| Maryland                        | 52-2027776          |
|---------------------------------|---------------------|
| (State or Other Jurisdiction of | (I.R.S. Employer    |
| Incorporation or Organization)  | Identification No.) |

| P.O. Box 210, 100 Spring Avenue, Chestertown, Maryland | 21620      |
|--------------------------------------------------------|------------|
| (Address of Principal Executive Offices)               | (Zip Code) |

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

----

|                                 |                                                                         | Page   |
|--------------------------------------|------------------------------------------------------------------------------|--------|
|                                 |                                                                         |   |
| Part I – Financial Information |
|                                 |                                                                         |   |
| Item 1.                              | Financial Statements                                                         | 3      |
|                                 |                                                                         |   |
|                                 | Consolidated Balance Sheets at March 31, 2011 (unaudited)                    |   |
|                                 | and December 31, 2010                                                        | 3      |
|                                 |                                                                         |   |
|                                 | Consolidated Statements of Income (unaudited) for the three months           |   |
|                                 | ended March 31, 2011 and 2010                                                | 4      |
|                                 |                                                                         |   |
|                                 | Consolidated Statements of Changes in Stockholders’ Equity (unaudited) |   |
|                                 | for the three months ended March 31, 2011 and 2010                           | 5      |
|                                 |                                                                         |   |
|                                 | Consolidated Statements of Cash Flows (unaudited) for the three months       |   |
|                                 | ended March 31, 2011 and 2010                                                | 6      |
|                                 |                                                                         |   |
|                                 | Notes to Financial Statements (unaudited)                                    | 8      |
|                                 |                                                                         |   |
| Item 2.                              | Management’s Discussion and Analysis of Financial Condition            |   |
|                                 | and Results of Operations                                                    | 22     |
| Item 3.                              | Quantitative and Qualitative Disclosures About Market Risk.                  | 31     |
| Item 4.                              | Controls and Procedures                                                      | 31     |
|                                 |                                                                         |   |
| Part II – Other Information    |                                                                         |
|                                 |                                                                         |   |
| Item 1.                              | Legal Proceedings                                                            | 31     |
| Item 1A.                             | Risk Factors                                                                 | 31     |
| Item 2.                              | Unregistered Sales of Equity Securities and Use of Proceeds                  | 32     |
| Item 3.                              | Defaults Upon Senior Securities                                              | 32     |
| Item 4.                              | (Removed and Reserved)                                                       | 32     |
| Item 5.                              | Other Information                                                            | 32     |
| Item 6.                              | Exhibits                                                                     | 32     |
|                                 |                                                                         |   |
| Signatures                           | 32                                                                           |
| Exhibit Index                        | 33                                                                           |

----

|                                                                                   |   | March 31, |        |   | December, 31 |   |
|----------------------------------------------------------------------------------------|--------|----------------|-------------|--------|-------------------|--------|
|                                                                                   |   | 2011           |        |   | 2010              |   |
|                                                                                   |   | (unaudited)    |        |   |              |   |
| ASSETS                                                                                 |   |           |        |   |              |   |
| Cash and due from banks                                                                |   | $              | 16,571,994  |   |              | $      | 10,378,485 |   |
| Federal funds sold                                                                     |   |           | 1,016,000   |   |              |   | 1,016,000 |   |
| Cash and cash equivalents                                                              |   |           | 17,587,994  |   |              |   | 11,394,485 |   |
| Securities available for sale                                                          |   |           | 9,071,820   |   |              |   | 8,035,780 |   |
| Securities held to maturity (approximate fair value of $1,527,317 and $3,554,315) |   |           | 1,508,150   |   |              |   | 3,510,533 |   |
| Federal Home Loan Bank & CBB Financial Corp. stock, at cost                        |   |           | 2,151,600   |   |              |   | 2,151,600 |   |
| Loans, less allowance for loan losses of $3,988,150 and $5,656,788                     |   |           | 204,731,970 |   |              |   | 207,295,877 |   |
| Premises and equipment                                                                 |   |           | 6,352,830   |   |              |   | 6,389,781 |   |
| Goodwill and intangible assets                                                         |   |           | 587,070     |   |              |   | 603,988 |   |
| Accrued interest receivable                                                            |   |           | 1,012,580   |   |              |   | 1,360,708 |   |
| Deferred income taxes                                                                  |   |           | 2,369,494   |   |              |   | 2,367,847 |   |
| Foreclosed real estate                                                                 |   |           | 1,370,000   |   |              |   | 1,201,600 |   |
| Other assets                                                                           |   |           | 1,903,318   |   |              |   | 1,480,216 |   |
| Total Assets                                                                           |   | $              | 248,646,826 |   |              | $      | 245,792,415 |   |
|                                                                                   |   |           |        |   |              |   |   |   |
| LIABILITIES AND STOCKHOLDERS’ EQUITY                                             |   |           |        |   |              |   |   |   |
| Deposits                                                                               |   |           |        |   |              |   |   |   |
| Non-interest bearing                                                                   |   | $              | 38,556,516  |   |              | $      | 36,219,753 |   |
| Interest-bearing                                                                       |   |           | 157,160,800 |   |              |   | 153,420,977 |   |
|                                                                                   |   |           | 195,717,316 |   |              |   | 189,640,730 |   |
|                                                                                   |   |           |        |   |              |   |   |   |
| Securities sold under repurchase agreements                                            |   |           | 2,179,654   |   |              |   | 2,754,321 |   |
| Federal Home Loan Bank advances                                                        |   |           | 22,000,000  |   |              |   | 24,000,000 |   |
| Accrued interest payable                                                               |   |           | 303,301     |   |              |   | 414,758 |   |
| Other liabilities                                                                      |   |           | 1,526,031   |   |              |   | 1,590,442 |   |
|                                                                                   |   |           | 221,726,302 |   |              |   | 218,400,251 |   |
| Stockholders’ equity                                                             |   |           |        |   |              |   |   |   |
| Common stock, par value $10 per share; authorized 1,000,000                            |   |           |        |   |              |   |   |   |
| shares; issued and outstanding 779,512 shares                                          |   |           | 7,795,120   |   |              |   | 7,795,120 |   |
| Additional paid-in capital                                                             |   |           | 2,920,866   |   |              |   | 2,920,866 |   |
| Retained earnings                                                                      |   |           | 16,619,629  |   |              |   | 17,088,742 |   |
|                                                                                   |   |           | 27,335,615  |   |              |   | 27,804,728 |   |
| Accumulated other comprehensive income (loss)                                          |   |           |        |   |              |   |   |   |
| Unrealized gain (loss) on available for sale securities                                |   |           | 8,947       |   |              |   | 11,474 |   |
| Unfunded liability of defined benefit plan                                             |   |           | (424,038    | )      |              |   | (424,038 | ) |
|                                                                                   |   |           | 26,920,524  |   |              |   | 27,392,164 |   |
| Total Liabilities and Stockholders’ Equity                                       |   | $              | 248,646,826 |   |              | $      | 245,792,415 |   |

----

|                                                 |   | For the three months ended March 31, |            |
|------------------------------------------------------|--------|--------------------------------------------------------------------|-----------------|
|                                                 |   | 2011                                                               |            |   | 2010 |   |
| Interest and dividend revenue                        |   |                                                               |            |   |   |   |
| Loans, including fees                                |   | $                                                                  | 2,888,493       |   |   | $ | 3,219,351 |   |
| U.S. government agency securities                    |   |                                                               | 41,713          |   |   |   | 108,470 |   |
| Deposit in other banks                               |   |                                                               | 8               |   |   |   | 5 |   |
| Federal funds sold                                   |   |                                                               | 693             |   |   |   | 696 |   |
| Equity securities                                    |   |                                                               | 4,245           |   |   |   | 1,593 |   |
| Total interest and dividend revenue                  |   |                                                               |  2,935,152 |   |   |   |  3,330,115 |   |
|                                                 |   |                                                               |            |   |   |   |   |   |
| Interest expense                                     |   |                                                               |            |   |   |   |   |   |
| Deposits                                             |   |                                                               | 672,450         |   |   |   | 739,813 |   |
| Borrowed funds                                       |   |                                                               | 181,131         |   |   |   | 245,149 |   |
| Total interest expense                               |   |                                                               | 853,581         |   |   |   | 984,962 |   |
|                                                 |   |                                                               |            |   |   |   |   |   |
| Net interest income                                  |   |                                                               | 2,081,571       |   |   |   | 2,345,153 |   |
|                                                 |   |                                                               |            |   |   |   |   |   |
| Provision for loan losses                            |   |                                                               | 1,500,000       |   |   |   | 475,000 |   |
|                                                 |   |                                                               |            |   |   |   |   |   |
| Noninterest revenue                                  |   |                                                               |            |   |   |   |   |   |
| Service charges on deposit accounts                  |   |                                                               | 245,185         |   |   |   | 214,802 |   |
| Insurance commissions                                |   |                                                               | 375,314         |   |   |   | 333,608 |   |
| Gain (loss) on sale of foreclosed real estate        |   |                                                               | (17,352         | ) |   |   | - |   |
| Other noninterest revenue                            |   |                                                               | 61,185          |   |   |   | 64,190 |   |
| Total noninterest revenue                            |   |                                                               | 664,332         |   |   |   | 612,600 |   |
|                                                 |   |                                                               |            |   |   |   |   |   |
| Noninterest expense                                  |   |                                                               |            |   |   |   |   |   |
| Salaries and employee benefits                       |   |                                                               | 1,024,359       |   |   |   | 1,065,009 |   |
| Occupancy                                            |   |                                                               | 120,798         |   |   |   | 127,715 |   |
| Furniture and equipment                              |   |                                                               | 84,702          |   |   |   | 89,155 |   |
| Other operating                                      |   |                                                               | 576,031         |   |   |   | 572,673 |   |
| Total noninterest expense                            |   |                                                               | 1,805,890       |   |   |   | 1,854,552 |   |
|                                                 |   |                                                               |            |   |   |   |   |   |
| Income (loss) before income taxes                    |   |                                                               | (559,987        | ) |   |   | 628,201 |   |
|                                                 |   |                                                               |            |   |   |   |   |   |
| Income tax expense (benefit)                         |   |                                                               | (262,367        | ) |   |   | 226,945 |   |
|                                                 |   |                                                               |            |   |   |   |   |   |
| Net income (loss)                                    |   | $                                                                  | (297,620        | ) |   | $ | 401,256 |   |
|                                                 |   |                                                               |            |   |   |   |   |   |
| Earnings (loss) per common share - basic and diluted |   | $                                                                  | (0.38           | ) |   | $ | 0.51 |   |

