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|                      Delaware                                                    |   | 36-3449727                           |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------|
|                           (State of Incorporation) |   | (I.R.S. Employer Identification No.) |

|  Large Accelerated Filer o |  Accelerated Filer o    |  Non-accelerated Filero  (Do not check if a smaller reporting company) |  Smaller reporting companyx |
|--------------------------------------|--------------------------------------------------|---------------------------------------------------------------------------------------|----------------------------------|

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D

| PART I.       | FINANCIAL INFORMATION                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |        |
|---------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------|
|          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |        |
| Item 1.  | Financial Statements                                                                                        | Page Number |
|          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |        |
|          | Report of Independent Registered Public Accounting Firm.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       | 2           |
|          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |        |
|          | Condensed Consolidated Financial Statements and Notes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          | 3           |
|          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |        |
| Item 2.  | Management’s Discussion and Analysis of Financial   Condition and Results of Operations                                                                                                                                                                                                                                                                                                                                                                                                                                                   | 30          |
|          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |        |
|  Item 3. | Quantitative and Qualitative Disclosures  About Market Risk                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          | 44          |
|          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |        |
| Item 4.       | Controls and Procedures                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | 46          |
|          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |        |
| PART II.      | OTHER INFORMATION                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |        |
|          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |        |
| Item 1.       | Legal Proceedings                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              | 46          |
|          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |        |
| Item 1A.      | Risk Factors                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | 46          |
|          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |        |
| Item 2.       | Unregistered Sales of Equity Securities and Use of Proceeds                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | 46          |
|          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |        |
| Item 3.  | Defaults Upon Senior Securities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | 47          |
|          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |        |
| Item 4.       | (Removed and Reserved)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | 47          |
|          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |        |
| Item 5.       | Other Information                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              | 47          |
|          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |        |
| Item 6.       | Exhibits                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       | 47          |
|          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |        |
|          | Signatures                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     | 48          |
|          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |        |
|          | EXHIBIT INDEX                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | 49          |

----

Index

NFO

TA

A

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

----

Index

| Assets                                                                                                                                                                                                 |   | March 31,2011 |    |   | December 31,2010 |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------|---------|--------|------------------|--------|
| Cash and due from banks                                                                                                                                                                                |   | $             | 6,675   |   |             | $      | 5,642 |   |
| Interest bearing deposits in financial institutions - maturities less than 90 days                                                                                                                     |   |          | 33,563  |   |             |   | 18,142 |   |
| Federal funds sold                                                                                                                                                                                     |   |          | 4,647   |   |             |   | 6,573 |   |
| Total cash and cash equivalents                                                                                                                                                                        |   |          | 44,885  |   |             |   | 30,357 |   |
| Securities available for sale                                                                                                                                                                          |   |          | 90,432  |   |             |   | 91,830 |   |
| Loans and leases, net of deferred fees                                                                                                                                                                 |   |          | 373,102 |   |             |   | 384,789 |   |
| Less: Allowance for loan and lease losses                                                                                                                                                              |   |          | (18,532 | )      |             |   | (18,336 | ) |
| Loans and leases, net                                                                                                                                                                                  |   |          | 354,570 |   |             |   | 366,453 |   |
| Federal Home Loan Bank stock                                                                                                                                                                           |   |          | 1,801   |   |             |   | 1,801 |   |
| Office buildings and equipment, net                                                                                                                                                                    |   |          | 9,307   |   |             |   | 9,454 |   |
| Other real estate owned                                                                                                                                                                                |   |          | 22,237  |   |             |   | 24,326 |   |
| Accrued interest receivable and other assets                                                                                                                                                           |   |          | 6,553   |   |             |   | 7,507 |   |
| Total assets                                                                                                                                                                                           |   | $             | 529,785 |   |             | $      | 531,728 |   |
|                                                                                                                                                                                                   |   |          |    |   |             |   |   |   |
| Liabilities and Stockholders' Equity                                                                                                                                                                   |   |          |    |   |             |   |   |   |
| Liabilities                                                                                                                                                                                            |   |          |    |   |             |   |   |   |
| Deposits                                                                                                                                                                                               |   |          |    |   |             |   |   |   |
| Demand - noninterest bearing                                                                                                                                                                           |   | $             | 62,544  |   |             | $      | 61,341 |   |
| Interest bearing                                                                                                                                                                                       |   |          | 389,436 |   |             |   | 385,210 |   |
| Total deposits                                                                                                                                                                                         |   |          | 451,980 |   |             |   | 446,551 |   |
| Securities sold under repurchase agreements                                                                                                                                                            |   |          | 28,146  |   |             |   | 35,517 |   |
| Subordinated debentures                                                                                                                                                                                |   |          | 10,310  |   |             |   | 10,310 |   |
| Advances from borrowers for taxes and insurance                                                                                                                                                        |   |          | 1,899   |   |             |   | 1,109 |   |
| Accrued interest payable and other liabilities                                                                                                                                                         |   |          | 5,014   |   |             |   | 4,956 |   |
| Total liabilities                                                                                                                                                                                      |   |          | 497,349 |   |             |   | 498,443 |   |
|                                                                                                                                                                                                   |   |          |    |   |             |   |   |   |
| Stockholders' Equity                                                                                                                                                                                   |   |          |    |   |             |   |   |   |
| Common stock (Par value $0.40 per share, authorized 6,500,000 shares,issued 4,472,255 shares and outstanding 4,279,755 shares at March 31, 2011 and outstanding 4,072,255 shares at December 31, 2010) |   |          | 1,789   |   |             |   | 1,789 |   |
| Preferred stock (Par value $0.40 per share, authorized 1,000,000shares, issued 17,211 shares with liquidation amounts of $1,000.00 per share at March 31, 2011 and December 31, 2010)                  |   |          | 16,802  |   |             |   | 16,768 |   |
| Warrants (584,084 issued and outstanding at March 31, 2011and December 31, 2010                                                                                                                        |   |          | 681     |   |             |   | 681 |   |
| Additional paid-in capital                                                                                                                                                                             |   |          | 6,922   |   |             |   | 11,584 |   |
| Retained earnings                                                                                                                                                                                      |   |          | 11,884  |   |             |   | 13,250 |   |
| Treasury stock, at cost (192,500 shares at March 31, 2011 and                                                                                                                                          |   |          |    |   |             |   |   |   |
| 400,000 shares at December 31, 2010)                                                                                                                                                                   |   |          | (4,466  | )      |             |   | (9,280 | ) |
| Accumulated other comprehensive loss                                                                                                                                                                   |   |          | (1,176  | )      |             |   | (1,507 | ) |
| Total stockholders' equity                                                                                                                                                                             |   |          | 32,436  |   |             |   | 33,285 |   |
| Total liabilities and stockholders' equity                                                                                                                                                             |   | $             | 529,785 |   |             | $      | 531,728 |   |

----

Index

|                                                               |   | Three months ended |   |
|--------------------------------------------------------------------|--------|--------------------|--------|
|                                                               |   | March 31,2011      |   |   | March 31,2010 |   |
| Interest income                                                    |   |               |   |   |   |   |
| Loans (including fee income)                                       |   | $                  | 4,835  |   |   | $ | 5,179 |   |
| Securities                                                         |   |               |   |   |   |   |   |   |
| Taxable                                                            |   |               | 562    |   |   |   | 1,015 |   |
| Exempt from federal income tax                                     |   |               | 36     |   |   |   | 76 |   |
| Federal funds sold and other                                       |   |               | 16     |   |   |   | 6 |   |
| Total interest income                                              |   |               | 5,449  |   |   |   | 6,276 |   |
| Interest expense                                                   |   |               |   |   |   |   |   |   |
| Time deposits                                                      |   |               | 623    |   |   |   | 1,284 |   |
| Other deposits                                                     |   |               | 91     |   |   |   | 204 |   |
| Repurchase agreements and federal funds purchased                  |   |               | 30     |   |   |   | 76 |   |
| Federal Home Loan Bank advances                                    |   |               | 0      |   |   |   | 8 |   |
| Subordinated debentures                                            |   |               | 57     |   |   |   | 104 |   |
| Total interest expense                                             |   |               | 801    |   |   |   | 1,676 |   |
| Net interest income                                                |   |               | 4,648  |   |   |   | 4,600 |   |
| Provision for loan and lease losses                                |   |               | 1,200  |   |   |   | 3,713 |   |
| Net interest income after provision for loan and lease losses      |   |               | 3,448  |   |   |   | 887 |   |
| Noninterest income                                                 |   |               |   |   |   |   |   |   |
| Service fees on deposits                                           |   |               | 413    |   |   |   | 550 |   |
| Trust income                                                       |   |               | 194    |   |   |   | 191 |   |
| Gain on sale of securities                                         |   |               | 0      |   |   |   | 653 |   |
| Net gain on sale of other real estate owned                        |   |               | 67     |   |   |   | 138 |   |
| Other than temporary impairment of securities                      |   |               | (143   | ) |   |   | (208 | ) |
| Noncredit portion of other than temporary impairment of securities |   |               | (20    | ) |   |   | (20 | ) |
| Other operating income                                             |   |               | 322    |   |   |   | 307 |   |
| Total noninterest income                                           |   |               | 833    |   |   |   | 1,611 |   |
| Noninterest expense                                                |   |               |   |   |   |   |   |   |
| Salaries and employee benefits                                     |   |               | 1,793  |   |   |   | 1,795 |   |
| Occupancy and equipment, net                                       |   |               | 673    |   |   |   | 629 |   |
| Data processing                                                    |   |               | 507    |   |   |   | 454 |   |
| FDIC insurance                                                     |   |               | 381    |   |   |   | 337 |   |
| Legal                                                              |   |               | 205    |   |   |   | 162 |   |
| Audit and other professional                                       |   |               | 286    |   |   |   | 283 |   |
| Amortization of core deposit intangible asset                      |   |               | 0      |   |   |   | 116 |   |
| Write-down of other real estate owned                              |   |               | 673    |   |   |   | 0 |   |
| Other operating expenses                                           |   |               | 865    |   |   |   | 719 |   |
| Total noninterest expense                                          |   |               | 5,383  |   |   |   | 4,495 |   |
| Loss before income taxes                                           |   |               | (1,102 | ) |   |   | (1,997 | ) |
| Income tax expense                                                 |   |               | 0      |   |   |   | 0 |   |
| Net loss                                                           |   |               | (1,102 | ) |   |   | (1,997 | ) |
| Dividends to preferred stockholders                                |   |               | 230    |   |   |   | 221 |   |
| Accretion of discount on preferred stock                           |   |               | 34     |   |   |   | 31 |   |
| Net loss available to common stockholders                          |   | $                  | (1,366 | ) |   | $ | (2,249 | ) |
|                                                               |   |               |   |   |   |   |   |   |
| Basic loss per share                                               |   | $                  | (0.32  | ) |   | $ | (0.55 | ) |
|                                                               |   |               |   |   |   |   |   |   |
| Diluted loss per share                                             |   | $                  | (0.32  | ) |   | $ | (0.55 | ) |
|                                                               |   |               |   |   |   |   |   |   |
| Comprehensive loss                                                 |   | $                  | (771   | ) |   | $ | (392 | ) |

