----

----

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

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

----

|   | New Jersey                                                          |   | 22-3351447                                |   |
|--------|---------------------------------------------------------------------|--------|-------------------------------------------|--------|
|   | (State      or other jurisdiction of incorporation or organization) |   | (I.R.S.      Employer Identification No.) |   |
|   |                                                                |   |                                      |   |
|   | 630 Godwin Avenue, Midland      Park,  NJ                 |   | 07432                                     |   |
|   | (Address      of principal executive offices)                       |   | (Zip      Code)                           |   |

----

----

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

----

----

----

war

|                                                                                                                                               |   |         | PAGE        |
|----------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------|-------------|
|                                                                                                                                               |   |         | NUMBER      |
| PART      I  -CONSOLIDATED FINANCIAL      INFORMATION                                                                                    |   |         |
|                                                                                                                                               |   |         |        |
| ITEM      1  -CONSOLIDATED      FINANCIAL STATEMENTS                                                                                     |   |         |
|                                                                                                                                               |   |         |        |
| Consolidated Statements of Financial Condition at March 31,      2008 (Unaudited) and December 31, 2007                                            |   | 1            |
|                                                                                                                                               |   |         |        |
| Consolidated Statements of Income for the Three Months ended      March 31, 2008 and 2007 (Unaudited)                                              |   | 2            |
|                                                                                                                                               |   |         |        |
| Consolidated Statements on Cash Flows for Three Months ended      March 31, 2008 and 2007 (Unaudited)                                              |   | 3            |
|                                                                                                                                               |   |         |        |
| Consolidated Statement of Changes in Stockholders’Equity for      the Three Months ended  March 31, 2008 and 2007      (Unaudited) |   | 4            |
|                                                                                                                                               |   |         |        |
| Notes to Consolidated Financial Statements      (Unaudited)                                                                                        |   |         |
|                                                                                                                                               |   |         | 5 -      13 |
|                                                                                                                                               |   |         |        |
| ITEM      2  -MANAGEMENT’S      DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF      OPERATIONS                      |   | 14      - 22 |
|                                                                                                                                               |   |         |        |
| ITEM      3 -QUANTITATIVE      AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK                                                                        |   | 22           |
|                                                                                                                                               |   |         |        |
| ITEM      4 -CONTROLS      AND PROCEDURES                                                                                                          |   | 22           |
|                                                                                                                                               |   |         |        |
| PART II  -      OTHER      INFORMATION                                                                                                   |   |         |
|                                                                                                                                               |   |
| ITEM      1A.RISK      FACTORS                                                                                                                     |   | 23           |
|                                                                                                                                               |   |         |        |
| ITEM      6 –EXHIBITS                                                                                                                        |   | 23           |
|                                                                                                                                               |   |         |        |
| SIGNATURES                                                                                                                                         |   | 24           |
|                                                                                                                                               |   |         |        |
| EXHIBIT      INDEX                                                                                                                                 |   | 25           |

