----

----

----

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

----

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----

INDEX

| PART I.   FINANCIAL INFORMATION                                                                 |        |   |
|----------------------------------------------------------------------------------------------------------------|-------------|--------|
|                                                                                                           | Page Number |   |
| Item 1.  Financial Statements                                                                        |        |   |
|                                                                                                           |        |   |
| 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 | 15          |   |
|                                                                                                           |        |   |
| Item 3. Quantitative and Qualitative Disclosures About Market Risk                                             | 35          |   |
|                                                                                                           |        |   |
| Item 4. Controls and Procedures                                                                                | 37          |   |
|                                                                                                           |        |   |
| PART II.   OTHER INFORMATION                                                                    |        |   |
|                                                                                                           |        |   |
| Item 1.  Legal Proceedings                                                                           | 37          |   |
|                                                                                                           |        |   |
| Item 1A.  Risk Factors                                                                               | 37          |   |
|                                                                                                           |        |   |
| Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds                                 | 37          |   |
|                                                                                                           |        |   |
| Item 3.  Defaults Upon Senior Securities                                                             | 37          |   |
|                                                                                                           |        |   |
| Item 4. (Removed and Reserved)                                                                                 | 37          |   |
|                                                                                                           |        |   |
| Item 5.  Other Information                                                                           | 37          |   |
|                                                                                                           |        |   |
| Item 6.  Exhibits                                                                                    | 38          |   |
|                                                                                                           |        |   |
| Signatures                                                                                                     | 39          |   |
|                                                                                                           |        |   |
| EXHIBIT INDEX                                                                                                  | 40          |   |

----

Index

P

I

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

----

Index

CONDENSED CONSOLIDATED BALANCE SHEETS

| Assets                                                                                                                                                                                    |   | September 30,2010 |    |   | December 31,2009 |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------|---------|--------|------------------|--------|
| Cash and due from banks                                                                                                                                                                   |   | $                 | 11,124  |   |             | $      | 10,646 |   |
| Interest bearing deposits in financial institutions -maturities less than 90 days                                                                                                         |   |              | 2,677   |   |             |   | 2,760 |   |
| Federal funds sold                                                                                                                                                                        |   |              | 32,023  |   |             |   | 20,788 |   |
| Total cash and cash equivalents                                                                                                                                                           |   |              | 45,824  |   |             |   | 34,194 |   |
| Securities available for sale                                                                                                                                                             |   |              | 94,341  |   |             |   | 133,421 |   |
| Loans and leases.                                                                                                                                                                         |   |              | 398,421 |   |             |   | 431,286 |   |
| Less: Allowance for loan and lease losses                                                                                                                                                 |   |              | (14,439 | )      |             |   | (18,027 | ) |
| Loans and leases, net                                                                                                                                                                     |   |              | 383,982 |   |             |   | 413,259 |   |
| Federal Home Loan Bank stock                                                                                                                                                              |   |              | 1,801   |   |             |   | 1,801 |   |
| Office buildings and equipment, net                                                                                                                                                       |   |              | 9,520   |   |             |   | 9,719 |   |
| Other real estate owned                                                                                                                                                                   |   |              | 16,680  |   |             |   | 19,198 |   |
| Core deposit intangible asset                                                                                                                                                             |   |              | 114     |   |             |   | 462 |   |
| Accrued interest receivable and other assets                                                                                                                                              |   |              | 7,125   |   |             |   | 10,236 |   |
| Total assets                                                                                                                                                                              |   | $                 | 559,387 |   |             | $      | 622,290 |   |
|                                                                                                                                                                                      |   |              |    |   |             |   |   |   |
| Liabilities and Stockholders' Equity                                                                                                                                                      |   |              |    |   |             |   |   |   |
| Liabilities                                                                                                                                                                               |   |              |    |   |             |   |   |   |
| Deposits                                                                                                                                                                                  |   |              |    |   |             |   |   |   |
| Demand - noninterest bearing                                                                                                                                                              |   | $                 | 61,408  |   |             | $      | 58,001 |   |
| Interest bearing                                                                                                                                                                          |   |              | 400,548 |   |             |   | 459,235 |   |
| Total deposits                                                                                                                                                                            |   |              | 461,956 |   |             |   | 517,236 |   |
| Securities sold under repurchase agreements                                                                                                                                               |   |              | 42,071  |   |             |   | 49,364 |   |
| Subordinated debentures                                                                                                                                                                   |   |              | 10,000  |   |             |   | 10,000 |   |
| Advances from borrowers for taxes and insurance                                                                                                                                           |   |              | 587     |   |             |   | 898 |   |
| Accrued interest payable and other liabilities                                                                                                                                            |   |              | 4,444   |   |             |   | 4,491 |   |
| Total liabilities                                                                                                                                                                         |   |              | 519,058 |   |             |   | 581,989 |   |
|                                                                                                                                                                                      |   |              |    |   |             |   |   |   |
| Stockholders' Equity                                                                                                                                                                      |   |              |    |   |             |   |   |   |
| Common stock (Par value $0.40 per share, authorized 6,500,000 shares, issued 4,472,255 shares and 4,072,255 outstanding at September 30, 2010 and December 31, 2009)                      |   |              | 1,789   |   |             |   | 1,789 |   |
| Preferred stock (Par value $0.40 per share, authorized 1,000,000 shares, issued 17,211 shares with liquidation amounts of $1,000.00 per share at September 30, 2010 and December 31, 2009 |   |              | 16,736  |   |             |   | 16,641 |   |
| Warrants (584,084 issued and outstanding at September 30, 2010                                                                                                                            |   |              |    |   |             |   |   |   |
| and December 31, 2009                                                                                                                                                                     |   |              | 681     |   |             |   | 681 |   |
| Additional paid-in capital                                                                                                                                                                |   |              | 11,584  |   |             |   | 11,584 |   |
| Retained earnings                                                                                                                                                                         |   |              | 17,158  |   |             |   | 20,632 |   |
| Treasury stock, at cost (400,000 shares at September 30, 2010 and December 31, 2009)                                                                                                      |   |              | (9,280  | )      |             |   | (9,280 | ) |
| Accumulated other comprehensive income (loss)                                                                                                                                             |   |              | 1,661   |   |             |   | (1,746 | ) |
| Total stockholders' equity                                                                                                                                                                |   |              | 40,329  |   |             |   | 40,301 |   |
| Total liabilities and stockholders' equity                                                                                                                                                |   | $                 | 559,387 |   |             | $      | 622,290 |   |