----

|                              |   |      |      |   |       |   |      |     |   |   | Accumulated   |   |   |          |     |
|-----------------------------------|--------|-----------|-----------|--------|------------|--------|-----------|----------|--------|--------|---------------|--------|--------|---------------|----------|
|                              |   |      |      |   | Additional |   |      |     |   |   | other         |   |   |          |     |
|                              |   |      |      |   | paid-in    |   |      | Retained |   |   | comprehensive |   |   | Comprehensive |     |
|                              |   | Par value |      |   | capital    |   |      | earnings |   |   | income        |   |   | income        |     |
|                              |   |      |      |   |       |   |      |     |   |   |          |   |   |          |     |
| Balance, December 31, 2009        |   | $         | 7,795,120 |   |       | $      | 2,920,866 |     |   | $      | 18,865,399    |   |   | $             | (691,637 | ) |   |   |   |
|                              |   |      |      |   |       |   |      |     |   |   |          |   |   |          |     |   |   |   |   |
| Net income                        |   |      | -         |   |       |   | -         |     |   |   | 401,256       |   |   |          | -        |   |   | $ | 401,256 |   |
| Unrealized loss on investment     |   |      |      |   |       |   |      |     |   |   |          |   |   |          |     |   |   |   |   |   |
| securities available for sale net |   |      |      |   |       |   |      |     |   |   |          |   |   |          |     |   |   |   |   |   |
| of income taxes of $587           |   |      | -         |   |       |   | -         |     |   |   | -             |   |   |          | (902     | ) |   |   | (902 | ) |
| Comprehensive income              |   |      |      |   |       |   |      |     |   |   |          |   |   |          |     |   |   | $ | 400,354 |   |
|                              |   |      |      |   |       |   |      |     |   |   |          |   |   |          |     |   |   |   |   |   |
| Cash dividend, $.45 per share     |   |      | -         |   |       |   | -         |     |   |   | (350,780      | )      |   |          | -        |   |   |   |   |   |
|                              |   |      |      |   |       |   |      |     |   |   |          |   |   |          |     |   |   |   |   |   |
| Balance, March 31, 2010           |   | $         | 7,795,120 |   |       | $      | 2,920,866 |     |   | $      | 18,671,133    |   |   | $             | (667,753 | ) |   |   |   |   |
|                              |   |      |      |   |       |   |      |     |   |   |          |   |   |          |     |   |   |   |   |   |
| Balance, December 31, 2010        |   | $         | 7,795,120 |   |       | $      | 2,920,866 |     |   | $      | 17,088,742    |   |   | $             | (412,564 | ) |   |   |   |   |
|                              |   |      |      |   |       |   |      |     |   |   |          |   |   |          |     |   |   |   |   |   |
| Net income (loss)                 |   |      | -         |   |       |   | -         |     |   |   | (297,620      | )      |   |          | -        |   |   | $ | (297,620 | ) |
| Unrealized loss on investment     |   |      |      |   |       |   |      |     |   |   |          |   |   |          |     |   |   |   |   |   |
| securities available for sale net |   |      |      |   |       |   |      |     |   |   |          |   |   |          |     |   |   |   |   |   |
| of income taxes of $1,646         |   |      | -         |   |       |   | -         |     |   |   | -             |   |   |          | (2,527   | ) |   |   | (2,527 | ) |
| Comprehensive income (loss)       |   |      |      |   |       |   |      |     |   |   |          |   |   |          |     |   |   | $ | (300,147 | ) |
|                              |   |      |      |   |       |   |      |     |   |   |          |   |   |          |     |   |   |   |   |   |
| Cash dividend, $.22 per share     |   |      | -         |   |       |   | -         |     |   |   | (171,493      | )      |   |          | -        |   |   |   |   |   |
|                              |   |      |      |   |       |   |      |     |   |   |          |   |   |          |     |   |   |   |   |   |
| Balance, March 31, 2011           |   | $         | 7,795,120 |   |       | $      | 2,920,866 |     |   | $      | 16,619,629    |   |   | $             | (415,091 | ) |   |   |   |   |

----

|                                              |   | For the three months ended March 31, |       |
|---------------------------------------------------|--------|--------------------------------------|------------|
|                                              |   | 2011                                 |       |   | 2010 |   |
|                                              |   |                                 |       |   |   |   |
| Interest received                                 |   | $                                    | 3,305,576  |   |   | $ | 3,548,116 |   |
| Fees and commissions received                     |   |                                 | 681,684    |   |   |   | 612,600 |   |
| Cash paid to suppliers and employees              |   |                                 | (2,191,494 | ) |   |   | (1,546,735 | ) |
| Interest paid                                     |   |                                 | (965,038   | ) |   |   | (1,088,969 | ) |
| Taxes paid                                        |   |                                 | 262,367    |   |   |   | (226,534 | ) |
|                                              |   |                                 | 1,093,095  |   |   |   | 1,298,478 |   |
| CASH FLOWS FROM INVESTING ACTIVITIES              |   |                                 |       |   |   |   |   |   |
| Cash paid for premises, equipment, and software   |   |                                 | (48,040    | ) |   |   | (69,544 | ) |
| Loans made, net of principal collected            |   |                                 | 703,240    |   |   |   | (2,694,290 | ) |
| Proceeds from sale of foreclosed real estate      |   |                                 | 164,248    |   |   |   | - |   |
| Proceeds from maturities and calls of securities  |   |                                 |       |   |   |   |   |   |
| Available for sale                                |   |                                 | 3,000,000  |   |   |   | - |   |
| Held to maturity                                  |   |                                 | 2,000,194  |   |   |   | 1,500,188 |   |
| Purchase of securities available for sale         |   |                                 | (4,049,654 | ) |   |   | (4,003,873 | ) |
| Purchase of securities held to maturity           |   |                                 | -          |   |   |   | - |   |
| Redemption of FHLB stock, net of purchases        |   |                                 | -          |   |   |   | - |   |
|                                              |   |                                 | 1,769,988  |   |   |   | (5,267,519 | ) |
| CASH FLOWS FROM FINANCING ACTIVITIES              |   |                                 |       |   |   |   |   |   |
| Net increase (decrease) in                        |   |                                 |       |   |   |   |   |   |
| Time deposits                                     |   |                                 | 736,878    |   |   |   | 1,041,256 |   |
| Other deposits                                    |   |                                 | 5,339,708  |   |   |   | (5,801,949 | ) |
| Securities sold under repurchase agreements       |   |                                 | (574,667   | ) |   |   | (1,295,742 | ) |
| Advances under (repayments of) notes payable, net |   |                                 | (2,000,000 | ) |   |   | (2,000,000 | ) |
| Repayments of other borrowings                    |   |                                 | -          |   |   |   | - |   |
| Dividends paid                                    |   |                                 | (171,493   | ) |   |   | (350,780 | ) |
|                                              |   |                                 | 3,330,426  |   |   |   | (8,407,215 | ) |
| NET INCREASE (DECREASE) IN CASH                   |   |                                 | 6,193,509  |   |   |   | (12,376,256 | ) |
| CASH AND EQUIVALENTS AT BEGINNING OF PERIOD       |   |                                 | 11,394,485 |   |   |   | 23,004,550 |   |
| CASH AND EQUIVALENTS AT END OF PERIOD             |   | $                                    | 17,587,994 |   |   | $ | 10,628,294 |   |
|                                              |   |                                 |       |   |   |   |   |   |
| NON CASH TRANSACTIONS                             |   |                                 |       |   |   |   |   |   |
| Transfer of foreclosed real estate                |   | $                                    | 350,000    |   |   | $ | - |   |

----

|                                                     |   | For the three months ended March 31, |      |
|----------------------------------------------------------|--------|--------------------------------------|-----------|
|                                                     |   | 2011                                 |      |   | 2010 |   |
|                                                     |   |                                 |      |   |   |   |
| RECONCILIATION OF NET INCOME TO NET CASH PROVIDED        |   |                                 |      |   |   |   |
| FROM OPERATING ACTIVITIES                                |   |                                 |      |   |   |   |
| Net income                                               |   | $                                    | (297,620  | ) |   | $ | 401,256 |   |
| ADJUSTMENTS                                              |   |                                 |      |   |   |   |   |   |
| Depreciation and amortization                            |   |                                 | 80,281    |   |   |   | 83,791 |   |
| Provision for loan losses                                |   |                                 | 1,500,000 |   |   |   | 475,000 |   |
| Deferred income taxes                                    |   |                                 | -         |   |   |   | 411 |   |
| Amortization of intangible assets                        |   |                                 | 16,918    |   |   |   | 16,918 |   |
| Security discount accretion, net of premium amortization |   |                                 | 11,629    |   |   |   | 10,353 |   |
| Gain of sale of foreclosed real estate                   |   |                                 | 17,352    |   |   |   | - |   |
| Decrease (increase) in                                   |   |                                 |      |   |   |   |   |   |
| Accrued interest receivable                              |   |                                 | 348,128   |   |   |   | 181,451 |   |
| Income Tax refund receivable                             |   |                                 | -         |   |   |   | - |   |
| Other assets                                             |   |                                 | (418,392  | ) |   |   | 175,037 |   |
| Increase (decrease) in                                   |   |                                 |      |   |   |   |   |   |
| Deferred origination fees and costs, net                 |   |                                 | 10,667    |   |   |   | 26,197 |   |
| Accrued interest payable                                 |   |                                 | (111,457  | ) |   |   | (104,007 | ) |
| Other Liabilities                                        |   |                                 | (64,411   | ) |   |   | 32,071 |   |
|                                                     |   | $                                    | 1,093,095 |   |   | $ | 1,298,478 |   |

