portfolio remained stable,
decreasing just slightly over the quarter. The increase in deposits and repurchase agreements were used by the Bank to pay down advances from the Federal Home Loan Bank. Managements focus continues to be on maintaining asset quality, business
development, improvement in operating efficiencies, identifying sound growth opportunities, and closely monitoring its strategic focus and changes in the economic condition of the areas in which the Bank operates. As of March 31, 2009, the Bank
continued to meet the definitions and regulatory capital requirements of a well-capitalized institution.



10



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##### Table of Contents

Investment Portfolio

Debt and equity securities have been classified in the consolidated balance sheets according to managements intent. The following table presents the amortized cost of securities and their approximate fair values as of March 31,
2009 (unaudited) and December 31, 2008:



|                                                                                               |  |                     |         |                      |   |                       |  |            |       |  |   |        
|---------------------------------------------------------------------------------------------- |  | ------------------- | ------- | -------------------- | - | --------------------- |  | ---------- | ----- |  | - | -------
|                                                                                               |  | AmortizedCost Basis |         | GrossUnrealizedGains |   | GrossUnrealizedLosses |  | Fair Value
|                                                                                               |  | (in thousands)     
|Available-for-sale securities:                                                                 |  |                     |         |                      |   |                       |  |            |       |  |   |        
|March 31, 2009 (unaudited):                                                                    |  |                     |         |                      |   |                       |  |            |       |  |   |        
|Debt securities issued by U.S. government corporations and agencies                            |  | $                   | 7,191   |                      | $ | 86                    |  | $          | 15    |  | $ | 7,262  
|Debt securities issued by states of the United States and political subdivisions of the states |  |                     | 12,906  |                      |   | 69                    |  |            | 423   |  |   | 12,552 
|Corporate debt securities                                                                      |  |                     | 6,053   |                      |   | 2                     |  |            | 256   |  |   | 5,799  
|Preferred stocks                                                                               |  |                     | 11,678  |                      |   |                      |  |            | 1,498 |  |   | 10,180 
|Marketable equity securities                                                                   |  |                     | 686     |                      |   | 1                     |  |            | 1     |  |   | 686    
|Mortgage-backed securities                                                                     |  |                     | 68,726  |                      |   | 1,883                 |  |            | 1,403 |  |   | 69,206 
|Debt securities issued by foreign governments                                                  |  |                     | 400     |                      |   |                      |  |            |      |  |   | 400    
|                                                                                               |  |                     |         |                      |   |                       |  |            |       |  |   |        
|                                                                                               |  | $                   | 107,640 |                      | $ | 2,041                 |  | $          | 3,596 |  | $ | 106,085
|                                                                                               |  |                     |         |                      |   |                       |  |            |       |  |   |        
|December 31, 2008:                                                                             |  |                     |         |                      |   |                       |  |            |       |  |   |        
|Debt securities issued by U.S. government corporations and agencies                            |  | $                   | 8,190   |                      | $ | 97                    |  | $          | 1     |  | $ | 8,286  
|Debt securities issued by states of the United States and political subdivisions of the states |  |                     | 12,319  |                      |   | 24                    |  |            | 608   |  |   | 11,735 
|Corporate debt securities                                                                      |  |                     | 1,955   |                      |   |                      |  |            | 10    |  |   | 1,945  
|Trust preferred securities                                                                     |  |                     | 11,699  |                      |   | 3                     |  |            | 1,192 |  |   | 10,510 
|Marketable equity securities                                                                   |  |                     | 681     |                      |   | 1                     |  |            | 7     |  |   | 675    
|Mortgage-backed securities                                                                     |  |                     | 70,366  |                      |   | 1,431                 |  |            | 1,725 |  |   | 70,072 
|Debt securities issued by foreign governments                                                  |  |                     | 400     |                      |   |                      |  |            |      |  |   | 400    
|                                                                                               |  |                     |         |                      |   |                       |  |            |       |  |   |        
|                                                                                               |  | $                   | 105,610 |                      | $ | 1,556                 |  | $          | 3,543 |  | $ | 103,623
|                                                                                               |  |                     |         |                      |   |                       |  |            |       |  |   |        