----

Index

| Three and nine months ended September 30, 2010 and 2009(In thousands of dollars, except per share data) (Unaudited) |   | Three months ended |   |   | Nine months ended |   |
|---------------------------------------------------------------------------------------------------------------------|--------|--------------------|--------|--------|-------------------|--------|
|                                                                                                                |   | September 30,2010  |   |   | September 30,2009 |   |   | September 30,2010 |   |   | September 30,2009 |   |
| Interest income                                                                                                     |   |               |   |   |              |   |   |   |   |   |   |   |
| Loans (including fee income)                                                                                        |   | $                  | 5,424  |   |              | $      | 6,187 |   |   | $ | 15,887 |   |   | $ | 18,620 |   |
| Securities                                                                                                          |   |               |   |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Taxable                                                                                                             |   |               | 655    |   |              |   | 1,093 |   |   |   | 2,367 |   |   |   | 3,464 |   |
| Exempt from federal income tax                                                                                      |   |               | 39     |   |              |   | 87 |   |   |   | 160 |   |   |   | 273 |   |
| Federal funds sold and other                                                                                        |   |               | 8      |   |              |   | 8 |   |   |   | 29 |   |   |   | 20 |   |
| Total interest income                                                                                               |   |               | 6,126  |   |              |   | 7,375 |   |   |   | 18,443 |   |   |   | 22,377 |   |
| Interest expense                                                                                                    |   |               |   |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Time deposits                                                                                                       |   |               | 804    |   |              |   | 1,831 |   |   |   | 3,068 |   |   |   | 6,115 |   |
| Other deposits                                                                                                      |   |               | 125    |   |              |   | 306 |   |   |   | 475 |   |   |   | 1,050 |   |
| Repurchase agreements and federal funds purchased                                                                   |   |               | 67     |   |              |   | 162 |   |   |   | 215 |   |   |   | 489 |   |
| Federal Home Loan Bank advances                                                                                     |   |               | 0      |   |              |   | 4 |   |   |   | 8 |   |   |   | 52 |   |
| Subordinated debentures                                                                                             |   |               | 102    |   |              |   | 109 |   |   |   | 314 |   |   |   | 349 |   |
| Total interest expense                                                                                              |   |               | 1,098  |   |              |   | 2,412 |   |   |   | 4,080 |   |   |   | 8,055 |   |
| Net interest income                                                                                                 |   |               | 5,028  |   |              |   | 4,963 |   |   |   | 14,363 |   |   |   | 14,322 |   |
| Provision for loan and lease losses                                                                                 |   |               | 338    |   |              |   | 12,825 |   |   |   | 4,568 |   |   |   | 18,244 |   |
| Net interest income after provision for loan and lease losses                                                       |   |               | 4,690  |   |              |   | (7,862 | ) |   |   | 9,795 |   |   |   | (3,922 | ) |
| Noninterest income                                                                                                  |   |               |   |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Service fees on deposits                                                                                            |   |               | 515    |   |              |   | 638 |   |   |   | 1,611 |   |   |   | 1,753 |   |
| Trust income                                                                                                        |   |               | 197    |   |              |   | 182 |   |   |   | 594 |   |   |   | 590 |   |
| Gain on sale of securities                                                                                          |   |               | 0      |   |              |   | 0 |   |   |   | 653 |   |   |   | 0 |   |
| Gain (loss) on sale of other real estate owned                                                                      |   |               | (426   | )      |              |   | 42 |   |   |   | (26 | ) |   |   | (1,594 | ) |
| Other than temporary impairment of securities                                                                       |   |               | (36    | )      |              |   | (150 | ) |   |   | (634 | ) |   |   | (2,243 | ) |
| Noncredit portion of other than temporary impairment of securities                                                  |   |               | 22     |   |              |   | (2,274 | ) |   |   | (25 | ) |   |   | (809 | ) |
| Other operating income                                                                                              |   |               | 343    |   |              |   | 320 |   |   |   | 971 |   |   |   | 881 |   |
| Total noninterest income                                                                                            |   |               | 615    |   |              |   | (1,242 | ) |   |   | 3,144 |   |   |   | (1,422 | ) |
| Noninterest expense                                                                                                 |   |               |   |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Salaries and employee benefits                                                                                      |   |               | 1,729  |   |              |   | 2,109 |   |   |   | 5,228 |   |   |   | 6,286 |   |
| Occupancy and equipment, net                                                                                        |   |               | 552    |   |              |   | 556 |   |   |   | 1,771 |   |   |   | 1,872 |   |
| Data processing                                                                                                     |   |               | 498    |   |              |   | 472 |   |   |   | 1,444 |   |   |   | 1,345 |   |
| FDIC insururance                                                                                                    |   |               | 402    |   |              |   | 324 |   |   |   | 1,103 |   |   |   | 1,080 |   |
| Legal                                                                                                               |   |               | 194    |   |              |   | 308 |   |   |   | 616 |   |   |   | 942 |   |
| Audit and other professional                                                                                        |   |               | 317    |   |              |   | 244 |   |   |   | 979 |   |   |   | 695 |   |
| Amortization of core deposit intangible asset                                                                       |   |               | 116    |   |              |   | 116 |   |   |   | 348 |   |   |   | 348 |   |
| Write-down of goodwill                                                                                              |   |               | 0      |   |              |   | 0 |   |   |   | 0 |   |   |   | 9,522 |   |
| Write-down of other real estate owned                                                                               |   |               | 1,076  |   |              |   | 0 |   |   |   | 2,500 |   |   |   | 0 |   |
| Other real estate owned expense                                                                                     |   |               | 99     |   |              |   | 178 |   |   |   | 327 |   |   |   | 442 |   |
| Other operating expenses                                                                                            |   |               | 465    |   |              |   | 663 |   |   |   | 1,337 |   |   |   | 2,024 |   |
| Total noninterest expense                                                                                           |   |               | 5,448  |   |              |   | 4,970 |   |   |   | 15,653 |   |   |   | 24,556 |   |
| Loss before income taxes                                                                                            |   |               | (143   | )      |              |   | (14,074 | ) |   |   | (2,714 | ) |   |   | (29,900 | ) |
| Provision for income taxes                                                                                          |   |               | 0      |   |              |   | 3,668 |   |   |   | 0 |   |   |   | 1,130 |   |
| Net loss                                                                                                            |   | $                  | (143   | )      |              | $      | (17,742 | ) |   | $ | (2,714 | ) |   | $ | (31,030 | ) |
|                                                                                                                |   |               |   |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Dividends to preferred stockholders                                                                                 |   |               | 222    |   |              |   | 215 |   |   |   | 665 |   |   |   | 528 |   |
| Accretion of discount on preferred stock                                                                            |   |               | 31     |   |              |   | 30 |   |   |   | 95 |   |   |   | 81 |   |
| Net loss available to common stockholders                                                                           |   | $                  | (396   | )      |              | $      | (17,987 | ) |   | $ | (3,474 | ) |   | $ | (31,639 | ) |
|                                                                                                                |   |               |   |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Basic loss per share                                                                                                |   | $                  | (0.10  | )      |              | $      | (4.42 | ) |   | $ | (0.85 | ) |   | $ | (7.77 | ) |
|                                                                                                                |   |               |   |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Diluted loss per share                                                                                              |   | $                  | (0.10  | )      |              | $      | (4.42 | ) |   | $ | (0.85 | ) |   | $ | (7.77 | ) |
|                                                                                                                |   |               |   |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Comprehensive income (loss)                                                                                         |   | $                  | (124   | )      |              | $      | (15,686 | ) |   | $ | 693 |   |   | $ | (29,531 | ) |

----

Index

| Nine months ended September 30, 2010 and 2009 (In thousands of dollars) (Unaudited)       |   | Nine months ended |    |
|-------------------------------------------------------------------------------------------|--------|-------------------|---------|
|                                                                                      |   | September 30,2010 |    |   | September 30,2009 |   |
| Cash flows - operating activities                                                         |   |              |    |   |   |   |
| Net loss                                                                                  |   | $                 | (2,714  | ) |   | $ | (31,030 | ) |
| Adjustments to reconcile net loss to net cash from operating activities:                  |   |              |    |   |   |   |   |   |
| Depreciation                                                                              |   |              | 488     |   |   |   | 466 |   |
| Amortization of other intangible assets                                                   |   |              | 348     |   |   |   | 348 |   |
| Provision for loan and lease losses                                                       |   |              | 4,568   |   |   |   | 18,244 |   |
| Net gain on sales of securities                                                           |   |              | (653    | ) |   |   | 0 |   |
| Impairment loss on securities                                                             |   |              | 659     |   |   |   | 3,052 |   |
| Net losses on sale of other real estate owned                                             |   |              | 26      |   |   |   | 1,594 |   |
| Write-down of other real estate owned                                                     |   |              | 2,500   |   |   |   | 0 |   |
| Write-down of goodwill                                                                    |   |              | 0       |   |   |   | 9,522 |   |
| Net change in accrued interest receivable and other assets                                |   |              | 1,008   |   |   |   | 4,709 |   |
| Net change in accrued interest payable and other liabilities                              |   |              | (712    | ) |   |   | 1,557 |   |
| Net cash - operating activities                                                           |   |              | 5,518   |   |   |   | 8,462 |   |
| Cash flows - investing activities                                                         |   |              |    |   |   |   |   |   |
| Proceeds from maturities, calls and principal reductions of securities available for sale |   |              | 9,588   |   |   |   | 25,887 |   |
| Proceeds from sales of securities available for sale                                      |   |              | 41,193  |   |   |   | 0 |   |
| Purchases of securities available for sale                                                |   |              | (6,224  | ) |   |   | (48,884 | ) |
| Purchases of Federal Home Loan Bank Stock                                                 |   |              | 0       |   |   |   | (44 | ) |
| Change in loans made to customers                                                         |   |              | 14,266  |   |   |   | 8,752 |   |
| Property and equipment expenditures                                                       |   |              | (289    | ) |   |   | (374 | ) |
| Improvements to other real estate owned                                                   |   |              | (34     | ) |   |   | (69 | ) |
| Proceeds from sales of other real estate owned                                            |   |              | 10,496  |   |   |   | 4,791 |   |
| Net cash - investing activities                                                           |   |              | 68,996  |   |   |   | (9,941 | ) |
| Cash flows - financing activities                                                         |   |              |    |   |   |   |   |   |
| Net increase (decrease) in:                                                               |   |              |    |   |   |   |   |   |
| Deposits                                                                                  |   |              | (55,280 | ) |   |   | 19,332 |   |
| Securities sold under repurchase agreements and federal funds purchased                   |   |              | (7,293  | ) |   |   | (158 | ) |
| Advances from borrowers for taxes and insurance                                           |   |              | (311    | ) |   |   | (567 | ) |
| Proceeds from issuance of preferred stock                                                 |   |              | 0       |   |   |   | 17,211 |   |
| Dividends paid on preferred stock                                                         |   |              | 0       |   |   |   | (418 | ) |
| Federal Home Loan Bank advances                                                           |   |              | 0       |   |   |   | 10,000 |   |
| Repayment of Federal Home Loan Bank advances                                              |   |              | 0       |   |   |   | (30,000 | ) |
| Net cash - financing activities                                                           |   |              | (62,884 | ) |   |   | 15,400 |   |
| Net change in cash and cash equivalents                                                   |   |              | 11,630  |   |   |   | 13,921 |   |
| Cash and cash equivalents at beginning of period                                          |   |              | 34,194  |   |   |   | 21,868 |   |
| Cash and cash equivalents at end of period                                                |   | $                 | 45,824  |   |   | $ | 35,789 |   |
|                                                                                      |   |              |    |   |   |   |   |   |
| Noncash transfer of loans to other real estate owned                                      |   | $                 | 10,470  |   |   | $ | 17,202 |   |
| Noncash accrual of preferred dividends                                                    |   |              | 665     |   |   |   | 110 |   |
| Cash paid for interest                                                                    |   |              | 4,473   |   |   |   | 8,504 |   |
| Cash received (paid) for income taxes                                                     |   |              | 0       |   |   |   | 2,252 |   |