----

Index

|                                                                                      |   | Three months ended |   |
|-------------------------------------------------------------------------------------------|--------|--------------------|--------|
|                                                                                      |   | March 31,2011      |   |   | March 31,2010 |   |
| Cash flows - operating activities                                                         |   |               |   |   |   |   |
| Net loss                                                                                  |   | $                  | (1,102 | ) |   | $ | (1,997 | ) |
| Adjustments to reconcile net loss to net cash from operating activities:                  |   |               |   |   |   |   |   |   |
| Depreciation                                                                              |   |               | 171    |   |   |   | 163 |   |
| Gain on sales of securities                                                               |   |               | 0      |   |   |   | (653 | ) |
| Net impairment loss on securities                                                         |   |               | 163    |   |   |   | 228 |   |
| Provision for loan and lease losses                                                       |   |               | 1,200  |   |   |   | 3,713 |   |
| Write-down of other real estate owned                                                     |   |               | 673    |   |   |   | 0 |   |
| Net gain on sale of other real estate owned                                               |   |               | (67    | ) |   |   | (138 | ) |
| Amortization of other intangible assets                                                   |   |               | 0      |   |   |   | 116 |   |
| Net change in accrued interest receivable and other assets                                |   |               | 781    |   |   |   | 727 |   |
| Net change in accrued interest payable and other liabilities                              |   |               | (172   | ) |   |   | 211 |   |
| Restricted stock awards expense                                                           |   |               | 152    |   |   |   | 0 |   |
| Net cash - operating activities                                                           |   |               | 1,799  |   |   |   | 2,370 |   |
| Cash flows - investing activities                                                         |   |               |   |   |   |   |   |   |
| Proceeds from maturities, calls and principal reductions of securities available for sale |   |               | 1,739  |   |   |   | 3,589 |   |
| Proceeds from sales of securities available for sale                                      |   |               | 0      |   |   |   | 41,193 |   |
| Purchases of securities available for sale                                                |   |               | 0      |   |   |   | (5,148 | ) |
| Change in loans made to customers                                                         |   |               | 10,622 |   |   |   | 13,111 |   |
| Property and equipment expenditures                                                       |   |               | (24    | ) |   |   | (40 | ) |
| Improvements to other real estate owned                                                   |   |               | 0      |   |   |   | (29 | ) |
| Proceeds from sales of other real estate owned                                            |   |               | 1,544  |   |   |   | 332 |   |
| Net cash - investing activities                                                           |   |               | 13,881 |   |   |   | 53,008 |   |
| Cash flows - financing activities                                                         |   |               |   |   |   |   |   |   |
| Net increase (decrease) in:                                                               |   |               |   |   |   |   |   |   |
| Deposits                                                                                  |   |               | 5,429  |   |   |   | (40,742 | ) |
| Securities sold under repurchase agreements                                               |   |               | (7,371 | ) |   |   | (6,099 | ) |
| Advances from borrowers for taxes and insurance                                           |   |               | 790    |   |   |   | 477 |   |
| Net cash - financing activities                                                           |   |               | (1,152 | ) |   |   | (46,364 | ) |
| Net change in cash and cash equivalents                                                   |   |               | 14,528 |   |   |   | 9,014 |   |
| Cash and cash equivalents at beginning of period                                          |   |               | 30,357 |   |   |   | 34,194 |   |
| Cash and cash equivalents at end of period                                                |   | $                  | 44,885 |   |   | $ | 43,208 |   |
|                                                                                      |   |               |   |   |   |   |   |   |
| Cash paid for interest                                                                    |   | $                  | 930    |   |   | $ | 1,861 |   |
| Noncash transfer of loans to other real estate owned                                      |   |               | 61     |   |   |   | 8,056 |   |
| Noncash accrual of preferred dividends                                                    |   |               | 230    |   |   |   | 221 |   |

----

Index

|                                                                    |   | Common Stock |   |   | Preferred Stock |   |   | Warrants |   |   | Additional Paid-In Capital |   |   | Retained Earnings |   |   | Treasury Stock, at Cost |   |   | Accumulated Other Comprehensive Income (Loss) |   |   | Total Stockholders' Equity |   |
|-------------------------------------------------------------------------|--------|--------------|--------|--------|-----------------|--------|--------|----------|--------|--------|----------------------------|--------|--------|-------------------|--------|--------|-------------------------|--------|--------|-----------------------------------------------|--------|--------|----------------------------|--------|
| Balance, December 31, 2009                                              |   | $            | 1,789  |   |            | $      | 16,641 |     |   | $      | 681                        |   |   | $                 | 11,584 |   |                    | $      | 20,632 |                                          |   | $      | (9,280                     | )      |   | $ | (1,746 | ) |   | $ | 40,301 |   |
| Net loss                                                                |   |         |   |   |            |   |   |     |   |   |                       |   |   |              |   |   |                    |   | (1,997 | )                                             |   |   |                       |   |   |   |   |   |   |   | (1,997 | ) |
| Accrued dividend on preferred stock                                     |   |         |   |   |            |   |   |     |   |   |                       |   |   |              |   |   |                    |   | (221   | )                                             |   |   |                       |   |   |   |   |   |   |   | (221 | ) |
| Accretion of preferred stock discount issued                            |   |         |   |   |            |   | 31     |     |   |   |                       |   |   |              |   |   |                    |   | (31    | )                                             |   |   |                       |   |   |   |   |   |   |   | 0 |   |
| Unrealized gain on securities available for sale, net of deferred tax   |   |         |   |   |            |   |   |     |   |   |                       |   |   |              |   |   |                    |   |   |                                          |   |   |                       |   |   |   | 1,605 |   |   |   | 1,605 |   |
| Balance, March 31, 2010                                                 |   | $            | 1,789  |   |            | $      | 16,672 |     |   | $      | 681                        |   |   | $                 | 11,584 |   |                    | $      | 18,383 |                                          |   | $      | (9,280                     | )      |   | $ | (141 | ) |   | $ | 39,688 |   |
|                                                                    |   |         |   |   |            |   |   |     |   |   |                       |   |   |              |   |   |                    |   |   |                                          |   |   |                       |   |   |   |   |   |   |   |   |   |
|                                                                    |   |         |   |   |            |   |   |     |   |   |                       |   |   |              |   |   |                    |   |   |                                          |   |   |                       |   |   |   |   |   |   |   |   |   |
| Balance, December 31, 2010                                              |   | $            | 1,789  |   |            | $      | 16,768 |     |   | $      | 681                        |   |   | $                 | 11,584 |   |                    | $      | 13,250 |                                          |   | $      | (9,280                     | )      |   | $ | (1,507 | ) |   | $ | 33,285 |   |
| Net loss                                                                |   |         |   |   |            |   |   |     |   |   |                       |   |   |              |   |   |                    |   | (1,102 | )                                             |   |   |                       |   |   |   |   |   |   |   | (1,102 | ) |
| Accrued dividend on preferred stock                                     |   |         |   |   |            |   |   |     |   |   |                       |   |   |              |   |   |                    |   | (230   | )                                             |   |   |                       |   |   |   |   |   |   |   | (230 | ) |
| Accretion of preferred stock discount issued                            |   |         |   |   |            |   | 34     |     |   |   |                       |   |   |              |   |   |                    |   | (34    | )                                             |   |   |                       |   |   |   |   |   |   |   | 0 |   |
| Restricted stock awards from treasury stock                             |   |         |   |   |            |   |   |     |   |   |                       |   |   |              | (4,814 | )      |                    |   |   |                                          |   |   | 4,814                      |   |   |   |   |   |   |   | 0 |   |
| Accretion of unearned portion of restricted stock awards                |   |         |   |   |            |   |   |     |   |   |                       |   |   |              | 152    |   |                    |   |   |                                          |   |   |                       |   |   |   |   |   |   |   | 152 |   |
| Unrealized gain on securities available for sale, net of deferred tax.. |   |         |   |   |            |   |   |     |   |   |                       |   |   |              |   |   |                    |   |   |                                          |   |   |                       |   |   |   | 331 |   |   |   | 331 |   |
| Balance, March 31, 2011                                                 |   | $            | 1,789  |   |            | $      | 16,802 |     |   | $      | 681                        |   |   | $                 | 6,922  |   |                    | $      | 11,884 |                                          |   | $      | (4,466                     | )      |   | $ | (1,176 | ) |   | $ | 32,436 |   |

----

Index

----

Index

| Dollars in thousands, except per share data)                   |   | Three Months Ended |      |
|----------------------------------------------------------------|--------|--------------------|-----------|
|                                                           |   | March 31,          |      |
|                                                           |   | 2011               |      |   | 2010 |   |
| Basic loss per share:                                          |   |               |      |   |   |   |
| Net loss                                                       |   | $                  | (1,102    | ) |   | $ | (1,997 | ) |
| Dividends accrued to preferred stockholders                    |   |               | 230       |   |   |   | 221 |   |
| Accretion of discount on preferred stock                       |   |               | 34        |   |   |   | 31 |   |
| Net loss available to common stockholders                      |   | $                  | (1,366    | ) |   | $ | (2,249 | ) |
| Weighted average common shares outstanding                     |   |               | 4,270,553 |   |   |   | 4,072,255 |   |
| Basic loss per share                                           |   | $                  | (0.32     | ) |   | $ | (0.55 | ) |
|                                                           |   |               |      |   |   |   |   |   |
| Diluted loss per share:                                        |   |               |      |   |   |   |   |   |
| Net loss                                                       |   | $                  | (1,102    | ) |   | $ | (1,997 | ) |
| Dividends accrued to preferred stockholders                    |   |               | 230       |   |   |   | 221 |   |
| Accretion of discount on preferred stock                       |   |               | 34        |   |   |   | 31 |   |
| Net loss available to common stockholders                      |   | $                  | (1,366    | ) |   | $ | (2,249 | ) |
| Weighted average common shares outstanding                     |   |               | 4,270,553 |   |   |   | 4,072,255 |   |
| Add: Dilutive effect of assumed warrant exercises.             |   |               | 0         |   |   |   | 0 |   |
| Weighted average common and dilutive common shares outstanding |   |               | 4,270,553 |   |   |   | 4,072,255 |   |
| Diluted loss per share                                         |   | $                  | (0.32     | ) |   | $ | (0.55 | ) |

----

Index

|                |   | March 31,2011 |      |   | December 31,2010 |   |
|---------------------|--------|---------------|-----------|--------|------------------|--------|
| Par value per share |   | $             | 0.40      |   |             | $      | 0.40 |   |
| Authorized shares   |   |          | 6,500,000 |   |             |   | 6,500,000 |   |
| Issued shares       |   |          | 4,472,255 |   |             |   | 4,472,255 |   |
| Treasury shares     |   |          | 192,500   |   |             |   | 400,000 |   |
| Outstanding shares  |   |          | 4,279,755 |   |             |   | 4,072,255 |   |

----

Index

|                                  |   |       |   |   | Gross Unrealized |             |
|---------------------------------------|--------|------------|--------|--------|------------------|------------------|
| March 31, 2011  ($000's)    |   | Fair Value |   |   | Gain             |             |   | Loss |   |
|                                  |   |       |   |   |             |             |   |   |   |
| U.S. Treasury                         |   | $          | 1,001  |   |             | $                | 0 |   |   | $ | 0 |   |
| States and political subdivisions     |   |       | 3,923  |   |             |             | 106 |   |   |   | 0 |   |
| Mortgage-backed securities            |   |       | 81,389 |   |             |             | 250 |   |   |   | (2,351 | ) |
| Equity securities                     |   |       | 4,119  |   |             |             | 15 |   |   |   | 0 |   |
|                                  |   |       |   |   |             |             |   |   |   |   |   |   |
| Total securities available for sale   |   | $          | 90,432 |   |             | $                | 371 |   |   | $ | (2,351 | ) |
|                                  |   |       |   |   |             |             |   |   |   |   |   |   |
|                                  |   |       |   |   |             |             |   |   |   |   |   |   |
|                                  |   |       |   |   |             |             |   |   |   |   |   |   |
|                                  |   |       |   |   |             | Gross Unrealized |   |
| December 31, 2010  ($000's) |   | Fair Value |   |   | Gains            |             |   | Losses |   |
|                                  |   |       |   |   |             |             |   |   |   |   |   |   |
| U.S. Treasury                         |   | $          | 1,002  |   |             | $                | 1 |   |   | $ | 0 |   |
| States and political subdivisions     |   |       | 3,997  |   |             |             | 75 |   |   |   | (11 | ) |
| Mortgage-backed securities            |   |       | 82,648 |   |             |             | 273 |   |   |   | (2,738 | ) |
| Other bonds                           |   |       | 20     |   |             |             | 0 |   |   |   | (114 | ) |
| Equity securities                     |   |       | 4,163  |   |             |             | 31 |   |   |   | 0 |   |
|                                  |   |       |   |   |             |             |   |   |   |   |   |   |
| Total securities available for sale   |   | $          | 91,830 |   |             | $                | 380 |   |   | $ | (2,863 | ) |