Loan Portfolio

The following table summarizes the distribution of the Banks loan portfolio as of March 31, 2009 and December 31, 2008:



|                                                |  |                |         |   |            |        |   |                   |   |         |            |  |        |  
|----------------------------------------------- |  | -------------- | ------- | - | ---------- | ------ | - | ----------------- | - | ------- | ---------- |  | ------ | -
|                                                |  | March 31, 2009 |         |   | % of Total |        |   | December 31, 2008 |   |         | % of Total | 
|                                                |  | (in thousands) |         |   |            |        |   | (in thousands)    |   |         |            | 
|                                                |  | (unaudited)    |         |   |            |        |   |                   |   |         |            | 
|Commercial, financial and agricultural          |  | $              | 54,843  |   |            | 16.47  | % |                   | $ | 50,952  |            |  | 15.23  | %
|Real estate - construction and land development |  |                | 4,458   |   |            | 1.34   | % |                   |   | 4,326   |            |  | 1.29   | %
|Real estate - residential                       |  |                | 122,481 |   |            | 36.79  | % |                   |   | 125,281 |            |  | 37.44  | %
|Real estate - commercial                        |  |                | 139,021 |   |            | 41.76  | % |                   |   | 141,497 |            |  | 42.28  | %
|Consumer                                        |  |                | 2,370   |   |            | 0.71   | % |                   |   | 2,398   |            |  | 0.72   | %
|Other                                           |  |                | 13,499  |   |            | 4.05   | % |                   |   | 13,656  |            |  | 4.08   | %
|                                                |  |                |         |   |            |        |   |                   |   |         |            |  |        |  
|                                                |  |                | 336,672 |   |            | 101.12 | % |                   |   | 338,110 |            |  | 101.04 | %
|Allowance for loan losses                       |  |                | (4,385  | ) |            | -1.32  | % |                   |   | (4,127  | )          |  | -1.24  | %
|Deferred loan costs, net                        |  |                | 640     |   |            | 0.20   | % |                   |   | 656     |            |  | 0.20   | %
|                                                |  |                |         |   |            |        |   |                   |   |         |            |  |        |  
|Net Loans                                       |  | $              | 332,927 |   |            | 100.00 | % |                   | $ | 334,639 |            |  | 100.00 | %
|                                                |  |                |         |   |            |        |   |                   |   |         |            |  |        |  



11



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##### Table of Contents

Deposits

The
following table summarizes deposits as of March 31, 2009 and December 31, 2008:



|                      |  |                |         |            |        |   |                   |   |            |  |        |  
|--------------------- |  | -------------- | ------- | ---------- | ------ | - | ----------------- | - | ---------- |  | ------ | -
|                      |  | March 31, 2009 |         | % of Total |        |   | December 31, 2008 |   | % of Total | 
|                      |  | (in thousands) |         |            |        |   | (in thousands)    |   |            | 
|                      |  | (unaudited)    |         |            |        |   |                   |   |            | 
|Demand Deposits       |  | $              | 73,110  |            | 20.91  | % |                   | $ | 74,872     |  | 22.05  | %
|NOW Accounts          |  |                | 50,097  |            | 14.33  | % |                   |   | 52,380     |  | 15.43  | %
|Money Market Accounts |  |                | 77,204  |            | 22.08  | % |                   |   | 80,085     |  | 23.59  | %
|Savings Deposits      |  |                | 74,229  |            | 21.23  | % |                   |   | 60,168     |  | 17.72  | %
|Time Deposits         |  |                | 75,029  |            | 21.45  | % |                   |   | 72,028     |  | 21.21  | %
|                      |  |                |         |            |        |   |                   |   |            |  |        |  
|Total                 |  | $              | 349,669 |            | 100.00 | % |                   | $ | 339,533    |  | 100.00 | %
|                      |  |                |         |            |        |   |                   |   |            |  |        |  

Comparison of operating results for the three months ended March 31, 2009 and 2008

The Company reported net income for the quarter ended March 31, 2009 of $925,000, or basic and fully diluted earnings of $0.35 per share. These results represent an
increase of 1.7% in net income and 1.3% in earnings per share from net income of $910,000, or basic and fully diluted earnings of $0.34 per share, for the same period last year.

The increase in earnings for the period presented is the net result of an increase in net interest and dividend income after the provision for loan losses, a reduction in noninterest income and a higher level of
noninterest and income tax expense. Net interest and dividend income before the provision for loan losses increased $535,000, or 13.5%, for the quarter ended March 31, 2009 from the same period last year. The improvement is primarily a result
of the reduction in cost of funds, spurred by lower interest rates, through the replacement of maturing certificates of deposit and FHLB advances at much lower current market rates. The net interest margin for the three months ended March 31,
2009 was 4.35%, compared to 3.79% for the same period last year.

