| President’s Letter                                                                    |         | 1      |
|---------------------------------------------------------------------------------------------|--------------|--------|
|                                                                                        |         |   |
| Comparative Summary of Selected Financial Data                                              |         | 2      |
|                                                                                        |         |   |
| Management’s Discussion and Analysis of Financial Condition and Results of Operations |         | 3      |
|                                                                                        |         |   |
| Report of Independent Registered Public Accounting Firm                                     |         | 22     |
|                                                                                        |         |   |
| Consolidated Financial Statements                                                           |         | 23     |
|                                                                                        |         |   |
| Notes to Consolidated Financial Statements                                                  |         | 28     |
|                                                                                        |         |   |
| Shareholder Information                                                                     |         | 48     |
|                                                                                        |         |   |
| Officers                                                                                    |         | 49     |
|                                                                                        |         |   |
| Board of Directors                                                                          |    | 50     |

----

----

| Year ended December 31                                          |   |   |      |   |   |   |      |   |   |   |      |   |   |   |      |
|-----------------------------------------------------------------|--------|--------|-----------|--------|--------|--------|-----------|--------|--------|--------|-----------|--------|--------|--------|-----------|
| (Dollars in thousands, except per share data)                   |   | 2010   |      |   | 2009   |   |      | 2008   |   |   | 2007      |   |   | 2006   |      |
|                                                            |   |   |      |   |   |   |      |   |   |   |      |   |   |   |      |
| Total assets                                                    |   | $      | 304,403   |   |   | $      | 294,280   |   |   | $      | 259,795   |   |   | $      | 266,225   |   |   | $ | 273,692 |   |
|                                                            |   |   |      |   |   |   |      |   |   |   |      |   |   |   |      |   |   |   |   |   |
| Total investment securities                                     |   |   | 36,103    |   |   |   | 36,733    |   |   |   | 37,621    |   |   |   | 48,875    |   |   |   | 51,111 |   |
|                                                            |   |   |      |   |   |   |      |   |   |   |      |   |   |   |      |   |   |   |   |   |
| Loans, net                                                      |   |   | 227,460   |   |   |   | 225,264   |   |   |   | 196,167   |   |   |   | 192,742   |   |   |   | 193,069 |   |
|                                                            |   |   |      |   |   |   |      |   |   |   |      |   |   |   |      |   |   |   |   |   |
| Total deposits                                                  |   |   | 277,244   |   |   |   | 264,709   |   |   |   | 231,668   |   |   |   | 238,511   |   |   |   | 249,665 |   |
|                                                            |   |   |      |   |   |   |      |   |   |   |      |   |   |   |      |   |   |   |   |   |
| Total borrowed funds                                            |   |   | —   |   |   |   | 5,000     |   |   |   | 5,000     |   |   |   | 5,000     |   |   |   | — |   |
|                                                            |   |   |      |   |   |   |      |   |   |   |      |   |   |   |      |   |   |   |   |   |
| Total shareholders’ equity                                |   |   | 24,389    |   |   |   | 22,695    |   |   |   | 21,305    |   |   |   | 21,266    |   |   |   | 22,447 |   |
|                                                            |   |   |      |   |   |   |      |   |   |   |      |   |   |   |      |   |   |   |   |   |
| Book value per outstanding share                                |   |   | 21.18     |   |   |   | 19.93     |   |   |   | 18.75     |   |   |   | 18.71     |   |   |   | 19.50 |   |
|                                                            |   |   |      |   |   |   |      |   |   |   |      |   |   |   |      |   |   |   |   |   |
| Shares outstanding                                              |   |   | 1,151,345 |   |   |   | 1,138,497 |   |   |   | 1,136,397 |   |   |   | 1,136,397 |   |   |   | 1,151,335 |   |
|                                                            |   |   |      |   |   |   |      |   |   |   |      |   |   |   |      |   |   |   |   |   |
| Results of Operations                                           |   |   |      |   |   |   |      |   |   |   |      |   |   |   |      |   |   |   |   |   |
|                                                            |   |   |      |   |   |   |      |   |   |   |      |   |   |   |      |   |   |   |   |   |
| Interest income                                                 |   | $      | 15,745    |   |   | $      | 15,541    |   |   | $      | 16,304    |   |   | $      | 17,887    |   |   | $ | 19,163 |   |
| Interest expense                                                |   |   | (3,589    | )      |   |   | (4,967    | )      |   |   | (6,277    | )      |   |   | (8,371    | ) |   |   | (8,488 | ) |
| Net interest income                                             |   |   | 12,156    |   |   |   | 10,574    |   |   |   | 10,027    |   |   |   | 9,516     |   |   |   | 10,675 |   |
| Provision for loan losses                                       |   |   | (1,370    | )      |   |   | (1,484    | )      |   |   | (1,127    | )      |   |   | (1,332    | ) |   |   | (435 | ) |
| Other income                                                    |   |   | 2,176     |   |   |   | 2,364     |   |   |   | 2,649     |   |   |   | 2,239     |   |   |   | 2,430 |   |
| Salaries and employee benefits                                  |   |   | (5,293    | )      |   |   | (5,046    | )      |   |   | (5,415    | )      |   |   | (5,904    | ) |   |   | (5,453 | ) |
| Other expenses                                                  |   |   | (4,604    | )      |   |   | (5,218    | )      |   |   | (4,645    | )      |   |   | (5,415    | ) |   |   | (4,947 | ) |
| Income (loss) before income taxes                               |   |   | 3,065     |   |   |   | 1,190     |   |   |   | 1,489     |   |   |   | (896      | ) |   |   | 2,270 |   |
| Income tax (expense) benefit                                    |   |   | (742      | )      |   |   | (89       | )      |   |   | (188      | )      |   |   | 597       |   |   |   | (490 | ) |
| Net income (loss)                                               |   | $      | 2,323     |   |   | $      | 1,101     |   |   | $      | 1,301     |   |   | $      | (299      | ) |   | $ | 1,780 |   |
|                                                            |   |   |      |   |   |   |      |   |   |   |      |   |   |   |      |   |   |   |   |   |
| Per Share Data                                                  |   |   |      |   |   |   |      |   |   |   |      |   |   |   |      |   |   |   |   |   |
|                                                            |   |   |      |   |   |   |      |   |   |   |      |   |   |   |      |   |   |   |   |   |
| Net income (loss)                                               |   |   |      |   |   |   |      |   |   |   |      |   |   |   |      |   |   |   |   |   |
| Basic                                                           |   | $      | 2.03      |   |   | $      | 0.97      |   |   | $      | 1.14      |   |   | $      | (0.26     | ) |   | $ | 1.54 |   |
| Diluted                                                         |   | $      | 2.03      |   |   | $      | 0.97      |   |   | $      | 1.14      |   |   | $      | (0.26     | ) |   | $ | 1.54 |   |
|                                                            |   |   |      |   |   |   |      |   |   |   |      |   |   |   |      |   |   |   |   |   |
| Cash dividend paid                                              |   | $      | 0.42      |   |   | $      | 0.58      |   |   | $      | 0.76      |   |   | $      | 0.76      |   |   | $ | 0.76 |   |
|                                                            |   |   |      |   |   |   |      |   |   |   |      |   |   |   |      |   |   |   |   |   |
| Financial Ratios                                                |   |   |      |   |   |   |      |   |   |   |      |   |   |   |      |   |   |   |   |   |
| Return on average total assets                                  |   |   | 0.77      | %      |   |   | 0.40      | %      |   |   | 0.50      | %      |   |   | -0.11     | % |   |   | 0.61 | % |
| Return on average shareholders’ equity                    |   |   | 9.76      | %      |   |   | 4.96      | %      |   |   | 6.09      | %      |   |   | -1.37     | % |   |   | 8.09 | % |
| Average shareholders’ equity to average total assets |   |   | 7.89      | %      |   |   | 8.01      | %      |   |   | 8.15      | %      |   |   | 8.11      | % |   |   | 7.56 | % |
|                                                            |   |   |      |   |   |   |      |   |   |   |      |   |   |   |      |   |   |   |   |   |
| Dividend payout                                                 |   |   | 20.70     | %      |   |   | 59.90     | %      |   |   | 66.38     | %      |   |   | n/a       |   |   |   | 49.40 | % |

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|   | · | Local, regional and national economic conditions and the impact they may have on the Corporation and its customers and the assessment of that impact on estimates including, but not limited to, the allowance for loan losses and fair value of other real estate owned. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Changes in the level of nonperforming assets and charge-offs. |
|--------|--------|---------------------------------------------------------------|

|   | · | Changes in the fair value of securities available for sale and management’s assessments of other-than-temporary impairment of such securities. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | The effect of changes in accounting policies and practices, as may be adopted by the regulatory agencies, as well as the Public Company Accounting Oversight Board, the Financial Accounting Standards Board and other accounting standard setters. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | The effects of, and changes in, trade, monetary and fiscal policies and laws, including interest rate policies of the Federal Reserve Board. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Changes in consumer spending and savings habits; and |
|--------|--------|------------------------------------------------------|

|   | · | The Corporation’s success at managing the risks detailed above. |
|--------|--------|-----------------------------------------------------------------------|

----

----

|   | · | Achieved record earnings: Net income of $2,323,000 in 2010, compared to $1,101,000 in 2009 and $1,301,000 in 2008. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------|

|   | · | Loan and deposit growth:  Average net loans grew to $220,455,000, an increase of $13,698,000 from the previous year.  Total average deposits grew to $273,548,000, an increase of $25,985,000 over the previous year. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Maintained strong capital and liquidity throughout 2010. |
|--------|--------|----------------------------------------------------------|

|   | · | Continued its focus on effectively managing its cost structure, with an efficiency ratio (the ratio of noninterest expense to taxable-equivalent net revenue, excluding net securities gains and losses) of 67.39% in 2010 compared to 77.23% in 2009 and 77.10% in 2008. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Improved basic and diluted earnings per common share:  $2.03 in 2010, compared to $0.97 in 2009 and $1.14 in 2008. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------|

----

|   | · | Improved ROA (return on average assets - measures how effectively a company utilizes its assets to produce income):  0.77% for 2010, compared to 0.40% and 0.50% for 2009 and 2008, respectively. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Improved ROE (return on average equity - indicates the amount of net income earned in relation to the total equity invested):  9.76% for 2010 compared to 4.96% for 2009 and 6.09% for 2008. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Reduced impaired and nonperforming loans |
|--------|--------|------------------------------------------|

| At December 31,                  |   | 2010 Compared to 2009 |   |   |   | 2009 Compared to 2008 |   |
|----------------------------------|--------|-----------------------|--------|--------|--------|-----------------------|--------|
| (Dollars in thousands)           |   | Total                 |   |   | Volume |                  |   | Rate |   |   |   | Total |   |   | Volume |   |   | Rate |   |
| Increase (decrease) in           |   |                  |   |   |   |                  |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                             |   |                  |   |   |   |                  |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest Income                  |   |                  |   |   |   |                  |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Federal funds invested           |   | $                     | 20     |   |   | $                     | 24     |   |   | $ | (4 | ) |   |   | $ | 3 |   |   | $ | 249 |   |   | $ | (246 | ) |
| Taxable investment securities    |   |                  | (92    | )      |   |                  | 28     |   |   |   | (120 | ) |   |   |   | (375 | ) |   |   | (226 | ) |   |   | (149 | ) |
| Tax-exempt investment securities |   |                  | (38    | )      |   |                  | (41    | ) |   |   | 3 |   |   |   |   | (43 | ) |   |   | (20 | ) |   |   | (23 | ) |
| Loans                            |   |                  | 318    |   |   |                  | 721    |   |   |   | (403 | ) |   |   |   | (369 | ) |   |   | 765 |   |   |   | (1,134 | ) |
| Total interest income            |   |                  | 208    |   |   |                  | 732    |   |   |   | (524 | ) |   |   |   | (784 | ) |   |   | 768 |   |   |   | (1,552 | ) |
|                             |   |                  |   |   |   |                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest Expense                 |   |                  |   |   |   |                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-bearing deposits        |   |                  | (305   | )      |   |                  | 182    |   |   |   | (487 | ) |   |   |   | (775 | ) |   |   | 20 |   |   |   | (795 | ) |
| Savings deposits                 |   |                  | (3     | )      |   |                  | 3      |   |   |   | (6 | ) |   |   |   | (4 | ) |   |   | (2 | ) |   |   | (2 | ) |
| Time deposits                    |   |                  | (972   | )      |   |                  | 76     |   |   |   | (1,048 | ) |   |   |   | (504 | ) |   |   | 487 |   |   |   | (991 | ) |
| Borrowed funds                   |   |                  | (98    | )      |   |                  | (101   | ) |   |   | 3 |   |   |   |   | (27 | ) |   |   | (29 | ) |   |   | 2 |   |
| Total interest expense           |   |                  | (1,378 | )      |   |                  | 160    |   |   |   | (1,538 | ) |   |   |   | (1,310 | ) |   |   | 476 |   |   |   | (1,786 | ) |
|                             |   |                  |   |   |   |                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net interest income              |   | $                     | 1,586  |   |   | $                     | 572    |   |   | $ | 1,014 |   |   |   | $ | 526 |   |   | $ | 292 |   |   | $ | 234 |   |

| (a) | This table shows the components of the change in net interest income by volume and rate on a taxable-equivalent basis utilizing a federal tax rate of 34 percent.  The change in interest not solely due to changes in volume or rates has been allocated on a pro-rata basis to volume and rate. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                               |   | 2010       |    |   | 2009    |   |   | 2008    |   |
|------------------------------------|--------|------------|---------|--------|---------|--------|--------|---------|--------|
|                               |   | Average    |    |   | Income  |   |   | Average |   |   | Average |   |   | Income |   |   | Average |   |   | Average |   |   | Income |   |   | Average |   |
|                               |   | Balance(4) |    |   | Expense |   |   | Yield   |   |   | Balance(4) |   |   | Expense |   |   | Yield |   |   | Balance(4) |   |   | Expense |   |   | Yield |   |
| Federal funds invested             |   | $          | 19,436  |   |    | $      | 41     |    |   |   | 0.21 | % |   | $ | 8,985 |   |   | $ | 21 |   |   |   | 0.23 | % |   | $ | 605 |   |   | $ | 18 |   |   |   | 2.98 | % |
| Investment securities:             |   |       |    |   |    |   |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Taxable securities(1)              |   |       | 19,493  |   |    |   | 620    |    |   |   | 3.18 |   |   |   | 18,754 |   |   |   | 712 |   |   |   | 3.80 |   |   |   | 23,681 |   |   |   | 1,087 |   |   |   | 4.59 |   |
| Tax-exempt securities(1)           |   |       | 18,037  |   |    |   | 1,053  |    |   |   | 5.84 |   |   |   | 18,734 |   |   |   | 1,091 |   |   |   | 5.82 |   |   |   | 19,077 |   |   |   | 1,134 |   |   |   | 5.94 |   |
| Loans(2)(3)                        |   |       | 220,455 |   |    |   | 14,387 |    |   |   | 6.53 |   |   |   | 206,757 |   |   |   | 14,069 |   |   |   | 6.80 |   |   |   | 193,291 |   |   |   | 14,438 |   |   |   | 7.47 |   |
| Earning assets                     |   |       | 277,421 |   |    |   | 16,101 |    |   |   | 5.80 | % |   |   | 253,230 |   |   |   | 15,893 |   |   |   | 6.28 | % |   |   | 236,654 |   |   |   | 16,677 |   |   |   | 7.05 | % |
| Other assets                       |   |       | 24,399  |   |    |   |   |    |   |   |   |   |   |   | 23,623 |   |   |   |   |   |   |   |   |   |   |   | 25,412 |   |   |   |   |   |   |   |   |   |
| Total assets                       |   | $          | 301,820 |   |    |   |   |    |   |   |   |   |   | $ | 276,853 |   |   |   |   |   |   |   |   |   |   | $ | 262,066 |   |   |   |   |   |   |   |   |   |
|                               |   |       |    |   |    |   |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-bearing                   |   |       |    |   |    |   |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| demand deposits                    |   | $          | 100,729 |   |    |   | 372    |    |   |   | 0.37 | % |   | $ | 81,861 |   |   |   | 677 |   |   |   | 0.83 | % |   | $ | 80,471 |   |   |   | 1,452 |   |   |   | 1.80 | % |
| Savings deposits                   |   |       | 15,771  |   |    |   | 41     |    |   |   | 0.26 |   |   |   | 14,751 |   |   |   | 44 |   |   |   | 0.30 |   |   |   | 15,464 |   |   |   | 48 |   |   |   | 0.31 |   |
| Time deposits                      |   |       | 129,040 |   |    |   | 3,105  |    |   |   | 2.41 |   |   |   | 126,720 |   |   |   | 4,077 |   |   |   | 3.22 |   |   |   | 114,548 |   |   |   | 4,581 |   |   |   | 4.00 |   |
| Borrowed funds                     |   |       | 2,099   |   |    |   | 71     |    |   |   | 3.38 |   |   |   | 5,202 |   |   |   | 169 |   |   |   | 3.25 |   |   |   | 6,150 |   |   |   | 196 |   |   |   | 3.19 |   |
| Interest-bearing liabilities       |   |       | 247,639 |   |    |   | 3,589  |    |   |   | 1.45 | % |   |   | 228,534 |   |   |   | 4,967 |   |   |   | 2.17 | % |   |   | 216,633 |   |   |   | 6,277 |   |   |   | 2.90 | % |
| Noninterest-bearing                |   |       |    |   |    |   |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| demand deposits                    |   |       | 28,008  |   |    |   |   |    |   |   |   |   |   |   | 24,231 |   |   |   |   |   |   |   |   |   |   |   | 22,167 |   |   |   |   |   |   |   |   |   |
| Other liabilities                  |   |       | 2,372   |   |    |   |   |    |   |   |   |   |   |   | 1,911 |   |   |   |   |   |   |   |   |   |   |   | 1,911 |   |   |   |   |   |   |   |   |   |
| Shareholders’ equity         |   |       | 23,801  |   |    |   |   |    |   |   |   |   |   |   | 22,177 |   |   |   |   |   |   |   |   |   |   |   | 21,355 |   |   |   |   |   |   |   |   |   |
| Total liabilities and              |   |       |    |   |    |   |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| shareholders’ equity         |   | $          | 301,820 |   |    |   |   |    |   |   |   |   |   | $ | 276,853 |   |   |   |   |   |   |   |   |   |   | $ | 262,066 |   |   |   |   |   |   |   |   |   |
|                               |   |       |    |   |    |   |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net interest income                |   |       |    |   |    | $      | 12,512 |    |   |   |   |   |   |   |   |   |   | $ | 10,926 |   |   |   |   |   |   |   |   |   |   | $ | 10,400 |   |   |   |   |   |
|                               |   |       |    |   |    |   |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| As a percentage of earning assets: |   |       |    |   |    |   |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net interest income                |   |       |    |   |    |   |   |    |   |   | 4.51 | % |   |   |   |   |   |   |   |   |   |   | 4.31 | % |   |   |   |   |   |   |   |   |   |   | 4.39 | % |