----

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, 2008                                                        |   | $            | 1,789  |   |            | $      | -      |     |   | $      | -                          |   |   | $                 | 11,584 |   |                    | $      | 56,082  |                                          |   | $      | (9,280                    | )      |   | $ | 1,439 |   |   | $ | 61,614 |   |
| Net loss                                                                          |   |         |   |   |            |   |   |     |   |   |                       |   |   |              |   |   |                    |   | (1,457  | )                                             |   |   |                      |   |   |   |   |   |   |   | (1,457 | ) |
| Issuance of preferred stock and warrants                                          |   |         |   |   |            |   | 16,530 |     |   |   | 681                        |   |   |              |   |   |                    |   |    |                                          |   |   |                      |   |   |   |   |   |   |   | 17,211 |   |
| Accrued dividend on preferred stock                                               |   |         |   |   |            |   |   |     |   |   |                       |   |   |              |   |   |                    |   | (98     | )                                             |   |   |                      |   |   |   |   |   |   |   | (98 | ) |
| Accretion of preferred stock discount issued                                      |   |         |   |   |            |   | 20     |     |   |   |                       |   |   |              |   |   |                    |   | (20     | )                                             |   |   |                      |   |   |   |   |   |   |   | 0 |   |
| Unrealized loss on securities available for sale, net of deferred tax             |   |         |   |   |            |   |   |     |   |   |                       |   |   |              |   |   |                    |   |    |                                          |   |   |                      |   |   |   | (735 | ) |   |   | (735 | ) |
| Balance, March 31, 2009                                                           |   |         | 1,789  |   |            |   | 16,550 |     |   |   | 681                        |   |   |              | 11,584 |   |                    |   | 54,507  |                                          |   |   | (9,280                    | )      |   |   | 704 |   |   |   | 76,535 |   |
| Adjustment for change in accounting from adoption of new accounting pronouncement |   |         |   |   |            |   |   |     |   |   |                       |   |   |              |   |   |                    |   | 962     |                                          |   |   |                      |   |   |   | (962 | ) |   |   | 0 |   |
| Balance, April 1, 2009                                                            |   |         | 1,789  |   |            |   | 16,550 |     |   |   | 681                        |   |   |              | 11,584 |   |                    |   | 55,469  |                                          |   |   | (9,280                    | )      |   |   | (258 | ) |   |   | 76,535 |   |
| Net loss                                                                          |   |         |   |   |            |   |   |     |   |   |                       |   |   |              |   |   |                    |   | (29,573 | )                                             |   |   |                      |   |   |   |   |   |   |   | (29,573 | ) |
| Accrued dividend on preferred stock                                               |   |         |   |   |            |   |   |     |   |   |                       |   |   |              |   |   |                    |   | (430    | )                                             |   |   |                      |   |   |   |   |   |   |   | (430 | ) |
| Accretion of preferred stock discount issued                                      |   |         |   |   |            |   | 61     |     |   |   |                       |   |   |              |   |   |                    |   | (61     | )                                             |   |   |                      |   |   |   |   |   |   |   | 0 |   |
| Unrealized gain on securities available for sale, net of deferred tax..           |   |         |   |   |            |   |   |     |   |   |                       |   |   |              |   |   |                    |   |    |                                          |   |   |                      |   |   |   | 2,234 |   |   |   | 2,234 |   |
| Balance, September 30, 2009                                                       |   | $            | 1,789  |   |            | $      | 16,611 |     |   | $      | 681                        |   |   | $                 | 11,584 |   |                    | $      | 25,405  |                                          |   | $      | (9,280                    | )      |   | $ | 1,976 |   |   | $ | 48,766 |   |
|                                                                              |   |         |   |   |            |   |   |     |   |   |                       |   |   |              |   |   |                    |   |    |                                          |   |   |                      |   |   |   |   |   |   |   |   |   |
|                                                                              |   |         |   |   |            |   |   |     |   |   |                       |   |   |              |   |   |                    |   |    |                                          |   |   |                      |   |   |   |   |   |   |   |   |   |
| Balance, December 31, 2009                                                        |   | $            | 1,789  |   |            | $      | 16,641 |     |   | $      | 681                        |   |   | $                 | 11,584 |   |                    | $      | 20,632  |                                          |   | $      | (9,280                    | )      |   | $ | (1,746 | ) |   | $ | 40,301 |   |
| Net loss                                                                          |   |         |   |   |            |   |   |     |   |   |                       |   |   |              |   |   |                    |   | (2,714  | )                                             |   |   |                      |   |   |   |   |   |   |   | (2,714 | ) |
| Accrued dividend on preferred stock                                               |   |         |   |   |            |   |   |     |   |   |                       |   |   |              |   |   |                    |   | (665    | )                                             |   |   |                      |   |   |   |   |   |   |   | (665 | ) |
| Accretion of preferred stock discount issued                                      |   |         |   |   |            |   | 95     |     |   |   |                       |   |   |              |   |   |                    |   | (95     | )                                             |   |   |                      |   |   |   |   |   |   |   | 0 |   |
| Unrealized gain on securities available for sale, net of deferred tax             |   |         |   |   |            |   |   |     |   |   |                       |   |   |              |   |   |                    |   |    |                                          |   |   |                      |   |   |   | 3,407 |   |   |   | 3,407 |   |
| Balance, September 30, 2010                                                       |   | $            | 1,789  |   |            | $      | 16,736 |     |   | $      | 681                        |   |   | $                 | 11,584 |   |                    | $      | 17,158  |                                          |   | $      | (9,280                    | )      |   | $ | 1,661 |   |   | $ | 40,329 |   |