----

| 1. | Basis of Presentation |
|----|-----------------------|

| 2. | Cash Flows |
|----|------------|

| 3. | Comprehensive income (loss) |
|----|-----------------------------|

----

| 4. | Loans and Allowance for Loan Losses |
|----|-------------------------------------|

|                                 |   | March 31, 2011 |        |   | December 31,2010 |   |
|--------------------------------------|--------|----------------|-------------|--------|------------------|--------|
|                                 |   |           |        |   |             |   |
| Real estate                          |   |           |        |   |             |   |
| Residential                          |   | $              | 74,186,183  |   |             | $      | 75,206,074 |   |
| Commercial                           |   |           | 89,132,895  |   |             |   | 89,617,135 |   |
| Construction                         |   |           | 13,450,751  |   |             |   | 13,403,765 |   |
| Commercial                           |   |           | 26,690,460  |   |             |   | 29,052,413 |   |
| Consumer                             |   |           | 5,186,050   |   |             |   | 5,588,830 |   |
|                                 |   |           | 208,646,339 |   |             |   | 212,868,217 |   |
| Deferred costs, net of deferred fees |   |           | 73,781      |   |             |   | 84,448 |   |
| Allowance for loan losses            |   |           | (3,988,150  | )      |             |   | (5,656,788 | ) |
|                                 |   | $              | 204,731,970 |   |             | $      | 207,295,877 |   |

| Within ninety days                    |   | $      | 44,630,667  |   |   | $      | 41,653,284  |   |
|---------------------------------------|--------|--------|-------------|--------|--------|--------|-------------|--------|
| Over ninety days to one year          |   |   | 85,806,933  |   |   |   | 96,362,940  |   |
| Over one year to five years           |   |   | 77,460,282  |   |   |   | 74,464,702  |   |
| Over five years                       |   |   | 748,457     |   |   |   | 387,291     |   |
|                                  |   | $      | 208,646,339 |   |   | $      | 212,868,217 |   |
|                                  |   |   |        |   |   |   |        |   |
| Variable rate loans included in above |   | $      | 48,939,041  |   |   | $      | 51,208,677  |   |

|                              |   | Recorded            |       |   | Unpaid    |   |       | Investment for       |   |   | Investment for               |   |
|-----------------------------------|--------|---------------------|------------|--------|-----------|--------|------------|---------------------------|--------|--------|-----------------------------------|--------|
|                              |   | Investment in  |       |   | Principal |   |       | which there          |   |   | which there                  |   |
| Description of Loans    |   | Impaired Loans |       |   | Balance   |   |       | is related ALLL |   |   | is no Related ALLL |   |
|                              |   |                |       |   |      |   |       |                      |   |   |                              |   |
| Residential real estate           |   | $                   | 2,571,014  |   |      | $      | 2,571,014  |                      |   | $      | 1,605,699                         |   |   | $ | 965,315 |   |
| Commercial real estate            |   |                | 5,011,092  |   |      |   | 5,011,092  |                      |   |   | 4,360,951                         |   |   |   | 650,141 |   |
| Other real estate                 |   |                | -          |   |      |   | -          |                      |   |   | -                                 |   |   |   | - |   |
| Construction and land development |   |                | 4,537,599  |   |      |   | 4,537,599  |                      |   |   | 3,911,632                         |   |   |   | 625,967 |   |
| Commercial loans                  |   |                | 101,523    |   |      |   | 101,523    |                      |   |   | 26,523                            |   |   |   | 75,000 |   |
| Consumer loans                    |   |                | -          |   |      |   | -          |                      |   |   | -                                 |   |   |   | - |   |
| Total impaired loans              |   | $                   | 12,221,228 |   |      | $      | 12,221,228 |                      |   | $      | 9,904,805                         |   |   | $ | 2,316,423 |   |

----

|                               |   | Recorded            |       |   | Current |   |       |      |   |   | Interest   |   |   |    |      |
|------------------------------------|--------|---------------------|------------|--------|---------|--------|------------|-----------|--------|--------|------------|--------|--------|---------|-----------|
|                               |   | Investment in  |       |   | Loan    |   |       | Related   |   |   | Income     |   |   | Average |      |
| Description of Loans     |   | Impaired Loans |       |   | Balance |   |       | Allowance |   |   | Recognized |   |   | Balance |      |
|                               |   |                |       |   |    |   |       |      |   |   |       |   |   |    |      |
| With Related Allowance recorded    |   |
| Residential real estate            |   | $                   | 1,605,699  |   |    | $      | 1,605,699  |      |   | $      | 794,111    |   |   | $       | 367,514   |   |   | $ | 1,609,815 |   |
| Commercial real estate             |   |                | 4,360,951  |   |    |   | 4,360,951  |      |   |   | 594,952    |   |   |    | 2,893,290 |   |   |   | 4,369,670 |   |
| Other real estate                  |   |                | -          |   |    |   | -          |      |   |   | -          |   |   |    | -         |   |   |   | - |   |
| Construction and land development  |   |                | 3,966,355  |   |    |   | 3,966,355  |      |   |   | 546,957    |   |   |    | 832,566   |   |   |   | 4,169,626 |   |
| Commercial loans                   |   |                | 26,523     |   |    |   | 26,523     |      |   |   | 26,523     |   |   |    | 995       |   |   |   | 26,821 |   |
| Consumer loans                     |   |                | -          |   |    |   | -          |      |   |   | -          |   |   |    | -         |   |   |   | - |   |
| Total impaired loans               |   | $                   | 9,959,528  |   |    | $      | 9,959,528  |      |   | $      | 1,962,543  |   |   | $       | 4,094,365 |   |   | $ | 10,175,931 |   |
|                               |   |                |       |   |    |   |       |      |   |   |       |   |   |    |      |   |   |   |   |   |
| With No Related Allowance recorded |   |
| Residential real estate            |   | $                   | 965,315    |   |    | $      | 965,315    |      |   | $      | -          |   |   | $       | 316,575   |   |   | $ | 1,020,772 |   |
| Commercial real estate             |   |                | 650,141    |   |    |   | 650,141    |      |   |   | -          |   |   |    | 250,454   |   |   |   | 650,141 |   |
| Other real estate                  |   |                | -          |   |    |   | -          |      |   |   | -          |   |   |    | -         |   |   |   | - |   |
| Construction and land development  |   |                | 625,967    |   |    |   | 625,967    |      |   |   | -          |   |   |    | 191,308   |   |   |   | 625,968 |   |
| Commercial loans                   |   |                | 75,000     |   |    |   | 75,000     |      |   |   | -          |   |   |    | 8,441     |   |   |   | 75,000 |   |
| Consumer loans                     |   |                | -          |   |    |   | -          |      |   |   | -          |   |   |    | -         |   |   |   | - |   |
| Total impaired loans               |   | $                   | 2,316,423  |   |    | $      | 2,316,423  |      |   | $      | -          |   |   | $       | 766,778   |   |   | $ | 2,371,881 |   |
|                               |   |                |       |   |    |   |       |      |   |   |       |   |   |    |      |   |   |   |   |   |
| TOTAL                              |   |
| Residential real estate            |   | $                   | 2,571,014  |   |    | $      | 2,571,014  |      |   | $      | 794,111    |   |   | $       | 684,089   |   |   | $ | 2,630,587 |   |
| Commercial real estate             |   |                | 5,011,092  |   |    |   | 5,011,092  |      |   |   | 594,952    |   |   |    | 3,143,744 |   |   |   | 5,019,811 |   |
| Other real estate                  |   |                | -          |   |    |   | -          |      |   |   | -          |   |   |    | -         |   |   |   | - |   |
| Construction and land development  |   |                | 4,592,322  |   |    |   | 4,592,322  |      |   |   | 546,957    |   |   |    | 1,023,873 |   |   |   | 4,795,593 |   |
| Commercial loans                   |   |                | 101,523    |   |    |   | 101,523    |      |   |   | 26,523     |   |   |    | 9,436     |   |   |   | 101,821 |   |
| Consumer loans                     |   |                | -          |   |    |   | -          |      |   |   | -          |   |   |    | -         |   |   |   | - |   |
| Total impaired loans               |   | $                   | 12,275,951 |   |    | $      | 12,275,951 |      |   | $      | 1,962,543  |   |   | $       | 4,861,142 |   |   | $ | 12,547,812 |   |

----

|                               |   | Recorded            |       |   | Current |   |       |      |   |   | Interest   |   |   |    |    |
|------------------------------------|--------|---------------------|------------|--------|---------|--------|------------|-----------|--------|--------|------------|--------|--------|---------|---------|
|                               |   | Investment in  |       |   | Loan    |   |       | Related   |   |   | Income     |   |   | Average |    |
| Description of Loans     |   | Impaired Loans |       |   | Balance |   |       | Allowance |   |   | Recognized |   |   | Balance |    |
|                               |   |                |       |   |    |   |       |      |   |   |       |   |   |    |    |
| With Related Allowance recorded    |   |
| Residential real estate            |   | $                   | 1,092,458  |   |    | $      | 1,092,458  |      |   | $      | 217,644    |   |   | $       | 16,091  |   |   | $ | 1,109,176 |   |
| Commercial real estate             |   |                | 1,670,505  |   |    |   | 1,670,505  |      |   |   | 535,044    |   |   |    | 72,645  |   |   |   | 1,589,338 |   |
| Other real estate                  |   |                | -          |   |    |   | -          |      |   |   | -          |   |   |    | -       |   |   |   | - |   |
| Construction and land development  |   |                | 5,169,481  |   |    |   | 5,169,481  |      |   |   | 2,494,682  |   |   |    | 239,506 |   |   |   | 4,726,734 |   |
| Commercial loans                   |   |                | 160,283    |   |    |   | 160,283    |      |   |   | 46,126     |   |   |    | 1,511   |   |   |   | 138,065 |   |
| Consumer loans                     |   |                | -          |   |    |   | -          |      |   |   | -          |   |   |    | -       |   |   |   | - |   |
| Total impaired loans               |   | $                   | 8,092,727  |   |    | $      | 8,092,727  |      |   | $      | 3,293,496  |   |   | $       | 329,753 |   |   | $ | 7,563,313 |   |
|                               |   |                |       |   |    |   |       |      |   |   |       |   |   |    |    |   |   |   |   |   |
| With No Related Allowance recorded |   |
| Residential real estate            |   | $                   | 1,080,353  |   |    | $      | 1,080,353  |      |   | $      | -          |   |   | $       | 33,360  |   |   | $ | 1,105,548 |   |
| Commercial real estate             |   |                | 1,441,244  |   |    |   | 1,441,244  |      |   |   | -          |   |   |    | 24,395  |   |   |   | 2,032,234 |   |
| Other real estate                  |   |                | -          |   |    |   | -          |      |   |   | -          |   |   |    | -       |   |   |   | - |   |
| Construction and land development  |   |                | 625,967    |   |    |   | 625,967    |      |   |   | -          |   |   |    | 3,552   |   |   |   | 617,399 |   |
| Commercial loans                   |   |                | 385,221    |   |    |   | 385,221    |      |   |   | -          |   |   |    | -       |   |   |   | 385,221 |   |
| Consumer loans                     |   |                | -          |   |    |   | -          |      |   |   | -          |   |   |    | -       |   |   |   | - |   |
| Total impaired loans               |   | $                   | 3,532,785  |   |    | $      | 3,532,785  |      |   | $      | -          |   |   | $       | 61,307  |   |   | $ | 4,140,402 |   |
|                               |   |                |       |   |    |   |       |      |   |   |       |   |   |    |    |   |   |   |   |   |
| TOTAL                              |   |
| Residential real estate            |   | $                   | 2,172,811  |   |    | $      | 2,172,811  |      |   | $      | 217,644    |   |   | $       | 49,451  |   |   | $ | 2,214,724 |   |
| Commercial real estate             |   |                | 3,111,749  |   |    |   | 3,111,749  |      |   |   | 535,044    |   |   |    | 97,040  |   |   |   | 3,621,572 |   |
| Other real estate                  |   |                | -          |   |    |   | -          |      |   |   | -          |   |   |    | -       |   |   |   | - |   |
| Construction and land development  |   |                | 5,795,448  |   |    |   | 5,795,448  |      |   |   | 2,494,682  |   |   |    | 243,058 |   |   |   | 5,344,133 |   |
| Commercial loans                   |   |                | 545,504    |   |    |   | 545,504    |      |   |   | 46,126     |   |   |    | 1,511   |   |   |   | 523,286 |   |
| Consumer loans                     |   |                | -          |   |    |   | -          |      |   |   | -          |   |   |    | -       |   |   |   | - |   |
| Total impaired loans               |   | $                   | 11,625,512 |   |    | $      | 11,625,512 |      |   | $      | 3,293,496  |   |   | $       | 391,060 |   |   | $ | 11,703,715 |   |