----

Index

Stewar

|                                                                                                                                                                                                            |   | March      31, |        |   | December      31, |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------|-------------|--------|-------------------|--------|
|                                                                                                                                                                                                            |   | 2008           |        |   | 2007              |   |
|                                                                                                                                                                                                            |   |           |        |   |              |   |
| Assets                                                                                                                                                                                                          |   |           |        |   |              |   |
|                                                                                                                                                                                                            |   |           |        |   |              |   |
| Cash      and due from banks                                                                                                                                                                                    |   | $              | 13,943,000  |   |              | $      | 11,789,000 |   |
| Other      interest-earning assets                                                                                                                                                                              |   |           | 90,000      |   |              |   | 143,000 |   |
| Federal      funds sold                                                                                                                                                                                         |   |           | 2,500,000   |   |              |   | - |   |
| Cash      and cash equivalents                                                                                                                                                                                  |   |           | 16,533,000  |   |              |   | 11,932,000 |   |
|                                                                                                                                                                                                            |   |           |        |   |              |   |   |   |
|                                                                                                                                                                                                            |   |           |        |   |              |   |   |   |
| Securities      available for sale                                                                                                                                                                              |   |           | 88,242,000  |   |              |   | 76,957,000 |   |
| Securities      held to maturity; estimated fair value of $38,028,000 (2008) and      $41,508,000 (2007)                                                                                                        |   |           | 37,410,000  |   |              |   | 41,189,000 |   |
| FHLB-NY      stock, at cost                                                                                                                                                                                     |   |           | 2,558,000   |   |              |   | 1,983,000 |   |
| Loans,      net of allowance for loan losses of of $ 4,571,000 (2008) and $4,457,000      (2007)                                                                                                                |   |           | 420,786,000 |   |              |   | 415,690,000 |   |
| Mortgage      loans held for sale                                                                                                                                                                               |   |           | 2,246,000   |   |              |   | 1,284,000 |   |
| Premises      and equipment, net                                                                                                                                                                                |   |           | 7,864,000   |   |              |   | 7,950,000 |   |
| Accrued      interest receivable                                                                                                                                                                                |   |           | 3,013,000   |   |              |   | 3,112,000 |   |
| Intangible      assets                                                                                                                                                                                          |   |           | 62,000      |   |              |   | 70,000 |   |
| Bank      owned life insurance                                                                                                                                                                                  |   |           | 8,355,000   |   |              |   | 8,273,000 |   |
| Other      assets                                                                                                                                                                                               |   |           | 3,164,000   |   |              |   | 3,465,000 |   |
|                                                                                                                                                                                                            |   |           |        |   |              |   |   |   |
| Total      assets                                                                                                                                                                                               |   | $              | 590,233,000 |   |              | $      | 571,905,000 |   |
|                                                                                                                                                                                                            |   |           |        |   |              |   |   |   |
| Liabilities      and Stockholders' equity                                                                                                                                                                       |   |           |        |   |              |   |   |   |
|                                                                                                                                                                                                            |   |           |        |   |              |   |   |   |
| Liabilities                                                                                                                                                                                                     |   |           |        |   |              |   |   |   |
|                                                                                                                                                                                                            |   |           |        |   |              |   |   |   |
| Deposits:                                                                                                                                                                                                       |   |           |        |   |              |   |   |   |
| Noninterest-bearing                                                                                                                                                                                             |   | $              | 95,497,000  |   |              | $      | 101,993,000 |   |
| Interest-bearing                                                                                                                                                                                                |   |           | 381,070,000 |   |              |   | 370,306,000 |   |
|                                                                                                                                                                                                            |   |           |        |   |              |   |   |   |
| Total      deposits                                                                                                                                                                                             |   |           | 476,567,000 |   |              |   | 472,299,000 |   |
|                                                                                                                                                                                                            |   |           |        |   |              |   |   |   |
| Other      borrowings                                                                                                                                                                                           |   |           | 41,425,000  |   |              |   | 28,645,000 |   |
| Subordinated      debentures                                                                                                                                                                                    |   |           | 7,217,000   |   |              |   | 7,217,000 |   |
| Securities      sold under agreements to repurchase                                                                                                                                                             |   |           | 16,508,000  |   |              |   | 17,283,000 |   |
| Accrued      interest payable                                                                                                                                                                                   |   |           | 1,845,000   |   |              |   | 2,080,000 |   |
| Accrued      expenses and other liabilities                                                                                                                                                                     |   |           | 4,533,000   |   |              |   | 3,291,000 |   |
|                                                                                                                                                                                                            |   |           |        |   |              |   |   |   |
| Total      liabilities                                                                                                                                                                                          |   |           | 548,095,000 |   |              |   | 530,815,000 |   |
|                                                                                                                                                                                                            |   |           |        |   |              |   |   |   |
| Commitments      and contingencies                                                                                                                                                                              |   |           | -           |   |              |   | - |   |
|                                                                                                                                                                                                            |   |           |        |   |              |   |   |   |
| Stockholders'      equity                                                                                                                                                                                       |   |           |        |   |              |   |   |   |
| Common      stock, no par value; 10,000,000 shares authorized; 5,317,471 and 5,306,828      shares issued; 5,315,972 and 5,306,828 outstanding at March 31, 2008      and December 31, 2007, respectively. |   |           | 34,936,000  |   |              |   | 34,871,000 |   |
| Treasury      stock, 1,499 shares outstanding at March 31, 2008                                                                                                                                                 |   |           | (21,000     | )      |              |   | - |   |
| Retained      earnings                                                                                                                                                                                          |   |           | 6,526,000   |   |              |   | 5,943,000 |   |
| Accumulated      other comprehensive gain                                                                                                                                                                       |   |           | 697,000     |   |              |   | 276,000 |   |
|                                                                                                                                                                                                            |   |           |        |   |              |   |   |   |
| Total      Stockholders' equity                                                                                                                                                                                 |   |           | 42,138,000  |   |              |   | 41,090,000 |   |
|                                                                                                                                                                                                            |   |           |        |   |              |   |   |   |
| Total      liabilities and Stockholders' equity                                                                                                                                                                 |   | $              | 590,233,000 |   |              | $      | 571,905,000 |   |

----

Index

eward

|                                                              |   | Three      Months Ended |      |
|-------------------------------------------------------------------|--------|-------------------------|-----------|
|                                                              |   | March      31,          |      |
|                                                              |   | 2008                    |      |   | 2007 |   |
| Interest      income:                                             |   |                    |      |   |   |   |
| Loans                                                             |   | $                       | 7,185,000 |   |   | $ | 6,570,000 |   |
| Securities      held to maturity                                  |   |                    |      |   |   |   |   |   |
| Taxable                                                           |   |                    | 204,000   |   |   |   | 229,000 |   |
| Non-taxable                                                       |   |                    | 207,000   |   |   |   | 177,000 |   |
| Securities      available for sale                                |   |                    |      |   |   |   |   |   |
| Taxable                                                           |   |                    | 994,000   |   |   |   | 907,000 |   |
| Non-taxable                                                       |   |                    | 27,000    |   |   |   | 14,000 |   |
| FHLB      dividends                                               |   |                    | 34,000    |   |   |   | 26,000 |   |
| Other      interest-earning assets                                |   |                    | 6,000     |   |   |   | 9,000 |   |
| Total      interest income                                        |   |                    | 8,657,000 |   |   |   | 7,932,000 |   |
|                                                              |   |                    |      |   |   |   |   |   |
| Interest      expense:                                            |   |                    |      |   |   |   |   |   |
| Deposits                                                          |   |                    | 2,910,000 |   |   |   | 2,760,000 |   |
| Borrowed      money                                               |   |                    | 585,000   |   |   |   | 499,000 |   |
| Total      interest expense                                       |   |                    | 3,495,000 |   |   |   | 3,259,000 |   |
|                                                              |   |                    |      |   |   |   |   |   |
| Net      interest income before provision for loan losses         |   |                    | 5,162,000 |   |   |   | 4,673,000 |   |
| Provision      for loan losses                                    |   |                    | 100,000   |   |   |   | 10,000 |   |
| Net      interest income after provision for loan losses          |   |                    | 5,062,000 |   |   |   | 4,663,000 |   |
|                                                              |   |                    |      |   |   |   |   |   |
| Noninterest      income:                                          |   |                    |      |   |   |   |   |   |
| Fees      and service charges                                     |   |                    | 295,000   |   |   |   | 394,000 |   |
| Bank      owned life insurance                                    |   |                    | 81,000    |   |   |   | 78,000 |   |
| Gain      on sales of mortgage loans                              |   |                    | 55,000    |   |   |   | 89,000 |   |
| Gain      on calls of securities                                  |   |                    | 41,000    |   |   |   | - |   |
| Merchant      processing                                          |   |                    | 369,000   |   |   |   | 365,000 |   |
| Miscellaneous                                                     |   |                    | 135,000   |   |   |   | 70,000 |   |
| Total      noninterest income                                     |   |                    | 976,000   |   |   |   | 996,000 |   |
|                                                              |   |                    |      |   |   |   |   |   |
| Noninterest      expenses:                                        |   |                    |      |   |   |   |   |   |
| Salaries      and employee benefits                               |   |                    | 2,016,000 |   |   |   | 1,794,000 |   |
| Occupancy,      net                                               |   |                    | 449,000   |   |   |   | 335,000 |   |
| Equipment                                                         |   |                    | 273,000   |   |   |   | 217,000 |   |
| Data      processing                                              |   |                    | 308,000   |   |   |   | 307,000 |   |
| Advertising                                                       |   |                    | 104,000   |   |   |   | 76,000 |   |
| FDIC      insurance premium                                       |   |                    | 73,000    |   |   |   | 13,000 |   |
| Amortization      of intangible assets                            |   |                    | 8,000     |   |   |   | 8,000 |   |
| Charitable      contributions                                     |   |                    | 162,000   |   |   |   | 169,000 |   |
| Stationery      and supplies                                      |   |                    | 111,000   |   |   |   | 83,000 |   |
| Merchant      processing                                          |   |                    | 325,000   |   |   |   | 335,000 |   |
| Bank-card      related services                                   |   |                    | 78,000    |   |   |   | 95,000 |   |
| Miscellaneous                                                     |   |                    | 572,000   |   |   |   | 563,000 |   |
| Total      noninterest expenses                                   |   |                    | 4,479,000 |   |   |   | 3,995,000 |   |
|                                                              |   |                    |      |   |   |   |   |   |
| Income      before income tax expense                             |   |                    | 1,559,000 |   |   |   | 1,664,000 |   |
| Income      tax expense                                           |   |                    | 498,000   |   |   |   | 578,000 |   |
| Net      income                                                   |   | $                       | 1,061,000 |   |   | $ | 1,086,000 |   |
|                                                              |   |                    |      |   |   |   |   |   |
| Basic      earnings per share                                     |   | $                       | 0.20      |   |   | $ | 0.21 |   |
| Diluted      earnings per share                                   |   | $                       | 0.20      |   |   | $ | 0.20 |   |
|                                                              |   |                    |      |   |   |   |   |   |
| Weighted      average number of common shares outstanding         |   |                    | 5,310,562 |   |   |   | 5,270,187 |   |
| Weighted      average number of diluted common shares outstanding |   |                    | 5,325,254 |   |   |   | 5,313,812 |   |