| (1) | Average yields on all securities have been computed based on amortized cost.  Income on tax-exempt securities has been computed on a taxable-equivalent basis using a 34% federal tax rate and a 20% disallowance of interest expense deductibility under TEFRA rules.  The amount of such adjustment was $356,000, $352,000 and $373,000 for 2010, 2009 and 2008, respectively. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | Average balance is net of deferred loan fees of $53,000, $63,000, and $94,000 for 2010, 2009 and 2008, respectively, as well as $60,000, $377,000, and $1,163,000 of unearned income for the same years. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3) | Average loan balances include nonaccruing loans. |
|-----|--------------------------------------------------|

| (4) | Average balances are computed on an average daily basis. |
|-----|----------------------------------------------------------|

----

----

----

|                    |   | 2010   |    |   | 2009   |   |    | 2008   |   |   | 2007    |   |   | 2006   |    |
|-------------------------|--------|--------|---------|--------|--------|--------|---------|--------|--------|--------|---------|--------|--------|--------|---------|
| At December 31          |   |   |    |   |   |   |    |   |   |   |    |   |   |   |    |
| (In thousands)          |   | Amount |    |   | Amount |   |    | Amount |   |   | Amount  |   |   | Amount |    |
| Commercial              |   | $      | 172,424 |   |   | $      | 168,611 |   |   | $      | 141,968 |   |   | $      | 139,571 |   |   | $ | 136,892 |   |
| Residential real estate |   |   | 13,775  |   |   |   | 11,825  |   |   |   | 8,921   |   |   |   | 8,580   |   |   |   | 9,117 |   |
| Consumer                |   |   | 23,065  |   |   |   | 23,721  |   |   |   | 21,596  |   |   |   | 18,499  |   |   |   | 12,440 |   |
| Home equity             |   |   | 21,231  |   |   |   | 22,685  |   |   |   | 22,244  |   |   |   | 19,160  |   |   |   | 17,551 |   |
| Indirect finance        |   |   | 163     |   |   |   | 1,166   |   |   |   | 3,921   |   |   |   | 9,343   |   |   |   | 19,084 |   |
| Total loans             |   | $      | 230,658 |   |   | $      | 228,008 |   |   | $      | 198,650 |   |   | $      | 195,153 |   |   | $ | 195,084 |   |

----

| One Year |   |   | One Through |   |   | Over       |   |
|----------|--------|--------|-------------|--------|--------|------------|--------|
| or Less  |   |   | Five Years  |   |   | Five Years |   |
| $        | 35,828 |   |        | $      | 23,057 |       |   | $ | 113,539 |   |

|   | 1) | Reviewed all underwriting guidelines for various loan portfolios and have strengthened underwriting guidelines where needed. |
|--------|----|------------------------------------------------------------------------------------------------------------------------------|

|   | 2) | Evaluated outside loan review parameters, engaging the services of a well-established firm to continue with such loan review, addressing not only specific loans but underwriting analysis, documentation, credit evaluation and risk identification. |
|--------|----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 3) | Increased the frequency of internal reviews of past due and delinquent loans to assess probable credit risks early in the delinquency process to minimize losses. |
|--------|----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 4) | Aggressively seeks ownership and control, when appropriate, of real estate properties, which would otherwise go through time-consuming and costly foreclosure proceedings to effectively control the disposition of such collateral. |
|--------|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 5) | Aggressively obtaining updated financial information on commercial credits and performing analytical reviews to determine debt source capacities in business performance trends. |
|--------|----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                                           |   | 2010   |    |   | 2009   |   |    | 2008   |   |   | 2007    |   |   | 2006   |    |
|----------------------------------------------------------------|--------|--------|---------|--------|--------|--------|---------|--------|--------|--------|---------|--------|--------|--------|---------|
| Balance at beginning of period                                 |   | $      | 2,744   |   |   | $      | 2,483   |   |   | $      | 2,411   |   |   | $      | 2,015   |   |   | $ | 2,755 |   |
|                                                           |   |   |    |   |   |   |    |   |   |   |    |   |   |   |    |   |   |   |   |   |
| Loans charged-off:                                             |   |   |    |   |   |   |    |   |   |   |    |   |   |   |    |   |   |   |   |   |
| Commercial                                                     |   |   | (610    | )      |   |   | (579    | )      |   |   | (690    | )      |   |   | (501    | ) |   |   | (302 | ) |
| Real Estate                                                    |   |   | (25     | )      |   |   | (96     | )      |   |   | (35     | )      |   |   | (22     | ) |   |   | (101 | ) |
| Consumer                                                       |   |   | (404    | )      |   |   | (640    | )      |   |   | (554    | )      |   |   | (764    | ) |   |   | (1,071 | ) |
| Total loans charged-off                                        |   |   | (1,039  | )      |   |   | (1,315  | )      |   |   | (1,279  | )      |   |   | (1,287  | ) |   |   | (1,474 | ) |
|                                                           |   |   |    |   |   |   |    |   |   |   |    |   |   |   |    |   |   |   |   |   |
| Recoveries of loans previously charged-off:                    |   |   |    |   |   |   |    |   |   |   |    |   |   |   |    |   |   |   |   |   |
| Commercial                                                     |   |   | 34      |   |   |   | 4       |   |   |   | 94      |   |   |   | 228     |   |   |   | 69 |   |
| Real Estate                                                    |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | 13 |   |
| Consumer                                                       |   |   | 89      |   |   |   | 88      |   |   |   | 130     |   |   |   | 123     |   |   |   | 217 |   |
| Total loan recoveries                                          |   |   | 123     |   |   |   | 92      |   |   |   | 224     |   |   |   | 351     |   |   |   | 299 |   |
| Provision charged to operating expense                         |   |   | 1,370   |   |   |   | 1,484   |   |   |   | 1,127   |   |   |   | 1,332   |   |   |   | 435 |   |
| Balance at end of period                                       |   | $      | 3,198   |   |   | $      | 2,744   |   |   | $      | 2,483   |   |   | $      | 2,411   |   |   | $ | 2,015 |   |
| Allowance for loan losses as a percentage of: Period-end loans |   |   | 1.39    | %      |   |   | 1.20    | %      |   |   | 1.25    | %      |   |   | 1.24    | % |   |   | 1.04 | % |

----

|        |   | 2010      |    |   | 2009   |   |   | 2008      |   |   | 2007    |   |   | 2006      |   |
|-------------|--------|-----------|---------|--------|--------|--------|--------|-----------|--------|--------|---------|--------|--------|-----------|--------|
|        |   | Allowance |    |   | Total  |   |   | Allowance |   |   | Total   |   |   | Allowance |   |   | Total |   |   | Allowance |   |   | Total |   |   | Allowance |   |   | Total |   |
| Loan Type   |   | Amount    |    |   | Loans  |   |   | Amount    |   |   | Loans   |   |   | Amount    |   |   | Loans |   |   | Amount |   |   | Loans |   |   | Amount |   |   | Loans |   |
| Commercial  |   | $         | 2,307   |   |   |   | 75     | %         |   | $      | 1,927   |   |   |      | 74     | % |   | $ | 1,772 |   |   |   | 71 | % |   | $ | 1,679 |   |   |   | 71 | % |   | $ | 1,112 |   |   |   | 69 | % |
| Real Estate |   |      | 182     |   |   |   | 6      |      |   |   | 158     |   |   |      | 5      |   |   |   | 67 |   |   |   | 5 |   |   |   | 64 |   |   |   | 4 |   |   |   | 177 |   |   |   | 14 |   |
| Consumer    |   |      | 709     |   |   |   | 19     |      |   |   | 659     |   |   |      | 21     |   |   |   | 644 |   |   |   | 24 |   |   |   | 668 |   |   |   | 25 |   |   |   | 726 |   |   |   | 17 |   |
| Unallocated |   |      | — |   |   |   | n/a    |      |   |   | — |   |   |      | n/a    |   |   |   | — |   |   |   | n/a |   |   |   | — |   |   |   | n/a |   |   |   | — |   |   |   | n/a |   |
| Total LLR   |   | $         | 3,198   |   |   |   | 100    | %         |   | $      | 2,744   |   |   |      | 100    | % |   | $ | 2,483 |   |   |   | 100 | % |   | $ | 2,411 |   |   |   | 100 | % |   | $ | 2,015 |   |   |   | 100 | % |

----

|                                                                                                  |   | 2010   |    |   | 2009   |   |    | 2008   |   |   | 2007    |   |   | 2006   |   |
|-------------------------------------------------------------------------------------------------------|--------|--------|---------|--------|--------|--------|---------|--------|--------|--------|---------|--------|--------|--------|--------|
| Impaired loans                                                                                        |   | $      | 1,864   |   |   | $      | 1,728   |   |   | $      | 2,965   |   |   | $      | 2,892  |   |   | $ | 2,267 |   |
| Loans accounted for on a nonaccrual basis (includes substantially all impaired loans)                 |   | $      | 1,934   |   |   | $      | 2,641   |   |   | $      | 5,355   |   |   | $      | 3,445  |   |   | $ | 1,984 |   |
| Accruing loans, which are contractually past due 90 days or more as to interest or principal payments |   |   | — |   |   |   | — |   |   |   | — |   |   |   | 5      |   |   |   | 283 |   |
| Total nonperforming loans                                                                             |   | $      | 1,934   |   |   | $      | 2,641   |   |   | $      | 5,355   |   |   | $      | 3,450  |   |   | $ | 2,267 |   |
| Nonperforming loans to allowance for loan losses                                                      |   |   | 0.60    |   |   |   | 0.96    |   |   |   | 2.16    |   |   |   | 1.43   |   |   |   | 1.13 |   |

----

|                                                |   | 2010   |   |   | 2009   |   |   | 2008   |   |
|-----------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| U.S. Treasury and U.S. Government Agency securities |   | $      | 9,065  |   |   | $      | 4,083  |   |   | $ | 1,007 |   |
| Obligations of states and political subdivisions    |   |   | 16,069 |   |   |   | 18,618 |   |   |   | 18,597 |   |
| Mortgage-backed securities                          |   |   | 8,709  |   |   |   | 11,774 |   |   |   | 15,759 |   |
| Other investment securities                         |   |   | 2,260  |   |   |   | 2,258  |   |   |   | 2,258 |   |
| Total investment securities                         |   | $      | 36,103 |   |   | $      | 36,733 |   |   | $ | 37,621 |   |

|                                                |   |        |   |   | Maturing     |   |   | Maturing      |   |   |      |   |
|-----------------------------------------------------|--------|-------------|--------|--------|--------------|--------|--------|---------------|--------|--------|-----------|--------|
|                                                |   | Maturing in |   |   | After One    |   |   | After Five    |   |   | Maturing  |   |
|                                                |   | One Year    |   |   | Year Through |   |   | Years Through |   |   | After     |   |
|                                                |   | or Less     |   |   | Five Years   |   |   | Ten Years     |   |   | Ten Years |   |
| (Dollars in thousands)                              |   | Amount      |   |   | Yield        |   |   | Amount        |   |   | Yield     |   |   | Amount |   |   | Yield |   |   | Amount |   |   | Yield |   |
| U.S. Treasury and U.S. Government Agency securities |   | $           | 9,065  |   |         |   | 1.50   | %             |   | $      | —   |   |   |   | n/a |   |   | $ | — |   |   |   | n/a |   |   | $ | — |   |   |   | n/a |   |
| Obligations of state and political Subdivisions     |   |        | 3,613  |   |         |   | 6.44   | %             |   |   | 8,172     |   |   |   | 5.66 | % |   |   | 4,113 |   |   |   | 5.97 | % |   |   | 171 |   |   |   | 6.80 | % |
| Mortgage-backed securities                          |   |        | 80     |   |         |   | 5.02   | %             |   |   | 401       |   |   |   | 3.64 | % |   |   | 1,711 |   |   |   | 4.17 | % |   |   | 6,517 |   |   |   | 4.35 | % |
| Total                                               |   | $           | 12,758 |   |         |   | 2.92   | %             |   | $      | 8,573     |   |   |   | 5.57 | % |   | $ | 5,824 |   |   |   | 5.45 | % |   | $ | 6,688 |   |   |   | 4.42 | % |

----

----

| (Dollars in thousands)                |   | 2010   |   |   | 2009   |   |
|---------------------------------------|--------|--------|--------|--------|--------|--------|
| Three months or less                  |   | $      | 8,268  |   |   | $      | 5,915 |   |
| Over three months through six months  |   |   | 8,047  |   |   |   | 6,835 |   |
| Over six months through twelve months |   |   | 9,084  |   |   |   | 10,249 |   |
| Over twelve months                    |   |   | 19,366 |   |   |   | 14,301 |   |
| Total                                 |   | $      | 44,765 |   |   | $      | 37,300 |   |

|                       |   | 2010    |    |   | 2009   |   |   | 2008   |   |
|----------------------------|--------|---------|---------|--------|--------|--------|--------|--------|--------|
|                       |   |    |    |   |   |   |   | % of   |   |   |   |   |   |   |   |   | % of |   |   |   |   |   |   |   |   | % of |   |
| (In thousands)             |   | Balance |    |   | Rate   |   |   | Total  |   |   | Balance |   |   | Rate |   |   | Total |   |   | Balance |   |   | Rate |   |   | Total |   |
| Interest-bearing demand    |   | $       | 100,729 |   |   |   | 0.37   | %      |   |   | 37 | % |   | $ | 81,861 |   |   |   | 0.83 | % |   |   | 33 | % |   | $ | 80,471 |   |   |   | 1.80 | % |   |   | 35 | % |
| Savings deposits           |   |    | 15,771  |   |   |   | 0.26   |   |   |   | 6 |   |   |   | 14,751 |   |   |   | 0.30 |   |   |   | 6 |   |   |   | 15,464 |   |   |   | 0.31 |   |   |   | 7 |   |
| Time deposits              |   |    | 129,040 |   |   |   | 2.41   |   |   |   | 47 |   |   |   | 126,720 |   |   |   | 3.22 |   |   |   | 51 |   |   |   | 114,548 |   |   |   | 4.00 |   |   |   | 49 |   |
| Noninterest-bearing demand |   |    | 28,008  |   |   |   |   |   |   |   | 10 |   |   |   | 24,231 |   |   |   |   |   |   |   | 10 |   |   |   | 22,167 |   |   |   |   |   |   |   | 9 |   |
| Total                      |   | $       | 273,548 |   |   |   |   |   |   |   | 100 | % |   | $ | 247,563 |   |   |   |   |   |   |   | 100 | % |   | $ | 232,650 |   |   |   |   |   |   |   | 100 | % |