|                            |   | March 31, 2011 |      |   | December 31, 2010 |   |      | March 31, 2010 |   |
|---------------------------------|--------|----------------|-----------|--------|-------------------|--------|-----------|----------------|--------|
|                            |   |           |      |   |              |   |      |           |   |
| Beginning balance               |   | $              | 5,656,788 |   |              | $      | 2,845,364 |           |   | $ | 2,845,364 |   |
| Provision charged to operations |   |           | 1,500,000 |   |              |   | 4,910,000 |           |   |   | 475,000 |   |
| Recoveries                      |   |           | 26,477    |   |              |   | 19,677    |           |   |   | 2,280 |   |
|                            |   |           | 7,183,265 |   |              |   | 7,775,041 |           |   |   | 3,322,644 |   |
| Loans charged off               |   |           | 3,195,115 |   |              |   | 2,118,253 |           |   |   | 623,006 |   |
| Ending balance                  |   | $              | 3,988,150 |   |              | $      | 5,656,788 |           |   | $ | 2,699,638 |   |

----

|                         |   |        |     |   |       |   |     |             |   |   |             |   |   | Construction  |      |   |             |   |       |     |   |   |      |   |   |   |    |
|------------------------------|--------|-------------|----------|--------|------------|--------|----------|------------------|--------|--------|------------------|--------|--------|---------------|-----------|--------|------------------|--------|------------|----------|--------|--------|-----------|--------|--------|--------|---------|
|                         |   |        |     |   |       |   |     | Residential      |   |   | Commercial       |   |   | and land |      |   | Other            |   |       |     |   |   |      |   |   |   |    |
|                         |   | Unallocated |     |   | Commercial |   |     | Real Estate |   |   | Real Estate |   |   | Development   |      |   | Real Estate |   |       | Consumer |   |   | Overdraft |   |   | Total  |    |
| Allowance for Credit Losses  |   |        |     |   |       |   |     |             |   |   |             |   |   |          |      |   |             |   |       |     |   |   |      |   |   |   |    |
| Beginning Balance            |   | $           | 137,047  |   |       | $      | 676,113  |             |   | $      | 806,728          |   |   | $             | 1,124,851 |   |             | $      | 2,780,148  |     |   | $      | 2,122     |   |   | $      | 126,751 |   |   | $ | 3,028 |   |   | $ | 5,656,788 |   |
| Charge-Offs                  |   |        | -        |   |       |   | (491,329 | )                |   |   | (366,626         | )      |   |          | (185,626  | )      |             |   | (2,141,948 | )        |   |   | -         |   |   |   | (8,904  | ) |   |   | (682 | ) |   |   | (3,195,115 | ) |
| Recoveries                   |   |        | -        |   |       |   | 210      |             |   |   | 1,575            |   |   |          | -         |   |             |   | -          |     |   |   | -         |   |   |   | 24,084  |   |   |   | 608 |   |   |   | 26,477 |   |
| Provision                    |   |        | (134,645 | )      |       |   | 350,135  |             |   |   | 995,276          |   |   |          | 276,093   |   |             |   | 38,425     |     |   |   | 91        |   |   |   | (36,053 | ) |   |   | 10,678 |   |   |   | 1,500,000 |   |
| Ending Balance               |   | $           | 2,402    |   |       | $      | 535,129  |             |   | $      | 1,436,953        |   |   | $             | 1,215,318 |   |             | $      | 676,625    |     |   | $      | 2,213     |   |   | $      | 105,878 |   |   | $ | 13,632 |   |   | $ | 3,988,150 |   |
|                         |   |        |     |   |       |   |     |             |   |   |             |   |   |          |      |   |             |   |       |     |   |   |      |   |   |   |    |   |   |   |   |   |   |   |   |   |
| Ending Balance allocated to: |   |        |     |   |       |   |     |             |   |   |             |   |   |          |      |   |             |   |       |     |   |   |      |   |   |   |    |   |   |   |   |   |   |   |   |   |
| Loans individually           |   |        |     |   |       |   |     |             |   |   |             |   |   |          |      |   |             |   |       |     |   |   |      |   |   |   |    |   |   |   |   |   |   |   |   |   |
| evaluated for impairment     |   | $           | -        |   |       | $      | 26,523   |             |   | $      | 794,111          |   |   | $             | 594,952   |   |             | $      | 546,957    |     |   | $      | -         |   |   | $      | -       |   |   | $ | - |   |   | $ | 1,962,543 |   |
| Loans collectively           |   |        |     |   |       |   |     |             |   |   |             |   |   |          |      |   |             |   |       |     |   |   |      |   |   |   |    |   |   |   |   |   |   |   |   |   |
| evaluated for impairment     |   |        | 2,402    |   |       |   | 508,606  |             |   |   | 642,842          |   |   |          | 620,366   |   |             |   | 129,668    |     |   |   | 2,213     |   |   |   | 105,878 |   |   |   | 13,632 |   |   |   | 2,025,607 |   |
|                         |   | $           | 2,402    |   |       | $      | 535,129  |             |   | $      | 1,436,953        |   |   | $             | 1,215,318 |   |             | $      | 676,625    |     |   | $      | 2,213     |   |   | $      | 105,878 |   |   | $ | 13,632 |   |   | $ | 3,988,150 |   |

|                         |   |        |    |   |       |   |     |             |   |   |             |   |   | Construction  |      |   |             |   |      |     |   |   |      |   |   |   |     |
|------------------------------|--------|-------------|---------|--------|------------|--------|----------|------------------|--------|--------|------------------|--------|--------|---------------|-----------|--------|------------------|--------|-----------|----------|--------|--------|-----------|--------|--------|--------|----------|
|                         |   |        |    |   |       |   |     | Residential      |   |   | Commercial       |   |   | and land |      |   | Other            |   |      |     |   |   |      |   |   |   |     |
|                         |   | Unallocated |    |   | Commercial |   |     | Real Estate |   |   | Real Estate |   |   | Development   |      |   | Real Estate |   |      | Consumer |   |   | Overdraft |   |   | Total  |     |
| Allowance for Credit Losses  |   |        |    |   |       |   |     |             |   |   |             |   |   |          |      |   |             |   |      |     |   |   |      |   |   |   |     |
| Beginning Balance            |   | $           | 140,751 |   |       | $      | 728,049  |             |   | $      | 920,132          |   |   | $             | 643,430   |   |             | $      | 164,539   |     |   | $      | 2,782     |   |   | $      | 245,137  |   |   | $ | 544 |   |   | $ | 2,845,364 |   |
| Charge-Offs                  |   |        | -       |   |       |   | (166,779 | )                |   |   | (888,040         | )      |   |          | (951,603  | )      |             |   | (7,040    | )        |   |   | -         |   |   |   | (101,162 | ) |   |   | (3,629 | ) |   |   | (2,118,253 | ) |
| Recoveries                   |   |        | -       |   |       |   | 2,660    |             |   |   | 374              |   |   |          | -         |   |             |   | -         |     |   |   | -         |   |   |   | 15,113   |   |   |   | 1,530 |   |   |   | 19,677 |   |
| Provision                    |   |        | (3,704  | )      |       |   | 112,183  |             |   |   | 774,262          |   |   |          | 1,433,024 |   |             |   | 2,622,649 |     |   |   | (660      | )      |   |   | (32,337  | ) |   |   | 4,583 |   |   |   | 4,910,000 |   |
| Ending Balance               |   | $           | 137,047 |   |       | $      | 676,113  |             |   | $      | 806,728          |   |   | $             | 1,124,851 |   |             | $      | 2,780,148 |     |   | $      | 2,122     |   |   | $      | 126,751  |   |   | $ | 3,028 |   |   | $ | 5,656,788 |   |
|                         |   |        |    |   |       |   |     |             |   |   |             |   |   |          |      |   |             |   |      |     |   |   |      |   |   |   |     |   |   |   |   |   |   |   |   |   |
| Ending Balance allocated to: |   |        |    |   |       |   |     |             |   |   |             |   |   |          |      |   |             |   |      |     |   |   |      |   |   |   |     |   |   |   |   |   |   |   |   |   |
| Loans individually           |   |        |    |   |       |   |     |             |   |   |             |   |   |          |      |   |             |   |      |     |   |   |      |   |   |   |     |   |   |   |   |   |   |   |   |   |
| evaluated for impairment     |   | $           | -       |   |       | $      | 46,126   |             |   | $      | 217,644          |   |   | $             | 535,044   |   |             | $      | 2,494,664 |     |   | $      | -         |   |   | $      | -        |   |   | $ | - |   |   | $ | 3,293,478 |   |
| Loans collectively           |   |        |    |   |       |   |     |             |   |   |             |   |   |          |      |   |             |   |      |     |   |   |      |   |   |   |     |   |   |   |   |   |   |   |   |   |
| evaluated for impairment     |   |        | 137,047 |   |       |   | 629,987  |             |   |   | 589,084          |   |   |          | 589,807   |   |             |   | 285,484   |     |   |   | 2,122     |   |   |   | 126,751  |   |   |   | 3,028 |   |   |   | 2,363,310 |   |
|                         |   | $           | 137,047 |   |       | $      | 676,113  |             |   | $      | 806,728          |   |   | $             | 1,124,851 |   |             | $      | 2,780,148 |     |   | $      | 2,122     |   |   | $      | 126,751  |   |   | $ | 3,028 |   |   | $ | 5,656,788 |   |