----

Index

tewar

|                                                                                         |   | Three      Months Ended |        |
|----------------------------------------------------------------------------------------------|--------|-------------------------|-------------|
|                                                                                         |   | March      31,          |        |
|                                                                                         |   | 2008                    |        |   | 2007 |   |
| Cash      flows from operating activities:                                                   |   |                    |        |   |   |   |
| Net      income                                                                              |   | $                       | 1,061,000   |   |   | $ | 1,086,000 |   |
| Adjustments      to reconcile net income to net cash provided by operating      activities:  |   |                    |        |   |   |   |   |   |
| Depreciation      and amortization of premises and equipment                                 |   |                    | 240,000     |   |   |   | 180,000 |   |
| Amortization      of premiums and accretion of discounts, net                                |   |                    | 30,000      |   |   |   | 39,000 |   |
| Accretion      of deferred loan fees                                                         |   |                    | (59,000     | ) |   |   | (34,000 | ) |
| Provision      for loan losses                                                               |   |                    | 100,000     |   |   |   | 10,000 |   |
| Originations      of mortgage loans held for sale                                            |   |                    | (5,642,000  | ) |   |   | (7,586,000 | ) |
| Proceeds      from sale of mortgage loans                                                    |   |                    | 4,736,000   |   |   |   | 8,811,000 |   |
| Gain      on sale of loans                                                                   |   |                    | (55,000     | ) |   |   | (89,000 | ) |
| Loss      on sale of fixed assets                                                            |   |                    | 12,000      |   |   |   | - |   |
| Gain      on calls of investment securities                                                  |   |                    | (41,000     | ) |   |   | - |   |
| Deferred      income tax (benefit) expense                                                   |   |                    | (50,000     | ) |   |   | 26,000 |   |
| Amortization      of intangible assets                                                       |   |                    | 8,000       |   |   |   | 8,000 |   |
| Nonqualified      stock option expense                                                       |   |                    | 12,000      |   |   |   | 13,000 |   |
| Increase      in bank owned life insurance                                                   |   |                    | (81,000     | ) |   |   | (78,000 | ) |
| Decrease      in accrued interest receivable                                                 |   |                    | 99,000      |   |   |   | 66,000 |   |
| Decrease      (increase) in other assets                                                     |   |                    | 86,000      |   |   |   | (143,000 | ) |
| (Decrease)      increase in accrued interest payable                                         |   |                    | (235,000    | ) |   |   | 315,000 |   |
| Increase      in other liabilities                                                           |   |                    | 33,000      |   |   |   | 1,155,000 |   |
| Net      cash provided by operating activities                                               |   |                    | 254,000     |   |   |   | 3,779,000 |   |
|                                                                                         |   |                    |        |   |   |   |   |   |
| Cash      flows from investing activities:                                                   |   |                    |        |   |   |   |   |   |
| Purchase      of securities available for sale                                               |   |                    | (18,442,000 | ) |   |   | (4,217,000 | ) |
| Proceeds      from maturities and principal repayments on securities available for      sale |   |                    | 1,746,000   |   |   |   | 4,605,000 |   |
| Proceeds      from calls on securities available for sale                                    |   |                    | 7,316,000   |   |   |   | 152,000 |   |
| Purchase      of securities held to maturity                                                 |   |                    | (404,000    | ) |   |   | (2,089,000 | ) |
| Proceeds      from maturities and principal repayments on securities held to      maturity   |   |                    | 412,000     |   |   |   | 1,842,000 |   |
| Proceeds      from calls on securities held to maturity                                      |   |                    | 3,770,000   |   |   |   | 152,000 |   |
| (Purchase)      redemption of FHLB-NY stock                                                  |   |                    | (575,000    | ) |   |   | 306,000 |   |
| Net  increase      in loans                                                        |   |                    | (5,137,000  | ) |   |   | (994,000 | ) |
| Additions      to premises and equipment                                                     |   |                    | (170,000    | ) |   |   | (490,000 | ) |
| Sales      of premises and equipment                                                         |   |                    | 4,000       |   |   |   | - |   |
| Net      cash used in investing activities                                                   |   |                    | (11,480,000 | ) |   |   | (733,000 | ) |
|                                                                                         |   |                    |        |   |   |   |   |   |
| Cash      flows from financing activities:                                                   |   |                    |        |   |   |   |   |   |
| Net      (decrease) increase in noninterest-bearing deposits                                 |   |                    | (6,496,000  | ) |   |   | 1,566,000 |   |
| Net      increase in interest-bearing deposits                                               |   |                    | 10,764,000  |   |   |   | 3,893,000 |   |
| Net      decrease in securities sold under agreements to repurchase                          |   |                    | (775,000    | ) |   |   | (185,000 | ) |
| Proceeds      from long term borrowings                                                      |   |                    | 30,000,000  |   |   |   | - |   |
| Net      decrease in short term borrowings                                                   |   |                    | (16,800,000 | ) |   |   | (6,400,000 | ) |
| Payments      on long term borrowings                                                   |   |                    | (420,000    | ) |   |   | (406,000 | ) |
| Cash      dividends paid on common stock                                                     |   |                    | (478,000    | ) |   |   | (452,000 | ) |
| Payment      of discount on dividend reinvestment plan                                       |   |                    | (11,000     | ) |   |   | (11,000 | ) |
| Options      exercised                                                                       |   |                    | 22,000      |   |   |   | - |   |
| Issuance      of common stock                                                                |   |                    | 21,000      |   |   |   | 22,000 |   |
| Net      cash provided by (used in) financing activities                                     |   |                    | 15,827,000  |   |   |   | (1,973,000 | ) |
|                                                                                         |   |                    |        |   |   |   |   |   |
| Net      increase in cash and cash equivalents                                               |   |                    | 4,601,000   |   |   |   | 1,073,000 |   |
| Cash      and cash equivalents - beginning                                                   |   |                    | 11,932,000  |   |   |   | 15,697,000 |   |
| Cash      and cash equivalents - ending                                                      |   | $                       | 16,533,000  |   |   | $ | 16,770,000 |   |
|                                                                                         |   |                    |        |   |   |   |   |   |
| Supplemental      disclosures of cash flow information:                                      |   |                    |        |   |   |   |   |   |
| Cash      paid during the year for interest                                                  |   | $                       | 3,729,000   |   |   | $ | 2,943,000 |   |
| Cash      paid during the year for income taxes                                              |   |                    | -           |   |   |   | 25,000 |   |
| Noncash      investing activities - security purchases due brokers                           |   |                    | 1,209,000   |   |   |   | - |   |