The following table summarizes the components and activity with respect to the
Companys net interest and dividend income and interest rate spread and margin for the periods presented:



|                                                 |                |                                          |                 |  |                                          |            |    |  |                |   |                 |   |         |            |   |       |    |  |      |  
|------------------------------------------------ | -------------- | ---------------------------------------- | --------------- |  | ---------------------------------------- | ---------- | -- |  | -------------- | - | --------------- | - | ------- | ---------- | - | ----- | -- |  | ---- | -
|                                                 |                | For the Three Months EndedMarch 31, 2009 |                 |  | For the Three Months EndedMarch 31, 2008 |           
|                                                 | AverageBalance |                                          | InterestInc/Exp |  |                                          | Yield/Rate |    |  | AverageBalance |   | InterestInc/Exp |   |         | Yield/Rate |  
|                                                 | (in thousands) |                                          | (in thousands)  |  |                                          |            |    |  | (in thousands) |   | (in thousands)  |   |         |            |  
|                                                 | (unaudited)    |                                          | (unaudited)     |  |                                          |            |    |  | (unaudited)    |   | (unaudited)     |   |         |            |  
|Assets                                           |                |                                          |                 |  |                                          |            |    |  |                |   |                 |   |         |            |   |       |    |  |      |  
|Federal funds sold and interest-bearing deposits |                | $                                        | 2,851           |  | $                                        | 1          |    |  | 0.18           | % |                 | $ | 3,857   |            | $ | 21    |    |  | 2.23 | %
|Investments                                      |                |                                          | 113,265         |  |                                          | 1,509      | *  |  | 5.30           | % |                 |   | 121,787 |            |   | 1,645 | *  |  | 5.43 | %
|Loans                                            |                |                                          | 336,892         |  |                                          | 4,915      | ** |  | 5.80           | % |                 |   | 326,099 |            |   | 5,213 | ** |  | 6.43 | %
|                                                 |                |                                          |                 |  |                                          |            |    |  |                |   |                 |   |         |            |   |       |    |  |      |  
|Total interest-earning assets                    |                | $                                        | 453,008         |  |                                          | 6,425      |    |  | 5.64           | % |                 | $ | 451,743 |            |   | 6,879 |    |  | 6.12 | %
|                                                 |                |                                          |                 |  |                                          |            |    |  |                |   |                 |   |         |            |   |       |    |  |      |  
|                                                 |                |                                          |                 |  |                                          |           
|Liabilities                                      |                |                                          |                 |  |                                          |            |    |  |                |   |                 |   |         |            |   |       |    |  |      |  
|Savings deposits                                 |                | $                                        | 65,188          |  |                                          | 161        |    |  | 1.00           | % |                 | $ | 49,062  |            |   | 136   |    |  | 1.11 | %
|NOW accounts                                     |                |                                          | 52,144          |  |                                          | 47         |    |  | 0.37           | % |                 |   | 55,598  |            |   | 99    |    |  | 0.72 | %
|Money market accounts                            |                |                                          | 80,424          |  |                                          | 303        |    |  | 1.53           | % |                 |   | 95,730  |            |   | 740   |    |  | 3.11 | %
|Time deposits                                    |                |                                          | 71,638          |  |                                          | 505        |    |  | 2.86           | % |                 |   | 87,499  |            |   | 957   |    |  | 4.40 | %
|                                                 |                |                                          |                 |  |                                          |            |    |  |                |   |                 |   |         |            |   |       |    |  |      |  
|Total interest-bearing deposits                  |                |                                          | 269,394         |  |                                          | 1,016      |    |  | 1.53           | % |                 |   | 287,889 |            |   | 1,932 |    |  | 2.70 | %
|Non-interest-bearing deposits                    |                |                                          | 73,243          |  |                                          |           |    |  |               |   |                 |   | 66,020  |            |   |      |    |  |     |  
|                                                 |                |                                          |                 |  |                                          |            |    |  |                |   |                 |   |         |            |   |       |    |  |      |  
|Total deposits                                   |                |                                          | 342,637         |  |                                          | 1,016      |    |  | 1.20           | % |                 |   | 353,909 |            |   | 1,932 |    |  | 2.20 | %