----

Index

| March 31, 2011 ($000's)           |   | FairValue |   |
|----------------------------------------|--------|-----------|--------|
|                                   |   |      |   |   |
| Due in one year or less                |   | $         | 1,937  |   |
| Due after one year through five years  |   |      | 560    |   |
| Due after five years through ten years |   |      | 890    |   |
| Due after ten years                    |   |      | 1,537  |   |
|                                   |   |      | 4,924  |   |
| Mortgage-backed securities             |   |      | 81,389 |   |
| Equity securities                      |   |      | 4,119  |   |
| Total securities available-for-sale    |   | $         | 90,432 |   |

----

Index

|                                         |   | Less than 12 Months |   |   | 12 Months or More |   |   | Total  |   |
|----------------------------------------------|--------|---------------------|--------|--------|-------------------|--------|--------|--------|--------|
|                                         |   | Fair                |   |   | Unrealized        |   |   | Fair   |   |   | Unrealized |   |   | Fair |   |   | Unrealized |   |
| March 31, 2011  ($000's)           |   | Value               |   |   | Losses            |   |   | Value  |   |   | Losses |   |   | Value |   |   | Losses |   |
|                                         |   |                |   |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Mortgage-backed securities                   |   | $                   | 66,914 |   |              | $      | (2,351 | )      |   | $ | 0 |   |   | $ | 0 |   |   | $ | 66,914 |   |   | $ | (2,351 | ) |
|    Total temporarily impaired |   | $                   | 66,914 |   |              | $      | (2,351 | )      |   | $ | 0 |   |   | $ | 0 |   |   | $ | 66,914 |   |   | $ | (2,351 | ) |
|                                         |   |                |   |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

|                                         |   | Less than 12 Months |   |   | 12 Months or More |   |   | Total  |   |
|----------------------------------------------|--------|---------------------|--------|--------|-------------------|--------|--------|--------|--------|
|                                         |   | Fair                |   |   | Unrealized        |   |   | Fair   |   |   | Unrealized |   |   | Fair |   |   | Unrealized |   |
| December 31, 2010  ($000's)        |   | Value               |   |   | Losses            |   |   | Value  |   |   | Losses |   |   | Value |   |   | Losses |   |
|                                         |   |                |   |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| States and political subdivisions            |   | $                   | 779    |   |              | $      | (11    | )      |   | $ | 0 |   |   | $ | 0 |   |   | $ | 779 |   |   | $ | (11 | ) |
| Mortgage-backed securities                   |   |                | 64,332 |   |              |   | (2,738 | )      |   |   | 0 |   |   |   | 0 |   |   |   | 64,332 |   |   |   | (2,738 | ) |
| Other bonds                                  |   |                | 0      |   |              |   | 0      |   |   |   | 20 |   |   |   | (114 | ) |   |   | 20 |   |   |   | (114 | ) |
|    Total temporarily impaired |   | $                   | 65,111 |   |              | $      | (2,749 | )      |   | $ | 20 |   |   | $ | (114 | ) |   | $ | 65,131 |   |   | $ | (2,863 | ) |

|   |   |   |
|--------|--------|--------|

----

Index

----

Index

| For the Three Months Ended                |   | Beginning |   |   |       |   |   |        |   |   |        |   |   | Ending    |   |
|-------------------------------------------|--------|-----------|--------|--------|------------|--------|--------|-------------|--------|--------|-------------|--------|--------|-----------|--------|
| March 31, 2011  ($ 000's)       |   | Balance   |   |   | Provision  |   |   |        |   |   | Recoveries  |   |   | Balance   |   |
|                                      |   | Allowance |   |   | Charges to |   |   |        |   |   | to Loans    |   |   | Allowance |   |
|                                      |   | for Loan  |   |   | Operating  |   |   | Loans       |   |   | Previously  |   |   | for Loan  |   |
|                                      |   | Losses    |   |   | Expense    |   |   | Charged Off |   |   | Charged Off |   |   | Losses    |   |
|                                      |   |      |   |   |       |   |   |        |   |   |        |   |   |      |   |
| Commercial                                |   | $         | 1,013  |   |       | $      | 182    |        |   | $      | 0           |   |   | $         | 4      |   |   | $ | 1,199 |   |
| Real estate-construction                  |   |      | 2,842  |   |       |   | (567   | )           |   |   | (1          | )      |   |      | 0      |   |   |   | 2,274 |   |
| Real estate-mortgage 1-4 family           |   |      | 988    |   |       |   | (18    | )           |   |   | (254        | )      |   |      | 0      |   |   |   | 716 |   |
| Real estate-mortgage 5+ family            |   |      | 1,025  |   |       |   | 884    |        |   |   | 0           |   |   |      | 0      |   |   |   | 1,909 |   |
| Real estate-mortgage commercial           |   |      | 11,977 |   |       |   | 721    |        |   |   | (750        | )      |   |      | 0      |   |   |   | 11,948 |   |
| Home equity                               |   |      | 468    |   |       |   | (3     | )           |   |   | 0           |   |   |      | 0      |   |   |   | 465 |   |
| Leases                                    |   |      | 0      |   |       |   | 0      |        |   |   | 0           |   |   |      | 0      |   |   |   | 0 |   |
| Installment                               |   |      | 23     |   |       |   | 1      |        |   |   | (4          | )      |   |      | 1      |   |   |   | 21 |   |
|                                      |   |      |   |   |       |   |   |        |   |   |        |   |   |      |   |   |   |   |   |   |
|       Total |   | $         | 18,336 |   |       | $      | 1,200  |        |   | $      | (1,009      | )      |   | $         | 5      |   |   | $ | 18,532 |   |

| For the Three Months Ended                |   | Beginning |   |   |       |   |   |        |   |   |        |   |   | Ending    |   |
|-------------------------------------------|--------|-----------|--------|--------|------------|--------|--------|-------------|--------|--------|-------------|--------|--------|-----------|--------|
| March 31, 2010  ($ 000's)       |   | Balance   |   |   | Provision  |   |   |        |   |   | Recoveries  |   |   | Balance   |   |
|                                      |   | Allowance |   |   | Charges to |   |   |        |   |   | to Loans    |   |   | Allowance |   |
|                                      |   | for Loan  |   |   | Operating  |   |   | Loans       |   |   | Previously  |   |   | for Loan  |   |
|                                      |   | Losses    |   |   | Expense    |   |   | Charged Off |   |   | Charged Off |   |   | Losses    |   |
|                                      |   |      |   |   |       |   |   |        |   |   |        |   |   |      |   |
| Commercial                                |   | $         | 516    |   |       | $      | 837    |        |   | $      | (93         | )      |   | $         | 2      |   |   | $ | 1,262 |   |
| Real estate-construction                  |   |      | 2,591  |   |       |   | (354   | )           |   |   | 0           |   |   |      | 0      |   |   |   | 2,237 |   |
| Real estate-mortgage 1-4 family           |   |      | 725    |   |       |   | (98    | )           |   |   | 0           |   |   |      | 0      |   |   |   | 627 |   |
| Real estate-mortgage 5+ family            |   |      | 799    |   |       |   | (245   | )           |   |   | 0           |   |   |      | 0      |   |   |   | 554 |   |
| Real estate-mortgage commercial           |   |      | 12,138 |   |       |   | 3,255  |        |   |   | (222        | )      |   |      | 0      |   |   |   | 15,171 |   |
| Home equity                               |   |      | 1,241  |   |       |   | 16     |        |   |   | 0           |   |   |      | 0      |   |   |   | 1,257 |   |
| Leases                                    |   |      | 0      |   |       |   | 306    |        |   |   | (306        | )      |   |      | 0      |   |   |   | 0 |   |
| Installment                               |   |      | 17     |   |       |   | (4     | )           |   |   | (3          | )      |   |      | 4      |   |   |   | 14 |   |
|                                      |   |      |   |   |       |   |   |        |   |   |        |   |   |      |   |   |   |   |   |   |
|       Total |   | $         | 18,027 |   |       | $      | 3,713  |        |   | $      | (624        | )      |   | $         | 6      |   |   | $ | 21,122 |   |

----

Index

|   | A. | The loan is maintained on a cash basis because of deterioration in the financial condition of the borrower. |
|--------|----|-------------------------------------------------------------------------------------------------------------|

|   | B. | The borrower is in bankruptcy and the exposure is not fully secured and in the process of collection. |
|--------|----|-------------------------------------------------------------------------------------------------------|

|   | C. | Full payment of principal or interest is not expected. |
|--------|----|--------------------------------------------------------|

|   | D. | The loan has been in default for a period of ninety (90) days or more unless the asset is both well secured and in the process of collection. |
|--------|----|-----------------------------------------------------------------------------------------------------------------------------------------------|

----

Index

| At March 31, 2011  ($ 000’s)                  |   |    |    |   |         |   |   | Allowance    |   |   |         |   |   | Allowance    |    |
|---------------------------------------------------------------|--------|---------|---------|--------|--------------|--------|--------|--------------|--------|--------|--------------|--------|--------|--------------|---------|
|                                                          |   |    |    |   |         |   |   | for Loan     |   |   |         |   |   | for Loan     |    |
|                                                          |   |    |    |   |         |   |   | Losses       |   |   |         |   |   | Losses       |    |
|                                                          |   | Ending  |    |   |         |   |   | Allocated to |   |   |         |   |   | Allocated to |    |
|                                                          |   | Balance |    |   | Loans        |   |   | Loans        |   |   | Loans        |   |   | Loans        |    |
|                                                          |   | Total   |    |   | Individually |   |   | Individually |   |   | Collectively |   |   | Collectively |    |
|                                                          |   | Loans   |    |   | Evaluated    |   |   | Evaluated    |   |   | Evaluated    |   |   | Evaluated    |    |
|                                                          |   | and     |    |   | for          |   |   | for          |   |   | for          |   |   | for          |    |
|                                                          |   | Leases  |    |   | Impairment   |   |   | Impairment   |   |   | Impairment   |   |   | Impairment   |    |
|                                                          |   |    |    |   |         |   |   |         |   |   |         |   |   |         |    |
| Commercial                                                    |   | $       | 19,820  |   |         | $      | 1,502  |         |   | $      | 776          |   |   | $            | 18,318  |   |   | $ | 423 |   |
| Real estate-construction                                      |   |    | 29,896  |   |         |   | 12,969 |         |   |   | 1,609        |   |   |         | 16,927  |   |   |   | 665 |   |
| Real estate-mortgage 1-4 family                               |   |    | 40,297  |   |         |   | 6,632  |         |   |   | 322          |   |   |         | 33,665  |   |   |   | 394 |   |
| Real estate-mortgage 5+ family                                |   |    | 43,254  |   |         |   | 12,191 |         |   |   | 1,534        |   |   |         | 31,063  |   |   |   | 375 |   |
| Real estate-mortgage commercial                               |   |    | 215,324 |   |         |   | 62,064 |         |   |   | 7,516        |   |   |         | 153,260 |   |   |   | 4,432 |   |
| Home equity                                                   |   |    | 22,886  |   |         |   | 1,842  |         |   |   | 276          |   |   |         | 21,044  |   |   |   | 189 |   |
| Leases                                                        |   |    | 403     |   |         |   | 0      |         |   |   | 0            |   |   |         | 403     |   |   |   | 0 |   |
| Installment                                                   |   |    | 1,589   |   |         |   | 8      |         |   |   | 0            |   |   |         | 1,581   |   |   |   | 21 |   |
|                                                          |   |    |    |   |         |   |   |         |   |   |         |   |   |         |    |   |   |   |   |   |
|       Balance at March 31, 2011 |   | $       | 373,469 |   |         | $      | 97,208 |         |   | $      | 12,033       |   |   | $            | 276,261 |   |   | $ | 6,499 |   |