----

Index

tewar

|                                                                                                                  |   | For      the Period Ended March 31, 2008 |      |
|-----------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------|-----------|
|                                                                                                                  |   |                                     |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                  |   |                                     |      |   |   |   |   |   |   |   |   |   |   |   |   |   | Accumulated |   |   |   |   |
|                                                                                                                  |   |                                     |      |   |   |   |   |   |   |   |   |   |   |   |   |   | Other |   |   |   |   |
|                                                                                                                  |   |                                     |      |   |   |   |   |   |   |   |   |   |   |   |   | Comprehensive |   |   |   |   |
|                                                                                                                  |   | Common      Stock                        |      |   | Treasury      Stock |   |   | Retained |   | Gain, |   |   |   |   |
|                                                                                                                  |   | Shares                                   |      |   | Amount |   |   | Shares |   |   | Amount |   |   | Earnings |   | Net |   |   | Total |   |
|                                                                                                                  |   |                                     |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance      -- December 31, 2007                                                                                     |   |                                     | 5,306,828 |   |   | $ | 34,871,000 |   |   |   | - |   |   | $ | - |   |   | $ | 5,943,000 |   |   | $ | 276,000 |   |   | $ | 41,090,000 |   |
| Dividends      Paid                                                                                                   |   |                                     | -         |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (478,000 | ) |   |   | - |   |   |   | (478,000 | ) |
| Payment      of discount on dividend reinvestment plan                                                                |   |                                     | -         |   |   |   | (11,000 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (11,000 | ) |
| Common      stock issued under stock plans                                                                            |   |                                     | 1,667     |   |   |   | 21,000 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 21,000 |   |
| Stock      option compensation expense                                                                                |   |                                     | -         |   |   |   | 12,000 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 12,000 |   |
| Stock      options exercised                                                                                          |   |                                     | 8,976     |   |   |   | 43,000 |   |   |   | (1,499 | ) |   |   | (21,000 | ) |   |   | - |   |   |   | - |   |   |   | 22,000 |   |
| Comprehensive      income:                                                                                            |   |                                     |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      income                                                                                                       |   |                                     | -         |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 1,061,000 |   |   |   | - |   |   |   | 1,061,000 |   |
| Unrealized      holding gains on securities available for sale arising during the period      (net taxes of $249,000) |   |                                     | -         |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 397,000 |   |   |   | 397,000 |   |
| Reclassification      adjustment for gains in net income (net of taxes of    $17,000)                                 |   |                                     | -         |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 24,000 |   |   |   | 24,000 |   |
| Total      comprehensive income, net of tax                                                                           |   |                                     |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 1,482,000 |   |
|                                                                                                                  |   |                                     |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance      -- March 31, 2008                                                                                        |   |                                     | 5,317,471 |   |   | $ | 34,936,000 |   |   |   | (1,499 | ) |   | $ | (21,000 | ) |   | $ | 6,526,000 |   |   | $ | 697,000 |   |   | $ | 42,138,000 |   |