----

| Contractual obligations              |   | Payments Due by Period |    |
|-------------------------------------------|--------|---------------------------------------|---------|
|                                      |   |                                  |    |   | Less Than |   |   |   |   |   |   |   |   | After |   |
|                                      |   | Total                                 |    |   | One Year |   |   | 1-3 Years |   |   | 3-5 Years |   |   | 5 Years |   |
| Time deposits and certificates of deposit |   | $                                     | 125,908 |   |   | $ | 77,371 |   |   | $ | 35,929 |   |   | $ | 12,482 |   |   | $ | 126 |   |
| Borrowed funds                            |   |                                  | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |
| Total contractual obligations             |   | $                                     | 125,908 |   |   | $ | 77,371 |   |   | $ | 35,929 |   |   | $ | 12,482 |   |   | $ | 126 |   |

| Other commitments                  |   | Amount of Commitment – Expiration by Period |   |
|-----------------------------------------|--------|---------------------------------------------------------------------------------|--------|
|                                    |   |                                                                            |   |   | Less Than |   |   |   |   |   |   |   |   | After |   |
|                                    |   | Total                                                                           |   |   | One Year |   |   | 1-3 Years |   |   | 3-5 Years |   |   | 5 Years |   |
| Commitments to extend commercial credit |   | $                                                                               | 11,380 |   |   | $ | 8,070 |   |   | $ | 815 |   |   | $ | 234 |   |   | $ | 2,261 |   |
| Commitments to extend consumer credit   |   |                                                                            | 10,880 |   |   |   | 8 |   |   |   | 3,272 |   |   |   | 2,889 |   |   |   | 4,711 |   |
| Standby letters of credit               |   |                                                                            | 308    |   |   |   | 298 |   |   |   | 10 |   |   |   | — |   |   |   | — |   |
| Total other commitments                 |   | $                                                                               | 22,568 |   |   | $ | 8,376 |   |   | $ | 4,097 |   |   | $ | 3,123 |   |   | $ | 6,972 |   |

----

----

| For the Year Ended December 31, 2010: |   |   |    |   |   |   |    |   |   |   |    |   |   |   |    |   |       |   |    |   |   |       | Fair    |   |
|---------------------------------------|--------|--------|---------|--------|--------|--------|---------|--------|--------|--------|---------|--------|--------|--------|---------|--------|------------|--------|---------|--------|--------|------------|---------|--------|
| Rate sensitive assets:                |   | 2011   |    |   | 2012   |   |    | 2013   |   |   | 2014    |   |   | 2015   |    |   | Thereafter |   |    | Total  |   |       | Value   |   |
| Fixed interest rate loans             |   | $      | 13,446  |   |   | $      | 7,106   |   |   | $      | 6,796   |   |   | $      | 9,195   |   |       | $      | 6,759   |   |   | $          | 19,110  |   |   | $ | 62,412 |   |   | $ | 65,024 |   |
| Average interest rate                 |   |   | 5.85    | %      |   |   | 6.69    | %      |   |   | 7.07    | %      |   |   | 7.23    | %      |       |   | 7.06    | %      |   |       | 7.15    | %      |   |   | 6.81 | % |   |   |   |   |
| Variable interest rate loans          |   | $      | 16,419  |   |   | $      | 1,850   |   |   | $      | 5,175   |   |   | $      | 5,191   |   |       | $      | 6,885   |   |   | $          | 132,726 |   |   | $ | 168,246 |   |   | $ | 175,286 |   |
| Average interest rate                 |   |   | 5.01    | %      |   |   | 5.39    | %      |   |   | 5.56    | %      |   |   | 5.33    | %      |       |   | 5.62    | %      |   |       | 5.95    | %      |   |   | 5.81 | % |   |   |   |   |
| Fixed interest rate securities        |   | $      | 226     |   |   | $      | 147     |   |   | $      | 6,902   |   |   | $      | 1,452   |   |       | $      | 3,383   |   |   | $          | 20,609  |   |   | $ | 32,719 |   |   | $ | 32,719 |   |
| Average interest rate                 |   |   | 2.93    | %      |   |   | 4.52    | %      |   |   | 1.69    | %      |   |   | 3.78    | %      |       |   | 2.76    | %      |   |       | 4.14    | %      |   |   | 3.46 | % |   |   |   |   |
| Variable interest rate securities     |   | $      | — |   |   | $      | — |   |   | $      | — |   |   | $      | — |   |       | $      | — |   |   | $          | 3,384   |   |   | $ | 3,384 |   |   | $ | 3,384 |   |
| Average interest rate                 |   |   |    |   |   |   |    |   |   |   |    |   |   |   |    |   |       |   |    |   |   |       | 3.96    | %      |   |   | 3.96 | % |   |   |   |   |
| Rate sensitive liabilities:           |   |   |    |   |   |   |    |   |   |   |    |   |   |   |    |   |       |   |    |   |   |       |    |   |   |   |   |   |   |   |   |   |
| Noninterest-bearing deposits          |   | $      | 8,349   |   |   | $      | 6,679   |   |   | $      | 5,009   |   |   | $      | 4,176   |   |       | $      | 4,176   |   |   | $          | 5,010   |   |   | $ | 33,399 |   |   | $ | 33,399 |   |
| Interest-bearing demand deposits      |   | $      | 21,437  |   |   | $      | 21,437  |   |   | $      | 21,437  |   |   | $      | 21,437  |   |       | $      | 21,437  |   |   | $          | 10,752  |   |   | $ | 117,937 |   |   | $ | 117,937 |   |
| Average interest rate                 |   |   | 0.35    | %      |   |   | 0.35    | %      |   |   | 0.35    | %      |   |   | 0.35    | %      |       |   | 0.35    | %      |   |       | 0.35    | %      |   |   | 0.35 | % |   |   |   |   |
| Interest-bearing time deposits        |   | $      | 77,371  |   |   | $      | 18,904  |   |   | $      | 17,026  |   |   | $      | 6,849   |   |       | $      | 5,633   |   |   | $          | 125     |   |   | $ | 125,908 |   |   | $ | 125,532 |   |
| Average interest rate                 |   |   | 1.88    | %      |   |   | 1.36    | %      |   |   | 3.17    | %      |   |   | 3.06    | %      |       |   | 2.48    | %      |   |       | 0.93    | %      |   |   | 2.07 | % |   |   |   |   |
| Fixed interest rate borrowing         |   | $      | — |   |   | $      | — |   |   | $      | — |   |   | $      | — |   |       | $      | — |   |   | $          | — |   |   | $ | — |   |   | $ | — |   |
| Average interest rate                 |   |   |    |   |   |   |    |   |   |   |    |   |   |   |    |   |       |   |    |   |   |       |    |   |   |   |   |   |   |   |   |   |
| Variable interest rate borrowing      |   | $      | — |   |   | $      | — |   |   | $      | — |   |   | $      | — |   |       | $      | — |   |   | $          | — |   |   | $ | — |   |   | $ | — |   |
| Average interest rate                 |   |   |    |   |   |   |    |   |   |   |    |   |   |   |    |   |       |   |    |   |   |       |    |   |   |   |   |   |   |   |   |   |
|                                  |   |   |    |   |   |   |    |   |   |   |    |   |   |   |    |   |       |   |    |   |   |       |    |   |   |   |   |   |   |   |   |   |
| For the Year Ended December 31, 2009: |   |   |    |   |   |   |    |   |   |   |    |   |   |   |    |   |       |   |    |   |   |       |    |   |   |   |   |   |   | Fair |   |
| Rate sensitive assets:                |   |   | 2010    |   |   |   | 2011    |   |   |   | 2012    |   |   |   | 2013    |   |       |   | 2014    |   |   | Thereafter |    |   | Total |   |   | Value |   |
| Fixed interest rate loans             |   | $      | 10,918  |   |   | $      | 7,301   |   |   | $      | 8,315   |   |   | $      | 7,862   |   |       | $      | 10,154  |   |   | $          | 17,548  |   |   | $ | 62,098 |   |   | $ | 61,589 |   |
| Average interest rate                 |   |   | 6.52    | %      |   |   | 7.27    | %      |   |   | 6.88    | %      |   |   | 7.09    | %      |       |   | 7.39    | %      |   |       | 7.61    | %      |   |   | 7.18 | % |   |   |   |   |
| Variable interest rate loans          |   | $      | 14,763  |   |   | $      | 1,725   |   |   | $      | 1,477   |   |   | $      | 5,451   |   |       | $      | 6,158   |   |   | $          | 136,336 |   |   | $ | 165,910 |   |   | $ | 164,550 |   |
| Average interest rate                 |   |   | 5.04    | %      |   |   | 6.15    | %      |   |   | 5.74    | %      |   |   | 5.59    | %      |       |   | 5.44    | %      |   |       | 6.14    | %      |   |   | 6.00 | % |   |   |   |   |
| Fixed interest rate securities        |   | $      | 45      |   |   | $      | 181     |   |   | $      | 152     |   |   | $      | 1,092   |   |       | $      | 1,577   |   |   | $          | 29,010  |   |   | $ | 32,057 |   |   | $ | 32,057 |   |
| Average interest rate                 |   |   | 4.46    | %      |   |   | 4.55    | %      |   |   | 4.53    | %      |   |   | 3.82    | %      |       |   | 3.78    | %      |   |       | 3.94    | %      |   |   | 3.93 | % |   |   |   |   |
| Variable interest rate securities     |   | $      | — |   |   | $      | — |   |   | $      | — |   |   | $      | — |   |       | $      | — |   |   | $          | 4,676   |   |   | $ | 4,676 |   |   | $ | 4,676 |   |
| Average interest rate                 |   |   |    |   |   |   |    |   |   |   |    |   |   |   |    |   |       |   |    |   |   |       | 4.27    | %      |   |   | 4.27 | % |   |   |   |   |
| Rate sensitive liabilities:           |   |   |    |   |   |   |    |   |   |   |    |   |   |   |    |   |       |   |    |   |   |       |    |   |   |   |   |   |   |   |   |   |
| Noninterest-bearing deposits          |   | $      | 7,846   |   |   | $      | 6,277   |   |   | $      | 4,707   |   |   | $      | 3,924   |   |       | $      | 3,924   |   |   | $          | 4,707   |   |   | $ | 31,385 |   |   | $ | 31,385 |   |
| Interest-bearing demand deposits      |   | $      | 19,811  |   |   | $      | 19,811  |   |   | $      | 19,811  |   |   | $      | 19,811  |   |       | $      | 19,811  |   |   | $          | 9,933   |   |   | $ | 108,988 |   |   | $ | 108,988 |   |
| Average interest rate                 |   |   | 0.66    | %      |   |   | 0.66    | %      |   |   | 0.66    | %      |   |   | 0.66    | %      |       |   | 0.66    | %      |   |       | 0.66    | %      |   |   | 0.66 | % |   |   |   |   |
| Interest-bearing time deposits        |   | $      | 62,465  |   |   | $      | 42,819  |   |   | $      | 2,426   |   |   | $      | 10,579  |   |       | $      | 5,922   |   |   | $          | 125     |   |   | $ | 124,336 |   |   | $ | 124,390 |   |
| Average interest rate                 |   |   | 2.15    | %      |   |   | 2.90    | %      |   |   | 3.89    | %      |   |   | 4.37    | %      |       |   | 3.21    | %      |   |       | 0.73    | %      |   |   | 2.68 | % |   |   |   |   |
| Fixed interest rate borrowing         |   | $      | 5,000   |   |   | $      | — |   |   | $      | — |   |   | $      | — |   |       | $      | — |   |   | $          | — |   |   | $ | 5,000 |   |   | $ | 5,001 |   |
| Average interest rate                 |   |   | 3.36    | %      |   |   |    |   |   |   |    |   |   |   |    |   |       |   |    |   |   |       |    |   |   |   | 3.36 | % |   |   |   |   |
| Variable interest rate borrowing      |   | $      | — |   |   | $      | — |   |   | $      | — |   |   | $      | — |   |       | $      | — |   |   | $          | — |   |   | $ | — |   |   | $ | — |   |
| Average interest rate                 |   |   |    |   |   |   |    |   |   |   |    |   |   |   |    |   |       |   |    |   |   |       |    |   |   |   |   |   |   |   |   |   |

----

----

| /s/ Plante & Moran, PLLC |   |
|--------------------------------------------------|--------|
| Plante & Moran, PLLC          |

----

----

|                                                         |   | 2010   |    |   | 2009   |   |
|--------------------------------------------------------------|--------|--------|---------|--------|--------|--------|
| ASSETS                                                       |   |   |    |   |   |   |
| Cash and cash equivalents                                    |   | $      | 5,270   |   |   | $      | 4,844 |   |
| Federal funds sold                                           |   |   | 16,810  |   |   |   | 7,402 |   |
| Cash equivalents and federal funds sold                      |   |   | 22,080  |   |   |   | 12,246 |   |
|                                                         |   |   |    |   |   |   |   |   |
| Securities available for sale                                |   |   | 33,843  |   |   |   | 34,475 |   |
| Other investment securities                                  |   |   | 2,260   |   |   |   | 2,258 |   |
| Total loans                                                  |   |   | 230,658 |   |   |   | 228,008 |   |
| Allowance for loan losses                                    |   |   | (3,198  | )      |   |   | (2,744 | ) |
| Loans, net                                                   |   |   | 227,460 |   |   |   | 225,264 |   |
| Premises and equipment, net                                  |   |   | 7,637   |   |   |   | 7,983 |   |
| Accrued interest receivable                                  |   |   | 1,288   |   |   |   | 1,147 |   |
| Other assets                                                 |   |   | 9,835   |   |   |   | 10,907 |   |
|                                                         |   |   |    |   |   |   |   |   |
| Total assets                                                 |   | $      | 304,403 |   |   | $      | 294,280 |   |
|                                                         |   |   |    |   |   |   |   |   |
| LIABILITIES                                                  |   |   |    |   |   |   |   |   |
| Deposits                                                     |   |   |    |   |   |   |   |   |
| Noninterest-bearing demand                                   |   | $      | 33,399  |   |   | $      | 31,385 |   |
| Interest-bearing demand                                      |   |   | 101,620 |   |   |   | 94,364 |   |
| Savings and time deposits                                    |   |   | 97,460  |   |   |   | 101,660 |   |
| Time deposits $100,000 and greater                           |   |   | 44,765  |   |   |   | 37,300 |   |
| Total deposits                                               |   |   | 277,244 |   |   |   | 264,709 |   |
| FHLB advances                                                |   |   | — |   |   |   | 5,000 |   |
| Accrued interest payable                                     |   |   | 192     |   |   |   | 239 |   |
| Other liabilities                                            |   |   | 2,578   |   |   |   | 1,637 |   |
| Total liabilities                                            |   |   | 280,014 |   |   |   | 271,585 |   |
|                                                         |   |   |    |   |   |   |   |   |
| SHAREHOLDERS’EQUITY                                    |   |   |    |   |   |   |   |   |
| Common stock, no par value; 4,000,000 shares authorized,     |   |   |    |   |   |   |   |   |
| 1,182,888 shares issued in 2010 and 1,181,038 issued in 2009 |   |   | 11,440  |   |   |   | 11,266 |   |
| Retained earnings                                            |   |   | 13,936  |   |   |   | 12,278 |   |
| Unearned compensation                                        |   |   | (36     | )      |   |   | (26 | ) |
| Deferred compensation plan shares; at cost,                  |   |   |    |   |   |   |   |   |
| 35,467 shares in 2010 and 22,702 shares in 2009              |   |   | (626    | )      |   |   | (494 | ) |
| Treasury stock; 31,543 shares in 2010 and 42,541 in 2009     |   |   | (862    | )      |   |   | (1,163 | ) |
| Accumulated other comprehensive income                       |   |   | 537     |   |   |   | 834 |   |
| Total shareholders’ equity                             |   |   | 24,389  |   |   |   | 22,695 |   |
|                                                         |   |   |    |   |   |   |   |   |
| Total liabilities and shareholders’ equity             |   | $      | 304,403 |   |   | $      | 294,280 |   |