|                         |   |        |     |   |       |   |    |             |   |   |             |   |   | Construction  |    |   |             |   |    |     |   |   |      |   |   |   |    |
|------------------------------|--------|-------------|----------|--------|------------|--------|---------|------------------|--------|--------|------------------|--------|--------|---------------|---------|--------|------------------|--------|---------|----------|--------|--------|-----------|--------|--------|--------|---------|
|                         |   |        |     |   |       |   |    | Residential      |   |   | Commercial       |   |   | and land |    |   | Other            |   |    |     |   |   |      |   |   |   |    |
|                         |   | Unallocated |     |   | Commercial |   |    | Real Estate |   |   | Real Estate |   |   | Development   |    |   | Real Estate |   |    | Consumer |   |   | Overdraft |   |   | Total  |    |
| Allowance for Credit Losses  |   |        |     |   |       |   |    |             |   |   |             |   |   |          |    |   |             |   |    |     |   |   |      |   |   |   |    |
| Beginning Balance            |   | $           | 140,751  |   |       | $      | 728,049 |             |   | $      | 920,132          |   |   | $             | 643,430 |   |             | $      | 164,539 |     |   | $      | 2,782     |   |   | $      | 245,137 |   |   | $ | 544 |   |   | $ | 2,845,364 |   |
| Charge-Offs                  |   |        | -        |   |       |   | (29,442 | )                |   |   | (489,267         | )      |   |          | (92,457 | )      |             |   | -       |     |   |   | -         |   |   |   | (10,531 | ) |   |   | (1,309 | ) |   |   | (623,006 | ) |
| Recoveries                   |   |        | -        |   |       |   | 820     |             |   |   | -                |   |   |          | -       |   |             |   | -       |     |   |   | -         |   |   |   | 355     |   |   |   | 1,105 |   |   |   | 2,280 |   |
| Provision                    |   |        | (138,362 | )      |       |   | (12,150 | )                |   |   | 420,648          |   |   |          | 185,113 |   |             |   | (3,986  | )        |   |   | (1,125    | )      |   |   | 22,412  |   |   |   | 2,449 |   |   |   | 474,999 |   |
| Ending Balance               |   | $           | 2,389    |   |       | $      | 687,277 |             |   | $      | 851,513          |   |   | $             | 736,086 |   |             | $      | 160,553 |     |   | $      | 1,657     |   |   | $      | 257,373 |   |   | $ | 2,789 |   |   | $ | 2,699,637 |   |
|                         |   |        |     |   |       |   |    |             |   |   |             |   |   |          |    |   |             |   |    |     |   |   |      |   |   |   |    |   |   |   |   |   |   |   |   |   |
| Ending Balance allocated to: |   |        |     |   |       |   |    |             |   |   |             |   |   |          |    |   |             |   |    |     |   |   |      |   |   |   |    |   |   |   |   |   |   |   |   |   |
| Loans individually           |   |        |     |   |       |   |    |             |   |   |             |   |   |          |    |   |             |   |    |     |   |   |      |   |   |   |    |   |   |   |   |   |   |   |   |   |
| evaluated for impairment     |   | $           | -        |   |       | $      | 164,257 |             |   | $      | 383,442          |   |   | $             | 672,576 |   |             | $      | 40,756  |     |   | $      | -         |   |   | $      | 1,578   |   |   | $ | - |   |   | $ | 1,262,609 |   |
| Loans collectively           |   |        |     |   |       |   |    |             |   |   |             |   |   |          |    |   |             |   |    |     |   |   |      |   |   |   |    |   |   |   |   |   |   |   |   |   |
| evaluated for impairment     |   |        | 2,389    |   |       |   | 523,020 |             |   |   | 468,071          |   |   |          | 63,510  |   |             |   | 119,797 |     |   |   | 1,657     |   |   |   | 255,795 |   |   |   | 2,789 |   |   |   | 1,437,028 |   |
|                         |   | $           | 2,389    |   |       | $      | 687,277 |             |   | $      | 851,513          |   |   | $             | 736,086 |   |             | $      | 160,553 |     |   | $      | 1,657     |   |   | $      | 257,373 |   |   | $ | 2,789 |   |   | $ | 2,699,637 |   |

----

| March 31, 2011          |   | Pass Watch |      |   | Special Mention |   |      | Substandard |   |   | Total      |   |
|-----------------------------------|--------|-----------------|-----------|--------|----------------------|--------|-----------|-------------|--------|--------|------------|--------|
|                              |   |            |      |   |                 |   |      |        |   |   |       |   |
| Commercial                        |   | $               | 218,242   |   |                 | $      | 39,681    |        |   | $      | 1,847,224  |   |   | $ | 2,105,147 |   |
| Residential real estate           |   |            | 2,225,967 |   |                 |   | -         |        |   |   | 4,509,823  |   |   |   | 6,735,790 |   |
| Commercial real estate            |   |            | 592,398   |   |                 |   | 1,828,743 |        |   |   | 7,225,936  |   |   |   | 9,647,077 |   |
| Construction and land development |   |            | 1,067,251 |   |                 |   | -         |        |   |   | 6,449,966  |   |   |   | 7,517,217 |   |
| Other real estate                 |   |            | -         |   |                 |   | -         |        |   |   | 43,318     |   |   |   | 43,318 |   |
| Consumer                          |   |            | 11,569    |   |                 |   | -         |        |   |   | 37,390     |   |   |   | 48,959 |   |
|                              |   | $               | 4,115,427 |   |                 | $      | 1,868,424 |        |   | $      | 20,113,657 |   |   | $ | 26,097,508 |   |

| December 31, 2010       |   | Pass Watch |      |   | Special Mention |   |      | Substandard |   |   | Total      |   |
|-----------------------------------|--------|-----------------|-----------|--------|----------------------|--------|-----------|-------------|--------|--------|------------|--------|
|                              |   |            |      |   |                 |   |      |        |   |   |       |   |
| Commercial                        |   | $               | 159,817   |   |                 | $      | 39,722    |        |   | $      | 2,673,725  |   |   | $ | 2,873,264 |   |
| Residential real estate           |   |            | 1,975,178 |   |                 |   | -         |        |   |   | 4,448,109  |   |   |   | 6,423,287 |   |
| Commercial real estate            |   |            | 3,255,868 |   |                 |   | 1,833,303 |        |   |   | 4,834,487  |   |   |   | 9,923,658 |   |
| Construction and land development |   |            | 301,009   |   |                 |   | -         |        |   |   | 10,012,172 |   |   |   | 10,313,181 |   |
| Other real estate                 |   |            | -         |   |                 |   | -         |        |   |   | 43,646     |   |   |   | 43,646 |   |
| Consumer                          |   |            | 11,695    |   |                 |   | -         |        |   |   | 10,417     |   |   |   | 22,112 |   |
|                              |   | $               | 5,703,567 |   |                 | $      | 1,873,025 |        |   | $      | 22,022,556 |   |   | $ | 29,599,148 |   |

----

|                              |   |            |      |   |            |   |      | Greater than    |   |   |          |   |   |    |       |   |   |   |        |                    |   |
|-----------------------------------|--------|-----------------|-----------|--------|-----------------|--------|-----------|----------------------|--------|--------|---------------|--------|--------|---------|------------|--------|--------|--------|-------------|-------------------------|--------|
|                              |   | 30-59 Days |      |   | 60-89 Days |   |      | 90 Days or |   |   | Total         |   |   |    |       |   | Total  |   |        | Loans 90 Days |   |
| March 31, 2011          |   | Past Due   |      |   | Past Due   |   |      | Nonaccruing          |   |   | Past Due |   |   | Current |       |   | Loans  |   |        | and Accruing       |   |
|                              |   |            |      |   |            |   |      |                 |   |   |          |   |   |    |       |   |   |   |        |                    |   |
| Residential real estate           |   | $               | 4,355,588 |   |            | $      | 897,789   |                 |   | $      | 4,496,886     |   |   | $       | 9,750,263  |   |   | $      | 64,435,920  |                    |   | $ | 74,186,183 |   |   | $ | 1,813,757 |   |
| Commercial real estate            |   |            | 964,532   |   |            |   | 163,584   |                 |   |   | 5,206,757     |   |   |    | 6,334,873  |   |   |   | 58,538,075  |                    |   |   | 64,872,948 |   |   |   | 1,386,885 |   |
| Other real estate                 |   |            | -         |   |            |   | -         |                 |   |   | 43,318        |   |   |    | 43,318     |   |   |   | 24,216,629  |                    |   |   | 24,259,947 |   |   |   | 43,318 |   |
| Construction and land development |   |            | 465,120   |   |            |   | 240,609   |                 |   |   | 4,100,296     |   |   |    | 4,806,025  |   |   |   | 8,644,726   |                    |   |   | 13,450,751 |   |   |   | 1,022,686 |   |
| Commercial loans                  |   |            | 509,101   |   |            |   | 35,236    |                 |   |   | 238,631       |   |   |    | 782,968    |   |   |   | 25,907,492  |                    |   |   | 26,690,460 |   |   |   | 52,819 |   |
| Consumer loans                    |   |            | 133,511   |   |            |   | 38,325    |                 |   |   | 43,233        |   |   |    | 215,069    |   |   |   | 4,970,981   |                    |   |   | 5,186,050 |   |   |   | 5,843 |   |
| Total                             |   | $               | 6,427,852 |   |            | $      | 1,375,543 |                 |   | $      | 14,129,121    |   |   | $       | 21,932,516 |   |   | $      | 186,713,823 |                    |   | $ | 208,646,339 |   |   | $ | 4,325,308 |   |