----

Index

----

Index

| Dollars in thousands, except per share data)                   |   | Three Months EndedSeptember 30, |      |   | Nine Months EndedSeptember 30, |   |
|----------------------------------------------------------------|--------|---------------------------------|-----------|--------|--------------------------------|--------|
|                                                           |   | 2010                            |      |   | 2009                           |   |   | 2010 |   |   | 2009 |   |
| Basic earnings per share:                                      |   |                            |      |   |                           |   |   |   |   |   |   |   |
| Net loss                                                       |   | $                               | (143      | )      |                           | $      | (17,742 | ) |   | $ | (2,714 | ) |   | $ | (31,030 | ) |
| Dividends accrued to preferredstockholders                     |   |                            | 222       |   |                           |   | 215 |   |   |   | 665 |   |   |   | 528 |   |
| Accretion of discount on preferred stock                       |   |                            | 31        |   |                           |   | 30 |   |   |   | 95 |   |   |   | 81 |   |
| Net loss available to common stockholders                      |   | $                               | (396      | )      |                           | $      | (17,987 | ) |   | $ | (3,474 | ) |   | $ | (31,639 | ) |
| Weighted average common shares outstanding                     |   |                            | 4,072,255 |   |                           |   | 4,072,255 |   |   |   | 4,072,255 |   |   |   | 4,072,255 |   |
| Basic loss per share                                           |   | $                               | (0.10     | )      |                           | $      | (4.42 | ) |   | $ | (0.85 | ) |   | $ | (7.77 | ) |
|                                                           |   |                            |      |   |                           |   |   |   |   |   |   |   |   |   |   |   |
| Diluted earnings per share:                                    |   |                            |      |   |                           |   |   |   |   |   |   |   |   |   |   |   |
| Net loss                                                       |   | $                               | (143      | )      |                           | $      | (17,742 | ) |   | $ | (2,714 | ) |   | $ | (31,030 | ) |
| Dividends accrued to preferredstockholders                     |   |                            | 222       |   |                           |   | 215 |   |   |   | 665 |   |   |   | 528 |   |
| Accretion of discount on preferred stock                       |   |                            | 31        |   |                           |   | 30 |   |   |   | 95 |   |   |   | 81 |   |
| Net loss available to common stockholders                      |   | $                               | (396      | )      |                           | $      | (17,987 | ) |   | $ | (3,474 | ) |   | $ | (31,639 | ) |
| Weighted average common shares outstanding                     |   |                            | 4,072,255 |   |                           |   | 4,072,255 |   |   |   | 4,072,255 |   |   |   | 4,072,255 |   |
| Add: Dilutive effect of assumed warrant exercises              |   |                            | -         |   |                           |   | - |   |   |   | - |   |   |   | - |   |
| Weighted average common and dilutive common shares outstanding |   |                            | 4,072,255 |   |                           |   | 4,072,255 |   |   |   | 4,072,255 |   |   |   | 4,072,255 |   |
| Diluted loss per share                                         |   | $                               | (0.10     | )      |                           | $      | (4.42 | ) |   | $ | (0.85 | ) |   | $ | ( 7.77 | ) |

----

Index

|                |   | September 30,2010 |      |   | December 31,2009 |   |
|---------------------|--------|-------------------|-----------|--------|------------------|--------|
| 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     |   |              | 400,000   |   |             |   | 400,000 |   |
| Outstanding shares  |   |              | 4,072,255 |   |             |   | 4,072,255 |   |

----

Index

|                                   |   |       |   |   | Gross Unrealized |   |
|----------------------------------------|--------|------------|--------|--------|------------------|--------|
| September 30, 2010  ($000's) |   | Fair Value |   |   | Gain             |   |   | Loss |   |
|                                   |   |       |   |   |             |   |   |   |   |
| U.S. Treasury                          |   | $          | 1,003  |   |             | $      | 1 |   |   | $ | - |   |
| States and political subdivisions      |   |       | 4,035  |   |             |   | 170 |   |   |   | - |   |
| Mortgage-backed securities             |   |       | 85,040 |   |             |   | 2,445 |   |   |   | - |   |
| Other bonds                            |   |       | 26     |   |             |   | - |   |   |   | (108 | ) |
| Equity securities                      |   |       | 4,237  |   |             |   | 127 |   |   |   | - |   |
|                                   |   |       |   |   |             |   |   |   |   |   |   |   |
| Total securities available for sale    |   | $          | 94,341 |   |             | $      | 2,743 |   |   | $ | (108 | ) |

|                                  |   |       |    |   |   | Gross Unrealized |   |
|---------------------------------------|--------|------------|---------|--------|--------|------------------|--------|
| December 31, 2009  ($000's) |   | Fair Value |    |   | Gains  |             |   | Losses |   |
|                                  |   |       |    |   |   |             |   |   |   |   |   |   |
| U.S. Treasury                         |   | $          | 1,006   |   |   | $                | 7      |   |   | $ | - |   |
| States and political subdivisions     |   |       | 9,641   |   |   |             | 193    |   |   |   | (27 | ) |
| Mortgage-backed securities            |   |       | 118,729 |   |   |             | 207    |   |   |   | (2,477 | ) |
| Other bonds                           |   |       | 37      |   |   |             | -      |   |   |   | (742 | ) |
| Equity securities                     |   |       | 4,008   |   |   |             | -      |   |   |   | (9 | ) |
|                                  |   |       |    |   |   |             |   |   |   |   |   |   |
| Total securities available for sale   |   | $          | 133,421 |   |   | $                | 407    |   |   | $ | (3,255 | ) |

----

Index

| September 30, 2010  ($000's) |   | Fair Value |   |
|----------------------------------------|--------|------------|--------|
|                                   |   |       |   |
| Due in one year or less                |   | $          | 1,859  |   |
| Due after one year through five years  |   |       | 550    |   |
| Due after five years through ten years |   |       | 745    |   |
| Due after ten years                    |   |       | 1,910  |   |
|                                   |   |       | 5,064  |   |
| Mortgage-backed securities             |   |       | 85,040 |   |
| Equity securities                      |   |       | 4,237  |   |
| Total securities available-for-sale    |   | $          | 94,341 |   |

|                                   |   | Less than 12 Months |   |   | 12 Months or More |   |   | Total     |   |
|----------------------------------------|--------|---------------------|--------|--------|-------------------|--------|--------|-----------|--------|
| September 30, 2010  ($000's) |   | FairValue           |   |   | Unrealized Losses |   |   | FairValue |   |   | Unrealized Losses |   |   | FairValue |   |   | Unrealized Losses |   |
|                                   |   |                |   |   |              |   |   |      |   |   |   |   |   |   |   |   |   |   |
| Other bonds                            |   | $                   | -      |   |              | $      | -      |      |   | $ | 26 |   |   | $ | (108 | ) |   | $ | 26 |   |   | $ | (108 | ) |
| Total temporarily impaired             |   | $                   | -      |   |              | $      | -      |      |   | $ | 26 |   |   | $ | (108 | ) |   | $ | 26 |   |   | $ | (108 | ) |

|                                  |   | Less than 12 Months |    |   | 12 Months or More |   |   | Total      |   |
|---------------------------------------|--------|---------------------|---------|--------|-------------------|--------|--------|------------|--------|
| December 31, 2009  ($000's) |   | Fair Value          |    |   | Unrealized Losses |   |   | Fair Value |   |   | Unrealized Losses |   |   | Fair Value |   |   | Unrealized Losses |   |
|                                  |   |                |    |   |              |   |   |       |   |   |   |   |   |   |   |   |   |   |
| States and political subdivisions     |   | $                   | 616     |   |              | $      | (7     | )          |   | $ | 771 |   |   | $ | (20 | ) |   | $ | 1,387 |   |   | $ | (27 | ) |
| Mortgage-backed securities            |   |                | 100,181 |   |              |   | (2,477 | )          |   |   | - |   |   |   | - |   |   |   | 100,181 |   |   |   | (2,477 | ) |
| Other bonds                           |   |                | -       |   |              |   | -      |       |   |   | 37 |   |   |   | (742 | ) |   |   | 37 |   |   |   | (742 | ) |
| Equity securities                     |   |                | 3,965   |   |              |   | (9     | )          |   |   | - |   |   |   | - |   |   |   | 3,965 |   |   |   | (9 | ) |
| Total temporarily impaired            |   | $                   | 104,762 |   |              | $      | (2,493 | )          |   | $ | 808 |   |   | $ | (762 | ) |   | $ | 105,570 |   |   | $ | (3,255 | ) |

----

Index

----

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; |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