----

----

|                                              |   | 2010   |    |   | 2009   |   |   | 2008   |   |
|---------------------------------------------------|--------|--------|---------|--------|--------|--------|--------|--------|--------|
| Interest income                                   |   |   |    |   |   |   |   |   |   |
| Interest and fees on loans                        |   | $      | 14,375  |   |   | $      | 14,059 |   |   | $ | 14,428 |   |
| Interest on investment securities:                |   |   |    |   |   |   |   |   |   |   |   |   |
| Taxable                                           |   |   | 620     |   |   |   | 712    |   |   |   | 1,087 |   |
| Tax-exempt                                        |   |   | 709     |   |   |   | 749    |   |   |   | 771 |   |
| Federal funds sold                                |   |   | 41      |   |   |   | 21     |   |   |   | 18 |   |
| Total interest income                             |   |   | 15,745  |   |   |   | 15,541 |   |   |   | 16,304 |   |
|                                              |   |   |    |   |   |   |   |   |   |   |   |   |
| Interest expense                                  |   |   |    |   |   |   |   |   |   |   |   |   |
| Interest on deposits                              |   |   | 3,518   |   |   |   | 4,798  |   |   |   | 6,081 |   |
| Interest on borrowings                            |   |   | 71      |   |   |   | 169    |   |   |   | 196 |   |
| Total interest expense                            |   |   | 3,589   |   |   |   | 4,967  |   |   |   | 6,277 |   |
|                                              |   |   |    |   |   |   |   |   |   |   |   |   |
| Netinterestincome                                 |   |   | 12,156  |   |   |   | 10,574 |   |   |   | 10,027 |   |
|                                              |   |   |    |   |   |   |   |   |   |   |   |   |
| Provision for loan losses                         |   |   | 1,370   |   |   |   | 1,484  |   |   |   | 1,127 |   |
| Net interest income after provision for loan loss |   |   | 10,786  |   |   |   | 9,090  |   |   |   | 8,900 |   |
|                                              |   |   |    |   |   |   |   |   |   |   |   |   |
| Noninterest income                                |   |   |    |   |   |   |   |   |   |   |   |   |
| Service fees and overdraft charges                |   |   | 1,679   |   |   |   | 1,849  |   |   |   | 1,883 |   |
| Gains on security sales, net                      |   |   | — |   |   |   | 22     |   |   |   | — |   |
| Losses on repossessed asset sales, net            |   |   | (271    | )      |   |   | (102   | )      |   |   | (21 | ) |
| Other income                                      |   |   | 768     |   |   |   | 595    |   |   |   | 787 |   |
| Total noninterest income                          |   |   | 2,176   |   |   |   | 2,364  |   |   |   | 2,649 |   |
|                                              |   |   |    |   |   |   |   |   |   |   |   |   |
| Noninterest expenses                              |   |   |    |   |   |   |   |   |   |   |   |   |
| Salaries and employee benefits                    |   |   | 5,293   |   |   |   | 5,046  |   |   |   | 5,415 |   |
| Premises and equipment                            |   |   | 1,220   |   |   |   | 1,444  |   |   |   | 1,575 |   |
| OREO and miscellaneous loan expense               |   |   | 342     |   |   |   | 411    |   |   |   | 183 |   |
| Professional fees                                 |   |   | 411     |   |   |   | 454    |   |   |   | 495 |   |
| Data processing                                   |   |   | 224     |   |   |   | 256    |   |   |   | 267 |   |
| Software maintenance                              |   |   | 318     |   |   |   | 287    |   |   |   | 266 |   |
| Advertising and promotional                       |   |   | 213     |   |   |   | 197    |   |   |   | 217 |   |
| FDIC deposit insurance                            |   |   | 458     |   |   |   | 659    |   |   |   | 91 |   |
| Franchise tax                                     |   |   | 285     |   |   |   | 270    |   |   |   | 264 |   |
| Other operating expense                           |   |   | 1,133   |   |   |   | 1,240  |   |   |   | 1,287 |   |
| Total noninterest expense                         |   |   | 9,897   |   |   |   | 10,264 |   |   |   | 10,060 |   |
|                                              |   |   |    |   |   |   |   |   |   |   |   |   |
| Income before income taxes                        |   |   | 3,065   |   |   |   | 1,190  |   |   |   | 1,489 |   |
| Income tax expense                                |   |   | 742     |   |   |   | 89     |   |   |   | 188 |   |
| Net income                                        |   | $      | 2,323   |   |   | $      | 1,101  |   |   | $ | 1,301 |   |
|                                              |   |   |    |   |   |   |   |   |   |   |   |   |
| Basic earnings per common share                   |   | $      | 2.03    |   |   | $      | 0.97   |   |   | $ | 1.14 |   |
| Diluted earnings per common share                 |   | $      | 2.03    |   |   | $      | 0.97   |   |   | $ | 1.14 |   |

----

----

|                                                                                |   |        |      |   |   |   |    |     |   |   |         |   |   | Accumulated        |    |   |             |   |    |     |   |   |                |   |
|------------------------------------------------------------------------------------------|--------|-------------|-----------|--------|--------|--------|---------|----------|--------|--------|--------------|--------|--------|--------------------|---------|--------|------------------|--------|---------|----------|--------|--------|---------------------|--------|
|                                                                                     |   |        |      |   |   |   |    |     |   |   |         |   |   | Other              |    |   | Deferred         |   |    |     |   |   | Total               |   |
|                                                                                     |   | Outstanding |      |   | Common |   |    | Retained |   |   | Unearned     |   |   | Comprehensive      |    |   | Compensation     |   |    | Treasury |   |   | Shareholders’ |   |
|                                                                                     |   | Shares      |      |   | Stock  |   |    | Earnings |   |   | Compensation |   |   | Income (Loss) |    |   | Plan Shares |   |    | Stock    |   |   | Equity              |   |
|                                                                                     |   |        |      |   |   |   |    |     |   |   |         |   |   |               |    |   |             |   |    |     |   |   |                |   |
| Balance at January 1, 2008                                                               |   |        | 1,136,397 |   |   | $      | 11,233  |     |   | $      | 11,722       |   |   | $                  | — |   |             | $      | (34     | )        |   | $      | (492                | )      |   | $ | (1,163 | ) |   | $ | 21,266 |   |
| Comprehensive income:                                                                    |   |        |      |   |   |   |    |     |   |   |         |   |   |               |    |   |             |   |    |     |   |   |                |   |   |   |   |   |   |   |   |   |
| Net income                                                                               |   |        |      |   |   |   |    |     |   |   | 1,301        |   |   |               |    |   |             |   |    |     |   |   |                |   |   |   |   |   |   |   | 1,301 |   |
| Change in net unrealized gain (loss) on securities available for sale, net of tax effect |   |        |      |   |   |   | — |     |   |   | —      |   |   |               | — |   |             |   | (74     | )        |   |   | —             |   |   |   | — |   |   |   | (74 | ) |
| Total comprehensive income                                                               |   |        |      |   |   |   |    |     |   |   |         |   |   |               |    |   |             |   |    |     |   |   |                |   |   |   |   |   |   |   | 1,227 |   |
| Cumulative effect of change in accounting for postretirement obligations                 |   |        |      |   |   |   | — |     |   |   | (323         | )      |   |               | — |   |             |   | — |     |   |   | —             |   |   |   | — |   |   |   | (323 | ) |
| Cash dividends ($0.76 per share)                                                         |   |        |      |   |   |   | — |     |   |   | (864         | )      |   |               | — |   |             |   | — |     |   |   | —             |   |   |   | — |   |   |   | (864 | ) |
| Shares acquired: deferred compensation; 2,510 shares                                     |   |        |      |   |   |   | 58      |     |   |   | —      |   |   |               | — |   |             |   | — |     |   |   | (58                 | )      |   |   | — |   |   |   | — |   |
| Shares divested: deferred compensation;  331 shares                            |   |        |      |   |   |   | (8      | )        |   |   | —      |   |   |               | — |   |             |   | — |     |   |   | 8                   |   |   |   | — |   |   |   | — |   |
| Stock-based compensation expense                                                         |   |        | —   |   |   |   | (1      | )        |   |   | —      |   |   |               | — |   |             |   | — |     |   |   | —             |   |   |   | — |   |   |   | (1 | ) |
|                                                                                     |   |        |      |   |   |   |    |     |   |   |         |   |   |               |    |   |             |   |    |     |   |   |                |   |   |   |   |   |   |   |   |   |
| Balance at December 31, 2008                                                             |   |        | 1,136,397 |   |   | $      | 11,282  |     |   | $      | 11,836       |   |   | $                  | — |   |             | $      | (108    | )        |   | $      | (542                | )      |   | $ | (1,163 | ) |   | $ | 21,305 |   |
|                                                                                     |   |        |      |   |   |   |    |     |   |   |         |   |   |               |    |   |             |   |    |     |   |   |                |   |   |   |   |   |   |   |   |   |
| Comprehensive income:                                                                    |   |        |      |   |   |   |    |     |   |   |         |   |   |               |    |   |             |   |    |     |   |   |                |   |   |   |   |   |   |   |   |   |
| Net income                                                                               |   |        |      |   |   |   |    |     |   |   | 1,101        |   |   |               |    |   |             |   |    |     |   |   |                |   |   |   |   |   |   |   | 1,101 |   |
| Change in net unrealized gain (loss) on securities available for sale, net of tax effect |   |        |      |   |   |   | — |     |   |   | —      |   |   |               | — |   |             |   | 942     |     |   |   | —             |   |   |   | — |   |   |   | 942 |   |
| Total comprehensive income                                                               |   |        |      |   |   |   |    |     |   |   |         |   |   |               |    |   |             |   |    |     |   |   |                |   |   |   |   |   |   |   | 2,043 |   |
|                                                                                     |   |        |      |   |   |   |    |     |   |   |         |   |   |               |    |   |             |   |    |     |   |   |                |   |   |   |   |   |   |   |   |   |
| Cash dividends ($0.58 per share)                                                         |   |        |      |   |   |   | — |     |   |   | (659         | )      |   |               | — |   |             |   | — |     |   |   | —             |   |   |   | — |   |   |   | (659 | ) |
| Shares acquired: deferred compensation; 5,673 shares                                     |   |        |      |   |   |   | 75      |     |   |   | —      |   |   |               | — |   |             |   | — |     |   |   | (75                 | )      |   |   | — |   |   |   | — |   |
| Shares divested: deferred compensation; 5,097 shares                                     |   |        |      |   |   |   | (123    | )        |   |   | —      |   |   |               | — |   |             |   | — |     |   |   | 123                 |   |   |   | — |   |   |   | — |   |
| Restricted shares awarded                                                                |   |        | 2,100     |   |   |   | 26      |     |   |   | —      |   |   |               | (26     | )      |             |   | — |     |   |   | —             |   |   |   | — |   |   |   | — |   |
| Stock-based compensation expense                                                         |   |        |      |   |   |   | 6       |     |   |   | —      |   |   |               | — |   |             |   | — |     |   |   | —             |   |   |   | — |   |   |   | 6 |   |
|                                                                                     |   |        |      |   |   |   |    |     |   |   |         |   |   |               |    |   |             |   |    |     |   |   |                |   |   |   |   |   |   |   |   |   |
| Balance at December 31, 2009                                                             |   |        | 1,138,497 |   |   | $      | 11,266  |     |   | $      | 12,278       |   |   | $                  | (26     | )      |             | $      | 834     |     |   | $      | (494                | )      |   | $ | (1,163 | ) |   | $ | 22,695 |   |

----

----

|                                                                                     |   |        |      |   |   |   |    |     |   |   |         |   |   | Accumulated        |    |   |             |   |    |     |   |   |                |   |
|------------------------------------------------------------------------------------------|--------|-------------|-----------|--------|--------|--------|---------|----------|--------|--------|--------------|--------|--------|--------------------|---------|--------|------------------|--------|---------|----------|--------|--------|---------------------|--------|
|                                                                                     |   |        |      |   |   |   |    |     |   |   |         |   |   | Other              |    |   | Deferred         |   |    |     |   |   | Total               |   |
|                                                                                     |   | Outstanding |      |   | Common |   |    | Retained |   |   | Unearned     |   |   | Comprehensive      |    |   | Compensation     |   |    | Treasury |   |   | Shareholders’ |   |
|                                                                                     |   | Shares      |      |   | Stock  |   |    | Earnings |   |   | Compensation |   |   | Income (Loss) |    |   | Plan Shares |   |    | Stock    |   |   | Equity              |   |
|                                                                                     |   |        |      |   |   |   |    |     |   |   |         |   |   |               |    |   |             |   |    |     |   |   |                |   |
| Balance at January 1, 2010                                                               |   |        | 1,138,497 |   |   | $      | 11,266  |     |   | $      | 12,278       |   |   | $                  | (26     | )      |             | $      | 834     |     |   | $      | (494                | )      |   | $ | (1,163 | ) |   | $ | 22,695 |   |
|                                                                                     |   |        |      |   |   |   |    |     |   |   |         |   |   |               |    |   |             |   |    |     |   |   |                |   |   |   |   |   |   |   |   |   |
| Comprehensive income:                                                                    |   |        |      |   |   |   |    |     |   |   |         |   |   |               |    |   |             |   |    |     |   |   |                |   |   |   |   |   |   |   |   |   |
| Net income                                                                               |   |        |      |   |   |   |    |     |   |   | 2,323        |   |   |               |    |   |             |   |    |     |   |   |                |   |   |   |   |   |   |   | 2,323 |   |
| Change in net unrealized gain (loss) on securities available for sale, net of tax effect |   |        |      |   |   |   | — |     |   |   | —      |   |   |               | — |   |             |   | (297    | )        |   |   | —             |   |   |   | — |   |   |   | (297 | ) |
| Total comprehensive income                                                               |   |        |      |   |   |   |    |     |   |   |    |   |   |               |    |   |             |   |    |     |   |   |                |   |   |   |   |   |   |   | 2,026 |   |
|                                                                                     |   |        |      |   |   |   |    |     |   |   |         |   |   |               |    |   |             |   |    |     |   |   |                |   |   |   |   |   |   |   |   |   |
| Cash dividends ($0.42 per share)                                                         |   |        |      |   |   |   | — |     |   |   | (481         | )      |   |               | — |   |             |   | — |     |   |   | —             |   |   |   | — |   |   |   | (481 | ) |
| Shares acquired: deferred compensation; 2,102 shares                                     |   |        |      |   |   |   | 22      |     |   |   | —      |   |   |               | — |   |             |   | — |     |   |   | (22                 | )      |   |   | — |   |   |   | — |   |
| Shares divested: deferred compensation;  335 shares                            |   |        |      |   |   |   | (7      | )        |   |   | —      |   |   |               | — |   |             |   | — |     |   |   | 7                   |   |   |   | — |   |   |   | — |   |
| Restricted shares awarded                                                                |   |        | 1,850     |   |   |   | 24      |     |   |   | —      |   |   |               | (24     | )      |             |   | — |     |   |   | —             |   |   |   | — |   |   |   | — |   |
| Stock-based compensation expense                                                         |   |        |      |   |   |   | 18      |     |   |   | —      |   |   |               | 14      |   |             |   | — |     |   |   | —             |   |   |   | — |   |   |   | 32 |   |
| Issuance of treasury stock for deferred compensation plan                                |   |        | 10,998    |   |   |   | 117     |     |   |   | (184         | )      |   |               | — |   |             |   | — |     |   |   | (117                | )      |   |   | 301 |   |   |   | 117 |   |
|                                                                                     |   |        |      |   |   |   |    |     |   |   |         |   |   |               |    |   |             |   |    |     |   |   |                |   |   |   |   |   |   |   |   |   |
| Balance at December 31, 2010                                                             |   |        | 1,151,345 |   |   | $      | 11,440  |     |   | $      | 13,936       |   |   | $                  | (36     | )      |             | $      | 537     |     |   | $      | (626                | )      |   | $ | (862 | ) |   | $ | 24,389 |   |