|                              |   |            |      |   |            |   |      | Greater than    |   |   |          |   |   |    |       |   |   |   |        |                    |
|-----------------------------------|--------|-----------------|-----------|--------|-----------------|--------|-----------|----------------------|--------|--------|---------------|--------|--------|---------|------------|--------|--------|--------|-------------|-------------------------|
|                              |   | 30-59 Days |      |   | 60-89 Days |   |      | 90 Days or |   |   | Total         |   |   |    |       |   | Total  |   |        | Loans 90 Days |
| December 31, 2010       |   | Past Due   |      |   | Past Due   |   |      | Nonaccruing          |   |   | Past Due |   |   | Current |       |   | Loans  |   |        | and Accruing       |
|                              |   |            |      |   |            |   |      |                 |   |   |          |   |   |    |       |   |   |   |        |                    |
| Residential real estate           |   | $               | 1,452,435 |   |            | $      | 1,258,246 |                 |   | $      | 4,506,064     |   |   | $       | 7,216,745  |   |   | $      | 67,989,329  |                    |   | $ | 75,206,074 |   |   | $ | 2,008,168 |
| Commercial real estate            |   |            | 980,023   |   |            |   | 467,285   |                 |   |   | 3,216,515     |   |   |    | 4,663,823  |   |   |   | 60,693,365  |                    |   |   | 65,357,188 |   |   |   | 2,120,564 |
| Other real estate                 |   |            | -         |   |            |   | -         |                 |   |   | 1,130,824     |   |   |    | 1,130,824  |   |   |   | 23,129,123  |                    |   |   | 24,259,947 |   |   |   | 1,130,824 |
| Construction and land development |   |            | -         |   |            |   | -         |                 |   |   | 2,180,150     |   |   |    | 2,180,150  |   |   |   | 11,223,615  |                    |   |   | 13,403,765 |   |   |   | 1,022,686 |
| Commercial loans                  |   |            | 54,262    |   |            |   | 28,545    |                 |   |   | 594,022       |   |   |    | 676,829    |   |   |   | 28,375,584  |                    |   |   | 29,052,413 |   |   |   | 19,838 |
| Consumer loans                    |   |            | 122,969   |   |            |   | 25,878    |                 |   |   | 66,563        |   |   |    | 215,410    |   |   |   | 5,373,420   |                    |   |   | 5,588,830 |   |   |   | 66,563 |
| Total                             |   | $               | 2,609,689 |   |            | $      | 1,779,954 |                 |   | $      | 11,694,138    |   |   | $       | 16,083,781 |   |   | $      | 196,784,436 |                    |   | $ | 212,868,217 |   |   | $ | 6,368,643 |

|                                     |   | March 31, |      |   | December 31, |   |
|------------------------------------------|--------|-----------|-----------|--------|--------------|--------|
|                                     |   | 2011      |      |   | 2010         |   |
|                                     |   |      |      |   |         |   |
| Residential real estate                  |   | $         | 2,756,901 |   |         | $      | 2,497,896 |   |
| Commercial real estate                   |   |      | 3,819,872 |   |         |   | 1,095,951 |   |
| Other real estate                        |   |      | -         |   |         |   | - |   |
| Construction and land development        |   |      | 3,077,610 |   |         |   | 1,157,464 |   |
| Commercial loans                         |   |      | 185,813   |   |         |   | 574,184 |   |
| Consumer loans                           |   |      | 37,390    |   |         |   | - |   |
| Total                                    |   | $         | 9,877,586 |   |         | $      | 5,325,495 |   |
|                                     |   |      |      |   |         |   |   |   |
| Interest not accrued on nonaccrual loans |   | $         | 591,191   |   |         | $      | 644,566 |   |

----

| 5. | Commitments |
|----|-------------|

|                                      |   | March 31, 2011 |       |   | December 31, 2010 |   |
|-------------------------------------------|--------|----------------|------------|--------|-------------------|--------|
|                                      |   |           |       |   |              |   |
| Check loan lines of credit                |   | $              | 487,622    |   |              | $      | 468,621 |   |
| Mortgage lines of credit                  |   |           | 7,455,389  |   |              |   | 6,727,480 |   |
| Other lines of credit                     |   |           | 12,412,420 |   |              |   | 10,964,947 |   |
| Undisbursed construction loan commitments |   |           | 1,916,574  |   |              |   | 2,240,747 |   |
|                                      |   | $              | 22,272,005 |   |              | $      | 20,401,795 |   |
|                                      |   |           |       |   |              |   |   |   |
| Standby letters of credit                 |   | $              | 2,877,909  |   |              | $      | 3,016,824 |   |

| 6. | Earnings Per Share |
|----|--------------------|

| 7. | Pension |
|----|---------|

| 8. | Segment Reporting |
|----|-------------------|

----

| For the three months endedMarch 31, 2011 |   | Community banking |        |   | Insurance productsand services |   |      | IntersegmentTransactions |   |   | Consolidated Total |   |
|------------------------------------------------------------------------|--------|------------------------|-------------|--------|------------------------------------------|--------|-----------|--------------------------|--------|--------|-------------------------|--------|
|                                                                   |   |                   |        |   |                                     |   |      |                     |   |   |                    |   |
| Net interest income                                                    |   | $                      | 2,081,253   |   |                                     | $      | 318       |                     |   | $      | -                       |   |   | $ | 2,081,571 |   |
| Provision for loan losses                                              |   |                   | 1,500,000   |   |                                     |   | -         |                     |   |   | -                       |   |   |   | 1,500,000 |   |
| Net interest income after provision                                    |   |                   | 581,253     |   |                                     |   | 318       |                     |   |   | -                       |   |   |   | 581,571 |   |
|                                                                   |   |                   |        |   |                                     |   |      |                     |   |   |                    |   |   |   |   |   |
| Noninterest revenue                                                    |   |                   | 288,417     |   |                                     |   | 375,915   |                     |   |   | -                       |   |   |   | 664,332 |   |
| Noninterest expense                                                    |   |                   | 1,585,507   |   |                                     |   | 220,383   |                     |   |   | -                       |   |   |   | 1,805,890 |   |
| Income before income taxes                                             |   |                   | (715,837    | )      |                                     |   | 155,850   |                     |   |   | -                       |   |   |   | (559,987 | ) |
| Income tax expense (benefit)                                           |   |                   | (323,842    | )      |                                     |   | 61,475    |                     |   |   | -                       |   |   |   | (262,367 | ) |
| Net income                                                             |   | $                      | (391,995    | )      |                                     | $      | 94,375    |                     |   | $      | -                       |   |   | $ | (297,620 | ) |
|                                                                   |   |                   |        |   |                                     |   |      |                     |   |   |                    |   |   |   |   |   |
| Average assets                                                         |   | $                      | 247,669,212 |   |                                     | $      | 1,718,752 |                     |   | $      | (756,434                | )      |   | $ | 248,631,530 |   |

| For the three months endedMarch 31, 2010 |   | Community banking |        |   | Insurance productsand services |   |      | IntersegmentTransactions |   |   | Consolidated Total |   |
|------------------------------------------------------------------------|--------|------------------------|-------------|--------|------------------------------------------|--------|-----------|--------------------------|--------|--------|-------------------------|--------|
|                                                                   |   |                   |        |   |                                     |   |      |                     |   |   |                    |   |
| Net interest income                                                    |   | $                      | 2,344,762   |   |                                     | $      | 391       |                     |   | $      | -                       |   |   | $ | 2,345,153 |   |
| Provision for loan losses                                              |   |                   | 475,000     |   |                                     |   | -         |                     |   |   | -                       |   |   |   | 475,000 |   |
| Net interest income after provision                                    |   |                   | 1,869,762   |   |                                     |   | 391       |                     |   |   | -                       |   |   |   | 1,870,153 |   |
|                                                                   |   |                   |        |   |                                     |   |      |                     |   |   |                    |   |   |   |   |   |
| Noninterest revenue                                                    |   |                   | 278,364     |   |                                     |   | 334,236   |                     |   |   | -                       |   |   |   | 612,600 |   |
| Noninterest expense                                                    |   |                   | 1,652,554   |   |                                     |   | 201,998   |                     |   |   | -                       |   |   |   | 1,854,552 |   |
| Income before income taxes                                             |   |                   | 495,572     |   |                                     |   | 132,629   |                     |   |   | -                       |   |   |   | 628,201 |   |
| Income tax expense                                                     |   |                   | 174,496     |   |                                     |   | 52,499    |                     |   |   | -                       |   |   |   | 226,995 |   |
| Net income                                                             |   | $                      | 321,076     |   |                                     | $      | 80,130    |                     |   | $      | -                       |   |   | $ | 401,206 |   |
|                                                                   |   |                   |        |   |                                     |   |      |                     |   |   |                    |   |   |   |   |   |
| Average assets                                                         |   | $                      | 251,003,285 |   |                                     | $      | 1,780,331 |                     |   | $      | (3,093,976              | )      |   | $ | 249,689,640 |   |