|                                                 |                |                                          |                 |  |                                          |            |    |  |                |   |                 |   |         |            |   |       |    |  |      |  
|FHLB advances                                    |                |                                          | 77,651          |  |                                          | 515        |    |  | 2.69           | % |                 |   | 59,001  |            |   | 612   |    |  | 4.17 | %
|Repurchase agreements                            |                |                                          | 14,733          |  |                                          | 36         |    |  | 1.00           | % |                 |   | 10,994  |            |   | 83    |    |  | 3.03 | %
|                                                 |                |                                          |                 |  |                                          |            |    |  |                |   |                 |   |         |            |   |       |    |  |      |  
|Total other borrowed funds                       |                |                                          | 92,384          |  |                                          | 551        |    |  | 2.42           | % |                 |   | 69,995  |            |   | 695   |    |  | 3.99 | %
|                                                 |                |                                          |                 |  |                                          |            |    |  |                |   |                 |   |         |            |   |       |    |  |      |  
|Total interest-bearing liabilities               |                |                                          | 361,778         |  |                                          | 1,567      |    |  | 1.76           | % |                 |   | 357,884 |            |   | 2,627 |    |  | 2.95 | %
|                                                 |                |                                          |                 |  |                                          |            |    |  |                |   |                 |   |         |            |   |       |    |  |      |  
|Total deposits and interest-bearing liabilities  |                | $                                        | 435,021         |  |                                          | 1,567      |    |  | 1.46           | % |                 | $ | 423,904 |            |   | 2,627 |    |  | 2.49 | %
|                                                 |                |                                          |                 |  |                                          |            |    |  |                |   |                 |   |         |            |   |       |    |  |      |  
|Net interest income                              |                |                                          |                 |  | $                                        | 4,858      |    |  |                |   |                 |   |         |            | $ | 4,252 |    |  |      |  
|                                                 |                |                                          |                 |  |                                          |            |    |  |                |   |                 |   |         |            |   |       |    |  |      |  
|Net interest spread                              |                |                                          |                 |  |                                          |            |    |  | 3.89           | % |                 |   |         |            |   |       |    |  | 3.17 | %
|                                                 |                |                                          |                 |  |                                          |            |    |  |                |   |                 |   |         |            |   |       |    |  |      |  
|Net interest margin                              |                |                                          |                 |  |                                          |            |    |  | 4.35           | % |                 |   |         |            |   |       |    |  | 3.79 | %
|                                                 |                |                                          |                 |  |                                          |            |    |  |                |   |                 |   |         |            |   |       |    |  |      |  
|                                                 |                |                                          |                 |  |                                          |           
|Tax Equivalent Income Adjustment:                |                |                                          |                 |  |                                          |            |    |  |                |   |                 |   |         |            |   |       |    |  |      |  
|State and Municipal Investment Income            |                |                                          |                 |  | $                                        | 64         | *  |  |                |   |                 |   |         |            | $ | 62    | *  |  |      |  
|Dividends Received Deduction Eligible Securities |                |                                          |                 |  |                                          |           |    |  |                |   |                 |   |         |            |   | 25    | *  |  |      |  
|Industrial Revenue Bond Income                   |                |                                          |                 |  |                                          | 81         | ** |  |                |   |                 |   |         |            |   | 85    | ** |  |      |  
|                                                 |                |                                          |                 |  |                                          |            |    |  |                |   |                 |   |         |            |   |       |    |  |      |  
|Total Tax Equivalent Income Adjustment           |                |                                          |                 |  | $                                        | 145        |    |  |                |   |                 |   |         |            | $ | 172   |    |  |      |  
|                                                 |                |                                          |                 |  |                                          |            |    |  |                |   |                 |   |         |            |   |       |    |  |      |  