----

----

|                                                         |   | 2010   |    |   | 2009   |   |    | 2008   |   |
|--------------------------------------------------------------|--------|--------|---------|--------|--------|--------|---------|--------|--------|
| Cash flows from operating activities                         |   |   |    |   |   |   |    |   |   |
| Net income                                                   |   | $      | 2,323   |   |   | $      | 1,101   |   |   | $ | 1,301 |   |
| Adjustments to reconcile net income to net cash from         |   |   |    |   |   |   |    |   |   |   |   |   |
| operating activities                                         |   |   |    |   |   |   |    |   |   |   |   |   |
| Depreciation                                                 |   |   | 645     |   |   |   | 862     |   |   |   | 1,031 |   |
| Provision for loan losses                                    |   |   | 1,370   |   |   |   | 1,484   |   |   |   | 1,127 |   |
| Deferred income taxes                                        |   |   | 107     |   |   |   | (84     | )      |   |   | (66 | ) |
| Loss on sale of repossessed assets, net                      |   |   | 271     |   |   |   | 102     |   |   |   | 21 |   |
| Gain on sale of securities, AFS                              |   |   | — |   |   |   | (22     | )      |   |   | — |   |
| Stock dividends on FHLB stock                                |   |   | — |   |   |   | — |   |   |   | (87 | ) |
| Net amortization on securities                               |   |   | 182     |   |   |   | 207     |   |   |   | 107 |   |
| Increased cash value of Bank-owned life insurance            |   |   | (282    | )      |   |   | (277    | )      |   |   | (268 | ) |
| Stock-based compensation expense                             |   |   | 32      |   |   |   | 6       |   |   |   | (1 | ) |
| Changes in:                                                  |   |   |    |   |   |   |    |   |   |   |   |   |
| Interest receivable                                          |   |   | (141    | )      |   |   | (112    | )      |   |   | 214 |   |
| Interest payable                                             |   |   | (47     | )      |   |   | (98     | )      |   |   | (49 | ) |
| Other assets and liabilities                                 |   |   | 548     |   |   |   | (1,748  | )      |   |   | 496 |   |
| Net cash from operating activities                           |   |   | 5,008   |   |   |   | 1,421   |   |   |   | 3,826 |   |
|                                                         |   |   |    |   |   |   |    |   |   |   |   |   |
| Cash flows from investing activities                         |   |   |    |   |   |   |    |   |   |   |   |   |
| Securities available for sale:                               |   |   |    |   |   |   |    |   |   |   |   |   |
| Purchases                                                    |   |   | (5,999  | )      |   |   | (8,148  | )      |   |   | — |   |
| Maturities and repayments                                    |   |   | 6,001   |   |   |   | 9,661   |   |   |   | 11,123 |   |
| Sales                                                        |   |   | — |   |   |   | 593     |   |   |   | — |   |
| Purchases of other investment securities                     |   |   | (2      | )      |   |   | — |   |   |   | — |   |
| Net change in loans                                          |   |   | (2,776  | )      |   |   | (32,597 | )      |   |   | (4,877 | ) |
| Proceeds from sale of OREO and repossessed assets            |   |   | 731     |   |   |   | 922     |   |   |   | 291 |   |
| Proceeds from sale of premises and equipment                 |   |   | 8       |   |   |   | 205     |   |   |   | 583 |   |
| Bank premises and equipment expenditures                     |   |   | (308    | )      |   |   | (1,128  | )      |   |   | (848 | ) |
| Net cash from investing activities                           |   |   | (2,345  | )      |   |   | (30,492 | )      |   |   | 6,272 |   |
|                                                         |   |   |    |   |   |   |    |   |   |   |   |   |
| Cash flows from financing activities                         |   |   |    |   |   |   |    |   |   |   |   |   |
| Net change in deposits                                       |   |   | 12,535  |   |   |   | 33,042  |   |   |   | (6,844 | ) |
| Proceeds from additional FHLB advances                       |   |   | — |   |   |   | — |   |   |   | 20,440 |   |
| Repayments of FHLB advances                                  |   |   | (5,000  | )      |   |   | — |   |   |   | (20,440 | ) |
| Cash dividends paid                                          |   |   | (481    | )      |   |   | (659    | )      |   |   | (864 | ) |
| Issuance of treasury stock for deferred compensation plan    |   |   | 117     |   |   |   | — |   |   |   | — |   |
| Net cash from financing activities                           |   |   | 7,171   |   |   |   | 32,383  |   |   |   | (7,708 | ) |
|                                                         |   |   |    |   |   |   |    |   |   |   |   |   |
| Net change in cash and cash equivalents                      |   |   | 9,834   |   |   |   | 3,312   |   |   |   | 2,390 |   |
| Cash equivalents and federal funds sold at beginning of year |   |   | 12,246  |   |   |   | 8,934   |   |   |   | 6,544 |   |
|                                                         |   |   |    |   |   |   |    |   |   |   |   |   |
| Cash equivalents and federal funds sold at end of year       |   | $      | 22,080  |   |   | $      | 12,246  |   |   | $ | 8,934 |   |
|                                                         |   |   |    |   |   |   |    |   |   |   |   |   |
| Supplemental disclosures:                                    |   |   |    |   |   |   |    |   |   |   |   |   |
| Cash paid for interest                                       |   | $      | 3,636   |   |   | $      | 5,065   |   |   | $ | 6,326 |   |
| Cash paid for income taxes                                   |   |   | 166     |   |   |   | 255     |   |   |   | — |   |
| Non-cash transfer of loans to foreclosed/repossessed assets  |   |   | 454     |   |   |   | 2,286   |   |   |   | 405 |   |

----

----

----

----

|                                                |   |   |   |   | Gross      |   |    | Gross      |   |
|-----------------------------------------------------|--------|--------|--------|--------|------------|--------|---------|------------|--------|
|                                                |   | Fair   |   |   | Unrealized |   |    | Unrealized |   |
|                                                |   | Value  |   |   | Gains      |   |    | Losses     |   |
| 2010                                                |   |   |   |   |       |   |    |       |   |   |   |   |
| Obligations of U.S. Government and federal agencies |   | $      | 9,065  |   |       | $      | 54      |       |   | $ | (21 | ) |
| Obligations of state and political subdivisions     |   |   | 16,069 |   |       |   | 467     |       |   |   | (96 | ) |
| Mortgage-backed securities                          |   |   | 8,709  |   |       |   | 410     |       |   |   | — |   |
| Total securities available for sale                 |   | $      | 33,843 |   |       | $      | 931     |       |   | $ | (117 | ) |
| 2009                                                |   |   |   |   |       |   |    |       |   |   |   |   |
| Obligations of U.S. Government and federal agencies |   | $      | 4,083  |   |       | $      | — |       |   | $ | (15 | ) |
| Obligations of state and political subdivisions     |   |   | 18,618 |   |       |   | 925     |       |   |   | (33 | ) |
| Mortgage-backed securities                          |   |   | 11,774 |   |       |   | 386     |       |   |   | — |   |
| Total securities available for sale                 |   | $      | 34,475 |   |       | $      | 1,311   |       |   | $ | (48 | ) |

|                                   |   | Fair Value |   |
|----------------------------------------|--------|------------|--------|
| Due less than one year                 |   | $          | 146    |   |
| Due after one year through five years  |   |       | 11,483 |   |
| Due after five years through ten years |   |       | 8,434  |   |
| Due after ten years                    |   |       | 5,071  |   |
| Mortgage-backed securities             |   |       | 8,709  |   |
|                                   |   | $          | 33,843 |   |

|         |   | 2010   |    |   | 2009   |   |    | 2008   |   |
|--------------|--------|--------|---------|--------|--------|--------|---------|--------|--------|
| Proceeds     |   | $      | — |   |   | $      | 593     |   |   | $ | — |   |
| Gross gains  |   |   | — |   |   |   | 22      |   |   |   | — |   |
| Gross losses |   |   | — |   |   |   | — |   |   |   | — |   |

|                                 |   | Less Than Twelve Months |   |   | Over Twelve Months |   |
|--------------------------------------|--------|-------------------------|--------|--------|--------------------|--------|
|                                 |   | Gross                   |   |   |               |   |   | Gross |   |   |   |   |
| (Dollars in thousands)               |   | Unrealized              |   |   | Fair               |   |   | Unrealized |   |   | Fair |   |
| Available for sale securities        |   | Losses                  |   |   | Value              |   |   | Losses |   |   | Value |   |
| U.S. Government and federal agencies |   | $                       | (21    | )      |               | $      | 1,979 |   |   | $ | 0 |   |   | $ | 0 |   |
| State and political subdivisions     |   |                    | (91    | )      |               |   | 3,198 |   |   |   | (5 | ) |   |   | 427 |   |
| Mortgage-backed securities           |   |                    | 0      |   |               |   | 0 |   |   |   | 0 |   |   |   | 0 |   |
| Total available for sale             |   | $                       | (112   | )      |               | $      | 5,177 |   |   | $ | (5 | ) |   | $ | 427 |   |

----

|                                 |   | Less Than Twelve Months |   |   | Over Twelve Months |   |
|--------------------------------------|--------|-------------------------|--------|--------|--------------------|--------|
|                                 |   | Gross                   |   |   |               |   |   | Gross |   |   |   |   |
| (Dollars in thousands)               |   | Unrealized              |   |   | Fair               |   |   | Unrealized |   |   | Fair |   |
| Available for sale securities        |   | Losses                  |   |   | Value              |   |   | Losses |   |   | Value |   |
| U.S. Government and federal agencies |   | $                       | (15    | )      |               | $      | 2,082 |   |   | $ | 0 |   |   | $ | 0 |   |
| State and political subdivisions     |   |                    | (16    | )      |               |   | 1,259 |   |   |   | (17 | ) |   |   | 835 |   |
| Mortgage-backed securities           |   |                    | 0      |   |               |   | 0 |   |   |   | 0 |   |   |   | 0 |   |
| Total available for sale             |   | $                       | (31    | )      |               | $      | 3,341 |   |   | $ | (17 | ) |   | $ | 835 |   |

|                          |   | 2010   |    |   | 2009   |   |
|-------------------------------|--------|--------|---------|--------|--------|--------|
| Commercial loans              |   | $      | 172,424 |   |   | $      | 168,611 |   |
| Residential real estate loans |   |   | 11,261  |   |   |   | 9,296 |   |
| Construction loans            |   |   | 2,514   |   |   |   | 2,529 |   |
| Consumer loans                |   |   | 23,065  |   |   |   | 23,721 |   |
| Home equity loans             |   |   | 21,231  |   |   |   | 22,685 |   |
| Indirect finance loans        |   |   | 163     |   |   |   | 1,166 |   |
| Total loans                   |   | $      | 230,658 |   |   | $      | 228,008 |   |

----

|     |   |   |       |    |   |         |   |   |             |   |   |             |   |   | Commercial |    |   | Commercial |   |
|----------|--------|--------|------------|---------|--------|--------------|--------|--------|------------------|--------|--------|------------------|--------|--------|------------|---------|--------|------------|--------|
|     |   |   | Commercial |    |   | Commercial   |   |   | Real Estate |   |   | Real Estate |   |
|     |   |   | Operating  |    |   | Agricultural |   |   | 1-4 Family  |   |   | Other            |   |
| Category |   |   | 2010       |    |   | 2009         |   |   | 2010             |   |   | 2009             |   |   | 2010       |    |   | 2009       |   |   | 2010 |   |   | 2009 |   |
| 1 - 2    |   |   | $          | 275     |   |         | $      | 261    |             |   | $      | 130              |   |   | $          | — |   |       | $      | — |   |   | $ | — |   |   | $ | — |   |   | $ | — |   |
| 3        |   |   |       | 97      |   |         |   | 2,308  |             |   |   | 2,207            |   |   |       | 2,100   |   |       |   | 2,079 |   |   |   | 2,125 |   |   |   | 2,641 |   |   |   | 2,699 |   |
| 4        |   |   |       | 24,916  |   |         |   | 22,790 |             |   |   | 23,885           |   |   |       | 21,255  |   |       |   | 26,660 |   |   |   | 23,209 |   |   |   | 54,926 |   |   |   | 73,306 |   |
| 5        |   |   |       | 1,926   |   |         |   | 1,927  |             |   |   | 2,073            |   |   |       | 917     |   |       |   | 1,753 |   |   |   | 1,337 |   |   |   | 13,432 |   |   |   | 2,771 |   |
| 6        |   |   |       | 232     |   |         |   | 346    |             |   |   | 335              |   |   |       | 755     |   |       |   | 899 |   |   |   | 601 |   |   |   | 11,942 |   |   |   | 7,181 |   |
| 7        |   |   |       | 472     |   |         |   | 311    |             |   |   | —          |   |   |       | 575     |   |       |   | 458 |   |   |   | 315 |   |   |   | 1,000 |   |   |   | 1,277 |   |
| 8        |   |   |       | — |   |         |   | 29     |             |   |   | —          |   |   |       | — |   |       |   | — |   |   |   | — |   |   |   | 86 |   |   |   | 216 |   |
| Total    |   |   | $          | 27,918  |   |         | $      | 27,972 |             |   | $      | 28,630           |   |   | $          | 25,602  |   |       | $      | 31,849 |   |   | $ | 27,587 |   |   | $ | 84,027 |   |   | $ | 87,450 |   |

|     |   | Residential                         |    |   | Residential                  |   |
|----------|--------|-------------------------------------|---------|--------|------------------------------|--------|
|     |   | Real Estate, Construction |    |   | Real Estate, Other |   |
| Category |   | 2010                                |    |   | 2009                         |   |   | 2010 |   |   | 2009 |   |
| 1 - 2    |   | $                                   | — |   |                         | $      | — |   |   | $ | — |   |   | $ | — |   |
| 3        |   |                                | — |   |                         |   | — |   |   |   | 346 |   |   |   | — |   |
| 4        |   |                                | 2,514   |   |                         |   | 2,529 |   |   |   | 9,257 |   |   |   | 8,557 |   |
| 5        |   |                                | — |   |                         |   | — |   |   |   | 1,287 |   |   |   | 337 |   |
| 6        |   |                                | — |   |                         |   | — |   |   |   | 154 |   |   |   | 157 |   |
| 7        |   |                                | — |   |                         |   | — |   |   |   | 217 |   |   |   | 245 |   |
| 8        |   |                                | — |   |                         |   | — |   |   |   | — |   |   |   | — |   |
| Total    |   | $                                   | 2,514   |   |                         | $      | 2,529 |   |   | $ | 11,261 |   |   | $ | 9,296 |   |

|     |   | Consumer |    |   | Consumer |   |    | Consumer |   |
|----------|--------|----------|---------|--------|----------|--------|---------|----------|--------|
|     |   | Equity   |    |   | Auto     |   |    | Other    |   |
| Category |   | 2010     |    |   | 2009     |   |    | 2010     |   |   | 2009 |   |   | 2010 |   |   | 2009 |   |
| 1 - 2    |   | $        | — |   |     | $      | — |     |   | $ | 277 |   |   | $ | — |   |   | $ | 1,118 |   |   | $ | 914 |   |
| 3        |   |     | 178     |   |     |   | — |     |   |   | — |   |   |   | — |   |   |   | 14 |   |   |   | — |   |
| 4        |   |     | 20,259  |   |     |   | 22,471  |     |   |   | 11,277 |   |   |   | 10,668 |   |   |   | 10,282 |   |   |   | 13,039 |   |
| 5        |   |     | 507     |   |     |   | 47      |     |   |   | 3 |   |   |   | 46 |   |   |   | 167 |   |   |   | 124 |   |
| 6        |   |     | 246     |   |     |   | 34      |     |   |   | — |   |   |   | — |   |   |   | 50 |   |   |   | 44 |   |
| 7        |   |     | 41      |   |     |   | 133     |     |   |   | — |   |   |   | — |   |   |   | 40 |   |   |   | 52 |   |
| 8        |   |     | — |   |     |   | — |     |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |
| Total    |   | $        | 21,231  |   |     | $      | 22,685  |     |   | $ | 11,557 |   |   | $ | 10,714 |   |   | $ | 11,671 |   |   | $ | 14,173 |   |