----

| 9. | Fair Value |
|----|------------|

|   | • | Level 1 inputs — Unadjusted quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. |
|--------|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | Level 2 inputs — Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly.  These might include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (such as interest rates. volatilities, prepayment speeds, credit risks, etc.) or inputs that are derived principally from or corroborated by market data by correlation or other means. |
|--------|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | Level 3 inputs — Unobservable inputs for determining the fair values of assets or liabilities that reflect an entity’s own assumptions about the assumptions that market participants would use in pricing the assets or liabilities. |
|--------|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| Available for Sale                 |   | Total |      |   | Level 1 Inputs |   |      | Level 2 Inputs |   |   | Level 3 Inputs |   |
|------------------------------------|--------|-------|-----------|--------|----------------|--------|-----------|----------------|--------|--------|----------------|--------|
| U. S. Government Agency Securities |   | $     | 9,071,820 |   |           | $      | 9,071,820 |           |   | $      | -              |   |   | $ | - |   |

|                   |   | Total  |      |   | Level 1 Inputs |   |   | Level 2 Inputs |   |   | Level 3 Inputs |   |
|------------------------|--------|--------|-----------|--------|----------------|--------|--------|----------------|--------|--------|----------------|--------|
|                   |   |   |      |   |           |   |   |           |   |   |           |   |
| Foreclosed real estate |   | $      | 1,370,000 |   |           | $      | -      |           |   | $      | 1,370,000      |   |   | $ | - |   |

|                                      |   | March 31, 2011 |        |   | December 31, 2010 |   |
|-------------------------------------------|--------|--------------------------|-------------|--------|-----------------------------|--------|
|                                      |   | Carrying                 |        |   | Fair                        |   |   | Carrying |   |   | Fair |   |
|                                      |   | amount                   |        |   | value                       |   |   | amount |   |   | value |   |
|                                      |   |                     |        |   |                        |   |   |   |   |   |   |   |
| Financial assets                          |   |                     |        |   |                        |   |   |   |   |   |   |   |
| Cash and due from banks                   |   | $                        | 16,571,994  |   |                        | $      | 16,571,994 |   |   | $ | 10,378,485 |   |   | $ | 10,378,485 |   |
| Federal funds sold                        |   |                     | 1,016,000   |   |                        |   | 1,016,000 |   |   |   | 1,016,000 |   |   |   | 1,016,000 |   |
| Investment securities (total)             |   |                     | 10,579,970  |   |                        |   | 10,599,137 |   |   |   | 11,546,313 |   |   |   | 11,590,095 |   |
| Federal Home Loan Bank  and CBB |   |                     |        |   |                        |   |   |   |   |   |   |   |   |   |   |   |
| Financial Corp. stock                     |   |                     | 2,151,600   |   |                        |   | 2,151,600 |   |   |   | 2,151,600 |   |   |   | 2,151,600 |   |
| Loans, net                                |   |                     | 204,731,970 |   |                        |   | 205,542,013 |   |   |   | 207,295,877 |   |   |   | 208,116,545 |   |
| Accrued interest receivable               |   |                     | 1,012,580   |   |                        |   | 1,012,580 |   |   |   | 1,306,708 |   |   |   | 1,360,708 |   |
|                                      |   |                     |        |   |                        |   |   |   |   |   |   |   |   |   |   |   |
| Financial liabilities                     |   |                     |        |   |                        |   |   |   |   |   |   |   |   |   |   |   |
| Noninterest-bearing deposits              |   | $                        | 38,556,516  |   |                        | $      | 38,556,516 |   |   | $ | 35,219,753 |   |   | $ | 35,219,753 |   |
| Interest-bearing deposits                 |   |                     | 157,160,800 |   |                        |   | 160,656,581 |   |   |   | 154,420,977 |   |   |   | 157,626,964 |   |
| Short-term borrowings                     |   |                     | 2,179,654   |   |                        |   | 2,179,654 |   |   |   | 2,754,321 |   |   |   | 2,754,321 |   |
| Federal Home Loan                         |   |                     |        |   |                        |   |   |   |   |   |   |   |   |   |   |   |
| Bank advances                             |   |                     | 22,000,000  |   |                        |   | 23,329,464 |   |   |   | 24,000,000 |   |   |   | 25,230,768 |   |
| Accrued interest payable                  |   |                     | 303,301     |   |                        |   | 303,301 |   |   |   | 414,758 |   |   |   | 414,758 |   |

----

|                       |   | Amortized |      |   | Unrealized |   |   | Unrealized |   |   | Fair   |   |
|----------------------------|--------|-----------|-----------|--------|------------|--------|--------|------------|--------|--------|--------|--------|
|                       |   | cost      |      |   | gains      |   |   | losses     |   |   | value  |   |
| March 31, 2011             |   |      |      |   |       |   |   |       |   |   |   |   |
| Available for sale         |   |      |      |   |       |   |   |       |   |   |   |   |
| U. S. government agency    |   | $         | 9,057,044 |   |       | $      | 16,075 |       |   | $      | 1,299  |   |   | $ | 9,071,820 |   |
|                       |   |      |      |   |       |   |   |       |   |   |   |   |   |   |   |   |
| Held to maturity           |   |      |      |   |       |   |   |       |   |   |   |   |   |   |   |   |
| U. S. government agency    |   | $         | 1,503,092 |   |       | $      | 19,083 |       |   | $      | -      |   |   | $ | 1,522,175 |   |
| Mortgage-backed securities |   |      | 5,058     |   |       |   | 84     |       |   |   | 6      |   |   |   | 5,136 |   |
|                       |   | $         | 1,508,150 |   |       | $      | 19,167 |       |   | $      | 6      |   |   | $ | 1,527,311 |   |
|                       |   |      |      |   |       |   |   |       |   |   |   |   |   |   |   |   |
| December 31, 2010          |   |      |      |   |       |   |   |       |   |   |   |   |   |   |   |   |
| Available for sale         |   |      |      |   |       |   |   |       |   |   |   |   |   |   |   |   |
| U. S. government agency    |   | $         | 8,016,831 |   |       | $      | 18,949 |       |   | $      | -      |   |   | $ | 8,035,780 |   |
|                       |   |      |      |   |       |   |   |       |   |   |   |   |   |   |   |   |
| Held to maturity           |   |      |      |   |       |   |   |       |   |   |   |   |   |   |   |   |
| U. S. government agency    |   | $         | 3,505,278 |   |       | $      | 43,757 |       |   | $      | -      |   |   | $ | 3,549,035 |   |
| Mortgage-backed securities |   |      | 5,255     |   |       |   | 25     |       |   |   | -      |   |   |   | 5,280 |   |
|                       |   | $         | 3,510,533 |   |       | $      | 43,782 |       |   | $      | -      |   |   | $ | 3,554,315 |   |

----

|                       |   | Available for sale |      |   | Held to maturity |   |
|----------------------------|--------|------------------------------|-----------|--------|----------------------------|--------|
|                       |   | Amortized                    |      |   | Fair                       |   |   | Amortized |   |   | Fair |   |
|                       |   | cost                         |      |   | value                      |   |   | cost |   |   | value |   |
| March 31, 2011             |   |                         |      |   |                       |   |   |   |   |   |   |   |
| Maturing                   |   |                         |      |   |                       |   |   |   |   |   |   |   |
| Within one year            |   | $                            | 5,012,643 |   |                       | $      | 5,025,240 |   |   | $ | 1,503,092 |   |   | $ | 1,522,175 |   |
| Over one to five years     |   |                         | 4,044,401 |   |                       |   | 4,046,580 |   |   |   | - |   |   |   | - |   |
| Mortgage-backed securities |   |                         | -         |   |                       |   | - |   |   |   | 5,058 |   |   |   | 5,136 |   |
|                       |   | $                            | 9,057,044 |   |                       | $      | 9,071,820 |   |   | $ | 1,508,150 |   |   | $ | 1,527,311 |   |
|                       |   |                         |      |   |                       |   |   |   |   |   |   |   |   |   |   |   |
| Pledged securities         |   | $                            | 2,362,611 |   |                       | $      | 2,367,625 |   |   | $ | 319,910 |   |   | $ | 321,994 |   |
|                       |   |                         |      |   |                       |   |   |   |   |   |   |   |   |   |   |   |
| December 31, 2010          |   |                         |      |   |                       |   |   |   |   |   |   |   |   |   |   |   |
| Maturing                   |   |                         |      |   |                       |   |   |   |   |   |   |   |   |   |   |   |
| Within one year            |   | $                            | 6,002,966 |   |                       | $      | 6,018,760 |   |   | $ | 3,505,278 |   |   | $ | 3,549,035 |   |
| Over one to five years     |   |                         | 2,013,865 |   |                       |   | 2,017,020 |   |   |   | - |   |   |   | - |   |
| Mortgage-backed securities |   |                         | -         |   |                       |   | - |   |   |   | 5,255 |   |   |   | 5,280 |   |
|                       |   | $                            | 8,016,831 |   |                       | $      | 8,035,780 |   |   | $ | 3,510,533 |   |   | $ | 3,554,315 |   |
|                       |   |                         |      |   |                       |   |   |   |   |   |   |   |   |   |   |   |
| Pledged securities         |   | $                            | 633,593   |   |                       | $      | 637,127 |   |   | $ | 2,530,378 |   |   | $ | 2,562,778 |   |