----

Index

| At December 31, 2010  ($ 000’s)                  |   |    |    |   |         |   |   | Allowance    |   |   |         |   |   | Allowance    |    |
|------------------------------------------------------------------|--------|---------|---------|--------|--------------|--------|--------|--------------|--------|--------|--------------|--------|--------|--------------|---------|
|                                                             |   |    |    |   |         |   |   | for Loan     |   |   |         |   |   | for Loan     |    |
|                                                             |   |    |    |   |         |   |   | Losses       |   |   |         |   |   | Losses       |    |
|                                                             |   | Ending  |    |   |         |   |   | Allocated to |   |   |         |   |   | Allocated to |    |
|                                                             |   | Balance |    |   | Loans        |   |   | Loans        |   |   | Loans        |   |   | Loans        |    |
|                                                             |   | Total   |    |   | Individually |   |   | Individually |   |   | Collectively |   |   | Collectively |    |
|                                                             |   | Loans   |    |   | Evaluated    |   |   | Evaluated    |   |   | Evaluated    |   |   | Evaluated    |    |
|                                                             |   | and     |    |   | for          |   |   | for          |   |   | for          |   |   | for          |    |
|                                                             |   | Leases  |    |   | Impairment   |   |   | Impairment   |   |   | Impairment   |   |   | Impairment   |    |
|                                                             |   |    |    |   |         |   |   |         |   |   |         |   |   |         |    |
| Commercial                                                       |   | $       | 20,927  |   |         | $      | 1,570  |         |   | $      | 614          |   |   | $            | 19,357  |   |   | $ | 399 |   |
| Real estate-construction                                         |   |    | 29,776  |   |         |   | 11,711 |         |   |   | 2,070        |   |   |         | 18,065  |   |   |   | 772 |   |
| Real estate-mortgage 1-4 family                                  |   |    | 41,228  |   |         |   | 5,737  |         |   |   | 441          |   |   |         | 35,491  |   |   |   | 547 |   |
| Real estate-mortgage 5+ family                                   |   |    | 44,021  |   |         |   | 8,594  |         |   |   | 491          |   |   |         | 35,427  |   |   |   | 534 |   |
| Real estate-mortgage commercial                                  |   |    | 223,546 |   |         |   | 51,116 |         |   |   | 6,579        |   |   |         | 172,430 |   |   |   | 5,398 |   |
| Home equity                                                      |   |    | 23,392  |   |         |   | 1,816  |         |   |   | 274          |   |   |         | 21,576  |   |   |   | 194 |   |
| Leases                                                           |   |    | 442     |   |         |   | 0      |         |   |   | 0            |   |   |         | 442     |   |   |   | 0 |   |
| Installment                                                      |   |    | 1,807   |   |         |   | 8      |         |   |   | 0            |   |   |         | 1,799   |   |   |   | 23 |   |
|                                                             |   |    |    |   |         |   |   |         |   |   |         |   |   |         |    |   |   |   |   |   |
|       Balance at December 31, 2010 |   | $       | 385,139 |   |         | $      | 80,552 |         |   | $      | 10,469       |   |   | $            | 304,587 |   |   | $ | 7,867 |   |

----

Index

| At March 31, 2011 ($ 000's)                             |   |    |    |   |       |   |   |       |   |   |         |   |   |     |   |   |      | Greater |   |
|--------------------------------------------------------------|--------|---------|---------|--------|------------|--------|--------|------------|--------|--------|--------------|--------|--------|----------|--------|--------|-----------|---------|--------|
|                                                         |   |    |    |   |       |   |   |       |   |   |         |   |   |     |   |   |      |    |   | Than |   |
|                                                         |   |    |    |   |       |   |   |       |   |   |         |   |   |     |   |   |      |    |   | 90 Days Past |   |
|                                                         |   |    |    |   |       |   |   |       |   |   | Greater      |   |   |     |   |   | Total     |    |   | Due and |   |
|                                                         |   |    |    |   | 30-59 Days |   |   | 60-89 Days |   |   | Than 90 Days |   |   | Total    |   |   | Loans and |    |   | Still |   |
|                                                         |   | Current |    |   | Past Due   |   |   | Past Due   |   |   | Past Due     |   |   | Past Due |   |   | Leases    |    |   | Accruing |   |
|                                                         |   |    |    |   |       |   |   |       |   |   |         |   |   |     |   |   |      |    |   |   |   |
| Commercial                                                   |   | $       | 17,709  |   |       | $      | 184    |       |   | $      | 28           |   |   | $        | 1,899  |   |      | $       | 2,111  |   |   | $ | 19,820 |   |   | $ | 1,686 |   |
| Real estate-construction                                     |   |    |    |   |       |   |   |       |   |   |         |   |   |     |   |   |      |    |   |   |   |   |   |   |   |   |   |   |
|      1-4 family                     |   |    | 14,593  |   |       |   | 0      |       |   |   | 0            |   |   |     | 2,843  |   |      |    | 2,843  |   |   |   | 17,436 |   |   |   | 18 |   |
|      Other                          |   |    | 11,251  |   |       |   | 0      |       |   |   | 0            |   |   |     | 1,209  |   |      |    | 1,209  |   |   |   | 12,460 |   |   |   | 0 |   |
| Real estate-mortgage                                         |   |    |    |   |       |   |   |       |   |   |         |   |   |     |   |   |      |    |   |   |   |   |   |   |   |   |   |   |
|      1-4 family                     |   |    | 37,460  |   |       |   | 401    |       |   |   | 0            |   |   |     | 2,436  |   |      |    | 2,837  |   |   |   | 40,297 |   |   |   | 150 |   |
| Real estate-mortgage                                         |   |    |    |   |       |   |   |       |   |   |         |   |   |     |   |   |      |    |   |   |   |   |   |   |   |   |   |   |
|      5+ family                      |   |    | 34,663  |   |       |   | 0      |       |   |   | 0            |   |   |     | 8,591  |   |      |    | 8,591  |   |   |   | 43,254 |   |   |   | 0 |   |
| Real estate-mortgage                                         |   |    |    |   |       |   |   |       |   |   |         |   |   |     |   |   |      |    |   |   |   |   |   |   |   |   |   |   |
|      Commercial                     |   |    |    |   |       |   |   |       |   |   |         |   |   |     |   |   |      |    |   |   |   |   |   |   |   |   |   |   |
|      Owner occupied                 |   |    | 59,050  |   |       |   | 6,880  |       |   |   | 1,706        |   |   |     | 940    |   |      |    | 9,526  |   |   |   | 68,576 |   |   |   | 35 |   |
|      Non-owner occupied             |   |    | 81,406  |   |       |   | 0      |       |   |   | 329          |   |   |     | 1,750  |   |      |    | 2,079  |   |   |   | 83,485 |   |   |   | 0 |   |
|      Hotel industry                 |   |    | 54,118  |   |       |   | 0      |       |   |   | 2,733        |   |   |     | 6,412  |   |      |    | 9,145  |   |   |   | 63,263 |   |   |   | 0 |   |
| Home equity                                                  |   |    | 20,993  |   |       |   | 288    |       |   |   | 287          |   |   |     | 1,318  |   |      |    | 1,893  |   |   |   | 22,886 |   |   |   | 32 |   |
| Leases                                                       |   |    | 403     |   |       |   | 0      |       |   |   | 0            |   |   |     | 0      |   |      |    | 0      |   |   |   | 403 |   |   |   | 0 |   |
| Installment                                                  |   |    | 1,555   |   |       |   | 32     |       |   |   | 2            |   |   |     | 0      |   |      |    | 34     |   |   |   | 1,589 |   |   |   | 0 |   |
|                                                         |   |    |    |   |       |   |   |       |   |   |         |   |   |     |   |   |      |    |   |   |   |   |   |   |   |   |   |   |
|      Balance at March 31, 2011 |   | $       | 333,201 |   |       | $      | 7,785  |       |   | $      | 5,085        |   |   | $        | 27,398 |   |      | $       | 40,268 |   |   | $ | 373,469 |   |   | $ | 1,921 |   |

----

Index

| At December 31, 2010 ($ 000's)                             |   |    |    |   |       |   |   |       |   |   |         |   |   |     |   |   |      | Greater |   |
|-----------------------------------------------------------------|--------|---------|---------|--------|------------|--------|--------|------------|--------|--------|--------------|--------|--------|----------|--------|--------|-----------|---------|--------|
|                                                            |   |    |    |   |       |   |   |       |   |   |         |   |   |     |   |   |      |    |   | Than |   |
|                                                            |   |    |    |   |       |   |   |       |   |   |         |   |   |     |   |   |      |    |   | 90 Days Past |   |
|                                                            |   |    |    |   |       |   |   |       |   |   | Greater      |   |   |     |   |   | Total     |    |   | Due and |   |
|                                                            |   |    |    |   | 30-59 Days |   |   | 60-89 Days |   |   | Than 90 Days |   |   | Total    |   |   | Loans and |    |   | Still |   |
|                                                            |   | Current |    |   | Past Due   |   |   | Past Due   |   |   | Past Due     |   |   | Past Due |   |   | Leases    |    |   | Accruing |   |
|                                                            |   |    |    |   |       |   |   |       |   |   |         |   |   |     |   |   |      |    |   |   |   |
| Commercial                                                      |   | $       | 20,178  |   |       | $      | 78     |       |   | $      | 158          |   |   | $        | 513    |   |      | $       | 749    |   |   | $ | 20,927 |   |   | $ | 513 |   |
| Real estate-construction                                        |   |    |    |   |       |   |   |       |   |   |         |   |   |     |   |   |      |    |   |   |   |   |   |   |   |   |   |   |
|      1-4 family                        |   |    | 14,234  |   |       |   | 0      |       |   |   | 0            |   |   |     | 2,886  |   |      |    | 2,886  |   |   |   | 17,120 |   |   |   | 0 |   |
|      Other                             |   |    | 10,263  |   |       |   | 0      |       |   |   | 1,184        |   |   |     | 1,209  |   |      |    | 2,393  |   |   |   | 12,656 |   |   |   | 0 |   |
| Real estate-mortgage                                            |   |    |    |   |       |   |   |       |   |   |         |   |   |     |   |   |      |    |   |   |   |   |   |   |   |   |   |   |
|      1-4 family                        |   |    | 36,416  |   |       |   | 894    |       |   |   | 1,236        |   |   |     | 2,682  |   |      |    | 4,812  |   |   |   | 41,228 |   |   |   | 130 |   |
| Real estate-mortgage                                            |   |    |    |   |       |   |   |       |   |   |         |   |   |     |   |   |      |    |   |   |   |   |   |   |   |   |   |   |
|      5+ family                         |   |    | 35,426  |   |       |   | 164    |       |   |   | 0            |   |   |     | 8,431  |   |      |    | 8,595  |   |   |   | 44,021 |   |   |   | 0 |   |
| Real estate-mortgage                                            |   |    |    |   |       |   |   |       |   |   |         |   |   |     |   |   |      |    |   |   |   |   |   |   |   |   |   |   |
|      Commercial                             |   |    |    |   |       |   |   |       |   |   |         |   |   |     |   |   |      |    |   |   |   |   |   |   |   |   |   |   |
|      Owner occupied                    |   |    | 65,485  |   |       |   | 749    |       |   |   | 2,181        |   |   |     | 414    |   |      |    | 3,344  |   |   |   | 68,829 |   |   |   | 0 |   |
|      Non-owner occupied                |   |    | 84,353  |   |       |   | 0      |       |   |   | 272          |   |   |     | 1,596  |   |      |    | 1,868  |   |   |   | 86,221 |   |   |   | 296 |   |
|      Hotel industry                    |   |    | 62,072  |   |       |   | 0      |       |   |   | 0            |   |   |     | 6,424  |   |      |    | 6,424  |   |   |   | 68,496 |   |   |   | 0 |   |
| Home equity                                                     |   |    | 21,487  |   |       |   | 73     |       |   |   | 300          |   |   |     | 1,532  |   |      |    | 1,905  |   |   |   | 23,392 |   |   |   | 172 |   |
| Leases                                                          |   |    | 442     |   |       |   | 0      |       |   |   | 0            |   |   |     | 0      |   |      |    | 0      |   |   |   | 442 |   |   |   | 0 |   |
| Installment                                                     |   |    | 1,756   |   |       |   | 13     |       |   |   | 8            |   |   |     | 30     |   |      |    | 51     |   |   |   | 1,807 |   |   |   | 30 |   |
|                                                            |   |    |    |   |       |   |   |       |   |   |         |   |   |     |   |   |      |    |   |   |   |   |   |   |   |   |   |   |
|      Balance at December 31, 2010 |   | $       | 352,112 |   |       | $      | 1,971  |       |   | $      | 5,339        |   |   | $        | 25,717 |   |      | $       | 33,027 |   |   | $ | 385,139 |   |   | $ | 1,141 |   |