|* | Amount included in investment income.
|- | -------------------------------------

|** | Amount included in loan income.
|-- | -------------------------------



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##### Table of Contents

Noninterest income decreased for the quarter ended March 31, 2009 as compared to the quarter ended March 31,
2008, as fees collected on deposit and loan services declined due to lower volumes. Income from wealth management services and the sale of non-deposit products also declined, as they were impacted by the current economic environment and a decline in
the market value of assets under management. Noninterest expenses increased, primarily a result of an industry-wide increase in FDIC insurance assessments, which rose from $10,000 for the quarter ended March 31, 2008 to $135,000 for the quarter
ended March 31, 2009 notwithstanding that the Bank is well capitalized. It is generally anticipated that these assessments will continue at increased rates due to significant decreases in the reserves of the FDICs Deposit Insurance Fund.

The following table sets forth the various components of noninterest income and noninterest expense for the quarters ended March 31, 2009 and 2008
and the dollar amount and percentage change between the periods:



|                                                 |  |                        |       |                     |   |       |  |   |      |   |  |         |  
|------------------------------------------------ |  | ---------------------- | ----- | ------------------- | - | ----- |  | - | ---- | - |  | ------- | -
|                                                 |  | March 31,              |       | Increase (Decrease) |  
|                                                 |  | 2009                   |       | 2008                |   | $     |  |   | %    |  
|                                                 |  | (Dollars in thousands) |      
|                                                 |  | (unaudited)            |      
|Noninterest income:                              |  |                        |       |                     |   |       |  |   |      |   |  |         |  
|Income from fiduciary activities                 |  | $                      | 385   |                     | $ | 474   |  | $ | (89  | ) |  | -18.78  | %
|Fees from sale of non-deposit products           |  |                        | 24    |                     |   | 50    |  |   | (26  | ) |  | -52.00  | %
|Service charges on deposit accounts              |  |                        | 151   |                     |   | 159   |  |   | (8   | ) |  | -5.03   | %
|Other deposit fees                               |  |                        | 182   |                     |   | 226   |  |   | (44  | ) |  | -19.47  | %
|Income on cash surrender value of life insurance |  |                        | 74    |                     |   | 73    |  |   | 1    |   |  | 1.37    | %
|Other income                                     |  |                        | 148   |                     |   | 200   |  |   | (52  | ) |  | -26.00  | %
|                                                 |  |                        |       |                     |   |       |  |   |      |   |  |         |  
|Total noninterest income                         |  | $                      | 964   |                     | $ | 1,182 |  | $ | (218 | ) |  | -18.44  | %
|                                                 |  |                        |       |                     |   |       |  |   |      |   |  |         |  
|                                                 |  |                        |       |                    
|Noninterest expense:                             |  |                        |       |                     |   |       |  |   |      |   |  |         |  
|Salaries and employee benefits                   |  | $                      | 2,211 |                     | $ | 2,216 |  | $ | (5   | ) |  | -0.23   | %
|Director fees                                    |  |                        | 87    |                     |   | 77    |  |   | 10   |   |  | 12.99   | %
|Occupancy expense                                |  |                        | 494   |                     |   | 465   |  |   | 29   |   |  | 6.24    | %
|Equipment expense                                |  |                        | 178   |                     |   | 246   |  |   | (68  | ) |  | -27.64  | %
|Data processing fees                             |  |                        | 352   |                     |   | 289   |  |   | 63   |   |  | 21.80   | %
|Marketing and public relations                   |  |                        | 101   |                     |   | 105   |  |   | (4   | ) |  | -3.81   | %
|Professional fees                                |  |                        | 218   |                     |   | 167   |  |   | 51   |   |  | 30.54   | %
|FDIC insurance assessments                       |  |                        | 135   |                     |   | 10    |  |   | 125  |   |  | 1250.00 | %
|Other expense                                    |  |                        | 384   |                     |   | 367   |  |   | 17   |   |  | 4.63    | %
|                                                 |  |                        |       |                     |   |       |  |   |      |   |  |         |  
|Total noninterest expense                        |  | $                      | 4,160 |                     | $ | 3,942 |  | $ | 218  |   |  | 5.53    | %
|                                                 |  |                        |       |                     |   |       |  |   |      |   |  |         |  

The effective income tax rate increased to 28.4% for the quarter ended March 31, 2009 from 23.7% for the same
period last year. This generated an $84,000, or 29.7%, increase in income tax expense for the periods presented. The primary reason for the increase in the effective tax rate is the decrease in the amount of the Banks dividend revenue eligible
for the dividends received deduction, namely on Fannie Mae and Freddie Mac preferred stock. These entities discontinued the payment of dividends of their preferred stock in the second half of 2008.



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##### Table of Contents

Provisions and Allowance for Loan Losses

Credit risk is inherent in the business of extending loans. The Bank maintains an allowance for loan losses through charges to earnings. The Company increased its provision for loan losses to $225,000 for the quarter
ended March 31, 2009, compared to $128,000 for the same period last year. The allowance for loan losses totaled $4.4 million, or 1.30%, of total loans at March 31, 2009, an increase from 1.22% at December 31, 2008. The increase was
driven by the combination of challenging economic conditions, concerns over further potential reduction in real estate collateral values and the impact a prolonged recession and economic downturn could have on the Companys loan portfolio.

The Bank formally determines the adequacy of the allowance for loan losses on a quarterly basis. This determination is based on an assessment of credit
quality or risk rating of loans. Loans are initially risk rated when originated and are reviewed periodically. If there is deterioration in the credit, the risk rating is adjusted accordingly.

The allowance also includes a component resulting from the application of the measurement criteria of SFAS No. 114, Accounting by Creditors for Impairment of
a Loan. Impaired loans receive individual evaluation of the allowance necessary on a quarterly basis. Impaired loans are defined in the Banks Loan Policy as those instances in which it is probable that the Bank will not be able to
collect all principal and interest due according to the terms of the note.

A loan is considered impaired when, based on current information and events, it
is probable that the Company will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Factors considered by management in determining impairment include payment
status, collateral value, and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. Management determines
the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the
borrowers prior payment record, and the amount of the shortfall in relation to the principal and interest owed. Impairment is measured on a loan by loan basis for commercial and construction loans by either the present value of expected future
cash flows discounted at the loans effective interest rate, the loans obtainable market price, or the fair value of the collateral if the loan is collateral dependent.

Large groups of loans consisting of smaller balance homogeneous loans are collectively evaluated for impairment. Accordingly, as a general rule, the Company does not separately identify individual consumer and
residential loans for impairment disclosures. The loss factors applied as a general allowance are determined by a periodic analysis of the allowance for loan losses. This analysis considers historical loan losses and delinquency figures and trends.