----

----

----

----

----

|                                          |   | For the Quarter Ended |        |   | For the Quarter Ended |   |
|-----------------------------------------------|--------|--------------------------------------|-------------|--------|--------------------------------------|--------|
|                                          |   | March 31, 2011             |        |   | March 31, 2010             |   |
|                                          |   | Average                              |        |   |                                 |   |   |   |   |   | Average |   |   |   |   |   |   |   |
|                                          |   | Balance                              |        |   | Interest                             |   |   | Yield |   |   | Balance |   |   | Interest |   |   | Yield |   |
| Assets                                        |   |                                 |        |   |                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Federal funds sold                            |   | $                                    | 1,016,000   |   |                                 | $      | 693 |   |   |   | 0.28 | % |   | $ | 2,323,879 |   |   | $ | 696 |   |   |   | 0.12 | % |
| Interest-bearing deposits                     |   |                                 | 5,103       |   |                                 |   | 9 |   |   |   | 0.67 | % |   |   | 49,293 |   |   |   | 5 |   |   |   | 0.04 | % |
| Investment securities:                        |   |                                 |        |   |                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| U.  S.  government agency |   |                                 | 11,218,568  |   |                                 |   | 44,114 |   |   |   | 1.59 | % |   |   | 14,668,105 |   |   |   | 113,723 |   |   |   | 3.14 | % |
| FHLB of Atlanta &                         |   |                                 |        |   |                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| CBB Financial Corp..  Stock         |   |                                 | 2,151,600   |   |                                 |   | 4,489 |   |   |   | 0.85 | % |   |   | 2,401,200 |   |   |   | 1,670 |   |   |   | 0.28 | % |
|                                          |   |                                 | 13,370,168  |   |                                 |   | 48,603 |   |   |   | 1.47 | % |   |   | 17,069,305 |   |   |   | 115,393 |   |   |   | 2.74 | % |
| Loans:                                        |   |                                 |        |   |                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Demand and time                               |   |                                 | 27,124,118  |   |                                 |   | 390,616 |   |   |   | 5.84 | % |   |   | 26,380,179 |   |   |   | 385,582 |   |   |   | 5.93 | % |
| Mortgage                                      |   |                                 | 177,737,461 |   |                                 |   | 2,443,258 |   |   |   | 5.57 | % |   |   | 175,474,292 |   |   |   | 2,751,427 |   |   |   | 6.36 | % |
| Installment                                   |   |                                 | 5,405,876   |   |                                 |   | 86,175 |   |   |   | 6.46 | % |   |   | 6,524,397 |   |   |   | 110,197 |   |   |   | 6.85 | % |
| Total loans                                   |   |                                 | 210,267,455 |   |                                 |   | 2,920,049 |   |   |   | 5.63 | % |   |   | 208,378,868 |   |   |   | 3,247,206 |   |   |   | 6.32 | % |
| Allowance for loan losses                     |   |                                 | 4,828,491   |   |                                 |   |   |   |   |   |   |   |   |   | 2,895,878 |   |   |   |   |   |   |   |   |   |
| Total loans, net of allowance                 |   |                                 | 205,438,964 |   |                                 |   | 2,920,049 |   |   |   | 5.76 | % |   |   | 205,482,990 |   |   |   | 3,247,206 |   |   |   | 6.41 | % |
| Total interest-earning assets                 |   |                                 | 219,830,235 |   |                                 |   | 2,969,354 |   |   |   | 5.48 | % |   |   | 224,925,467 |   |   |   | 3,363,300 |   |   |   | 6.06 | % |
| Non-interest-bearing cash                     |   |                                 | 15,400,343  |   |                                 |   |   |   |   |   |   |   |   |   | 11,750,199 |   |   |   |   |   |   |   |   |   |
| Premises and equipment                        |   |                                 | 6,365,631   |   |                                 |   |   |   |   |   |   |   |   |   | 6,523,920 |   |   |   |   |   |   |   |   |   |
| Other assets                                  |   |                                 | 7,035,321   |   |                                 |   |   |   |   |   |   |   |   |   | 6,490,054 |   |   |   |   |   |   |   |   |   |
| Total assets                                  |   | $                                    | 248,631,530 |   |                                 |   |   |   |   |   |   |   |   | $ | 249,689,640 |   |   |   |   |   |   |   |   |   |
| Liabilities and Stockholders’ Equity    |   |                                 |        |   |                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-bearing Deposits                     |   |                                 |        |   |                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Savings and NOW deposits                      |   | $                                    | 46,626,954  |   |                                 | $      | 17,037 |   |   |   | 0.15 | % |   | $ | 48,055,941 |   |   | $ | 22,668 |   |   |   | 0.19 | % |
| Money market and supernow                     |   |                                 | 10,849,151  |   |                                 |   | 7,306 |   |   |   | 0.27 | % |   |   | 11,106,248 |   |   |   | 13,354 |   |   |   | 0.49 | % |
| Other time deposits                           |   |                                 | 98,610,504  |   |                                 |   | 648,107 |   |   |   | 2.67 | % |   |   | 95,239,534 |   |   |   | 703,791 |   |   |   | 3.00 | % |
| Total interest-bearing deposits               |   |                                 | 156,086,609 |   |                                 |   | 672,450 |   |   |   | 1.75 | % |   |   | 154,401,723 |   |   |   | 739,813 |   |   |   | 1.94 | % |
| Borrowed funds                                |   |                                 | 25,897,427  |   |                                 |   | 181,131 |   |   |   | 2.84 | % |   |   | 28,738,342 |   |   |   | 245,149 |   |   |   | 3.46 | % |
| Total interest-bearing liabilities            |   |                                 | 181,984,036 |   |                                 |   | 853,581 |   |   |   | 1.90 | % |   |   | 183,140,065 |   |   |   | 984,962 |   |   |   | 2.18 | % |
| Noninterest-bearing deposits                  |   |                                 | 37,316,794  |   |                                 |   |   |   |   |   |   |   |   |   | 35,216,655 |   |   |   |   |   |   |   |   |   |
|                                          |   |                                 | 219,300,830 |   |                                 |   |   |   |   |   |   |   |   |   | 218,356,720 |   |   |   |   |   |   |   |   |   |
| Other liabilities                             |   |                                 | 1,993,817   |   |                                 |   |   |   |   |   |   |   |   |   | 2,493,075 |   |   |   |   |   |   |   |   |   |
| Stockholders’ equity                    |   |                                 | 27,336,883  |   |                                 |   |   |   |   |   |   |   |   |   | 28,839,845 |   |   |   |   |   |   |   |   |   |
| Total liabilities and stockholders equity     |   | $                                    | 248,631,530 |   |                                 |   |   |   |   |   |   |   |   | $ | 249,689,640 |   |   |   |   |   |   |   |   |   |
| Net interest spread                           |   |                                 |        |   |                                 |   |   |   |   |   | 3.58 | % |   |   |   |   |   |   |   |   |   |   | 3.88 | % |
| Net interest income                           |   |                                 |        |   |                                 | $      | 2,324,672 |   |   |   |   |   |   |   |   |   |   | $ | 2,378,338 |   |   |   |   |   |
| Net margin on interest-earning assets         |   |                                 |        |   |                                 |   |   |   |   |   | 3.90 | % |   |   |   |   |   |   |   |   |   |   | 4.29 | % |

----

----

----

|                                           |   | Three months endedMarch 31,2011 |      |   | Three months endedMarch 31,2010 |   |      | Year endedDecember 31,2010 |   |
|------------------------------------------------|--------|------------------------------------------------|-----------|--------|------------------------------------------------|--------|-----------|--------------------------------------|--------|
|                                           |   |                                           |      |   |                                           |   |      |                                 |   |
| Balance at beginning of year                   |   | $                                              | 5,656,788 |   |                                           | $      | 2,845,364 |                                 |   | $ | 2,845,364 |   |
| Loan losses:                                   |   |                                           |      |   |                                           |   |      |                                 |   |   |   |   |
| Commercial                                     |   |                                           | 491,329   |   |                                           |   | 29,442    |                                 |   |   | 166,779 |   |
| Mortgages                                      |   |                                           | 2,694,200 |   |                                           |   | 581,725   |                                 |   |   | 1,846,683 |   |
| Consumer                                       |   |                                           | 9,586     |   |                                           |   | 11,839    |                                 |   |   | 104,791 |   |
| Total loan losses                              |   |                                           | 3,195,115 |   |                                           |   | 623,006   |                                 |   |   | 2.118,253 |   |
| Recoveries on loans previously charged off     |   |                                           |      |   |                                           |   |      |                                 |   |   |   |   |
| Commercial                                     |   |                                           | 210       |   |                                           |   | 820       |                                 |   |   | 2,660 |   |
| Mortgages                                      |   |                                           | 1,576     |   |                                           |   | 0         |                                 |   |   | 374 |   |
| Consumer                                       |   |                                           | 24,691    |   |                                           |   | 1,460     |                                 |   |   | 16,643 |   |
| Total loan recoveries                          |   |                                           | 26,477    |   |                                           |   | 2,280     |                                 |   |   | 19,677 |   |
| Net loan losses                                |   |                                           | 3,168,638 |   |                                           |   | 620,726   |                                 |   |   | 2,098,576 |   |
| Provision for loan losses charged to expense   |   |                                           | 1,500,000 |   |                                           |   | 475,000   |                                 |   |   | 4,910,000 |   |
| Balance at end of year                         |   | $                                              | 3,988,150 |   |                                           | $      | 2,699,638 |                                 |   | $ | 5,656,788 |   |
| Allowance for loan losses to loans outstanding |   |                                           |      |   |                                           |   |      |                                 |   |   |   |   |
| At end of period                               |   |                                           | 1.91      | %      |                                           |   | 1.29      | %                                    |   |   | 2.66 | % |

----

|                                    |   | March 31, |       |   | December 31, |   |
|-----------------------------------------|--------|-----------|------------|--------|--------------|--------|
|                                    |   | 2011      |       |   | 2010         |   |
| Nonaccrual Loans                        |   |      |       |   |         |   |
| Commercial                              |   | $         | 185,813    |   |         | $      | 574,184 |   |
| Mortgage                                |   |      | 9,654,383  |   |         |   | 4,751,311 |   |
| Consumer                                |   |      | 37,390     |   |         |   | - |   |
|                                    |   |      | 9,877,586  |   |         |   | 5,325,495 |   |
| Accruing Loans Past Due 90 Days or More |   |      |       |   |         |   |   |   |
| Commercial                              |   |      | 52,819     |   |         |   | 19,838 |   |
| Mortgage                                |   |      | 4,192,874  |   |         |   | 6,282,242 |   |
| Consumer                                |   |      | 5,843      |   |         |   | 66,563 |   |
|                                    |   |      | 4,251,535  |   |         |   | 6,368,643 |   |
|                                    |   | $         | 14,129,121 |   |         | $      | 11,694,138 |   |

----

|                         |   | March 31, 2011 |      |   | December 31, 2010 |   |
|------------------------------|--------|----------------|-----------|--------|-------------------|--------|
|                         |   | Amount         |      |   | Rate              |   |   | Amount |   |   | Rate |   |
|                         |   |           |      |   |              |   |   |   |   |   |   |   |
| Retail Repurchase Agreements |   |           | 2,179,654 |   |              |   | .47 | % |   |   | 2,754,321 |   |   |   | 1.76 | % |

----

|                            |   |   |   |   | Minimum      |   |   | To be well  |   |
|---------------------------------|--------|--------|--------|--------|--------------|--------|--------|-------------|--------|
|                            |   | Actual |   |   | Requirements |   |   | Capitalized |   |
| Total risk-based capital ratio  |   |   | 14.00  | %      |         |   | 8.00   | %           |   |   | 10.00 | % |
| Tier 1 risk-based capital ratio |   |   | 12.74  | %      |         |   | 4.00   | %           |   |   | 6.00 | % |
| Tier 1 leverage ratio           |   |   | 10.31  | %      |         |   | 4.00   | %           |   |   | 5.00 | % |

----

|                          | PEOPLES BANCORP, INC. |
|-------------------------------|-----------------------|
|                          |                  |   |   |
| Date:  May 13, 2011 | By:                   | /s/ Thomas G. Stevenson |   |
|                          |                  | Thomas G. Stevenson |
|                          |                  | President/Chief Executive Officer |
|                          |                  | & Chief Financial Officer |

----

| Exhibit No. |         | Description                                                                                                   |
|-------------|--------------|---------------------------------------------------------------------------------------------------------------|
|        |         |                                                                                                          |
| 31.1        |         | Certifications of the CEO/CFO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith)      |
| 32.1        |    | Certifications of the CEO/ CFO pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith) |

----