----

| 1 – Prime | All of the risks associated with this credit (based on each of the Bank’s creditworthiness criteria) are minimal or the loan is supported by pledged deposits, U.S. government securities, etc. |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2 – Good | Most of the risks associated with this credit (based on each of the Bank’s creditworthiness criteria) are minimal. |
|----------------|--------------------------------------------------------------------------------------------------------------------------|

| 3 – Satisfactory | Some of risks associated with this credit (based on each of the Bank’s creditworthiness criteria) are minimal. |
|------------------------|----------------------------------------------------------------------------------------------------------------------|

| 4 – Fair | The weighted overall risk associated with this credit (based on each of the Bank’s creditworthiness criteria) is acceptable. |
|----------------|------------------------------------------------------------------------------------------------------------------------------------|

| 5 – Watch | The credits possess some of the credit deficiency or potential weakness which deserves close attention of management, but does not yet warrant substandard classification. |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 6 – Special Mention | The weighted overall risk associated with this credit is considered higher than normal (but still acceptable) or the loan possesses deficiencies which corrective action by the Bank would remedy, thereby reducing risk. |
|---------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 7 – Substandard | The weighted overall risk associated with this credit (based on each of the Bank’s creditworthiness criteria) is considered undesirable, or the Bank is inadequately protected and there exists the distinct possibility of sustaining some loss if not corrected. |
|-----------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 8 – Doubtful | Weakness makes collection or liquidation in full (based on currently existing facts) improbable. |
|--------------------|--------------------------------------------------------------------------------------------------|

| 9 – Loss | This credit is of little value and not warranted as a bankable asset. |
|----------------|-----------------------------------------------------------------------|

|                                                 |   | Commercial |    |   | Real Estate |   |    | Consumer |   |   | Total   |   |
|------------------------------------------------------|--------|------------|---------|--------|------------------|--------|---------|----------|--------|--------|---------|--------|
| 2010                                                 |   |       |    |   |             |   |    |     |   |   |    |   |
| Beginning balance                                    |   | $          | 1,927   |   |             | $      | 158     |     |   | $      | 659     |   |   | $ | 2,744 |   |
| Charge-offs                                          |   |       | (610    | )      |             |   | (25     | )        |   |   | (404    | )      |   |   | (1,039 | ) |
| Recoveries                                           |   |       | 34      |   |             |   | — |     |   |   | 89      |   |   |   | 123 |   |
| Provision                                            |   |       | 956     |   |             |   | 49      |     |   |   | 365     |   |   |   | 1,370 |   |
| Ending balance                                       |   | $          | 2,307   |   |             | $      | 182     |     |   | $      | 709     |   |   | $ | 3,198 |   |
| Allowance:                                           |   |       |    |   |             |   |    |     |   |   |    |   |   |   |   |   |
| Ending balance individually evaluated for impairment |   | $          | 116     |   |             | $      | — |     |   | $      | 40      |   |   | $ | 156 |   |
| Ending balance collectively evaluated for impairment |   | $          | 2,191   |   |             | $      | 182     |     |   | $      | 669     |   |   | $ | 3,042 |   |
| Loans:                                               |   |       |    |   |             |   |    |     |   |   |    |   |   |   |   |   |
| Ending balance individually evaluated for impairment |   | $          | 1,774   |   |             | $      | — |     |   | $      | 90      |   |   | $ | 1,864 |   |
| Ending balance collectively evaluated for impairment |   | $          | 170,650 |   |             | $      | 13,775  |     |   | $      | 44,369  |   |   | $ | 228,794 |   |
|                                                 |   |       |    |   |             |   |    |     |   |   |    |   |   |   |   |   |
| 2009                                                 |   |       |    |   |             |   |    |     |   |   |    |   |   |   |   |   |
| Beginning balance                                    |   | $          | 1,771   |   |             | $      | 67      |     |   | $      | 645     |   |   | $ | 2,483 |   |
| Charge-offs                                          |   |       | (579    | )      |             |   | (96     | )        |   |   | (640    | )      |   |   | (1,315 | ) |
| Recoveries                                           |   |       | 4       |   |             |   | — |     |   |   | 88      |   |   |   | 92 |   |
| Provision                                            |   |       | 731     |   |             |   | 187     |     |   |   | 566     |   |   |   | 1,484 |   |
| Ending Balance                                       |   | $          | 1,927   |   |             | $      | 158     |     |   | $      | 659     |   |   | $ | 2,744 |   |
| Allowance:                                           |   |       |    |   |             |   |    |     |   |   |    |   |   |   |   |   |
| Ending balance individually evaluated for impairment |   | $          | 88      |   |             | $      | — |     |   | $      | — |   |   | $ | 88 |   |
| Ending balance collectively evaluated for impairment |   | $          | 1,839   |   |             | $      | 158     |     |   | $      | 659     |   |   | $ | 2,656 |   |
| Loans:                                               |   |       |    |   |             |   |    |     |   |   |    |   |   |   |   |   |
| Ending balance individually evaluated for impairment |   | $          | 1,669   |   |             | $      | — |     |   | $      | — |   |   | $ | 1,669 |   |
| Ending balance collectively evaluated for impairment |   | $          | 166,942 |   |             | $      | 11,825  |     |   | $      | 47,572  |   |   | $ | 226,339 |   |

----

|                                |   |       |    |   |      |   |    |      |   |   | YTD        |   |   |       |    |
|-------------------------------------|--------|------------|---------|--------|-----------|--------|---------|-----------|--------|--------|------------|--------|--------|------------|---------|
| (In thousands)                      |   |       |    |   | Unpaid    |   |    |      |   |   | Average    |   |   | Interest   |    |
|                                |   | Recorded   |    |   | Principal |   |    | Related   |   |   | Recorded   |   |   | Income     |    |
| 2010                                |   | Investment |    |   | Balance   |   |    | Allowance |   |   | Investment |   |   | Recognized |    |
| With no related allowance recorded: |   |       |    |   |      |   |    |      |   |   |       |   |   |       |    |
| Commercial                          |   |       |    |   |      |   |    |      |   |   |       |   |   |       |    |
| Operating                           |   | $          | 331     |   |      | $      | 363     |      |   | $      | —    |   |   | $          | 170     |   |   | $ | 26 |   |
| Agricultural                        |   |       | — |   |      |   | — |      |   |   | —    |   |   |       | — |   |   |   | — |   |
| Real estate, 1-4 family             |   |       | 53      |   |      |   | 106     |      |   |   | —    |   |   |       | 53      |   |   |   | — |   |
| Real estate, other                  |   |       | 500     |   |      |   | 562     |      |   |   | —    |   |   |       | 238     |   |   |   | 19 |   |
| With an allowance recorded:         |   |       |    |   |      |   |    |      |   |   |       |   |   |       |    |   |   |   |   |   |
| Commercial                          |   |       |    |   |      |   |    |      |   |   |       |   |   |       |    |   |   |   |   |   |
| Agricultural                        |   |       | — |   |      |   | — |      |   |   | —    |   |   |       | — |   |   |   | — |   |
| Real estate, 1-4 family             |   |       | 405     |   |      |   | 452     |      |   |   | 71         |   |   |       | 112     |   |   |   | 29 |   |
| Real estate, other                  |   |       | 485     |   |      |   | 713     |      |   |   | 45         |   |   |       | 638     |   |   |   | 14 |   |
| Consumer, other                     |   |       | 90      |   |      |   | 90      |      |   |   | 40         |   |   |       | 8       |   |   |   | — |   |
| Total                               |   | $          | 1,864   |   |      | $      | 2,286   |      |   | $      | 156        |   |   | $          | 1,219   |   |   | $ | 88 |   |

|                                |   |       |    |   |      |   |    |      |   |   | YTD        |   |   |       |    |
|-------------------------------------|--------|------------|---------|--------|-----------|--------|---------|-----------|--------|--------|------------|--------|--------|------------|---------|
| (In thousands)                      |   |       |    |   | Unpaid    |   |    |      |   |   | Average    |   |   | Interest   |    |
|                                |   | Recorded   |    |   | Principal |   |    | Related   |   |   | Recorded   |   |   | Income     |    |
| 2009                                |   | Investment |    |   | Balance   |   |    | Allowance |   |   | Investment |   |   | Recognized |    |
| With no related allowance recorded: |   |       |    |   |      |   |    |      |   |   |       |   |   |       |    |
| Commercial                          |   |       |    |   |      |   |    |      |   |   |       |   |   |       |    |
| Operating                           |   | $          | 48      |   |      | $      | 48      |      |   | $      | —    |   |   | $          | 32      |   |   | $ | 1 |   |
| Agricultural                        |   |       | 354     |   |      |   | 354     |      |   |   | —    |   |   |       | 758     |   |   |   | — |   |
| Real estate, 1-4 family             |   |       | 79      |   |      |   | 79      |      |   |   | —    |   |   |       | 46      |   |   |   | 1 |   |
| Real estate, other                  |   |       | 462     |   |      |   | 472     |      |   |   | —    |   |   |       | 526     |   |   |   | 13 |   |
| With an allowance recorded:         |   |       |    |   |      |   |    |      |   |   |       |   |   |       |    |   |   |   |   |   |
| Commercial                          |   |       |    |   |      |   |    |      |   |   |       |   |   |       |    |   |   |   |   |   |
| Operating                           |   |       | 30      |   |      |   | 75      |      |   |   | 2          |   |   |       | 95      |   |   |   | — |   |
| Real estate, 1-4 family             |   |       | 124     |   |      |   | 124     |      |   |   | 24         |   |   |       | 314     |   |   |   | — |   |
| Real estate, other                  |   |       | 631     |   |      |   | 654     |      |   |   | 62         |   |   |       | 715     |   |   |   | 16 |   |
| Consumer, other                     |   |       | — |   |      |   | — |      |   |   | —    |   |   |       | — |   |   |   | — |   |
| Total                               |   | $          | 1,728   |   |      | $      | 1,806   |      |   | $      | 88         |   |   | $          | 2,486   |   |   | $ | 31 |   |

----

|                |   |          |    |   |          |   |    |          |   |   |          |   |   |    |    |   |        |   |    | Recorded               |   |
|---------------------|--------|---------------|---------|--------|---------------|--------|---------|---------------|--------|--------|---------------|--------|--------|---------|---------|--------|-------------|--------|---------|------------------------|--------|
| (In thousands) |   | 30-59         |    |   | 60-89         |   |    | > 90  |   |   |          |   |   |    |    |   | Total       |   |    | Investment             |   |
|                |   | Days          |    |   | Days          |   |    | Days          |   |   | Total         |   |   |    |    |   | Financing   |   |    | > 90 Days |   |
| 2010                |   | Past Due |    |   | Past Due |   |    | Past Due |   |   | Past Due |   |   | Current |    |   | Receivables |   |    | and Accruing      |   |
| Commercial          |   |          |    |   |          |   |    |          |   |   |          |   |   |    |    |   |        |   |    |                   |   |
| Operating           |   | $             | 47      |   |          | $      | — |          |   | $      | 10            |   |   | $       | 57      |   |        | $      | 27,861  |                   |   | $ | 27,918 |   |   | $ | — |   |
| Agricultural        |   |          | — |   |          |   | — |          |   |   | —       |   |   |    | — |   |        |   | 28,631  |                   |   |   | 28,630 |   |   |   | — |   |
| Real estate,        |   |          |    |   |          |   |    |          |   |   |          |   |   |    |    |   |        |   |    |                   |   |   |   |   |   |   |   |   |
| 1-4 family          |   |          | 39      |   |          |   | — |          |   |   | 130           |   |   |    | 169     |   |        |   | 31,725  |                   |   |   | 31,894 |   |   |   | — |   |
| Real estate,        |   |          |    |   |          |   |    |          |   |   |          |   |   |    |    |   |        |   |    |                   |   |   |   |   |   |   |   |   |
| other               |   |          | 1,156   |   |          |   | 849     |          |   |   | 440           |   |   |    | 2,445   |   |        |   | 81,536  |                   |   |   | 83,982 |   |   |   | — |   |
| Residential         |   |          |    |   |          |   |    |          |   |   |          |   |   |    |    |   |        |   |    |                   |   |   |   |   |   |   |   |   |
| Construction        |   |          | — |   |          |   | — |          |   |   | —       |   |   |    | — |   |        |   | 2,514   |                   |   |   | 2,514 |   |   |   | — |   |
| Other               |   |          | — |   |          |   | — |          |   |   | —       |   |   |    | — |   |        |   | 11,261  |                   |   |   | 11,261 |   |   |   | — |   |
| Consumer            |   |          |    |   |          |   |    |          |   |   |          |   |   |    |    |   |        |   |    |                   |   |   |   |   |   |   |   |   |
| Equity              |   |          | 18      |   |          |   | 15      |          |   |   | 11            |   |   |    | 44      |   |        |   | 21,187  |                   |   |   | 21,231 |   |   |   | — |   |
| Auto                |   |          | — |   |          |   | — |          |   |   | —       |   |   |    | — |   |        |   | 11,557  |                   |   |   | 11,557 |   |   |   | — |   |
| Other               |   |          | 128     |   |          |   | — |          |   |   | 20            |   |   |    | 148     |   |        |   | 11,523  |                   |   |   | 11,671 |   |   |   | — |   |
| Total               |   | $             | 1,388   |   |          | $      | 864     |          |   | $      | 611           |   |   | $       | 2,863   |   |        | $      | 227,795 |                   |   | $ | 230,658 |   |   | $ | — |   |

|         |   |          |    |   |          |   |    |          |   |   |          |   |   |    |    |   |        |   |    | Recorded               |   |
|--------------|--------|---------------|---------|--------|---------------|--------|---------|---------------|--------|--------|---------------|--------|--------|---------|---------|--------|-------------|--------|---------|------------------------|--------|
|         |   | 30-59         |    |   | 60-89         |   |    | > 90  |   |   |          |   |   |    |    |   | Total       |   |    | Investment             |   |
|         |   | Days          |    |   | Days          |   |    | Days          |   |   | Total         |   |   |    |    |   | Financing   |   |    | > 90 Days |   |
| 2009         |   | Past Due |    |   | Past Due |   |    | Past Due |   |   | Past Due |   |   | Current |    |   | Receivables |   |    | and Accruing      |   |
| Commercial   |   |          |    |   |          |   |    |          |   |   |          |   |   |    |    |   |        |   |    |                   |   |
| Operating    |   | $             | 72      |   |          | $      | 19      |          |   | $      | 60            |   |   | $       | 151     |   |        | $      | 27,821  |                   |   | $ | 27,972 |   |   | $ | — |   |
| Agricultural |   |          | — |   |          |   | — |          |   |   | 354           |   |   |    | 354     |   |        |   | 25,248  |                   |   |   | 25,602 |   |   |   | — |   |
| Real estate, |   |          |    |   |          |   |    |          |   |   |          |   |   |    |    |   |        |   |    |                   |   |   |   |   |   |   |   |   |
| 1-4 family   |   |          | 58      |   |          |   | — |          |   |   | 320           |   |   |    | 378     |   |        |   | 27,209  |                   |   |   | 27,587 |   |   |   | — |   |
| Real estate, |   |          |    |   |          |   |    |          |   |   |          |   |   |    |    |   |        |   |    |                   |   |   |   |   |   |   |   |   |
| other        |   |          | 48      |   |          |   | 364     |          |   |   | 610           |   |   |    | 1,022   |   |        |   | 86,428  |                   |   |   | 87,450 |   |   |   | — |   |
| Residential  |   |          |    |   |          |   |    |          |   |   |          |   |   |    |    |   |        |   |    |                   |   |   |   |   |   |   |   |   |
| Construction |   |          | — |   |          |   | — |          |   |   | —       |   |   |    | — |   |        |   | 2,662   |                   |   |   | 2,662 |   |   |   | — |   |
| Other        |   |          | 107     |   |          |   | — |          |   |   | 48            |   |   |    | 155     |   |        |   | 9,008   |                   |   |   | 9,163 |   |   |   | — |   |
| Consumer     |   |          |    |   |          |   |    |          |   |   |          |   |   |    |    |   |        |   |    |                   |   |   |   |   |   |   |   |   |
| Equity       |   |          | 5       |   |          |   | — |          |   |   | 66            |   |   |    | 71      |   |        |   | 22,614  |                   |   |   | 22,685 |   |   |   | — |   |
| Auto         |   |          | 35      |   |          |   | 14      |          |   |   | —       |   |   |    | 49      |   |        |   | 10,665  |                   |   |   | 10,714 |   |   |   | — |   |
| Other        |   |          | 166     |   |          |   | 97      |          |   |   | 17            |   |   |    | 280     |   |        |   | 13,893  |                   |   |   | 14,173 |   |   |   | — |   |
| Total        |   | $             | 491     |   |          | $      | 494     |          |   | $      | 1,475         |   |   | $       | 2,460   |   |        | $      | 225,548 |                   |   | $ | 228,008 |   |   | $ | — |   |