Concentrations of credit and local economic factors are also evaluated on a periodic basis. Historical average net losses by loan type are examined and
any identified trends are assessed. The Banks loan mix over that same period of time is also analyzed. A loan loss allocation is made for each type of loan and multiplied by the loan mix percentage for each loan type to produce a weighted
average factor.

Changes in the allowance for loan losses were as follows for the three months ended March 31, 2009 and 2008:



|                                           |  |                |       |   |      |   |       |  
|------------------------------------------ |  | -------------- | ----- | - | ---- | - | ----- | -
|                                           |  | 2009           |       |   | 2008 |  
|                                           |  | (in thousands) |      
|                                           |  | (unaudited)    |      
|Balance as of January 1st                  |  | $              | 4,127 |   |      | $ | 3,614 |  
|Loans charged off                          |  |                | (1    | ) |      |   | (16   | )
|Provision for loan losses                  |  |                | 225   |   |      |   | 128   |  
|Recoveries of loans previously charged off |  |                | 34    |   |      |   | 1     |  
|                                           |  |                |       |   |      |   |       |  
|Balance as of March 31st                   |  | $              | 4,385 |   |      | $ | 3,727 |  
|                                           |  |                |       |   |      |   |       |  

The allowance for loan losses represented 2,520% and 1,521% of non-performing loans, which totaled $174,000 and
$245,000, at March 31, 2009 and 2008, respectively. Non-performing loans represented less than 0.1% of total loans and mortgages held-for-sale at March 31, 2009 and 2008.



14



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##### Table of Contents

Management maintains the adequacy of the allowance through monthly provisions. The amount of the provision is based on
changes in economic and real estate market conditions, information obtained regarding problem loans, identification of additional problem loans and other factors, both within and outside of managements control. The overall level of
non-performing loans remains low. Accordingly, while the overall quality of the loan portfolio remains strong, management will continue to monitor economic conditions and the performance of the portfolio in order to maintain an adequate allowance
for loan losses.

Capital Resources

As of
March 31, 2009, the Company had total capital of $41.8 million, an increase of $714,000, or 1.7%, from total capital as of December 31, 2008. The net change in the Companys capital reflects current year income, dividends paid and the
decrease in accumulated other comprehensive loss.

The Companys policy has been to pay dividends out of funds in excess of the needs of the business.
The Company declared and paid cash dividends to shareholders on a quarterly basis at a rate of $0.20 per share for each quarter of 2008 and the first quarter of 2009.

As of March 31, 2009, the Banks Tier 1 capital amounted to 8.83% of average total assets. At March 31, 2009, the Banks ratio of risk-based capital to risk-weighted assets amounted to 12.86%,
which satisfies the applicable risk-based capital requirements. As of December 31, 2008, the Banks Tier 1 capital amounted to 8.69% of average assets and risk-based capital amounted to 12.61% of total risk-based assets.

The capital ratios of the Bank exceed all regulatory requirements, and the entity is considered well capitalized by its federal supervisory agencies.

Liquidity

The primary function of asset/liability
management is to assure adequate liquidity and maintain an appropriate balance between interest-sensitive earning assets and interest-bearing liabilities. Liquidity management involves the ability to meet the cash flow requirements of customers who
may be either depositors wanting to withdraw funds or borrowers needing assurance that sufficient funds will be available to meet their credit needs. Interest rate sensitivity management seeks to avoid fluctuating net interest margins and to enhance
consistent growth of net interest income through periods of changing interest rates.

Certain marketable investment securities, particularly those of
shorter maturities, are the principal source of asset liquidity. The Company maintains such securities in an available-for-sale account as a liquidity resource. Securities maturing in one year or less amounted to $5.4 million at March 31, 2009;
additionally, a minimum amount of contractual payments in the amount of $29.4 million for the mortgage-backed securities portfolio is due within one year at March 31, 2009. Assets such as federal funds sold, mortgages held for sale,
pre-payments and payoffs on mortgage-backed securities, as well as maturing loans, are also sources of liquidity. The Companys objectives are to be substantially neutral with respect to interest rate sensitivity and maintain a net cumulative
gap at one year of less than 15% of total earning assets. The Companys current practices are consistent with these objectives.

Off Balance Sheet
Arrangements

The Company is party to financial instruments with off-balance sheet risk in the normal course of business to meet the financial needs of
its customers. In the opinion of Management, these off-balance sheet arrangements are not likely to have a material effect on the Companys financial condition, results of operations, or liquidity. As of March 31, 2009, total off-balance
sheet financial commitments, which include unadvanced funds on loans and commitments to fund loans and letters of credit, amounted to approximately $57.5 million.