|                                                                                                                 |   | For      the Period Ended March 31, 2007 |
|----------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------|
|                                                                                                                 |   |                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                 |   |                                     |   |   |   |   |   |   |   |   |   |   |   | Accumulated |   |   |   |   |
|                                                                                                                 |   |                                     |   |   |   |   |   |   |   |   |   |   |   | Other |   |   |   |   |   |
|                                                                                                                 |   |                                     |   |   |   |   |   |   |   |   |   |   | Comprehensive |   |   |   |   |
|                                                                                                                 |   | Common      Stock                        |   |   | Retained |   | Loss, |   |   |   |   |
|                                                                                                                 |   | Shares                                   |   |   | Amount |   |   | Earnings |   | Net |   | Total |   |
|                                                                                                                 |   |                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance      -- December 31, 2006                                                                                    |   |                                     | 5,017,919 |   |   | $ | 31,148,000 |   |   | $ | 6,750,000 |   |   | $ | (592,000 | ) |   | $ | 37,306,000 |   |
| Dividends      Paid                                                                                                  |   |                                     | - |   |   |   | - |   |   |   | (452,000 | ) |   |   | - |   |   |   | (452,000 | ) |
| Payment      of discount on dividend reinvestment plan                                                               |   |                                     | - |   |   |   | (11,000 | ) |   |   | - |   |   |   | - |   |   |   | (11,000 | ) |
| Common      stock issued under stock plans                                                                           |   |                                     | 1,810 |   |   |   | 22,000 |   |   |   | - |   |   |   | - |   |   |   | 22,000 |   |
| Repurchase      common stock                                                                                         |   |                                     | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Stock      option compensation expense                                                                               |   |                                     | - |   |   |   | 13,000 |   |   |   | - |   |   |   | - |   |   |   | 13,000 |   |
| Comprehensive      income:                                                                                           |   |                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      income                                                                                                      |   |                                     | - |   |   |   | - |   |   |   | 1,086,000 |   |   |   | - |   |   |   | 1,086,000 |   |
| Unrealized      holding gains on securities available for sale arising during the period      (net taxes of $91,000) |   |                                     | - |   |   |   | - |   |   |   | - |   |   |   | 144,000 |   |   |   | 144,000 |   |
| Total      comprehensive income, net of tax                                                                          |   |                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 1,230,000 |   |
|                                                                                                                 |   |                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance      -- March 31, 2007                                                                                       |   |                                     | 5,019,729 |   |   | $ | 31,172,000 |   |   | $ | 7,384,000 |   |   | $ | (448,000 | ) |   | $ | 38,108,000 |   |

----

Index

Stewa

----

Index

Stewa

|                                                       |   | 2008            |          |   | 2007                |   |
|------------------------------------------------------------|--------|-----------------|---------------|--------|---------------------|--------|
|                                                       |   |            |          |   | Weighted            |   |   |   |   |   | Weighted |   |
|                                                       |   |            |          |   | Average             |   |   |   |   |   | Average |   |
|                                                       |   | Shares          |          |   | Exercise      Price |   |   | Shares |   |   | Exercise      Price |   |
|                                                       |   |            |          |   |                |   |   |   |   |   |   |   |
| Outstanding      at beginning of year                      |   |            | 36,417        |   |                | $      | 7.56 |   |   |   | 79,193 |   |   | $ | 5.70 |   |
| Granted                                                    |   |            | -             |   |                |   | - |   |   |   | - |   |   |   | - |   |
| Exercised                                                  |   |            | ( 8,976  | )      |                |   | 4.80 |   |   |   | - |   |   |   | - |   |
| Forfeited                                                  |   |            | ( 1,459       | )      |                |   | 11.94 |   |   |   | ( 510 | ) |   |   | 12.34 |   |
| Outstanding      at end of period                          |   |            | 25,982        |   |                | $      | 8.27 |   |   |   | 78,683 |   |   | $ | 5.65 |   |
| Options      exercisable                                   |   |            | 25,982        |   |                |   |   |   |   |   | 78,683 |   |   |   |   |   |
| Weighted-average      remaining contractual      life |   | 2.78      years |          |   |                |   |   |   | 1.68      years |   |   |   |   |   |
| Aggregate      intrinsic value                             |   | $               | 155,000       |   |                |   |   |   |   | $ | 567,000 |   |   |   |   |   |
| Intrinsic value of      options exercisable           |   | $          |  155,000 |   |                |   |   |   |   | $  |  567,000 |   |   |   |   |   |

----

Index

Stewa

|                                              |   | 2008            |         |   | 2007                |   |
|---------------------------------------------------|--------|-----------------|--------------|--------|---------------------|--------|
|                                              |   |            |         |   | Weighted            |   |   |   |   |   | Weighted |   |
|                                              |   |            |         |   | Average             |   |   |   |   |   | Average |   |
|                                              |   | Shares          |         |   | Exercise      Price |   |   | Shares |   |   | Exercise      Price |   |
|                                              |   |            |         |   |                |   |   |   |   |   |   |   |
| Outstanding      at beginning of year             |   |            | 57,446       |   |                | $      | 12.35 |   |   |   | 60,753 |   |   | $ | 12.34 |   |
| Granted                                           |   |            | -            |   |                |   | - |   |   |   | - |   |   |   | - |   |
| Exercised                                         |   |            | -            |   |                |   | - |   |   |   | - |   |   |   | - |   |
| Expired                                           |   |            | -            |   |                |   | - |   |   |   | - |   |   |   | - |   |
| Outstanding      at end of period                 |   |            | 57,446       |   |                | $      | 12.35 |   |   |   | 60,753 |   |   | $ | 12.34 |   |
| Options      exercisable                          |   |            | 13,346       |   |                |   |   |   |   |   | 5,628 |   |   |   |   |   |
| Weighted-average      remaining contractual life  |   | 3.97      years |         |   |                |   |   |   | 4.98      years |   |   |   |   |   |
| Aggregate      intrinsic value                    |   | $               | 109,000      |   |                |   |   |   |   | $ | 31,000 |   |   |   |   |   |
| Intrinsic value of      options exercisable  |   | $          |  20,787 |   |                |   |   |   |   | $  |  - |   |   |   |   |   |