----

Index

| At March 31, 2011  ($ 000’s)            |   | Pass   |    |   | Watch  |   |   | Substandard |   |   | Nonaccrual |   |   | Doubtful |   |   | Total  |   |
|---------------------------------------------------------|--------|--------|---------|--------|--------|--------|--------|-------------|--------|--------|------------|--------|--------|----------|--------|--------|--------|--------|
|                                                    |   |   |    |   |   |   |   |        |   |   |       |   |   |     |   |   |   |   |
| Commercial                                              |   | $      | 15,767  |   |   | $      | 2,550  |        |   | $      | 1,290      |   |   | $        | 213    |   |   | $      | 0 |   |   | $ | 19,820 |   |
| Real estate-construction                                |   |   |    |   |   |   |   |        |   |   |       |   |   |     |   |   |   |   |   |   |   |   |   |   |
|      1-4 family                |   |   | 2,713   |   |   |   | 4,230  |        |   |   | 7,669      |   |   |     | 2,824  |   |   |   | 0 |   |   |   | 17,436 |   |
|      Other                     |   |   | 430     |   |   |   | 9,554  |        |   |   | 1,267      |   |   |     | 1,209  |   |   |   | 0 |   |   |   | 12,460 |   |
| Real estate-mortgage 1-4 family                         |   |   | 29,093  |   |   |   | 4,572  |        |   |   | 4,346      |   |   |     | 2,286  |   |   |   | 0 |   |   |   | 40,297 |   |
| Real estate-mortgage 5+ family                          |   |   | 24,602  |   |   |   | 6,461  |        |   |   | 3,600      |   |   |     | 8,591  |   |   |   | 0 |   |   |   | 43,254 |   |
| Real estate-mortgage commercial                         |   |   |    |   |   |   |   |        |   |   |       |   |   |     |   |   |   |   |   |   |   |   |   |   |
|      Owner occupied            |   |   | 38,744  |   |   |   | 15,070 |        |   |   | 6,542      |   |   |     | 8,220  |   |   |   | 0 |   |   |   | 68,576 |   |
|      Non-owner occupied        |   |   | 49,120  |   |   |   | 21,699 |        |   |   | 10,916     |   |   |     | 1,750  |   |   |   | 0 |   |   |   | 83,485 |   |
|      Hotel industry            |   |   | 18,990  |   |   |   | 9,637  |        |   |   | 28,224     |   |   |     | 6,412  |   |   |   | 0 |   |   |   | 63,263 |   |
| Home equity                                             |   |   | 20,251  |   |   |   | 793    |        |   |   | 489        |   |   |     | 1,353  |   |   |   | 0 |   |   |   | 22,886 |   |
| Leases                                                  |   |   | 330     |   |   |   | 73     |        |   |   | 0          |   |   |     | 0      |   |   |   | 0 |   |   |   | 403 |   |
| Installment                                             |   |   | 1,581   |   |   |   | 0      |        |   |   | 8          |   |   |     | 0      |   |   |   | 0 |   |   |   | 1,589 |   |
|                                                    |   |   |    |   |   |   |   |        |   |   |       |   |   |     |   |   |   |   |   |   |   |   |   |   |
|      Balance at March 31, 2011 |   | $      | 201,621 |   |   | $      | 74,639 |        |   | $      | 64,351     |   |   | $        | 32,858 |   |   | $      | 0 |   |   | $ | 373,469 |   |

| At December 31, 2010  ($ 000’s)            |   | Pass   |    |   | Watch  |   |   | Substandard |   |   | Nonaccrual |   |   | Doubtful |   |   | Total  |   |
|------------------------------------------------------------|--------|--------|---------|--------|--------|--------|--------|-------------|--------|--------|------------|--------|--------|----------|--------|--------|--------|--------|
|                                                       |   |   |    |   |   |   |   |        |   |   |       |   |   |     |   |   |   |   |
| Commercial                                                 |   | $      | 17,470  |   |   | $      | 1,887  |        |   | $      | 1,570      |   |   | $        | 0      |   |   | $      | 0 |   |   | $ | 20,927 |   |
| Real estate-construction                                   |   |   |    |   |   |   |   |        |   |   |       |   |   |     |   |   |   |   |   |   |   |   |   |   |
|      1-4 family                   |   |   | 6,587   |   |   |   | 1,181  |        |   |   | 6,466      |   |   |     | 2,886  |   |   |   | 0 |   |   |   | 17,120 |   |
|      Other                        |   |   | 557     |   |   |   | 9,740  |        |   |   | 1,150      |   |   |     | 1,209  |   |   |   | 0 |   |   |   | 12,656 |   |
| Real estate-mortgage 1-4 family                            |   |   | 30,356  |   |   |   | 5,135  |        |   |   | 3,185      |   |   |     | 2,552  |   |   |   | 0 |   |   |   | 41,228 |   |
| Real estate-mortgage 5+ family                             |   |   | 25,341  |   |   |   | 10,086 |        |   |   | 0          |   |   |     | 8,594  |   |   |   | 0 |   |   |   | 44,021 |   |
| Real estate-mortgage commercial                            |   |   |    |   |   |   |   |        |   |   |       |   |   |     |   |   |   |   |   |   |   |   |   |   |
|      Owner occupied               |   |   | 39,757  |   |   |   | 17,282 |        |   |   | 9,985      |   |   |     | 1,805  |   |   |   | 0 |   |   |   | 68,829 |   |
|      Non-owner occupied           |   |   | 52,509  |   |   |   | 29,034 |        |   |   | 3,378      |   |   |     | 1,300  |   |   |   | 0 |   |   |   | 86,221 |   |
|      Hotel industry               |   |   | 19,207  |   |   |   | 14,641 |        |   |   | 28,224     |   |   |     | 6,424  |   |   |   | 0 |   |   |   | 68,496 |   |
| Home equity                                                |   |   | 20,783  |   |   |   | 793    |        |   |   | 457        |   |   |     | 1,359  |   |   |   | 0 |   |   |   | 23,392 |   |
| Leases                                                     |   |   | 358     |   |   |   | 84     |        |   |   | 0          |   |   |     | 0      |   |   |   | 0 |   |   |   | 442 |   |
| Installment                                                |   |   | 1,799   |   |   |   | 0      |        |   |   | 8          |   |   |     | 0      |   |   |   | 0 |   |   |   | 1,807 |   |
|                                                       |   |   |    |   |   |   |   |        |   |   |       |   |   |     |   |   |   |   |   |   |   |   |   |   |
|      Balance at December 31, 2010 |   | $      | 214,724 |   |   | $      | 89,863 |        |   | $      | 54,423     |   |   | $        | 26,129 |   |   | $      | 0 |   |   | $ | 385,139 |   |

----

Index

| At and for the Three Months Ended March 31, 2011 ($ 000's) |   |       |   |   |      |   |    |      | Investment |   |
|-----------------------------------------------------------------|--------|------------|--------|--------|-----------|--------|---------|-----------|------------|--------|
|                                                            |   |       |   |   |      |   |    |      |       |   |   |   |   | Income |   |
|                                                            |   |       |   |   |      |   |    |      |       |   |   |   |   | Recognized |   |
|                                                            |   |       |   |   | Unpaid    |   |    |      |       |   | Average |   |   | For Three |   |
|                                                            |   | Recorded   |   |   | Principal |   |    | Related   |       |   | Recorded |   |   | Months Ended |   |
|                                                            |   | Investment |   |   | Balance   |   |    | Allowance |       |   | Investment |   |   | March 31. 2011 |   |
|                                                            |   |       |   |   |      |   |    |      |       |   |   |   |   |   |   |
| With no related allowance recorded:                             |   |       |   |   |      |   |    |      |       |   |   |   |   |   |   |
| Commercial                                                      |   | $          | 31     |   |      | $      | 31      |      |       | $      | 0 |   |   | $ | 33 |   |   | $ | 1 |   |
| Real estate-construction                                        |   |       |   |   |      |   |    |      |       |   |   |   |   |   |   |   |   |   |   |   |
|      1-4 family                        |   |       | 2,864  |   |      |   | 2,864   |      |       |   | 0 |   |   |   | 2,501 |   |   |   | 22 |   |
|      Other                             |   |       | 851    |   |      |   | 2,584   |      |       |   | 0 |   |   |   | 773 |   |   |   | 0 |   |
| Real estate-mortgage 1-4 family                                 |   |       | 3,578  |   |      |   | 3,578   |      |       |   | 0 |   |   |   | 3,725 |   |   |   | 25 |   |
| Real estate-mortgage 5+ family                                  |   |       | 7,936  |   |      |   | 7,936   |      |       |   | 0 |   |   |   | 5,538 |   |   |   | 57 |   |
| Real estate-mortgage commercial                                 |   |       |   |   |      |   |    |      |       |   |   |   |   |   |   |   |   |   |   |   |
|      Owner occupied                    |   |       | 4,989  |   |      |   | 4,989   |      |       |   | 0 |   |   |   | 4,369 |   |   |   | 37 |   |
|      Non-owner occupied                |   |       | 8,687  |   |      |   | 8,687   |      |       |   | 0 |   |   |   | 3,657 |   |   |   | 13 |   |
|      Hotel industry                    |   |       | 3,214  |   |      |   | 3,214   |      |       |   | 0 |   |   |   | 3,214 |   |   |   | 32 |   |
| Home equity                                                     |   |       | 556    |   |      |   | 556     |      |       |   | 0 |   |   |   | 535 |   |   |   | 6 |   |
| Leases                                                          |   |       | 0      |   |      |   | 0       |      |       |   | 0 |   |   |   | 0 |   |   |   | 0 |   |
| Installment                                                     |   |       | 8      |   |      |   | 8       |      |       |   | 0 |   |   |   | 8 |   |   |   | 0 |   |
| With an allowance recorded:                                     |   |       |   |   |      |   |    |      |       |   |   |   |   |   |   |   |   |   |   |   |
| Commercial                                                      |   |       | 695    |   |      |   | 1,471   |      |       |   | 776 |   |   |   | 803 |   |   |   | 24 |   |
| Real estate-construction                                        |   |       |   |   |      |   |    |      |       |   |   |   |   |   |   |   |   |   |   |   |
|      1-4 family                        |   |       | 6,189  |   |      |   | 7,630   |      |       |   | 1,441 |   |   |   | 5,880 |   |   |   | 45 |   |
|      Other                             |   |       | 1,456  |   |      |   | 1,624   |      |       |   | 168 |   |   |   | 1,456 |   |   |   | 9 |   |
| Real estate-mortgage 1-4 family                                 |   |       | 2,732  |   |      |   | 3,054   |      |       |   | 322 |   |   |   | 2,361 |   |   |   | 27 |   |
| Real estate-mortgage 5+ family                                  |   |       | 2,721  |   |      |   | 4,255   |      |       |   | 1,534 |   |   |   | 3,415 |   |   |   | 0 |   |
| Real estate-mortgage commercial                                 |   |       |   |   |      |   |    |      |       |   |   |   |   |   |   |   |   |   |   |   |
|      Owner occupied                    |   |       | 6,337  |   |      |   | 9,773   |      |       |   | 3,436 |   |   |   | 6,913 |   |   |   | 12 |   |
|      Non-owner occupied                |   |       | 11,596 |   |      |   | 12,176  |      |       |   | 372 |   |   |   | 11,533 |   |   |   | 120 |   |
|      Hotel industry                    |   |       | 19,724 |   |      |   | 26,409  |      |       |   | 3,708 |   |   |   | 18,781 |   |   |   | 193 |   |
| Home equity                                                     |   |       | 1,010  |   |      |   | 1,286   |      |       |   | 276 |   |   |   | 1,016 |   |   |   | 0 |   |
| Leases                                                          |   |       | 0      |   |      |   | 0       |      |       |   | 0 |   |   |   | 0 |   |   |   | 0 |   |
| Installment                                                     |   |       | 0      |   |      |   | 0       |      |       |   | 0 |   |   |   | 0 |   |   |   | 0 |   |
| Total:                                                          |   |       |   |   |      |   |    |      |       |   |   |   |   |   |   |   |   |   |   |   |
| Commercial                                                      |   | $          | 726    |   |      | $      | 1,502   |      |       | $      | 776 |   |   | $ | 836 |   |   | $ | 25 |   |
| Real estate-construction                                        |   |       | 11,360 |   |      |   | 14,702  |      |       |   | 1,609 |   |   |   | 10,610 |   |   |   | 76 |   |
| Real estate-mortgage 1-4 family                                 |   |       | 6,310  |   |      |   | 6,632   |      |       |   | 322 |   |   |   | 6,086 |   |   |   | 52 |   |
| Real estate-mortgage 5+ family                                  |   |       | 10,657 |   |      |   | 12,191  |      |       |   | 1,534 |   |   |   | 8,953 |   |   |   | 57 |   |
| Real estate-mortgage commercial                                 |   |       | 54,547 |   |      |   | 65,248  |      |       |   | 7,516 |   |   |   | 48,467 |   |   |   | 407 |   |
| Home equity                                                     |   |       | 1,566  |   |      |   | 1,842   |      |       |   | 276 |   |   |   | 1,551 |   |   |   | 6 |   |
| Leases                                                          |   |       | 0      |   |      |   | 0       |      |       |   | 0 |   |   |   | 0 |   |   |   | 0 |   |
| Installment                                                     |   |       | 8      |   |      |   | 8       |      |       |   | 0 |   |   |   | 8 |   |   |   | 0 |   |
|                                                            |   |       |   |   |      |   |    |      |       |   |   |   |   |   |   |   |   |   |   |   |
|      Total at March 31, 2011           |   | $          | 85,174 |   |      | $      | 102,125 |      |       | $      | 12,033 |   |   | $ | 76,511 |   |   | $ | 623 |   |