----

|                    |   | December 31, 2010 |    |   | December 31, 2009 |   |
|-------------------------|--------|-----------------------------|---------|--------|-----------------------------|--------|
| Commercial              |   |                        |    |   |                        |   |
| Operating               |   | $                           | 44      |   |                        | $      | 111 |   |
| Agricultural            |   |                        | — |   |                        |   | 575 |   |
| Real estate, 1-4 family |   |                        | 130     |   |                        |   | 320 |   |
| Real estate, other      |   |                        | 1,453   |   |                        |   | 1,168 |   |
| Residential real estate |   |                        |    |   |                        |   |   |   |
| Other                   |   |                        | 216     |   |                        |   | 245 |   |
| Consumer                |   |                        |    |   |                        |   |   |   |
| Equity                  |   |                        | 55      |   |                        |   | 92 |   |
| Auto                    |   |                        | — |   |                        |   | 46 |   |
| Other                   |   |                        | 36      |   |                        |   | 84 |   |
| Total                   |   | $                           | 1,934   |   |                        | $      | 2,641 |   |

|                        |   | 2010   |    |   | 2009   |   |
|-----------------------------|--------|--------|---------|--------|--------|--------|
| Land                        |   | $      | 1,059   |   |   | $      | 1,110 |   |
| Buildings                   |   |   | 8,629   |   |   |   | 8,613 |   |
| Furniture and equipment     |   |   | 5,371   |   |   |   | 5,300 |   |
| Construction in process     |   |   | — |   |   |   | 35 |   |
| Total                       |   |   | 15,059  |   |   |   | 15,058 |   |
| Accumulated depreciation    |   |   | 7,422   |   |   |   | 7,075 |   |
| Premises and equipment, net |   | $      | 7,637   |   |   | $      | 7,983 |   |

| 2011                |   | $      | 77,371  |   |
|---------------------|--------|--------|---------|--------|
| 2012                |   |   | 18,903  |   |
| 2013                |   |   | 17,026  |   |
| 2014                |   |   | 6,849   |   |
| 2015                |   |   | 5,633   |   |
| 2016 and thereafter |   |   | 126     |   |
|                |   | $      | 125,908 |   |

|                                  |   | Interest |   |   |   |   |   |   |   |
|---------------------------------------|--------|----------|--------|--------|--------|--------|--------|--------|--------|
|                                  |   | Rate     |   |   | 2010   |   |   | 2009   |   |
| FHLB fixed rate advance, with monthly |   |     |   |   |   |   |   |   |   |
| Interest payments; due June 2010      |   |     | 3.36   | %      |   | $      | 0      |   |   | $ | 5,000 |   |

----

|                              |   | 2010   |   |   | 2009   |   |   | 2008   |   |
|-----------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Current provision                 |   | $      | 635    |   |   | $      | 173    |   |   | $ | 254 |   |
| Deferred provision (benefit)      |   |   | 107    |   |   |   | (84    | )      |   |   | (66 | ) |
| Total income tax expense (credit) |   | $      | 742    |   |   | $      | 89     |   |   | $ | 188 |   |

|                                                                   |   | 2010   |   |   | 2009   |   |
|------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|
| Items giving rise to deferred tax assets |   |   |   |   |   |   |   |   |
| Allowance for loan losses in excess of tax reserve                     |   | $      | 715    |   |   | $      | 564 |   |
| Deferred compensation                                                  |   |   | 318    |   |   |   | 264 |   |
| Alternative minimum tax credit carry forward                           |   |   | 153    |   |   |   | 374 |   |
| Nonaccrual loan interest                                               |   |   | 17     |   |   |   | 40 |   |
| Accrued expenses and other                                             |   |   | 20     |   |   |   | 53 |   |
| Total                                                                  |   |   | 1,223  |   |   |   | 1,295 |   |

|                                             |   |   |   |   |   |   |
|--------------------------------------------------|--------|--------|--------|--------|--------|--------|
| Items giving rise to deferred tax liabilities    |   |   |   |   |   |   |
| Depreciation                                     |   |   | (265   | )      |   |   | (208 | ) |
| Deferred loan fees and costs                     |   |   | (112   | )      |   |   | (145 | ) |
| FHLB stock dividend                              |   |   | (309   | )      |   |   | (309 | ) |
| Unrealized gain on securities available for sale |   |   | (277   | )      |   |   | (429 | ) |
| Prepaid expenses and other                       |   |   | (115   | )      |   |   | (104 | ) |
| Total                                            |   |   | (1,078 | )      |   |   | (1,195 | ) |
| Net deferred tax asset                           |   | $      | 145    |   |   | $      | 100 |   |

|                                       |   | 2010   |   |   | 2009   |   |   | 2008   |   |
|--------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Tax at statutory rates                     |   | $      | 1,042  |   |   | $      | 405    |   |   | $ | 506 |   |
| Increase (decrease) in tax resulting from: |   |   |   |   |   |   |   |   |   |   |   |   |
| Tax-exempt income                          |   |   | (310   | )      |   |   | (325   | )      |   |   | (310 | ) |
| Other                                      |   |   | 10     |   |   |   | 9      |   |   |   | (8 | ) |
| Total income tax expense (credit)          |   | $      | 742    |   |   | $      | 89     |   |   | $ | 188 |   |

----

|                                |   | 2010   |   |   | 2009   |   |
|-------------------------------------|--------|--------|--------|--------|--------|--------|
| Estimated fair value                |   | $      | 2.14   |   |   | $      | 2.08 |   |
| Dividend yield                      |   |   | 3.36   | %      |   |   | 3.38 | % |
| Risk-free interest rate             |   |   | 2.11   | %      |   |   | 3.35 | % |
| Expected volatility                 |   |   | 22.33  | %      |   |   | 19.98 | % |
| Expected life of options (in years) |   |   | 8      |   |   |   | 8 |   |

|                    |   | 2010   |    |   | 2009     |   |    | 2008   |   |
|-------------------------|--------|--------|---------|--------|----------|--------|---------|--------|--------|
|                    |   |   |    |   | Weighted |   |    |   |   |   | Weighted |   |   |   |   |   | Weighted |   |
|                    |   |   |    |   | Average  |   |    |   |   |   | Average |   |   |   |   |   | Average |   |
|                    |   |   |    |   | Exercise |   |    |   |   |   | Exercise |   |   |   |   |   | Exercise |   |
|                    |   | Shares |    |   | Price    |   |    | Shares |   |   | Price |   |   | Shares |   |   | Price |   |
| Outstanding at          |   |   |    |   |     |   |    |   |   |   |   |   |   |   |   |   |   |   |
| beginning of year       |   |   | 24,702  |   |     | $      | 15.58   |   |   |   | 6,602 |   |   | $ | 24.59 |   |   |   | 16,328 |   |   | $ | 26.71 |   |
| Granted                 |   |   | 11,100  |   |     |   | 13.25   |   |   |   | 18,100 |   |   |   | 12.30 |   |   |   | — |   |   |   | — |   |
| Exercised               |   |   | — |   |     |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |
| Expired                 |   |   | (4,472  | )      |     |   | 24.55   |   |   |   | — |   |   |   | — |   |   |   | (8,250 | ) |   |   | 28.64 |   |
| Forfeited               |   |   | — |   |     |   | — |   |   |   | — |   |   |   | — |   |   |   | (1,476 | ) |   |   | 25.46 |   |
| Outstanding at year-end |   |   | 31,330  |   |     | $      | 13.47   |   |   |   | 24,702 |   |   | $ | 15.58 |   |   |   | 6,602 |   |   | $ | 24.59 |   |
| Options exercisable     |   |   |    |   |     |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| at year-end             |   |   | 7,167   |   |     |   |    |   |   |   | 5,602 |   |   |   |   |   |   |   | 5,602 |   |   |   |   |   |
| Weighted average        |   |   |    |   |     |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| fair value of options   |   |   |    |   |     |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| granted during the year |   | $      | 2.14    |   |     |   |    |   |   | $ | 2.08 |   |   |   |   |   |   |   | n/a |   |   |   |   |   |

|                    |   | Outstanding |   | Exercisable           |       |
|-------------------------|--------|-------------|--------|-----------------------|------------|
|                    |   |        |   | Weighted Average |       |   |   |   | Weighted |   |
| Range of           |   |        |   | Remaining             |       |   |   |   | Average |   |
| Exercise Prices    |   | Number      |   | Contractual Life |       | Number |   |   | Exercise Price |   |
| $12 - $15               |   |        | 29,200 |                  | 8.39 years |   |   | 6,037 |   |   | $ | 12.30 |   |
| $22 - $25               |   |        | 1,130  |                  | 2.00 years |   |   | 1,130 |   |   |   | 22.75 |   |
| $26 - $30               |   |        | 1,000  |                  | 5.00 years |   |   | 0 |   |   |   |   |   |
| Outstanding at year-end |   |        | 31,330 |                  |       |   |   | 7,167 |   |   |   |   |   |

----

|                                    |   | Number  |    |   | Weighted |   |
|-----------------------------------------|--------|---------|---------|--------|----------|--------|
|                                    |   | Of      |    |   | Average  |   |
|                                    |   | Options |    |   | Price    |   |
| Non-vested options at January 1, 2010   |   |    | 19,100  |   |     | $      | 13.06 |   |
| Options granted August, 2010            |   |    | 11,100  |   |     |   | 13.25 |   |
| Options vested                          |   |    | (6,037  | )      |     |   | 12.30 |   |
| Options forfeited                       |   |    | — |   |     |   | 0.00 |   |
| Non-vested options at December 31, 2010 |   |    | 24,163  |   |     | $      | 13.33 |   |

----

|                                    |   | 2010   |   |   | 2009   |   |
|-----------------------------------------|--------|--------|--------|--------|--------|--------|
| Commitments to extend commercial credit |   | $      | 11,380 |   |   | $      | 10,841 |   |
| Commitments to extend consumer credit   |   |   | 10,880 |   |   |   | 11,275 |   |
| Standby letters of credit               |   |   | 308    |   |   |   | 273 |   |
|                                    |   | $      | 22,568 |   |   | $      | 22,389 |   |
| Fixed rate                              |   | $      | 2,774  |   |   | $      | 3,876 |   |
| Variable rate                           |   |   | 19,794 |   |   |   | 18,513 |   |
|                                    |   | $      | 22,568 |   |   | $      | 22,389 |   |

|                   |   | Capital to risk-weighted assets |   |   | Tier 1 capital |   |
|------------------------|--------|------------------------------------------------|--------|--------|--------------------------|--------|
|                   |   | Total                                          |   |   | Tier 1              |   |   | to average assets |   |
| Well capitalized       |   |                                           | 10     | %      |                     |   | 6 | % |   |   | 5 | % |
| Adequately capitalized |   |                                           | 8      | %      |                     |   | 4 | % |   |   | 4 | % |
| Undercapitalized       |   |                                           | 6      | %      |                     |   | 3 | % |   |   | 3 | % |

----

|                                     |   |   |   |   |                   |   |   | Minimum Required |   |   | Minimum Required |   |
|------------------------------------------|--------|--------|--------|--------|------------------------|--------|--------|-----------------------|--------|--------|-----------------------|--------|
|                                     |   |   |   |   |                   |   |   | For Capital      |   |   | To Be Well  |   |
|                                     |   | Actual |   |   | Adequacy Purposes |   |   | Capitalized           |   |
|                                     |   | Amount |   |   | Ratio                  |   |   | Amount                |   |   | Ratio                 |   |   | Amount |   |   | Ratio |   |
| Total capital (to risk-weighted assets)  |   | $      | 26,367 |   |                   |   | 11.3   | %                     |   | $      | 18,752                |   |   |   | 8.0 | % |   | $ | 23,441 |   |   |   | 10.0 | % |
| Tier 1 capital (to risk-weighted assets) |   | $      | 23,434 |   |                   |   | 10.0   | %                     |   | $      | 9,376                 |   |   |   | 4.0 | % |   | $ | 14,064 |   |   |   | 6.0 | % |
| Tier 1 capital (to average assets)       |   | $      | 23,434 |   |                   |   | 7.6    | %                     |   | $      | 12,375                |   |   |   | 4.0 | % |   | $ | 15,469 |   |   |   | 5.0 | % |

|                                     |   |   |   |   | Minimum Required  |   |   | Minimum Required |   |
|------------------------------------------|--------|--------|--------|--------|------------------------|--------|--------|-----------------------|--------|
|                                     |   |   |   |   | For Capital       |   |   | To Be Well  |   |
|                                     |   | Actual |   |   | Adequacy Purposes |   |   | Capitalized           |   |
|                                     |   | Amount |   |   | Ratio                  |   |   | Amount                |   |   | Ratio |   |   | Amount |   |   | Ratio |   |
| Total capital (to risk-weighted assets)  |   | $      | 24,326 |   |                   |   | 10.3   | %                     |   | $ | 18,968 |   |   |   | 8.0 | % |   | $ | 23,711 |   |   |   | 10.0 | % |
| Tier 1 capital (to risk-weighted assets) |   | $      | 21,582 |   |                   |   | 9.1    | %                     |   | $ | 9,484 |   |   |   | 4.0 | % |   | $ | 14,226 |   |   |   | 6.0 | % |
| Tier 1 capital (to average assets)       |   | $      | 21,582 |   |                   |   | 7.5    | %                     |   | $ | 11,496 |   |   |   | 4.0 | % |   | $ | 14,370 |   |   |   | 5.0 | % |

|                   |   | 2010   |   |
|------------------------|--------|--------|--------|
| Beginning balance      |   | $      | 3,062  |   |
| New loans and advances |   |   | 0      |   |
| Payments               |   |   | (17    | ) |
| Ending balance         |   | $      | 3,045  |   |

----

|   | · | Level 1 – Quoted prices in active markets for identical assets or liabilities. |
|--------|--------|--------------------------------------------------------------------------------------|

|   | · | Level 2 – Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities in active markets, and other inputs such as interest rates and yield curves that are observable at commonly quoted intervals. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                 |   | Quoted Prices in |    |   | Significant |   |    | Significant  |   |   |    |   |
|--------------------------------------|--------|------------------|---------|--------|-------------|--------|---------|--------------|--------|--------|---------|--------|
|                                 |   | Active Markets   |    |   | Observable  |   |    | Unobservable |   |   |    |   |
|                                 |   | For Identical    |    |   | Inputs      |   |    | Inputs       |   |   |    |   |
|                                 |   | Assets (Level 1) |    |   | (Level 2)   |   |    | (Level 3)    |   |   | Balance |   |
| December 31, 2010                    |   |             |    |   |        |   |    |         |   |   |    |   |
| Assets                               |   |             |    |   |        |   |    |         |   |   |    |   |
| U.S. Government and federal agencies |   | $                | — |   |        | $      | 9,065   |         |   | $      | — |   |   | $ | 9,065 |   |
| State and political subdivisions     |   |             | — |   |        |   | 16,069  |         |   |   | — |   |   |   | 16,069 |   |
| Mortgage-backed securities           |   |             | — |   |        |   | 8,709   |         |   |   | — |   |   |   | 8,709 |   |
| Total Assets                         |   | $                | — |   |        | $      | 33,843  |         |   | $      | — |   |   | $ | 33,843 |   |
| Liabilities                          |   | $                | — |   |        | $      | — |         |   | $      | — |   |   | $ | — |   |
|                                 |   |             |    |   |        |   |    |         |   |   |    |   |   |   |   |   |
| December 31, 2009                    |   |             |    |   |        |   |    |         |   |   |    |   |   |   |   |   |
| Assets                               |   |             |    |   |        |   |    |         |   |   |    |   |   |   |   |   |
| U.S. Government and federal agencies |   | $                | — |   |        | $      | 4,083   |         |   | $      | — |   |   | $ | 4,083 |   |
| State and political subdivisions     |   |             | — |   |        |   | 18,618  |         |   |   | — |   |   |   | 18,618 |   |
| Mortgage-backed securities           |   |             | — |   |        |   | 11,774  |         |   |   | — |   |   |   | 11,774 |   |
| Total Assets                         |   | $                | — |   |        | $      | 34,475  |         |   | $      | — |   |   | $ | 34,475 |   |
| Liabilities                          |   | $                | — |   |        | $      | — |         |   | $      | — |   |   | $ | — |   |