Forward-Looking Statements

This Form 10-Q and future filings made by the Company with the Securities and Exchange Commission, as well as
other filings, reports and press releases made or issued by the Company and the Bank, and oral statements made by executive officers of the Company and the Bank, may include forward-looking statements relating to such matters as:



| | (a) | assumptions concerning future economic and business conditions and their effect on the economy in general and on the markets in which the Company and the Bank do business; and
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (b) | expectations for increased revenues and earnings for the Company and Bank through growth resulting from acquisitions, attraction of new deposit and loan customers and the
introduction of new products and services.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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##### Table of Contents

Such forward-looking statements are based on assumptions rather than historical or current facts and, therefore, are
inherently uncertain and subject to risk. For those statements, the Company claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Act of 1995.

The Company notes that a variety of factors could cause the actual results or experience to differ materially from the anticipated results or other expectations
described or implied by such forward-looking statements. The risks and uncertainties that may affect the operation, performance, development and results of the Companys and Banks business include the following:



|(a) | the risk of adverse changes in business conditions in the banking industry generally and in the specific markets in which the Bank operates;
|--- | --------------------------------------------------------------------------------------------------------------------------------------------



|(b) | changes in the legislative and regulatory environment that negatively impact the Company and Bank through increased operating expenses;
|--- | ---------------------------------------------------------------------------------------------------------------------------------------



|(c) | increased competition from other financial and non-financial institutions;
|--- | --------------------------------------------------------------------------



|(d) | the impact of technological advances; and
|--- | -----------------------------------------



|(e) | other risks detailed from time to time in the Companys filings with the Securities and Exchange Commission.
|--- | ------------------------------------------------------------------------------------------------------------

Such developments could have an adverse impact on the Companys and the Banks financial position and results of operation.



|ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
|------- | -----------------------------------------------------------

Market risk
is the risk of loss from adverse changes in market prices. In particular, the market price of interest-earning assets and liabilities may be affected by changes in interest rates. Since net interest income (the difference, or spread, between the
interest earned on loans and investments and the interest paid on deposits and borrowings) is the Companys primary source of revenue, interest rate risk is the most significant non-credit related market risk to which the Company is exposed.
Net interest income is affected by changes in interest rates as well as fluctuations in the level and duration of the Companys assets and liabilities.

The Companys net interest margin for the three months ended March 31, 2009 was 4.35%, in comparison to 3.79% for the three months ended March 31, 2008. Interest rate risk is the exposure of net interest income to movements
in interest rates. In addition to directly impacting net interest income, changes in interest rates can also affect the amount of new loan originations, the ability of borrowers to repay variable rate loans, the volume of loan prepayments and
re-financings, the carrying value of investment securities classified as available for sale and the flow and mix of deposits.

The Asset/Liability
Management Committee is comprised of the President and Chief Executive Officer of the Company; the Senior Executive Vice President, Chief Financial Officer and Chief Operating Officer; the Executive Vice President and Senior Loan Officer; the
Executive Vice President of Retail Banking; the Senior Vice President, Secretary and Chief Operations Officer; the Senior Vice President and Chief Risk Officer; and various lending, retail and finance officers. The Committee is responsible for
managing interest rate risk in accordance with policies approved by the Board of Directors regarding acceptable levels of interest rate risk, liquidity and capital. The Committee meets bi-weekly and develops new products, sets the rates paid on
deposits, approves loan pricing and reviews investment transactions. This Asset/Liability Management Committee reports to the Board of Directors Asset/Liability Management Committee, which is comprised of several Directors and the President
and Chief Executive Officer.

The Company is subject to interest rate risk in the event that rates either increase or decrease. The two primary
measurements of exposure to changes in interest rates, which the Bank manages and monitors closely, are net interest income simulation, using various interest rate scenarios, or rate shocks, and the impact on the economic value of equity, given
those same interest rate scenarios.

The Bank works with a consultant to calculate and review these various measurements.

In the event that interest rates increase or decrease, the economic value of equity (EVE) changes due to its inherent correlation to changes in the market value of the
Companys assets and liabilities. The Company is considered liability sensitive if changes in the interest rate would cause the assets of the Company to extend out, and as a result, liabilities would re-price faster than assets.
Conversely, the Company is considered asset sensitive if interest rate changes cause liabilities to extend out, thus making assets re-price faster than liabilities.



16



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##### Table of Contents

As of March 31, 2009, the capital ratio of the Company on an EVE basis, at current rate levels, is 10.28%. Based on
the most recent analysis it is estimated that an increase in interest rates over the next year of 200 basis points (for example, an increase in the prime rate from 3.25% to 5.25%) would result in an EVE capital ratio of 10.38%. Alternatively, if
interest rates were to decrease over the next year by 100 basis points, the EVE capital ratio is estimated to be 9.97%. These changes are within the risk tolerance levels established by the Company policies.