----

Index

| At December 31, 2010  ($ 000's)                |   |       |   |   | Unpaid    |   |   |      |   |
|----------------------------------------------------------|--------|------------|--------|--------|-----------|--------|--------|-----------|--------|
|                                                     |   | Recorded   |   |   | Principal |   |   | Related   |   |
|                                                     |   | Investment |   |   | Balance   |   |   | Allowance |   |
|                                                     |   |       |   |   |      |   |   |      |   |
| With no related allowance recorded:                      |   |       |   |   |      |   |   |      |   |
| Commercial                                               |   | $          | 35     |   |      | $      | 35     |      |   | $ | 0 |   |
| Real estate-construction                                 |   |       |   |   |      |   |   |      |   |   |   |   |
|      1-4 family                 |   |       | 1,680  |   |      |   | 1,680  |      |   |   | 0 |   |
|      Other                      |   |       | 734    |   |      |   | 2,468  |      |   |   | 0 |   |
| Real estate-mortgage 1-4 family                          |   |       | 3,454  |   |      |   | 3,454  |      |   |   | 0 |   |
| Real estate-mortgage 5+ family                           |   |       | 7,172  |   |      |   | 7,172  |      |   |   | 0 |   |
| Real estate-mortgage commercial                          |   |       |   |   |      |   |   |      |   |   |   |   |
|      Owner occupied             |   |       | 2,971  |   |      |   | 2,971  |      |   |   | 0 |   |
|      Non-owner occupied         |   |       | 1,768  |   |      |   | 1,768  |      |   |   | 0 |   |
|      Hotel industry             |   |       | 5,947  |   |      |   | 5,947  |      |   |   | 0 |   |
| Home equity                                              |   |       | 525    |   |      |   | 525    |      |   |   | 0 |   |
| Leases                                                   |   |       | 0      |   |      |   | 0      |      |   |   | 0 |   |
| Installment                                              |   |       | 8      |   |      |   | 8      |      |   |   | 0 |   |
| With an allowance recorded:                              |   |       |   |   |      |   |   |      |   |   |   |   |
| Commercial                                               |   |       | 921    |   |      |   | 1,535  |      |   |   | 614 |   |
| Real estate-construction                                 |   |       |   |   |      |   |   |      |   |   |   |   |
|      1-4 family                 |   |       | 5,771  |   |      |   | 7,673  |      |   |   | 1,902 |   |
|      Other                      |   |       | 1,456  |   |      |   | 1,624  |      |   |   | 168 |   |
| Real estate-mortgage 1-4 family                          |   |       | 1,842  |   |      |   | 2,282  |      |   |   | 441 |   |
| Real estate-mortgage 5+ family                           |   |       | 931    |   |      |   | 1,422  |      |   |   | 491 |   |
| Real estate-mortgage commercial                          |   |       |   |   |      |   |   |      |   |   |   |   |
|      Owner occupied             |   |       | 7,391  |   |      |   | 8,369  |      |   |   | 978 |   |
|      Non-owner occupied         |   |       | 3,121  |   |      |   | 3,567  |      |   |   | 239 |   |
|      Hotel industry             |   |       | 23,339 |   |      |   | 31,677 |      |   |   | 5,362 |   |
| Home equity                                              |   |       | 1,017  |   |      |   | 1,291  |      |   |   | 274 |   |
| Leases                                                   |   |       | 0      |   |      |   | 0      |      |   |   | 0 |   |
| Installment                                              |   |       | 0      |   |      |   | 0      |      |   |   | 0 |   |
| Total:                                                   |   |       |   |   |      |   |   |      |   |   |   |   |
| Commercial                                               |   | $          | 956    |   |      | $      | 1,570  |      |   | $ | 614 |   |
| Real estate-construction                                 |   |       | 9,641  |   |      |   | 13,445 |      |   |   | 2,070 |   |
| Real estate-mortgage 1-4 family                          |   |       | 5,296  |   |      |   | 5,736  |      |   |   | 441 |   |
| Real estate-mortgage 5+ family                           |   |       | 8,103  |   |      |   | 8,594  |      |   |   | 491 |   |
| Real estate-mortgage commercial                          |   |       | 44,537 |   |      |   | 54,299 |      |   |   | 6,579 |   |
| Home equity                                              |   |       | 1,542  |   |      |   | 1,816  |      |   |   | 274 |   |
| Leases                                                   |   |       | 0      |   |      |   | 0      |      |   |   | 0 |   |
| Installment                                              |   |       | 8      |   |      |   | 8      |      |   |   | 0 |   |
|                                                     |   |       |   |   |      |   |   |      |   |   |   |   |
|      Total at December 31, 2010 |   | $          | 70,083 |   |      | $      | 85,468 |      |   | $ | 10,469 |   |

----

Index

| Securities Available for Sale  ($000’s) |   |   |                                                   |   | Fair Value Measurements at Reporting Date Using  |   |
|---------------------------------------------------------|--------|--------|--------------------------------------------------------|--------|--------------------------------------------------|--------|
|                                                    |   |   |                                                   |   | Quoted Pricesin ActiveMarkets forIdenticalAssets |   |   | SignificantOtherObservableInputs |   |   | SignificantUnobservableInputs |   |
|                                                    |   | Total  |                                                   |   | (Level 1)                                        |   |   | (Level 2) |   |   | (Level 3) |   |
| U.S. Treasury                                           |   | $      | 1,001                                                  |   |                                             | $      | 1,001 |   |   | $ | 0 |   |   | $ | 0 |   |
| States and political subdivisions                       |   |   | 3,923                                                  |   |                                             |   | 0 |   |   |   | 3,923 |   |   |   | 0 |   |
| Mortgage-backed securities                              |   |   | 81,389                                                 |   |                                             |   | 0 |   |   |   | 81,389 |   |   |   | 0 |   |
|                                                    |   |   |                                                   |   |                                             |   |   |   |   |   |   |   |   |   |   |   |
| Equity securities                                       |   |   | 4,119                                                  |   |                                             |   | 4,119 |   |   |   | 0 |   |   |   | 0 |   |
| At March 31, 2011                                       |   | $      | 90,432                                                 |   |                                             | $      | 5,120 |   |   | $ | 85,312 |   |   | $ | 0 |   |
|                                                    |   |   |                                                   |   |                                             |   |   |   |   |   |   |   |   |   |   |   |
|                                                    |   |   |                                                   |   |                                             |   |   |   |   |   |   |   |   |   |   |   |
| U.S. Treasury                                           |   | $      | 1,002                                                  |   |                                             | $      | 1,002 |   |   | $ | 0 |   |   | $ | 0 |   |
| States and political subdivisions                       |   |   | 3,997                                                  |   |                                             |   | 0 |   |   |   | 3,997 |   |   |   | 0 |   |
| Mortgage-backed securities                              |   |   | 82,648                                                 |   |                                             |   | 0 |   |   |   | 82,648 |   |   |   | 0 |   |
| Other bonds                                             |   |   | 20                                                     |   |                                             |   | 0 |   |   |   | 0 |   |   |   | 20 |   |
| Equity securities                                       |   |   | 4,163                                                  |   |                                             |   | 4,163 |   |   |   | 0 |   |   |   | 0 |   |
| At December 31, 2010                                    |   | $      |         91,830 |   |                                             | $      | 5,165 |   |   | $ | 86,645 |   |   | $ | 20 |   |

----

Index

|                                                                                                 |   | Securities              |   |
|------------------------------------------------------------------------------------------------------|--------|-------------------------|--------|
|                                                                                                 |   | Available               |   |
|                                                                                                 |   | for Sale ($000’s) |   |
| Balance at December 31, 2010                                                                         |   | $                       | 20     |   |
|      Total realized and unrealized gains (losses) included in income        |   |                    | (163   | ) |
|      Total unrealized gains (losses) included in other comprehensive income |   |                    | 143    |   |
|      Net purchase, sales, calls and maturities                              |   |                    | 0      |   |
|      Net transfer into Level 3                                              |   |                    | 0      |   |
| Balance at March 31, 2011                                                                            |   | $                       | 0      |   |

|                                                                                                 |   | Securities              |   |
|------------------------------------------------------------------------------------------------------|--------|-------------------------|--------|
|                                                                                                 |   | Available               |   |
|                                                                                                 |   | for Sale ($000’s) |   |
| Balance at December 31, 2009                                                                         |   | $                       | 37     |   |
|      Total realized and unrealized gains (losses) included in income        |   |                    | (228   | ) |
|      Total unrealized gains (losses) included in other comprehensive income |   |                    | 208    |   |
|      Net purchase, sales, calls and maturities                              |   |                    | 0      |   |
|      Net transfer into Level 3                                              |   |                    | 0      |   |
| Balance at March 31, 2010                                                                            |   | $                       | 17     |   |

----

Index

| Impaired Loans  ($000’s) |   |   |   |   | Fair Value Measurements at Reporting Date Using |   |
|------------------------------------------|--------|--------|--------|--------|-------------------------------------------------|--------|
|                                     |   |   |   |   | Quoted Prices                                   |   |   |   |   |   |   |   |
|                                     |   |   |   |   | in Active                                       |   |   | Significant |   |   |   |   |
|                                     |   |   |   |   | Markets for                                     |   |   | Other |   |   | Significant |   |
|                                     |   |   |   |   | Identical                                       |   |   | Observable |   |   | Unobservable |   |
|                                     |   |   |   |   | Assets                                          |   |   | Inputs |   |   | Inputs |   |
|                                     |   | Total  |   |   | (Level 1)                                       |   |   | (Level 2) |   |   | (Level 3) |   |
| At March 31, 2011                        |   | $      | 52,460 |   |                                            | $      | 0 |   |   | $ | 0 |   |   | $ | 52,460 |   |
|                                     |   |   |   |   |                                            |   |   |   |   |   |   |   |   |   |   |   |
| At December 31, 2010                     |   | $      | 56,992 |   |                                            | $      | 0 |   |   | $ | 0 |   |   | $ | 56,992 |   |

| Impaired Other Real Estate Owned  ($000’s) |   |   |   |   | Fair Value Measurements at Reporting Date Using |   |
|-----------------------------------------------------------------|--------|--------|--------|--------|-------------------------------------------------|--------|
|                                                            |   |   |   |   | Quoted Prices                                   |   |   |   |   |   |   |   |
|                                                            |   |   |   |   | in Active                                       |   |   | Significant |   |   |   |   |
|                                                            |   |   |   |   | Markets for                                     |   |   | Other |   |   | Significant |   |
|                                                            |   |   |   |   | Identical                                       |   |   | Observable |   |   | Unobservable |   |
|                                                            |   |   |   |   | Assets                                          |   |   | Inputs |   |   | Inputs |   |
|                                                            |   | Total  |   |   | (Level 1)                                       |   |   | (Level 2) |   |   | (Level 3) |   |
| At March 31, 2011                                               |   | $      | 21,785 |   |                                            | $      | 0 |   |   | $ | 0 |   |   | $ | 21,785 |   |
|                                                            |   |   |   |   |                                            |   |   |   |   |   |   |   |   |   |   |   |
| At December 31, 2010                                            |   | $      | 23,874 |   |                                            | $      | 0 |   |   | $ | 0 |   |   | $ | 23,874 |   |