----

|                 |   | Fair Value Measurements at Reporting Date Using |   |   |         |
|----------------------|--------|-------------------------------------------------------------------------------|--------|--------|--------------|
|                 |   |                                                                          |   |   |         |   |   |   |   |   |   |   |   | Change in fair value |   |
|                 |   | Balance at                                                               |   |   |         |   |   |   |   |   |   |   |   | for the year ended |   |
| (In thousands)  |   | December 31,                                                             |   |   | Level 1 |   |   | Level 2 |   |   | Level 3 |   |   | December 31, |   |
| 2010                 |   |                                                                          |   |   |         |   |   |   |   |   |   |   |   |   |   |
| Impaired loans       |   | $                                                                             | 1,864  |   |         | $ | — |   |   | $ | — |   |   | $ | 1,864 |   |   | $ | (245 | ) |
| Real estate acquired |   |                                                                          |   |   |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| through foreclosure  |   |                                                                          | 20     |   |         |   | — |   |   |   | — |   |   |   | 20 |   |   |   | (59 | ) |
|                 |   |                                                                          |   |   |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 2009                 |   |                                                                          |   |   |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Impaired loans       |   | $                                                                             | 1,728  |   |         | $ | — |   |   | $ | — |   |   | $ | 1,728 |   |   | $ | 0 |   |
| Real estate acquired |   |                                                                          |   |   |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| through foreclosure  |   |                                                                          | 1,032  |   |         |   | — |   |   |   | — |   |   |   | 1,032 |   |   |   | (140 | ) |

|                                       |   | December 31, 2010 |     |   | December 31, 2009 |   |
|--------------------------------------------|--------|-----------------------------|----------|--------|-----------------------------|--------|
|                                       |   | Carrying                    |     |   | Estimated                   |   |   | Carrying |   |   | Estimated |   |
|                                       |   | Amount                      |     |   | Fair Value             |   |   | Amount |   |   | Fair Value |   |
| Financial assets                           |   |                        |     |   |                        |   |   |   |   |   |   |   |
| Cash equivalents and federal funds sold    |   | $                           | 22,080   |   |                        | $      | 22,080 |   |   | $ | 12,246 |   |   | $ | 12,246 |   |
| Securities available for sale         |   |                        | 33,843   |   |                        |   | 33,843 |   |   |   | 34,475 |   |   |   | 34,475 |   |
| Other investment securities                |   |                        | 2,260    |   |                        |   | 2,260 |   |   |   | 2,258 |   |   |   | 2,258 |   |
| Loans, net of allowance for loan loss |   |                        | 227,460  |   |                        |   | 225,298 |   |   |   | 225,264 |   |   |   | 223,395 |   |
| Accrued interest receivable                |   |                        | 1,288    |   |                        |   | 1,288 |   |   |   | 1,147 |   |   |   | 1,147 |   |
|                                       |   |                        |     |   |                        |   |   |   |   |   |   |   |   |   |   |   |
| Financial liabilities                      |   |                        |     |   |                        |   |   |   |   |   |   |   |   |   |   |   |
| Demand and savings deposits           |   | $                           | (151,336 | )      |                        | $      | (151,336 | ) |   | $ | (140,373 | ) |   | $ | (140,373 | ) |
| Time deposits                              |   |                        | (125,908 | )      |                        |   | (125,532 | ) |   |   | (124,336 | ) |   |   | (124,390 | ) |
| FHLB advances                              |   |                        | —  |   |                        |   | — |   |   |   | (5,000 | ) |   |   | (5,001 | ) |
| Accrued interest payable                   |   |                        | (192     | )      |                        |   | (192 | ) |   |   | (239 | ) |   |   | (239 | ) |

----

|   | · | Cash equivalents and federal funds sold - The carrying value of cash, amounts due from banks and federal funds sold assumed to approximate fair value. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Investment securities – Fair value is based on quoted market prices in active markets for identical assets or similar assets in active markets.  If quoted market prices are not available, with the assistance of an independent pricing service, management’s fair value measurements consider observable data which may include market maker bids, quotes and pricing models.  Inputs to the pricing models include recent trades, benchmark interest rates, spreads and actual and projected cash flows. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Loans – The loan portfolio includes adjustable and fixed-rate loans, the fair value of which is estimated using discounted cash flow analyses.  To calculate discounted cash flows, the loans are aggregated into pools of similar types and expected repayment terms.  The expected cash flows of loans considered historical prepayment experiences and estimated credit losses for nonperforming loans and were discounted using current rates offered to borrowers of similar credit characteristics.  Fair values for impaired loans are estimated using discounted cash flow analyses or underlying collateral values, where applicable. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Accrued interest receivable – The fair value approximates the carrying value. |
|--------|--------|-------------------------------------------------------------------------------------|

|   | · | Demand and savings deposits – The fair value is equal to the amount payable on demand at the reporting date. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------|

|   | · | Time deposits – The fair value for fixed-rate time deposits is estimated using a discounted cash flow calculation that applies interest rates currently being offered for time deposits with similar terms and remaining maturities. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | FHLB advances – The fair value is determined by discounting the contractual cash flows using current market rates at which similar borrowings with similar remaining maturities could be made. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Accrued interest payable – The fair value approximates the carrying value. |
|--------|--------|----------------------------------------------------------------------------------|

|                                                                 |   | 2010   |    |   | 2009   |   |   | 2008   |   |
|----------------------------------------------------------------------|--------|--------|---------|--------|--------|--------|--------|--------|--------|
| Unrealized holding gains and losses on securities available for sale |   | $      | (449    | )      |   | $      | 1,404  |   |   | $ | (112 | ) |
| Less reclassification adjustments for gains                          |   |   |    |   |   |   |   |   |   |   |   |   |
| and losses later recognized in income                                |   |   | — |   |   |   | (22    | )      |   |   | — |   |
| Net unrealized gains and losses                                      |   |   | (449    | )      |   |   | 1,426  |   |   |   | (112 | ) |
| Tax effect                                                           |   |   | (152    | )      |   |   | 484    |   |   |   | (38 | ) |
| Other comprehensive income (loss)                                    |   | $      | (297    | )      |   | $      | 942    |   |   | $ | (74 | ) |

|                                                |   | 2010   |      |   | 2009   |   |      | 2008   |   |
|-----------------------------------------------------|--------|--------|-----------|--------|--------|--------|-----------|--------|--------|
| Weighted average shares outstanding during the year |   |   | 1,142,610 |   |   |   | 1,137,214 |   |   |   | 1,136,397 |   |
| Dilutive effect of stock options                    |   |   | 388       |   |   |   | —   |   |   |   | — |   |
| Weighted average shares considering dilutive effect |   |   | 1,142,998 |   |   |   | 1,137,214 |   |   |   | 1,136,397 |   |
|                                                |   |   |      |   |   |   |      |   |   |   |   |   |
| Anti-dilutive stock options not considered in       |   |   |      |   |   |   |      |   |   |   |   |   |
| computing diluted earnings per share                |   |   | 13,230    |   |   |   | 24,702    |   |   |   | 6,602 |   |

----

|                                             |   | 2010   |   |   | 2009   |   |
|--------------------------------------------------|--------|--------|--------|--------|--------|--------|
| ASSETS                                           |   |   |   |   |   |   |
| Cash on deposit with subsidiary                  |   | $      | 113    |   |   | $      | 33 |   |
| Investment in common stock of subsidiaries       |   |   | 24,009 |   |   |   | 22,458 |   |
| Other assets                                     |   |   | 308    |   |   |   | 210 |   |
| Total assets                                     |   | $      | 24,430 |   |   | $      | 22,701 |   |
|                                             |   |   |   |   |   |   |   |   |
| LIABILITIES AND SHAREHOLDERS’ EQUITY       |   |   |   |   |   |   |   |   |
| Liabilities                                      |   | $      | 41     |   |   | $      | 6 |   |
| Shareholders’ equity                       |   |   | 24,389 |   |   |   | 22,695 |   |
| Total liabilities and shareholders’ equity |   | $      | 24,430 |   |   | $      | 22,701 |   |

|                                                           |   | 2010   |    |   | 2009   |   |    | 2008   |   |
|----------------------------------------------------------------|--------|--------|---------|--------|--------|--------|---------|--------|--------|
| INCOME                                                         |   |   |    |   |   |   |    |   |   |
| Dividends from Bank subsidiary                                 |   | $      | 600     |   |   | $      | 757     |   |   | $ | 1,050 |   |
| Other income                                                   |   |   | — |   |   |   | — |   |   |   | — |   |
| Total income                                                   |   |   | 600     |   |   |   | 757     |   |   |   | 1,050 |   |
|                                                           |   |   |    |   |   |   |    |   |   |   |   |   |
| EXPENSES                                                       |   |   |    |   |   |   |    |   |   |   |   |   |
| Professional fees                                              |   |   | 67      |   |   |   | 32      |   |   |   | 123 |   |
| Other                                                          |   |   | 76      |   |   |   | 82      |   |   |   | 65 |   |
| Total expenses                                                 |   |   | 143     |   |   |   | 114     |   |   |   | 188 |   |
|                                                           |   |   |    |   |   |   |    |   |   |   |   |   |
| Tax benefit                                                    |   |   | (47     | )      |   |   | (39     | )      |   |   | (64 | ) |
| Income before equity in undistributed earnings of subsidiaries |   |   | 504     |   |   |   | 682     |   |   |   | 926 |   |
| Equity in undistributed earnings of subsidiaries               |   |   |    |   |   |   |    |   |   |   |   |   |
| (distribution from subsidiaries in excess of net income)       |   |   | 1,819   |   |   |   | 419     |   |   |   | 375 |   |
|                                                           |   |   |    |   |   |   |    |   |   |   |   |   |
| NET INCOME                                                     |   | $      | 2,323   |   |   | $      | 1,101   |   |   | $ | 1,301 |   |

----

|                                                 |   | 2010   |    |   | 2009   |   |    | 2008   |   |
|------------------------------------------------------|--------|--------|---------|--------|--------|--------|---------|--------|--------|
| CASH FLOWS FROM OPERATING ACTIVITIES                 |   |   |    |   |   |   |    |   |   |
| Net income                                           |   | $      | 2,323   |   |   | $      | 1,101   |   |   | $ | 1,301 |   |
| Adjustments to reconcile net income to               |   |   |    |   |   |   |    |   |   |   |   |   |
| net cash from operating activities                   |   |   |    |   |   |   |    |   |   |   |   |   |
| Equity in undistributed earnings of subsidiaries     |   |   | (1,819  | )      |   |   | (419    | )      |   |   | (375 | ) |
| Stock-based compensation                             |   |   | — |   |   |   | 6       |   |   |   | (1 | ) |
| Other                                                |   |   | (60     | )      |   |   | (44     | )      |   |   | (51 | ) |
| Net cash from operating activities                   |   |   | 444     |   |   |   | 644     |   |   |   | 874 |   |
|                                                 |   |   |    |   |   |   |    |   |   |   |   |   |
| CASH FLOWS FROM INVESTING ACTIVITIES                 |   |   |    |   |   |   |    |   |   |   |   |   |
| Net cash from investing activities                   |   |   | — |   |   |   | — |   |   |   | — |   |
| CASH FLOWS FROM FINANCING ACTIVITIES                 |   |   |    |   |   |   |    |   |   |   |   |   |
| Treasury stock issued for deferred compensation plan |   |   | 117     |   |   |   | — |   |   |   | — |   |
| Cash dividends paid                                  |   |   | (481    | )      |   |   | (659    | )      |   |   | (864 | ) |
| Net cash from financing activities                   |   |   | (364    | )      |   |   | (659    | )      |   |   | (864 | ) |
|                                                 |   |   |    |   |   |   |    |   |   |   |   |   |
| Net change in cash                                   |   |   | 80      |   |   |   | (15     | )      |   |   | 10 |   |
| Cash at beginning of period                          |   |   | 33      |   |   |   | 48      |   |   |   | 38 |   |
| Cash at end of period                                |   | $      | 113     |   |   | $      | 33      |   |   | $ | 48 |   |

| 2010                              |   | March 31, |   |   | June 30, |   |   | September 30, |   |   | December 31, |   |
|-----------------------------------|--------|----------------|--------|--------|---------------|--------|--------|--------------------|--------|--------|-------------------|--------|
| Total interest income             |   | $              | 3,915  |   |          | $      | 3,927  |               |   | $      | 3,969             |   |   | $ | 3,934 |   |
| Total interest expense            |   |           | 969    |   |          |   | 941    |               |   |   | 879               |   |   |   | 800 |   |
| Net interest income               |   | $              | 2,946  |   |          | $      | 2,986  |               |   | $      | 3,090             |   |   | $ | 3,134 |   |
| Provision for loan losses         |   |           | 245    |   |          |   | 280    |               |   |   | 380               |   |   |   | 465 |   |
| Net income                        |   | $              | 517    |   |          | $      | 557    |               |   | $      | 598               |   |   | $ | 651 |   |
|                              |   |           |   |   |          |   |   |               |   |   |              |   |   |   |   |   |
| Basic earnings per common share   |   |           | 0.45   |   |          |   | 0.49   |               |   |   | 0.53              |   |   |   | 0.56 |   |
| Diluted earnings per common share |   |           | 0.45   |   |          |   | 0.49   |               |   |   | 0.53              |   |   |   | 0.56 |   |

| 2009                              |   | March 31, |   |   | June 30, |   |   | September 30, |   |   | December 31, |   |
|-----------------------------------|--------|----------------|--------|--------|---------------|--------|--------|--------------------|--------|--------|-------------------|--------|
| Total interest income             |   | $              | 3,769  |   |          | $      | 3,797  |               |   | $      | 4,000             |   |   | $ | 3,963 |   |
| Total interest expense            |   |           | 1,425  |   |          |   | 1,282  |               |   |   | 1,177             |   |   |   | 1,083 |   |
| Net interest income               |   | $              | 2,344  |   |          | $      | 2,515  |               |   | $      | 2,823             |   |   | $ | 2,880 |   |
| Provision for loan losses         |   |           | 284    |   |          |   | 332    |               |   |   | 385               |   |   |   | 483 |   |
| Net income                        |   | $              | 211    |   |          | $      | 129    |               |   | $      | 383               |   |   | $ | 378 |   |
|                              |   |           |   |   |          |   |   |               |   |   |              |   |   |   |   |   |
| Basic earnings per common share   |   |           | 0.19   |   |          |   | 0.11   |               |   |   | 0.34              |   |   |   | 0.33 |   |
| Diluted earnings per common share |   |           | 0.19   |   |          |   | 0.11   |               |   |   | 0.34              |   |   |   | 0.33 |   |

----

|                            |   | Dividends |   |   |         |   |   |          |   |
|---------------------------------|--------|-----------|--------|--------|--------------|--------|--------|---------------|--------|
| 2010                            |   | Declared  |   |   | Low Bid |   |   | High Bid |   |
| Three months ended March 31     |   | $         | 0.10   |   |         | $      | 8.60   |          |   | $ | 12.50 |   |
| Three months ended June 30      |   |      | 0.10   |   |         |   | 11.27  |          |   |   | 13.95 |   |
| Three months ended September 30 |   |      | 0.10   |   |         |   | 12.30  |          |   |   | 14.38 |   |
| Three months ended December 31  |   |      | 0.12   |   |         |   | 13.65  |          |   |   | 14.75 |   |

|                            |   | Dividends |   |   |    |   |   |     |   |
|---------------------------------|--------|-----------|--------|--------|---------|--------|--------|----------|--------|
| 2009                            |   | Declared  |   |   | Low Bid |   |   | High Bid |   |
| Three months ended March 31     |   | $         | 0.19   |   |    | $      | 11.00  |     |   | $ | 14.72 |   |
| Three months ended June 30      |   |      | 0.19   |   |    |   | 10.50  |     |   |   | 14.20 |   |
| Three months ended September 30 |   |      | 0.10   |   |    |   | 11.40  |     |   |   | 13.00 |   |
| Three months ended December 31  |   |      | 0.10   |   |    |   | 9.00   |     |   |   | 11.70 |   |

----

----

| Michael A. Shope – Chairman        | Retired CFO, Walbro Corporation                |
|------------------------------------------|------------------------------------------------|
|                                     | Norwalk, Ohio                                  |
|                                     |                                           |
| Stanley K. Kinnett – Vice Chairman | President and CEO, Dixie-Southern              |
|                                     | Duette, Florida                                |
|                                     |                                           |
| Robert E. Beach                          | President and CEO of Commercial                |
|                                     | Bancshares, Inc. and the Commercial            |
|                                     | Savings Bank, Upper Sandusky, Ohio             |
|                                     |                                           |
| Daniel E. Berg                           | Director of Operations, Tower Automotive       |
|                                     | Livonia, Michigan                              |
|                                     |                                           |
| J. William Bremyer                       | Foot and Ankle Surgery                         |
|                                     | Mercy Health Systems, Tiffin, Ohio             |
|                                     | Blanchard Valley Medical Center, Findlay, Ohio |
|                                     |                                           |
| Lynn R. Child                            | CEO, Aardvark, Inc. and Chairman, CentraComm   |
|                                     | Communications, LLC, Findlay, Ohio             |
|                                     |                                           |
| Mark Dillon                              | President and CEO, Fairborn U.S.A., Inc.       |
|                                     | Upper Sandusky, Ohio                           |
|                                     |                                           |
| Deborah J. Grafmiller                    | State Certified General Appraiser              |
|                                     | Professional Appraisal Service                 |
|                                     | Findlay, Ohio                                  |
|                                     |                                           |
| Kurt D. Kimmel                           | President/Co-owner, Kimmel Cleaners            |
|                                     | Upper Sandusky, Ohio                           |
|                                     |                                           |
| Lee M. Sisler                            | President, Sisler and Associates               |
|                                     | Marion, Ohio                                   |
|                                     |                                           |
| Richard Sheaffer                         | President, R.A. Sheaffer, Inc.                 |
|                                     | Morral, Ohio                                   |

----