Index

|   | (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

ITEM 2

----

Index

----

Index

----

Index

----

Index

----

Index

| Securities Available for Sale     |   |   |    |   | Fair Value Measurements at Reporting Date Using           |   |
|-----------------------------------|--------|--------|---------|--------|-----------------------------------------------------------|--------|
|                              |   | Total  |    |   | Quoted Pricesin ActiveMarkets forIdenticalAssets(Level 1) |   |   | SignificantOtherObservableInputs(Level 2) |   |   | SignificantUnobservableInputs(Level 3) |   |
|                              |   |   |    |   |                                                      |   |   |   |   |   |   |   |
| U.S. Treasury                     |   | $      | 1,003   |   |                                                      | $      | 1,003 |   |   |   |   |   |   |   |
| States and political subdivisions |   |   | 4,035   |   |                                                      |   |   |   |   |   | 4,035 |   |   |   |   |
| Mortgage - backed securities      |   |   | 85,040  |   |                                                      |   |   |   |   |   | 85,040 |   |   |   |   |
| Other bonds                       |   |   | 26      |   |                                                      |   |   |   |   |   |   |   |   |   | 26 |   |
| Equity securities                 |   |   | 4,237   |   |                                                      |   |   |   |   |   | 4,237 |   |   |   |   |   |
|                              |   |   |    |   |                                                      |   |   |   |   |   |   |   |   |   |   |   |
| Total at September 30, 2010       |   | $      | 94,341  |   |                                                      | $      | 1,003 |   |   | $ | 93,312 |   |   | $ | 26 |   |
|                              |   |   |    |   |                                                      |   |   |   |   |   |   |   |   |   |   |   |
|                              |   |   |    |   |                                                      |   |   |   |   |   |   |   |   |   |   |   |
| U.S. Treasury                     |   | $      | 1,006   |   |                                                      | $      | 1,006 |   |   |   |   |   |   |   |   |   |
| States and political subdivisions |   |   | 9,641   |   |                                                      |   |   |   |   |   | 9,641 |   |   |   |   |   |
| Mortgage - backed securities      |   |   | 118,729 |   |                                                      |   |   |   |   |   | 118,729 |   |   |   |   |   |
| Other bonds                       |   |   | 37      |   |                                                      |   |   |   |   |   |   |   |   |   | 37 |   |
| Equity securities                 |   |   | 4,008   |   |                                                      |   |   |   |   |   | 4,008 |   |   |   |   |   |
|                              |   |   |    |   |                                                      |   |   |   |   |   |   |   |   |   |   |   |
| Total at December 31, 2009        |   | $      | 133,421 |   |                                                      | $      | 1,006 |   |   | $ | 132,378 |   |   | $ | 37 |   |

----

Index

|                                                                   |   | Securities Availablefor Sale |   |
|------------------------------------------------------------------------|--------|------------------------------|--------|
| Balance at December 31, 2009                                           |   | $                            | 37     |   |
| Total realized and unrealized gains (losses) included in income        |   |                         | (645   | ) |
| Total unrealized gains (losses) included in other comprehensive income |   |                         | 634    |   |
| Net purchase, sales, calls and maturities                              |   |                         | 0      |   |
| Net transfer into Level 3                                              |   |                         | 0      |   |
| Balance at September 30, 2010                                          |   | $                            | 26     |   |

|                                                                   |   | Securities Available for Sale |   |
|------------------------------------------------------------------------|--------|------------------------------------|--------|
| Balance at December 31, 2008                                           |   | $                                  | 2,265  |   |
| Total realized and unrealized gains (losses) included in income        |   |                               | (3.052 | ) |
| Total unrealized gains (losses) included in other comprehensive income |   |                               | 816    |   |
| Net purchase, sales, calls and maturities                              |   |                               | (7     | ) |
| Net transfer into Level 3                                              |   |                               | 0      |   |
| Balance at September 30, 2009                                          |   | $                                  | 22     |   |

----

Index

| Impaired Loans        |   |   |   |   | Fair Value Measurements at Reporting Date Using             |   |
|-----------------------|--------|--------|--------|--------|-------------------------------------------------------------|--------|
|                  |   | Total  |   |   | Quoted Pricein Active Markets for Identical Assets(Level 1) |   |   | Significant Other Observable Inputs(Level 2) |   |   | Significant Unobservable Inputs(Level 3) |   |
| At September 30, 2010 |   | $      | 46,873 |   |                                                        | $      | - |   |   | $ | - |   |   | $ | 46,873 |   |
|                  |   |   |   |   |                                                        |   |   |   |   |   |   |   |   |   |   |   |
| At December 31, 2009  |   | $      | 25,447 |   |                                                        | $      | - |   |   | $ | - |   |   | $ | 25,447 |   |

| Impaired Other Real Estate Owned |   |   |   |   | Fair Value Measurements at Reporting Date Using           |   |
|----------------------------------|--------|--------|--------|--------|-----------------------------------------------------------|--------|
|                             |   | Total  |   |   | Quoted Pricesin ActiveMarkets forIdenticalAssets(Level 1) |   |   | SignificantOtherObservableInputs(Level 2) |   |   | SignificantUnobservableInputs(Level 3) |   |
| At September 30, 2010            |   | $      | 12,668 |   |                                                      | $      | - |   |   | $ | - |   |   | $ | 12,668 |   |
|                             |   |   |   |   |                                                      |   |   |   |   |   |   |   |   |   |   |   |
| At December 31, 2009             |   | $      | 13,185 |   |                                                      | $      | - |   |   | $ | - |   |   | $ | 13,185 |   |

----

Index

| September 30, 2010                              |   | Carrying Value |     |   | EstimatedFair Value |   |
|-------------------------------------------------|--------|----------------|----------|--------|---------------------|--------|
| Financial assets:                               |   |           |     |   |                |   |
| Cash and cash equivalents                       |   | $              | 45,824   |   |                | $      | 45,824 |   |
| Securities available for sale                   |   |           | 94,341   |   |                |   | 94,341 |   |
| Loans and leases, net                           |   |           | 383,982  |   |                |   | 395,290 |   |
| Federal Home Loan Bank stock                    |   |           | 1,801    |   |                |   | 1,801 |   |
| Accrued interest receivable                     |   |           | 1,723    |   |                |   | 1,723 |   |
|                                            |   |           |     |   |                |   |   |   |
| Financial liabilities:                          |   |           |     |   |                |   |   |   |
| Deposits                                        |   | $              | (461,956 | )      |                | $      | (462,434 | ) |
| Securities sold under repurchase agreement      |   |           | (42,071  | )      |                |   | (41,833 | ) |
| Subordinated debentures                         |   |           | (10,000  | )      |                |   | (5,415 | ) |
| Advances from borrowers for taxes and insurance |   |           | (587     | )      |                |   | (587 | ) |
| Accrued interest payable                        |   |           | (1,380   | )      |                |   | (1,380 | ) |

| December 31, 2009                               |   | Carrying Value |     |   | EstimatedFair Value |   |
|-------------------------------------------------|--------|----------------|----------|--------|---------------------|--------|
| Financial assets:                               |   |           |     |   |                |   |
| Cash and cash equivalents                       |   | $              | 34,194   |   |                | $      | 34,194 |   |
| Securities available for sale                   |   |           | 133,421  |   |                |   | 133,421 |   |
| Loans and leases, net                           |   |           | 413,259  |   |                |   | 418,085 |   |
| Federal Home Loan Bank stock                    |   |           | 1,801    |   |                |   | 1,801 |   |
| Accrued interest receivable                     |   |           | 2,203    |   |                |   | 2,203 |   |
|                                            |   |           |     |   |                |   |   |   |
| Financial liabilities:                          |   |           |     |   |                |   |   |   |
| Deposits                                        |   | $              | (517,236 | )      |                | $      | (519,606 | ) |
| Securities sold under repurchase agreement      |   |           | (49,364  | )      |                |   | (49,244 | ) |
| Subordinated debentures                         |   |           | (10,000  | )      |                |   | (6,728 | ) |
| Advances from borrowers for taxes and insurance |   |           | (898     | )      |                |   | (898 | ) |
| Accrued interest payable                        |   |           | (1,773   | )      |                |   | (1,773 | ) |