As part of its risk management practices the Company runs net interest income simulations to determine the impact on net interest income given an increase or decrease in
interest rates as these changes would have an impact on future levels of net interest income. These simulations require that estimates and assumptions be made with respect to deposit pricing; including potential changes in non-maturity core
deposits, and reinvestment of cash flows from the loan and investment portfolios given changes in rates both up and down.

The following table summarizes
the net interest income simulation as of March 31, 2009:



|                    |  |                             |        |                             |   |      |   |  |       |  
|------------------- |  | --------------------------- | ------ | --------------------------- | - | ---- | - |  | ----- | -
|                    |  | March 31, 2009              |       
|                    |  | Projectednet interestincome |        | Change fromyear 1 base case |  
|                    |  | (Dollars in thousands)      |       
|Year 1 projections: |  |                             |        |                             |   |      |   | 
|Down 100BP          |  | $                           | 19,078 |                             | $ | 36   |   |  | 0.19  | %
|Base                |  |                             | 19,042 |                             |   |     |   |  |      |  
|Up 200BP            |  |                             | 19,011 |                             |   | (31  | ) |  | -0.16 | %
|                    |  |                             |       
|Year 2 projections: |  |                             |        |                             |   |      |   | 
|Down 100BP          |  | $                           | 18,546 |                             | $ | (496 | ) |  | -2.60 | %
|Base                |  |                             | 19,038 |                             |   | (4   | ) |  | -0.02 | %
|Up 200BP            |  |                             | 19,884 |                             |   | 842  |   |  | 4.42  | %



|ITEM 4T. | CONTROLS AND PROCEDURES.
|-------- | ------------------------

The Companys Chief Executive Officer and
Chief Financial Officer concluded that based upon an evaluation as of March 31, 2009, as required by Rule 13a-15(b) of the Securities Exchange Act of 1934 (the Exchange Act), the Companys disclosure controls and procedures as
defined in Rule 13a-15(e) of the Exchange Act are effective to ensure that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act, is recorded, processed, summarized and reported within the
time periods specified in the SECs rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed is accumulated and communicated to the
Companys Management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, Management
recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management necessarily was required to apply its judgment in evaluating the
cost benefit relationship of possible controls and procedures.

During the quarter ended March 31, 2009, there were no changes in the Companys
internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, the Companys internal control over financial reporting.



17



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##### Table of Contents

PART II  OTHER INFORMATION



|        |  |                                                              |  |                                                                   |  | 
|------- |  | ------------------------------------------------------------ |  | ----------------------------------------------------------------- |  | 
|Item 1. |  | Legal Proceedings.                                           |  | None                                                             
|        |  |                                                             
|Item 2. |  | Unregistered Sales of Equity Securities and Use of Proceeds. |  | None                                                             
|        |  |                                                             
|Item 3. |  | Defaults Upon Senior Securities.                             |  | None                                                             
|        |  |                                                             
|Item 4. |  | Submission of Matters to a Vote of Security Holders.         |  | None                                                             
|        |  |                                                             
|Item 5. |  | Other Information.                                           |  | None                                                             
|        |  |                                                              | 
|Item 6. |  | Exhibits.                                                    |  |                                                                   |  | 
|        |  |                                                              | 
|        |  | 11                                                           |  | Computation of Per Share Earnings                                 |  | 
|        |  |                                                              | 
|        |  | 31.1                                                         |  | Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer |  | 
|        |  |                                                              | 
|        |  | 31.2                                                         |  | Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer |  | 
|        |  |                                                              | 
|        |  | 32                                                           |  | Section 1350 Certifications                                       |  | 



18



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##### Table of Contents

SIGNATURES

In accordance with the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



|                   |  |  |  |                              |  |                                                                                     
|------------------ |  |  |  | ---------------------------- |  | ------------------------------------------------------------------------------------
|                   |  |  |  | BEVERLY NATIONAL CORPORATION
|                   |  |  |  | (Registrant)                
|                   |  |  | 
|Date: May 13, 2009 |  |  |  | By:                          |  | /s/ Donat A. Fournier                                                               
|                   |  |  |  |                              |  | Donat A. Fournier                                                                   
|                   |  |  |  |                              |  | President and Chief Executive Officer                                               
|                   |  |  | 
|Date: May 13, 2009 |  |  |  | By:                          |  | /s/ Michael O. Gilles                                                               
|                   |  |  |  |                              |  | Michael O. Gilles                                                                   
|                   |  |  |  |                              |  | Senior Executive Vice President, Chief Financial Officer and Chief Operating Officer



19