----

Index

|                                                 |   | March      31, 2008    |       |
|------------------------------------------------------|--------|------------------------|------------|
|                                                 |   |                   |       |   | Gross |   |   | Gross |   |
|                                                 |   | Fair                   |       |   | Unrealized |   |   | Unrealized |   |
|                                                 |   | Value                  |       |   | Holding      Gains |   |   | Holding      Losses |   |
|                                                 |   |                   |       |   |   |   |   |   |   |
| U.S.      government-sponsored agencies              |   | $                 | 43,393,000 |   |   | $  | 731,000 |   |   | $  | 47,000 |   |
| Obligations      of state and political subdivisions |   |                   | 4,014,000  |   |   |   | 19,000 |   |   |   | 30,000 |   |
| Mortgage-backed      securities                      |   |                   | 39,593,000 |   |   |   | 502,000 |   |   |   | 22,000 |   |
| Other      securities                                |   |                   | 1,242,000  |   |   |   | - |   |   |   | 20,000 |   |
|                                                 |   | $                      | 88,242,000 |   |   | $ | 1,252,000 |   |   | $ | 119,000 |   |
|                                                 |   |                   |       |   |   |   |   |   |   |   |   |   |
|                                                 |   | December      31, 2007 |       |
|                                                 |   |                   |       |   |   | Gross |   |   | Gross |   |
|                                                 |   | Fair                   |       |   | Unrealized |   |   | Unrealized |   |
|                                                 |   | Value                  |       |   | Holding      Gains |   |   | Holding      Losses |   |
|                                                 |   |                   |       |   |   |   |   |   |   |   |   |   |
| U.S.      government-sponsored agencies              |   | $                      | 35,693,000 |   |   | $ | 495,000 |   |   | $ | 4,000 |   |
| Obligations      of state and political subdivisions |   |                   | 2,903,000  |   |   |   | 2,000 |   |   |   | 29,000 |   |
| Mortgage-backed      securities                      |   |                   | 37,131,000 |   |   |   | 205,000 |   |   |   | 205,000 |   |
| Other      securities                                |   |                   | 1,230,000  |   |   |   | - |   |   |   | 17,000 |   |
|                                                 |   | $                      | 76,957,000 |   |   | $ | 702,000 |   |   | $ | 255,000 |   |

|                                                 |   | March      31, 2008    |       |
|------------------------------------------------------|--------|------------------------|------------|
|                                                 |   |                   |       |   | Gross |   |   | Gross |   |   |   |   |
|                                                 |   | Carrying               |       |   | Unrecognized |   |   | Unrecognized |   |   | Fair |   |
|                                                 |   | Value                  |       |   | Holding      Gains |   |   | Holding      Losses |   |   | Value |   |
|                                                 |   |                   |       |   |   |   |   |   |   |   |   |   |
| U.S.      Treasury securities                        |   | $                      | 500,000    |   |   | $ | 10,000 |   |   | $ | - |   |   | $ | 510,000 |   |
| U.S.      government-sponsored agencies              |   |                   | 8,583,000  |   |   |   | 225,000 |   |   |   | - |   |   |   | 8,808,000 |   |
| Obligations      of state and political subdivisions |   |                   | 22,855,000 |   |   |   | 367,000 |   |   |   | 69,000 |   |   |   | 23,153,000 |   |
| Mortgage-backed      securities                      |   |                   | 5,472,000  |   |   |   | 89,000 |   |   |   | 4,000 |   |   |   | 5,557,000 |   |
|                                                 |   | $                      | 37,410,000 |   |   | $ | 691,000 |   |   | $ | 73,000 |   |   | $ | 38,028,000 |   |
|                                                 |   |                   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                 |   | December      31, 2007 |       |
|                                                 |   |                   |       |   |   | Gross |   |   | Gross |   |   |   |   |   |
|                                                 |   | Carrying               |       |   | Unrecognized |   |   | Unrecognized |   |   | Fair |   |
|                                                 |   | Value                  |       |   | Holding      Gains |   |   | Holding      Losses |   |   | Value |   |
|                                                 |   |                   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| U.S.      Treasury securities                        |   | $                      | 501,000    |   |   | $ | 5,000 |   |   | $ | - |   |   | $ | 506,000 |   |
| U.S.      government-sponsored agencies              |   |                   | 12,331,000 |   |   |   | 135,000 |   |   |   | 1,000 |   |   |   | 12,465,000 |   |
| Obligations      of state and political subdivisions |   |                   | 22,569,000 |   |   |   | 204,000 |   |   |   | 40,000 |   |   |   | 22,733,000 |   |
| Mortgage-backed      securities                      |   |                   | 5,788,000  |   |   |   | 48,000 |   |   |   | 32,000 |   |   |   | 5,804,000 |   |
|                                                 |   | $                      | 41,189,000 |   |   | $ | 392,000 |   |   | $ | 73,000 |   |   | $ | 41,508,000 |   |