----

Index

----

Index

----

Index

----

Index

|                                                 |   |            |    |   | 2010     |   |   |   |   |   |            |   |   | 2009     |    |   |   |   |
|------------------------------------------------------|--------|-----------------|---------|--------|----------|--------|--------|--------|--------|--------|-----------------|--------|--------|----------|---------|--------|--------|--------|
|                                                 |   | Average Balance |    |   | Interest |   |   | Rate   |   |   | Average Balance |   |   | Interest |    |   | Rate   |   |
| Assets                                               |   |            |    |   |     |   |   |   |   |   |            |   |   |     |    |   |   |   |
| Loans (1)(2)(3)                                      |   | $               | 401,897 |   |     | $      | 5,453  |   |   |   | 5.43            | %      |   | $        | 470,543 |   |   | $      | 6,208 |   |   |   | 5.28 | % |
| Taxable securities (4)                               |   |            | 93,474  |   |     |   | 655    |   |   |   | 2.89            | %      |   |     | 91,728  |   |   |   | 1,093 |   |   |   | 4.69 | % |
| Tax advantaged securities (2) (4)                    |   |            | 3,988   |   |     |   | 58     |   |   |   | 6.04            | %      |   |     | 8,554   |   |   |   | 132 |   |   |   | 6.18 | % |
| Federal funds sold                                   |   |            | 18,984  |   |     |   | 8      |   |   |   | 0.17            | %      |   |     | 33,761  |   |   |   | 8 |   |   |   | 0.09 | % |
| Interest earning assets (4)                          |   |            | 518,343 |   |     |   | 6,174  |   |   |   | 4.79            | %      |   |     | 604,586 |   |   |   | 7,441 |   |   |   | 4.91 | % |
| Noninterest earning assets                           |   |            | 33,344  |   |     |   |   |   |   |   |            |   |   |     | 29,711  |   |   |   |   |   |   |   |   |   |
| Average assets                                       |   | $               | 551,687 |   |     |   |   |   |   |   |            |   |   | $        | 634,297 |   |   |   |   |   |   |   |   |   |
|                                                 |   |            |    |   |     |   |   |   |   |   |            |   |   |     |    |   |   |   |   |   |   |   |   |   |
| Liabilities and stockholders' equity                 |   |            |    |   |     |   |   |   |   |   |            |   |   |     |    |   |   |   |   |   |   |   |   |   |
| NOW deposits                                         |   | $               | 61,278  |   |     | $      | 41     |   |   |   | 0.27            | %      |   | $        | 50,001  |   |   | $      | 77 |   |   |   | 0.62 | % |
| Money market deposits                                |   |            | 51,003  |   |     |   | 68     |   |   |   | 0.53            | %      |   |     | 61,343  |   |   |   | 191 |   |   |   | 1.25 | % |
| Savings deposits                                     |   |            | 63,427  |   |     |   | 16     |   |   |   | 0.10            | %      |   |     | 61,388  |   |   |   | 38 |   |   |   | 0.25 | % |
| Time deposits                                        |   |            | 217,699 |   |     |   | 804    |   |   |   | 1.48            | %      |   |     | 275,531 |   |   |   | 1,831 |   |   |   | 2.66 | % |
| Other borrowings                                     |   |            | 48,542  |   |     |   | 169    |   |   |   | 1.39            | %      |   |     | 56,847  |   |   |   | 275 |   |   |   | 1.94 | % |
| Interest bearing liabilities                         |   |            | 441,949 |   |     |   | 1,098  |   |   |   | 0.99            | %      |   |     | 505,110 |   |   |   | 2,412 |   |   |   | 1.91 | % |
| Demand deposits                                      |   |            | 62,834  |   |     |   |   |   |   |   |            |   |   |     | 57,439  |   |   |   |   |   |   |   |   |   |
| Other noninterest bearing liabilities                |   |            | 5,467   |   |     |   |   |   |   |   |            |   |   |     | 6,503   |   |   |   |   |   |   |   |   |   |
| Stockholders' equity                                 |   |            | 41,437  |   |     |   |   |   |   |   |            |   |   |     | 65,245  |   |   |   |   |   |   |   |   |   |
| Average liabilities and stockholders' equity         |   | $               | 551,687 |   |     |   |   |   |   |   |            |   |   | $        | 634,297 |   |   |   |   |   |   |   |   |   |
|                                                 |   |            |    |   |     |   |   |   |   |   |            |   |   |     |    |   |   |   |   |   |   |   |   |   |
| Net interest income                                  |   |            |    |   |     | $      | 5,076  |   |   |   |            |   |   |     |    |   |   | $      | 5,029 |   |   |   |   |   |
|                                                 |   |            |    |   |     |   |   |   |   |   |            |   |   |     |    |   |   |   |   |   |   |   |   |   |
| Net interest spread                                  |   |            |    |   |     |   |   |   |   |   | 3.80            | %      |   |     |    |   |   |   |   |   |   |   | 3.00 | % |
|                                                 |   |            |    |   |     |   |   |   |   |   |            |   |   |     |    |   |   |   |   |   |   |   |   |   |
| Net yield on interest earning assets (4)             |   |            |    |   |     |   |   |   |   |   | 3.94            | %      |   |     |    |   |   |   |   |   |   |   | 3.32 | % |
|                                                 |   |            |    |   |     |   |   |   |   |   |            |   |   |     |    |   |   |   |   |   |   |   |   |   |
| Interest-bearing liabilities to earning assets ratio |   |            |    |   |     |   |   |   |   |   | 85.26           | %      |   |     |    |   |   |   |   |   |   |   | 83.55 | % |

| (1) - | Interest income on loans includes loan origination and other fees of $100,000 and ($4,000) for the three months ended September 30, 2010 and 2009, 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 $29,000 and $21,000 for the three months ended September 30, 2010 and 2009, respectively.  The tax equivalent adjustment reflected in the above table for municipal securities is approximately $19,000 and $45,000 for the three months ended September 30, 2010 and 2009, 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 September 30, 2010 and 2009 average balance information includes an average unrealized gain (loss) for taxable securities of $2,890,000 and ($1,578,000), respectively, and for tax-advantaged securities of $144,000 and $12,000, respectively. |
|-------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

Index

|                                                 |   |            |    |   | 2010     |   |   |   |   |   |            |   |   | 2009     |    |   |   |   |
|------------------------------------------------------|--------|-----------------|---------|--------|----------|--------|--------|--------|--------|--------|-----------------|--------|--------|----------|---------|--------|--------|--------|
|                                                 |   | Average Balance |    |   | Interest |   |   | Rate   |   |   | Average Balance |   |   | Interest |    |   | Rate   |   |
| Assets                                               |   |            |    |   |     |   |   |   |   |   |            |   |   |     |    |   |   |   |
| Loans (1)(2)(3)                                      |   | $               | 411,227 |   |     | $      | 15,971 |   |   |   | 5.18            | %      |   | $        | 474,673 |   |   | $      | 18,685 |   |   |   | 5.25 | % |
| Taxable securities (4)                               |   |            | 103,834 |   |     |   | 2,367  |   |   |   | 3.07            | %      |   |     | 91,026  |   |   |   | 3,464 |   |   |   | 5.15 | % |
| Tax advantaged securities (2) (4)                    |   |            | 5,426   |   |     |   | 242    |   |   |   | 6.10            | %      |   |     | 8,896   |   |   |   | 414 |   |   |   | 6.21 | % |
| Federal funds sold                                   |   |            | 22,842  |   |     |   | 29     |   |   |   | 0.17            | %      |   |     | 29,267  |   |   |   | 20 |   |   |   | 0.09 | % |
| Interest earning assets (4)                          |   |            | 543,329 |   |     |   | 18,609 |   |   |   | 4.58            | %      |   |     | 603,862 |   |   |   | 22,583 |   |   |   | 5.00 | % |
| Noninterest earning assets                           |   |            | 34,306  |   |     |   |   |   |   |   |            |   |   |     | 37,335  |   |   |   |   |   |   |   |   |   |
| Average assets                                       |   | $               | 577,635 |   |     |   |   |   |   |   |            |   |   | $        | 641,197 |   |   |   |   |   |   |   |   |   |
|                                                 |   |            |    |   |     |   |   |   |   |   |            |   |   |     |    |   |   |   |   |   |   |   |   |   |
| Liabilities and stockholders' equity                 |   |            |    |   |     |   |   |   |   |   |            |   |   |     |    |   |   |   |   |   |   |   |   |   |
| NOW deposits                                         |   | $               | 62,974  |   |     | $      | 209    |   |   |   | 0.44            | %      |   | $        | 47,029  |   |   | $      | 163 |   |   |   | 0.46 | % |
| Money market deposits                                |   |            | 52,659  |   |     |   | 219    |   |   |   | 0.55            | %      |   |     | 63,411  |   |   |   | 741 |   |   |   | 1.56 | % |
| Savings deposits                                     |   |            | 63,247  |   |     |   | 47     |   |   |   | 0.10            | %      |   |     | 61,562  |   |   |   | 146 |   |   |   | 0.32 | % |
| Time deposits                                        |   |            | 236,577 |   |     |   | 3,068  |   |   |   | 1.73            | %      |   |     | 271,857 |   |   |   | 6,115 |   |   |   | 3.00 | % |
| Other borrowings                                     |   |            | 52,812  |   |     |   | 537    |   |   |   | 1.36            | %      |   |     | 65,017  |   |   |   | 890 |   |   |   | 1.83 | % |
| Interest bearing liabilities                         |   |            | 468,269 |   |     |   | 4,080  |   |   |   | 1.16            | %      |   |     | 508,876 |   |   |   | 8,055 |   |   |   | 2.11 | % |
| Demand deposits                                      |   |            | 60,904  |   |     |   |   |   |   |   |            |   |   |     | 54,993  |   |   |   |   |   |   |   |   |   |
| Other noninterest bearing liabilities                |   |            | 6,319   |   |     |   |   |   |   |   |            |   |   |     | 5,229   |   |   |   |   |   |   |   |   |   |
| Stockholders' equity                                 |   |            | 42,143  |   |     |   |   |   |   |   |            |   |   |     | 72,099  |   |   |   |   |   |   |   |   |   |
| Average liabilities and stockholders' equity         |   | $               | 577,635 |   |     |   |   |   |   |   |            |   |   | $        | 641,197 |   |   |   |   |   |   |   |   |   |
|                                                 |   |            |    |   |     |   |   |   |   |   |            |   |   |     |    |   |   |   |   |   |   |   |   |   |
| Net interest income                                  |   |            |    |   |     | $      | 14,529 |   |   |   |            |   |   |     |    |   |   | $      | 14,528 |   |   |   |   |   |
|                                                 |   |            |    |   |     |   |   |   |   |   |            |   |   |     |    |   |   |   |   |   |   |   |   |   |
| Net interest spread                                  |   |            |    |   |     |   |   |   |   |   | 3.42            | %      |   |     |    |   |   |   |   |   |   |   | 2.89 | % |
|                                                 |   |            |    |   |     |   |   |   |   |   |            |   |   |     |    |   |   |   |   |   |   |   |   |   |
| Net yield on interest earning assets (4)             |   |            |    |   |     |   |   |   |   |   | 3.57            | %      |   |     |    |   |   |   |   |   |   |   | 3.22 | % |
|                                                 |   |            |    |   |     |   |   |   |   |   |            |   |   |     |    |   |   |   |   |   |   |   |   |   |
| Interest-bearing liabilities to earning assets ratio |   |            |    |   |     |   |   |   |   |   | 86.19           | %      |   |     |    |   |   |   |   |   |   |   | 84.27 | % |