----

Index

|                                            |   | Carrying |     |    | Estimated  |    |
|-------------------------------------------------|--------|----------|----------|---------|------------|---------|
| March 31, 2011  ($000's)              |   | Value    |     |    | Fair Value |    |
| Financial assets:                               |   |     |     |    |       |    |
| Cash and cash equivalents                       |   | $        | 44,885   |    |       | $       | 44,885 |   |
| Securities available for sale                   |   |     | 90,432   |    |       |    | 90,432 |   |
| Loans and leases, net                           |   |     | 354,570  |    |       | 368,007 |   |
| Federal Home Loan Bank stock                    |   |     | 1,801    |    |       |    | 1,801 |   |
| Accrued interest receivable                     |   |     | 1,697    |    |       |    | 1,697 |   |
|                                            |   |     |     |    |       |    |   |   |
| Financial liabilities:                          |   |     |     |    |       |    |   |   |
| Deposits                                        |   | $        | (451,980 | )  |       | $       | (451,977 | ) |
| Securities sold under repurchase agreements     |   |     | (28,146  | )       |       | (28,064 | ) |
| Subordinated debentures                         |   |     | (10,310  | )       |       |    | (6,069 | ) |
| Advances from borrowers for taxes and insurance |   |     | (1,899   | )       |       |    | (1,899 | ) |
| Accrued interest payable                        |   |     | (1,188   | )       |       |    | (1,188 | ) |

|                                            |   |     |     |   |       |   |     |   |
|-------------------------------------------------|--------|----------|----------|--------|------------|--------|----------|--------|
|                                            |   | Carrying |     |   | Estimated  |   |
| December 31, 2010  ($000's)           |   | Value    |     |   | Fair Value |   |
| Financial assets:                               |   |     |     |   |       |   |     |   |
| Cash and cash equivalents                       |   | $        | 30,357   |   |       | $      | 30,357   |   |
| Securities available for sale                   |   |     | 91,830   |   |       |   | 91,830   |   |
| Loans and leases, net                           |   |     | 366,453  |   |       |   | 359,891  |   |
| Federal Home Loan Bank stock                    |   |     | 1,801    |   |       |   | 1,801    |   |
| Accrued interest receivable                     |   |     | 1,751    |   |       |   | 1,751    |   |
|                                            |   |     |     |   |       |   |     |   |
| Financial liabilities:                          |   |     |     |   |       |   |     |   |
| Deposits                                        |   | $        | (446,551 | )      |       | $      | (447,147 | )      |
| Securities sold under repurchase agreements     |   |     | (35,517  | )      |       |   | (35,421  | )      |
| Subordinated debentures                         |   |     | (10,310  | )      |       |   | (5,904   | )      |
| Advances from borrowers for taxes and insurance |   |     | (1,109   | )      |       |   | (1,109   | )      |
| Accrued interest payable                        |   |     | (1,317   | )      |       |   | (1,317   | )      |

----

Index

|   | (1) | increase the participation of the Bank’s Board of Directors in overseeing and supervising the affairs and activities of the Bank, including holding meetings of the Board no less frequently than monthly; |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (2) | adopt and implement a program for monitoring compliance with the Consent Order, including establishing a committee comprised of at least three outside Bank board members responsible for such oversight; |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (3) | maintain a Tier 1 capital to total assets ratio of at least 8% and a total risk-based capital ratio of at least 12%; |
|--------|-----|----------------------------------------------------------------------------------------------------------------------|

|   | (4) | prohibit the extension of additional credit to or for the benefit of any existing borrower with a loan that has been previously charged-off or classified “loss” by the examiners, as well as prohibit the extension of additional credit in any amount in excess of $10,000 to any existing borrower with an outstanding loan classified as “substandard”, “doubtful” or “special mention” unless the Board of Directors or a committee thereof determines the loan to be in the best interests of the Bank; |
|--------|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (5) | adopt a written action plan with respect to each classified asset and delinquent loan in excess of $1,000,000 for the purpose of reducing the Bank’s risk position with respect to such asset; |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (6) | correct all deficiencies in the loans listed as “special mention” by the examiners; |
|--------|-----|-------------------------------------------------------------------------------------------------|

|   | (7) | adopt a written action plan to reduce and manage concentrations of credit identified by the examiners, including procedures that provide for the ongoing measurement and monitoring of the concentrations of credit, the performance of portfolio stress testing analysis and the setting of concentration limits commensurate with the Bank’s capital levels and overall risk profile; |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (8) | provide for quarterly reviews of and adjustments to the allowance for loan and lease losses in accordance with bank regulatory guidelines; |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------------------|

|   | (9) | implement revised written lending and collection policies as indicated by the examiners, as well as revised loan grading and review procedures, including procedures for periodic confirmation of the accuracy and completeness of the watch list and all risk grade assignments, identification of loan relationships that warrant special management attention, and identification and tracking of credit and collateral documentation exceptions; |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (10) | adopt a written profit plan and comprehensive budget containing formal goals and strategies to reduce discretionary expenses and to improve the Bank’s overall earnings; |
|--------|------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (11) | adopt a written contingency funding/liquidity plan which includes identification of the sources of liquid assets available to meet the Bank’s contingency funding needs over one-, two- and three-month time horizons; and |
|--------|------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (12) | adopt a revised investment policy and interest rate risk policy to address the recommendations of the examiners. |
|--------|------|------------------------------------------------------------------------------------------------------------------|

----

Index

|   | 1) | serve as a source of strength to the Bank; |
|--------|----|--------------------------------------------|

|   | 2) | abstain from paying any dividends, redeeming any stock or incurring any debt without Federal Reserve approval; |
|--------|----|----------------------------------------------------------------------------------------------------------------|

|   | 3) | adopt a capital plan; |
|--------|----|-----------------------|

|   | 4) | provide the Federal Reserve with cash flow projections on a quarterly basis; |
|--------|----|------------------------------------------------------------------------------|

|   | 5) | notify the Federal Reserve of the proposed addition of any individual to the Board of Directors or the employment of any individual as a senior executive officer of the Company before such addition or employment becomes effective; and |
|--------|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 6) | provide progress reports to the Federal Reserve concerning the Company’s compliance with the Written Agreement. |
|--------|----|-----------------------------------------------------------------------------------------------------------------------|

----

Index

----

Index

SS

----

Index

----

Index

----

Index

----

Index

----

Index

----

Index

----

Index

|                                                 |   | 2011    |    |   | 2010     |   |
|------------------------------------------------------|--------|---------|---------|--------|----------|--------|
|                                                 |   | Average |    |   |     |   |   |   |   |   | Average |   |   |   |   |   |   |   |
|                                                 |   | Balance |    |   | Interest |   |   | Rate |   |   | Balance |   |   | Interest |   |   | Rate |   |
| Assets                                               |   |    |    |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loans (1)(2)(3)                                      |   | $       | 380,376 |   |     | $      | 4,862 |   |   |   | 5.11 | % |   | $ | 424,021 |   |   | $ | 5,206 |   |   |   | 4.91 | % |
| Taxable securities (4)                               |   |    | 88,850  |   |     |   | 562 |   |   |   | 2.46 | % |   |   | 124,836 |   |   |   | 1,015 |   |   |   | 3.24 | % |
| Tax advantaged securities (2) (4)                    |   |    | 3,906   |   |     |   | 55 |   |   |   | 5.75 | % |   |   | 7,663 |   |   |   | 115 |   |   |   | 6.15 | % |
| Federal funds sold                                   |   |    | 32,492  |   |     |   | 16 |   |   |   | 0.20 | % |   |   | 19,454 |   |   |   | 6 |   |   |   | 0.12 | % |
| Interest earning assets (4)                          |   |    | 505,624 |   |     |   | 5,495 |   |   |   | 4.33 | % |   |   | 575,974 |   |   |   | 6,342 |   |   |   | 4.40 | % |
| Noninterest earning assets                           |   |    | 28,053  |   |     |   |   |   |   |   |   |   |   |   | 35,157 |   |   |   |   |   |   |   |   |   |
| Average assets                                       |   | $       | 533,677 |   |     |   |   |   |   |   |   |   |   | $ | 611,131 |   |   |   |   |   |   |   |   |   |
|                                                 |   |    |    |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Liabilities and stockholders' equity                 |   |    |    |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| NOW deposits                                         |   | $       | 59,711  |   |     | $      | 34 |   |   |   | 0.23 | % |   | $ | 62,629 |   |   | $ | 107 |   |   |   | 0.68 | % |
| Money market deposits                                |   |    | 51,066  |   |     |   | 44 |   |   |   | 0.34 | % |   |   | 55,296 |   |   |   | 82 |   |   |   | 0.59 | % |
| Savings deposits                                     |   |    | 64,601  |   |     |   | 13 |   |   |   | 0.08 | % |   |   | 61,882 |   |   |   | 15 |   |   |   | 0.10 | % |
| Time deposits                                        |   |    | 217,019 |   |     |   | 623 |   |   |   | 1.15 | % |   |   | 261,194 |   |   |   | 1,284 |   |   |   | 1.97 | % |
| Other borrowings                                     |   |    | 38,770  |   |     |   | 87 |   |   |   | 0.95 | % |   |   | 59,809 |   |   |   | 188 |   |   |   | 1.26 | % |
| Interest bearing liabilities                         |   |    | 431,167 |   |     |   | 801 |   |   |   | 0.74 | % |   |   | 500,810 |   |   |   | 1,676 |   |   |   | 1.34 | % |
| Demand deposits                                      |   |    | 62,316  |   |     |   |   |   |   |   |   |   |   |   | 58,331 |   |   |   |   |   |   |   |   |   |
| Other noninterest bearing liabilities                |   |    | 6,398   |   |     |   |   |   |   |   |   |   |   |   | 7,614 |   |   |   |   |   |   |   |   |   |
| Stockholders' equity                                 |   |    | 33,796  |   |     |   |   |   |   |   |   |   |   |   | 44,376 |   |   |   |   |   |   |   |   |   |
| Average liabilities and stockholders' equity         |   | $       | 533,677 |   |     |   |   |   |   |   |   |   |   | $ | 611,131 |   |   |   |   |   |   |   |   |   |
|                                                 |   |    |    |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net interest income                                  |   |    |    |   |     | $      | 4,694 |   |   |   |   |   |   |   |   |   |   | $ | 4,666 |   |   |   |   |   |
|                                                 |   |    |    |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net interest spread                                  |   |    |    |   |     |   |   |   |   |   | 3.59 | % |   |   |   |   |   |   |   |   |   |   | 3.06 | % |
|                                                 |   |    |    |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net yield on interest earning assets (4)             |   |    |    |   |     |   |   |   |   |   | 3.70 | % |   |   |   |   |   |   |   |   |   |   | 3.24 | % |
|                                                 |   |    |    |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-bearing liabilities to earning assets ratio |   |    |    |   |     |   |   |   |   |   | 85.27 | % |   |   |   |   |   |   |   |   |   |   | 86.95 | % |

| (1)- | Interest income on loans includes loan origination and other fees of $28,000 and $20,000 for the three months ended March 31, 2011 and 2010, respectively. |
|------|------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2)- | Tax-exempt income is reflected on a fully tax equivalent basis utilizing a 34 percent tax rate. The tax equivalent adjustment reflected in the above table for municipal loans is approximately $27,000 for the three months ended March 31, 2011 and 2010, respectively. The tax equivalent adjustment reflected in the above table for municipal securities is approximately $19,000  and $39,000 for the three months ended March 31, 2011 and 2010, respectively. |
|------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3)- | Non-accrual loans are included in average loans. |
|------|--------------------------------------------------|

| (4)- | Rate information was calculated on the average amortized cost for securities. The three months ended March 31, 2011 and 2010 average balance information includes an average unrealized gain (loss) for taxable securities of ($2,587,000) and ($519,000), respectively, and for tax-advantaged securities of $81,000 and $188,000, respectively. |
|------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