----

Index

|                                        |   | March      31, |        |   | December      31, |   |
|---------------------------------------------|--------|----------------|-------------|--------|-------------------|--------|
|                                        |   | 2008           |        |   | 2007              |   |
|                                        |   |           |        |   |              |   |
|                                        |   |           |        |   |              |   |
| Mortgage                                    |   |           |        |   |              |   |
| Residential                                 |   | $              | 43,776,000  |   |              | $      | 44,719,000 |   |
| Commercial                                  |   |           | 214,293,000 |   |              |   | 209,082,000 |   |
| Commercial                                  |   |           | 91,465,000  |   |              |   | 89,845,000 |   |
| Equity                                      |   |           | 19,940,000  |   |              |   | 19,723,000 |   |
| Installment                                 |   |           | 55,777,000  |   |              |   | 56,796,000 |   |
| Other                                       |   |           | 540,000     |   |              |   | 424,000 |   |
| Total      loans                            |   |           | 425,791,000 |   |              |   | 420,589,000 |   |
|                                        |   |           |        |   |              |   |   |   |
| Less:  Deferred      loan fees    |   |           | 434,000     |   |              |   | 442,000 |   |
|         Allowance for loan losses |   |           | 4,571,000   |   |              |   | 4,457,000 |   |
|                                        |   |           | 5,005,000   |   |              |   | 4,899,000 |   |
|                                        |   |           |        |   |              |   |   |   |
| Loans,      net                             |   | $              | 420,786,000 |   |              | $      | 415,690,000 |   |

|                                 |   | Three      Months Ended March 31, |      |
|--------------------------------------|--------|-----------------------------------|-----------|
|                                 |   | 2008                              |      |   | 2007 |   |
|                                 |   |                              |      |   |   |   |   |   |
| Balance,      beginning of period    |   | $                                 | 4,457,000 |   |   | $ | 4,101,000 |   |
| Provision      charged to operations |   |                              | 100,000   |   |   |   | 10,000 |   |
| Recoveries      of loans charged off |   |                              | 18,000    |   |   |   | 1,000 |   |
| Loans      charged off               |   |                              | (4,000    | ) |   |   | (19,000 | ) |
|                                 |   |                              |      |   |   |   |   |   |
| Balance,      end of period          |   | $                                 | 4,571,000 |   |   | $ | 4,093,000 |   |

----

Index

|                                           |   | March      31, |    |   | December      31, |   |
|------------------------------------------------|--------|----------------|---------|--------|-------------------|--------|
|                                           |   | 2008           |    |   | 2007              |   |
|                                           |   |           |    |   |              |   |
| Impaired      loans                            |   |           |    |   |              |   |
| With      related allowance for loan losses    |   | $              | 222,000 |   |              | $      | 222,000 |   |
| Without      related allowance for loan losses |   |           | 138,000 |   |              |   | 233,000 |   |
| Total      impaired loans                      |   | $              | 360,000 |   |              | $      | 455,000 |   |
|                                           |   |           |    |   |              |   |   |   |
| Related      allowance for loan losses         |   | $              | 39,000  |   |              | $      | 39,000 |   |

----

|                                           |   |               |       |   | Fair      Value Measurements at March 31, 2008 Using                  |   |
|------------------------------------------------|--------|--------------------|------------|--------|-----------------------------------------------------------------------|--------|
|                                           |   | March      31,2008 |       |   | Quoted      Prices inActive Markets forIdentical Assets(Level      1) |   |   | SignificantOtherObservableInputs      (Level 2) |   |   | Significant      Unobservable Inputs(Level      3) |   |
| Assets:                                        |   |               |       |   |                                                                  |   |   |   |   |   |   |   |
|   Available      for sale securities |   | $                  | 88,242,000 |   |                                                                  | $      | 1,242,000 |   |   | $ | 87,000,000 |   |   | $ | - |   |

----

Index

----

Index

|                                        |   | Three      Months Ended                                            |   |
|---------------------------------------------|--------|--------------------------------------------------------------------|--------|
|                                        |   | March      31,                                                     |   |
|                                        |   | 2008                                                               |   |   | 2007 |   |
|                                        |   | (Dollars      and shares in thousands,except per share    amounts) |   |
|                                        |   |                                                               |   |   |   |   |   |   |
| Net      income                             |   | $                                                                  | 1,061  |   |   | $ | 1,086 |   |
|                                        |   |                                                               |   |   |   |   |   |   |
| Weighted      average shares                |   |                                                               | 5,311  |   |   |   | 5,270 |   |
| Effect      of dilutive stock options       |   |                                                               | 14     |   |   |   | 44 |   |
| Total      weighted average dilutive shares |   |                                                               | 5,325  |   |   |   | 5,314 |   |
|                                        |   |                                                               |   |   |   |   |   |   |
| Basic      earnings per share               |   | $                                                                  | 0.20   |   |   | $ | 0.21 |   |
| Diluted      earnings per share             |   | $                                                                  | 0.20   |   |   | $ | 0.20 |   |