| (1) -  | Interest income on loans includes loan origination and other fees of $130,000 and $42,000 for the nine months ended September 30, 2010 and 2009, 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 $84,000 and $65,000 for the nine months ended September 30, 2010 and 2009, respectively.  The tax equivalent adjustment reflected in the above table for municipal securities is approximately $82,000 and $141,000 for the nine months ended September 30, 2010 and 2009, respectively. |
|-------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

| (4) - | Rate information was calculated on the average amortized cost for securities.  The nine months ended September 30, 2010 and 2009 average balance information includes an average unrealized gain for taxable securities of $880,000 and $1,354,000, respectively, and for tax-advantaged  securities of $136,000 and $12,000, respectively. |
|-------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

Index

----

Index

| Nonperforming loans at September 30, 2010 |   | NonaccrualLoans |   |   | 90 Days orMore Past Due,Still Accruing |   |   | RestructuredLoans,Still Accruing |   |   | Total Non-performingLoans |   |   | % Non-performingLoans |   |
|-------------------------------------------|--------|-----------------|--------|--------|----------------------------------------|--------|--------|----------------------------------|--------|--------|---------------------------|--------|--------|-----------------------|--------|
|                                      |   |            |   |   |                                   |   |   |                             |   |   |                      |   |   |                  |   |
| Commercial                                |   | $               | -      |   |                                   | $      | -      |                             |   | $      | -                         |   |   | $                     | -      |   |   |   | 0.0 | % |
| Real estate-construction                  |   |            | 4,129  |   |                                   |   | -      |                             |   |   | 2,398                     |   |   |                  | 6,527  |   |   |   | 9.3 | % |
| Real estate-mortgage 1-4 family           |   |            | 2,245  |   |                                   |   | 90     |                             |   |   | 923                       |   |   |                  | 3,258  |   |   |   | 4.6 | % |
| Real estate-mortgage 5+ family            |   |            | 20,040 |   |                                   |   | -      |                             |   |   | -                         |   |   |                  | 20,040 |   |   |   | 28.5 | % |
| Real estate-mortgage commercial           |   |            | 11,884 |   |                                   |   | -      |                             |   |   | 27,408                    |   |   |                  | 39,292 |   |   |   | 55.7 | % |
| Home equity                               |   |            | 1,366  |   |                                   |   | -      |                             |   |   | -                         |   |   |                  | 1,366  |   |   |   | 1.9 | % |
| Leases                                    |   |            | -      |   |                                   |   | -      |                             |   |   | -                         |   |   |                  | -      |   |   |   | 0.0 | % |
| Installment                               |   |            | 2      |   |                                   |   | 4      |                             |   |   | -                         |   |   |                  | 6      |   |   |   | 0.0 | % |
| Total                                     |   | $               | 39,666 |   |                                   | $      | 94     |                             |   | $      | 30,729                    |   |   | $                     | 70,489 |   |   |   | 100.0 | % |

| Nonperforming loans at December 31, 2009 |   | NonaccrualLoans |   |   | 90 Days orMore Past Due,Still Accruing |   |   | RestructuredLoans,Still Accruing |   |   | Total Non-performingLoans |   |   | % Non-PerformingLoans |   |
|------------------------------------------|--------|-----------------|--------|--------|----------------------------------------|--------|--------|----------------------------------|--------|--------|---------------------------|--------|--------|-----------------------|--------|
|                                     |   |            |   |   |                                   |   |   |                             |   |   |                      |   |   |                  |   |
| Commercial                               |   | $               | 63     |   |                                   | $      | 13     |                             |   | $      | 291                       |   |   | $                     | 367    |   |   |   | 0.9 | % |
| Real estate-construction                 |   |            | 9,286  |   |                                   |   | -      |                             |   |   | -                         |   |   |                  | 9,286  |   |   |   | 22.1 | % |
| Real estate-mortgage 1-4 family          |   |            | 2,382  |   |                                   |   | -      |                             |   |   | -                         |   |   |                  | 2,382  |   |   |   | 5.6 | % |
| Real estate-mortgage 5+ family           |   |            | 11,602 |   |                                   |   | -      |                             |   |   | -                         |   |   |                  | 11,602 |   |   |   | 27.6 | % |
| Real estate-mortgage commercial          |   |            | 15,565 |   |                                   |   | -      |                             |   |   | 190                       |   |   |                  | 15,755 |   |   |   | 37.4 | % |
| Home equity                              |   |            | 2,378  |   |                                   |   | -      |                             |   |   | -                         |   |   |                  | 2,378  |   |   |   | 5.6 | % |
| Leases                                   |   |            | 306    |   |                                   |   | -      |                             |   |   | -                         |   |   |                  | 306    |   |   |   | 0.7 | % |
| Installment                              |   |            | 7      |   |                                   |   | 17     |                             |   |   | -                         |   |   |                  | 24     |   |   |   | 0.1 | % |
| Total                                    |   | $               | 41,589 |   |                                   | $      | 30     |                             |   | $      | 481                       |   |   | $                     | 42,100 |   |   |   | 100.0 | % |

----

Index

|                          |   | September 30,2010 |   |   | December 31,2009 |   |
|-------------------------------|--------|-------------------|--------|--------|------------------|--------|
|                          |   |              |   |   |             |   |
| Real estate - vacant land     |   | $                 | 3,209  |   |             | $      | 2,999 |   |
| Real estate - 1-4 family      |   |              | 2,602  |   |             |   | 3,265 |   |
| Real estate - commercial      |   |              | 10,869 |   |             |   | 12,934 |   |
|                          |   |              |   |   |             |   |   |   |
| Total other real estate owned |   | $                 | 16,680 |   |             | $      | 19,198 |   |

|                            |   | Nine months ended |    |
|---------------------------------|--------|-------------------|---------|
|                            |   | September 30,2010 |    |   | September 30,2009 |   |
|                            |   |              |    |   |   |   |
| Balance beginning of the period |   | $                 | 19,198  |   |   | $ | 10,575 |   |
| Additions                       |   |              | 10,470  |   |   |   | 17,202 |   |
| Improvements                    |   |              | 34      |   |   |   | 69 |   |
| Sales proceeds                  |   |              | (10,496 | ) |   |   | (4,791 | ) |
| Gains (losses) on sales         |   |              | (26     | ) |   |   | (1,594 | ) |
| Write-downs                     |   |              | (2,500  | ) |   |   | - |   |
|                            |   |              |    |   |   |   |   |   |
| Balance at end of period        |   | $                 | 16,680  |   |   | $ | 21,461 |   |

----

Index

----

Index

----

Index

----

Index

| Contractual obligations       |   | One yearor less |    |   | Greater than 1 yr. and less than or equal to 3 yrs. |   |   | Greater than 3 yrs. and less than or equal to 5 yrs. |   |   | Greater than 5 yrs. |   |   | Total  |   |
|-------------------------------|--------|-----------------|---------|--------|--------------------------------------------------------------------|--------|--------|---------------------------------------------------------------------|--------|--------|--------------------------|--------|--------|--------|--------|
|                          |   |            |    |   |                                                               |   |   |                                                                |   |   |                     |   |   |   |   |
| Long-term debt                |   |            |    |   |                                                               |   |   |                                                                |   |   |                     |   |   |   |   |
| Subordinated debentures       |   | $               | 0       |   |                                                               | $      | 0      |                                                                |   | $      | 0                        |   |   | $      | 10,000 |   |   | $ | 10,000 |   |
| Time deposits                 |   |            | 203,003 |   |                                                               |   | 16,181 |                                                                |   |   | 0                        |   |   |   | 0      |   |   |   | 219,184 |   |
| Other contractual obligations |   |            |    |   |                                                               |   |   |                                                                |   |   |                     |   |   |   |   |   |   |   |   |   |
| Standby letters of credit     |   |            | 5,544   |   |                                                               |   | 0      |                                                                |   |   | 0                        |   |   |   | 0      |   |   |   | 5,544 |   |

ITEM 3.