Index

----

Index

|                                      |   |
|-------------------------------------------|--------|
| TABLE 2                                   |   |
|                                      |   |
| NORTHERN STATES FINANCIAL CORPORATION     |   |
| NONPERFORMING LOANS                       |   |
| ($ 000s)                                  |   |
|                                      |   |   |   |   |   |   |   | Troubled Debt |   |   |   |   |   |   |   |
|                                      |   |   |   |   | 90 Days or |   |   | Restructured |   |   | Total Non- |   |   | % Non- |   |
|                                      |   | Nonaccrual |   |   | More Past Due, |   |   | Loans, |   |   | performing |   |   | performing |   |
| Nonperforming loans at March 31, 2011     |   | Loans |   |   | Still Accruing |   |   | Still Accruing |   |   | Loans |   |   | Loans |   |
|                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commercial                                |   | $ | 213 |   |   | $ | 1,686 |   |   | $ | 11 |   |   | $ | 1,910 |   |   |   | 2.5 | % |
| Real estate-construction                  |   |   | 4,033 |   |   |   | 18 |   |   |   | 3,579 |   |   |   | 7,630 |   |   |   | 10.0 | % |
| Real estate-mortgage 1-4 family      |   |   | 2,286 |   |   |   | 150 |   |   |   | 3,010 |   |   |   | 5,446 |   |   |   | 7.1 | % |
| Real estate-mortgage 5+ family       |   |   | 8,591 |   |   |   | 0 |   |   |   | 0 |   |   |   | 8,591 |   |   |   | 11.3 | % |
| Real estate-mortgage commercial      |   |   | 16,382 |   |   |   | 35 |   |   |   | 35,038 |   |   |   | 51,455 |   |   |   | 67.3 | % |
| Home equity                               |   |   | 1,353 |   |   |   | 32 |   |   |   | 0 |   |   |   | 1,385 |   |   |   | 1.8 | % |
| Leases                                    |   |   | 0 |   |   |   | 0 |   |   |   | 0 |   |   |   | 0 |   |   |   | 0.0 | % |
| Installment                               |   |   | 0 |   |   |   | 0 |   |   |   | 0 |   |   |   | 0 |   |   |   | 0.0 | % |
|       Total |   | $ | 32,858 |   |   | $ | 1,921 |   |   | $ | 41,638 |   |   | $ | 76,417 |   |   |   | 100.0 | % |

|                                      |   |       |   |   |           |       |   |           |         | Troubled Debt |       |       |   |       |   |   |   |   |   |
|-------------------------------------------|--------|------------|--------|--------|----------------|------------|--------|----------------|--------------|---------------|------------|------------|--------|------------|--------|--------|--------|--------|--------|
|                                      |   |       |   |   |           | 90 Days or |   |           | Restructured |          |       | Total Non- |   |       | % Non- |   |
|                                      |   | Nonaccrual |   |   | More Past Due, |       |   | Loans,         |         |          | performing |       |   | performing |   |
| Nonperforming loans at December 31, 2010  |   | Loans      |   |   | Still Accruing |       |   | Still Accruing |         |          | Loans      |       |   | Loans      |   |
|                                      |   |       |   |   |           |       |   |           |         |          |       |       |   |       |   |   |   |   |   |   |
| Commercial                                |   | $          | 0      |   |           | $          | 513    |           |         | $             | 223        |       |   | $          | 736    |   |   |   | 1.0    | % |
| Real estate-construction                  |   |       | 4,095  |   |           |       | 0      |           |         |          | 2,398      |       |   |       | 6,493  |   |   |   | 9.1    | % |
| Real estate-mortgage 1-4 family           |   |       | 2,552  |   |           |       | 130    |           |         |          | 1,665      |       |   |       | 4,347  |   |   |   | 6.1    | % |
| Real estate-mortgage 5+ family            |   |       | 8,594  |   |           |       | 0      |           |         |          | 0          |       |   |       | 8,594  |   |   |   | 12.1   | % |
| Real estate-mortgage commercial      |   |       | 9,529  |   |           |       | 296    |           |         |          | 39,806     |       |   |       | 49,631 |   |   |   | 69.6   | % |
| Home equity                               |   |       | 1,359  |   |           |       | 172    |           |         |          | 0          |       |   |       | 1,531  |   |   |   | 2.1    | % |
| Leases                                    |   |       | 0      |   |           |       | 0      |           |         |          | 0          |       |   |       | 0      |   |   |   | 0.0    | % |
| Installment                               |   |       | 0      |   |           |       | 30     |           |         |          | 0          |       |   |       | 30     |   |   |   | 0.0    | % |
|       Total |   | $          | 26,129 |   |           | $          | 1,141  |           |         | $             | 44,092     |       |   | $          | 71,362 |   |   |   | 100.0  | % |

----

Index

| TABLE 3                                   |   |
|-------------------------------------------|--------|
|                                      |   |   |   |   |   |   |
| NORTHERN STATES FINANCIAL CORPORATION     |   |
| OTHER REAL ESTATE OWNED                   |   |
| ($ 000's)                                 |   |
|                                      |   |   |   |   |   |   |
|                                      |   | March 31, |   |   | December 31, |   |
|                                      |   | 2011 |   |   | 2010 |   |
|                                      |   |   |   |   |   |   |
| Real estate - vacant land                 |   | $ | 2,874 |   |   | $ | 2,209 |   |
| Real estate - 1-4 family                  |   |   | 827 |   |   |   | 1,695 |   |
| Real estate - 5+ family                   |   |   | 7,381 |   |   |   | 7,544 |   |
| Real estate - commercial                  |   |   | 11,155 |   |   |   | 12,878 |   |
|                                      |   |   |   |   |   |   |   |   |
|   Total other real estate owned |   | $ | 22,237 |   |   | $ | 24,326 |   |

|                                            |   |               |   |   |      |   |   |   |
|-------------------------------------------------|--------|--------------------|--------|--------|-----------|--------|--------|--------|
|                                            |   | Three months ended |   |
|                                            |   | March 31,          |   |   | March 31, |   |
|                                            |   |               | 2011   |   |      |   | 2010   |   |
|                                            |   |               |   |   |      |   |   |   |
| Balance beginning of the period                 |   | $                  | 24,326 |   |      | $      | 19,198 |   |
|     Additions               |   |               | 61     |   |      |   | 8,056  |   |
|     Improvements            |   |               | 0      |   |      |   | 29     |   |
|     Sales proceeds          |   |               | (1,544 | )      |      |   | (332   | )      |
|     Gains (losses) on sales |   |               | 67     |   |      |   | 138    |   |
|     Write-downs             |   |               | (673   | )      |      |   | 0      |   |
|                                            |   |               |   |   |      |   |   |   |
| Balance at end of period                        |   | $                  | 22,237 |   |      | $      | 27,089 |   |

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Index

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Index

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Index

| TABLE 4                                                 |   |
|---------------------------------------------------------|--------|
|                                                    |   |
| NORTHERN STATES FINANCIAL CORPORATION                   |   |
| CONTRACTUAL OBLIGATIONS                                 |   |
| As of March 31, 2011                                    |   |
| ($ 000s)                                                |   |
|                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                    |   |   |   |   | Greater than |   |   | Greater than |   |   |   |   |   |   |   |
|                                                    |   |   |   |   | 1 yr. and less |   |   | 3 yrs. and less |   |   |   |   |   |   |   |
|                                                    |   | One year |   |   | than or equal |   |   | than or equal |   |   | Greater than |   |   |   |   |
| Contractual obligations                                 |   | or less |   |   | to 3 yrs. |   |   | to 5 yrs. |   |   | 5 yrs. |   |   | Total |   |
|                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Long-term debt Subordinated debentures                  |   | $ | 0 |   |   | $ | 0 |   |   | $ | 0 |   |   | $ | 10,310 |   |   | $ | 10,310 |   |
|    Time deposits                         |   |   | 189,953 |   |   |   | 21,911 |   |   |   | 998 |   |   |   | 0 |   |   |   | 212,862 |   |
|                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other contractual obligations Standby letters of credit |   |   | 2,953 |   |   |   | 0 |   |   |   | 0 |   |   |   | 0 |   |   |   | 2,953 |   |

AT

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Index

|                              |   |   |   |   | Immediate Change in Rates |   |   |   |   |
|-----------------------------------|--------|--------|--------|--------|---------------------------|--------|--------|--------|--------|
|                              |   |   | -2.00  | %      |                      |   | -1.00  | %      |   |   | +1.00 | % |   |   | +2.00 | % |
|                              |   |   |   |   |                      |   |   |   |   |   |   |   |   |   |   |   |
| March 31, 2011:                   |   |   |   |   |                      |   |   |   |   |   |   |   |   |   |   |   |
| Dollar Change from Base Forecast  |   | $      | (1,161 | )      |                      | $      | (990   | )      |   | $ | 892 |   |   | $ | 1,760 |   |
| Percent Change from Base Forecast |   |   | -5.59  | %      |                      |   | -4.76  |   |   |   | 4.29 | % |   |   | 8.47 | % |
|                              |   |   |   |   |                      |   |   |   |   |   |   |   |   |   |   |   |
| December 31, 2010:                |   |   |   |   |                      |   |   |   |   |   |   |   |   |   |   |   |
| Dollar Change from Base Forecast  |   | $      | (2,244 | )      |                      | $      | (747   | )      |   | $ | 301 |   |   | $ | 606 |   |
| Percent Change from Base Forecast |   |   | -12.31 | %      |                      |   | -4.10  |   |   |   | 1.65 | % |   |   | 3.32 | % |

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Index

ITEM 4. CONTROLS 

HE

ED

R

E

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Index

S 

M

MAT

HI

| (a) | Exhibits. |
|-----|-----------|

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Index

NA

|                                                                                                                                                                                                                                    |  NORTHERN STATES FINANCIAL CORPORATION                                                                                                                                                                         |                                  |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------|
|                                                                                                                                                                                                                                    |                                 (Registrant)   |                                  |
|                                                                                                                                                                                                                                    |                                                                                                                                                                                                                |                                  |
|                                                                                                                                                                                                                                    |                                                                                                                                                                                                                |                                  |
|                                                                                                                                                                                                                                    |                                                                                                                                                                                                                |                                  |   |
| Date        May 2, 2011                             | By:                                                                                                                                                                                                                 | /s/  Scott Yelvington       |   |
|                                                                                                                                                                                                                                    |                                                                                                                                                                                                                | Scott Yelvington                      |   |
|                                                                                                                                                                                                                                    |                                                                                                                                                                                                                | President and Chief Executive Officer |   |
|                                                                                                                                                                                                                                    |                                                                                                                                                                                                                |                                  |   |

|                                                                                                                                                                                                                                                     |   |                                                  |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------------------|--------|
| Date         May 2, 2011                              | By:    | /s/ Steven Neudecker                             |   |
|                                                                                                                                                                                                                                                     |   | Steven Neudecker                                      |   |
|                                                                                                                                                                                                                                                     |   | Vice President and Chief Financial  Officer |   |
|                                                                                                                                                                                                                                                     |   |                                                  |   |

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Index

IB

Exhibit 15.1 

Exhibit 31.1

Exhibit 31.2

Exhibit 32.1

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