----

Index

|                              |   |   |   |   |                      |   |   |   |   |
|-----------------------------------|--------|--------|--------|--------|---------------------------|--------|--------|--------|--------|
|                              |   |   |   |   | Immediate Change in Rates |   |   |   |   |
|                              |   |   | -2.00% |   |                      |   | -1.00% |   |   |   | +1.00% |   |   |   | +2.00% |   |
|                              |   |   |   |   |                      |   |   |   |   |   |   |   |   |   |   |   |
| September 30, 2010:               |   |   |   |   |                      |   |   |   |   |   |   |   |   |   |   |   |
| Dollar Change from Base Forecast  |   | $      | (2,058 | )      |                      | $      | (542   | )      |   | $ | 423 |   |   | $ | 963 |   |
| Percent Change from Base Forecast |   |   | -11.13 | %      |                      |   | -2.93  | %      |   |   | 2.29 | % |   |   | 5.21 | % |
|                              |   |   |   |   |                      |   |   |   |   |   |   |   |   |   |   |   |
| December 31, 2009:                |   |   |   |   |                      |   |   |   |   |   |   |   |   |   |   |   |
| Dollar Change from Base Forecast  |   | $      | (427   | )      |                      | $      | (17    | )      |   | $ | (2 | ) |   | $ | (59 | ) |
| Percent Change from Base Forecast |   |   | -2.35  | %      |                      |   | -0.09  | %      |   |   | -0.01 | % |   |   | -0.33 | % |

----

Index

ITEM 4.

PART II.

ITEM 1.  

ITEM 1A.  RISK FACTORS

ITEM 2.

ITEM 3.  DEFAULTS 

ITEM 4.  (REMOVED 

ITEM 5.  OTHER INFORMATION

----

Index

ITEM 6.  EXHIBITS.

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

|    | Exhibit3.1   Certificate of Incorporation of the Company, as amended (incorporated herein by reference to the Company’s Annual Report on Form 10-K for the year ended December 31, 1994 (File No. 000-19300)). |
|--------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|      | Exhibit 3.2 Certificate of Amendment of the Certificate of Incorporation of the Company, as amended, dated April 27, 1998 (incorporated herein by reference to Exhibit 3.2 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2008 (File No. 000-19300) filed on March 25, 2009). |
|--------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|    | Exhibit 3.3 Certificate of Amendment of the Certificate of Incorporation of the Company, as amended, dated January 20, 2009 (incorporated herein by reference to Exhibit 3.3 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2008 (File No. 000-19300) filed on March 25, 2009). |
|--------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Exhibit 3.4 Certificate of Designations of Fixed Rate Cumulative Perpetual Preferred Stock, Series A, dated February 18, 2009 (incorporated herein by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K (File No. 000-19300) filed on February 20, 2009). |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Exhibit 3.5 Amended and Restated By-laws of the Company dated April 20, 2004 (incorporated herein by reference to Exhibit 3.2 to the Company’s Quarterly Report on Form 10-Q (File No. 000-19300) filed on May 10, 2004). |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Exhibit 4.1 Form of Certificate of the Preferred Stock (incorporated herein by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K (File No. 000-19300) filed on February 20, 2009). |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Exhibit 4.2 Warrant to purchase shares of Common Stock (incorporated herein by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K (File No. 000-19300) filed on February 20, 2009). |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Exhibit 11.1  Statement of Computation of per share earnings. (Contained in Notes 1 and 3 to the condensed consolidated financial statements.) |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Exhibit 15.1 Acknowledgement of Independent Registered Public Accounting Firm. |
|--------|--------------------------------------------------------------------------------|

|   | Exhibit 31.1 Section 302 Certification of President and Chief Executive Officer. |
|--------|----------------------------------------------------------------------------------|

|   | Exhibit 31.2 Section 302 Certification of Vice President and Chief Financial Officer. |
|--------|---------------------------------------------------------------------------------------|

|   | Exhibit 32.1 Section 906 Certification. |
|--------|-----------------------------------------|

----

Index

SIGNATURES

|                                                                                                                                                                                                      |   |  NORTHERN STATES FINANCIAL CORPORATION                                 (Registrant) |                                                                                                                                                     |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                      |   |                                                                                                                                                                                                                                                |                                                                                                                                                     |   |
| Date         November 4, 2010                                                                                                                                |   | By:                                                                                                                                                                                                                                                 | /s/ Scott Yelvington                       |   |
|                                                                                                                                                                                                      |   |                                                                                                                                                                                                                                                | Scott YelvingtonPresident and Chief Executive Officer                                                                                                    |   |
|                                                                                                                                                                                                      |   |                                                                                                                                                                                                                                                |                                                                                                                                                     |   |
|                                                                                                                                                                                                      |   |                                                                                                                                                                                                                                                |                                                                                                                                                     |   |
| Date:        November 4, 2010                       |   | By:                                                                                                                                                                                                                                                 | /s/ Steven Neudecker                                                                                                                                     |   |
|                                                                                                                                                                                                      |   |                                                                                                                                                                                                                                                | Steven NeudeckerVice President and Chief Financial Officer                                                                                               |   |

----

Index

EXHIBIT INDEX

|    | Exhibit 3.1 Certificate of Incorporation of the Company, as amended (incorporated herein by reference to the Company’s Annual Report on Form 10-K for the year ended December 31, 1994 (File No. 000-19300)). |
|--------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Exhibit 3.2 Certificate of Amendment of the Certificate of Incorporation of the Company, as amended dated April 27, 1998 (incorporated herein by reference to Exhibit 3.2 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2008 (File No. 000-19300) filed on March 25, 2009). |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Exhibit 3.3 Certificate of Amendment of the Certificate of Incorporation of the Company, as amended dated January 20, 2009 (incorporated herein by reference to Exhibit 3.3 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2008 (File No. 000-19300) filed on March 25, 2009). |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Exhibit 3.4 Certificate of Designations of Fixed Rate Cumulative Perpetual Preferred Stock, Series A, dated February 18, 2009 (incorporated herein by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K (File No. 000-19300) filed on February 20, 2009). |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Exhibit 3.5 Amended and Restated By-laws of the Company dated April 20, 2004 (incorporated herein by reference to Exhibit 3.2 to the Company’s Quarterly Report on Form 10-Q (File No. 000-19300) filed on May 10, 2004). |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Exhibit 4.1 Form of Certificate of the Preferred Stock (incorporated herein by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K (File No. 000-19300) filed on February 20, 2009). |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Exhibit 4.2 Warrant to purchase shares of Common Stock (incorporated herein by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K (File No. 000-19300) filed on February 20, 2009). |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|    | Exhibit 11.1  Statement of Computation of per share earnings. (Contained in Notes 1 and 3 to the condensed consolidated financial statements.) |
|--------------|-----------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Exhibit 15.1 Acknowledgement of Independent Registered Public Accounting Firm. |
|--------|--------------------------------------------------------------------------------|

|   | Exhibit 31.1 Section 302 Certification of President and Chief Executive Officer. |
|--------|----------------------------------------------------------------------------------|

|   | Exhibit 31.2 Section 302 Certification of Vice President and Chief Financial Officer. |
|--------|---------------------------------------------------------------------------------------|

|   | Exhibit 32.1 Section 906 Certification. |
|--------|-----------------------------------------|

----