----

Index

tewa

----

Index

----

Index

----

Index

|                                                                          |   | 2008                        |    | 2007   |
|-------------------------------------------------------------------------------|--------|-----------------------------|---------|--------|
|                                                                          |   |                        |    |   |   |   |   | Average |   |   |   |   |   |   |   | Average |
|                                                                          |   |                        |    |   | Interest |   |   | Rates |   |   |   |   | Interest |   |   | Rates |
|                                                                          |   | Average                     |    |   | Income/ |   |   | Earned/ |   | Average |   |   | Income/ |   |   | Earned/ |
|                                                                          |   | Balance                     |    |   | Expense |   |   | Paid |   | Balance |   |   | Expense |   |   | Paid |
|                                                                          |   | (Dollars      in thousands) |    |
|                                                                          |   |                        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Assets                                                                        |   |                        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                          |   |                        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-earning      assets:                                                 |   |                        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loans      (1) (2)                                                            |   | $                           | 424,449 |   |   | $ | 7,196 |   |   |   | 6.88 | % |   | $ | 372,299 |   |   | $ | 6,570 |   |   |   | 7.16 |  % |
| Taxable      investment securities (1)                                        |   |                        | 95,002  |   |   |   | 1,232 |   |   |   | 5.26 |   |   |   | 90,837 |   |   |   | 1,162 |   |   |   | 5.19 |   |
| Tax-exempt      investment securities (1) (2)                                 |   |                        | 25,698  |   |   |   | 341 |   |   |   | 5.38 |   |   |   | 22,190 |   |   |   | 276 |   |   |   | 5.04 |   |
| Other      interest-earning assets                                            |   |                        | 222     |   |   |   | 6 |   |   |   | 10.96 |   |   |   | 418 |   |   |   | 9 |   |   |   | 8.73 |   |
| Total      interest-earning assets                                            |   |                        | 545,371 |   |   |   | 8,775 |   |   |   | 6.53 |   |   |   | 485,744 |   |   |   | 8,017 |   |   |   | 6.69 |   |
|                                                                          |   |                        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Non-interest-earning      assets:                                             |   |                        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Allowance      for loan losses                                                |   |                        | (4,488  | )      |   |   |   |   |   |   |   |   |   |   | (4,102 | ) |   |   |   |   |   |   |   |   |
| Other      assets                                                             |   |                        | 33,062  |   |   |   |   |   |   |   |   |   |   |   | 33,809 |   |   |   |   |   |   |   |   |   |
| Total      assets                                                             |   | $                           | 573,945 |   |   |   |   |   |   |   |   |   |   | $ | 515,451 |   |   |   |   |   |   |   |   |   |
|                                                                          |   |                        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                          |   |                        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Liabilities      and Stockholders' Equity                                     |   |                        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                          |   |                        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-bearing      liabilities:                                            |   |                        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-bearing      demand deposits                                         |   | $                           | 155,341 |   |   | $ | 870 |   |   |   | 2.27 |  % |   | $ | 119,502 |   |   | $ | 660 |   |   |   | 2.24 |  % |
| Savings      deposits                                                         |   |                        | 36,398  |   |   |   | 69 |   |   |   | 0.77 |   |   |   | 37,037 |   |   |   | 70 |   |   |   | 0.77 |   |
| Time      deposits                                                            |   |                        | 175,882 |   |   |   | 1,971 |   |   |   | 4.54 |   |   |   | 182,399 |   |   |   | 2,030 |   |   |   | 4.51 |   |
| Repurchase      agreements                                                    |   |                        | 16,683  |   |   |   | 143 |   |   |   | 3.48 |   |   |   | 9,185 |   |   |   | 103 |   |   |   | 4.55 |   |
| FHLB      borrowing                                                           |   |                        | 38,958  |   |   |   | 318 |   |   |   | 3.31 |   |   |   | 24,558 |   |   |   | 274 |   |   |   | 4.52 |   |
| Subordinated      debenture                                                   |   |                        | 7,217   |   |   |   | 124 |   |   |   | 6.97 |   |   |   | 7,217 |   |   |   | 122 |   |   |   | 6.86 |   |
| Total      interest-bearing liabilities                                       |   |                        | 430,479 |   |   |   | 3,495 |   |   |   | 3.29 |   |   |   | 379,898 |   |   |   | 3,259 |   |   |   | 3.48 |   |
| Non-interest-bearing      liabilities:                                        |   |                        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Demand      deposits                                                          |   |                        | 97,183  |   |   |   |   |   |   |   |   |   |   |   | 92,902 |   |   |   |   |   |   |   |   |   |
| Other      liabilities                                                        |   |                        | 4,838   |   |   |   |   |   |   |   |   |   |   |   | 4,773 |   |   |   |   |   |   |   |   |   |
| Stockholders'      equity                                                     |   |                        | 41,445  |   |   |   |   |   |   |   |   |   |   |   | 37,878 |   |   |   |   |   |   |   |   |   |
| Total      liabilities and Stockholders' equity                               |   | $                           | 573,945 |   |   |   |   |   |   |   |   |   |   | $ | 515,451 |   |   |   |   |   |   |   |   |   |
|                                                                          |   |                        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      interest income (taxable equivalent basis)                           |   |                        |    |   |   | $ | 5,280 |   |   |   |   |   |   |   |   |   |   | $ | 4,758 |   |   |   |   |   |
| Tax      Equivalent adjustment                                                |   |                        |    |   |   |   | (118 | ) |   |   |   |   |   |   |   |   |   |   | (85 | ) |   |   |   |   |
| Net      interest income                                                      |   |                        |    |   |   |   | 5,162 |   |   |   |   |   |   |   |   |   |   |   | 4,673 |   |   |   |   |   |
|                                                                          |   |                        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      interest spread (taxable equivalent basis)                           |   |                        |    |   |   |   |   |   |   |   | 3.23 |   |   |   |   |   |   |   |   |   |   |   | 3.21 |   |
|                                                                          |   |                        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      yield on interest-earning assets (taxable equivalent basis)      (3) |   |                        |    |   |   |   |   |   |   |   | 3.93 | % |   |   |   |   |   |   |   |   |   |   | 3.97 | % |

----

|   | (1) | For      purpose of these calculations, nonaccruing loans are included in the      average balance.  Fees are included in loan      interest.  Loans and total interest-earning assets are net of      unearned income.  Securities are included at amortized      cost. |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (2) | The      tax equivalent adjustments are based on a marginal tax rate of      34%. |
|--------|-----|-----------------------------------------------------------------------------------|

|   | (3) | Net      interest income (taxable equivalent basis) divided by average      interest-earning assets. |
|--------|-----|------------------------------------------------------------------------------------------------------|

----

Index

----

Index

|                                                  |   | 03/31/08                    |   |   | 12/31/07 |   |   | 09/30/07 |   |   | 06/30/07 |   |
|-------------------------------------------------------|--------|-----------------------------|--------|--------|----------|--------|--------|----------|--------|--------|----------|--------|
|                                                  |   | (Dollars      in Thousands) |   |
| Nonaccrual      loans: (1)                            |   | $                           | 360    |   |     | $      | 455    |     |   | $      | 238      |   |   | $ | 300 |   |
| Loans      past due 90 days or more: (2)              |   |                        | 703    |   |     |   | 26     |     |   |   | 28       |   |   |   | 10 |   |
| Total      nonperforming loans                        |   | $                           | 1,063  |   |     | $      | 481    |     |   | $      | 266      |   |   | $ | 310 |   |
|                                                  |   |                        |   |   |     |   |   |     |   |   |     |   |   |   |   |   |
| Other      real estate owned                          |   | $                           | -      |   |     | $      | -      |     |   | $      | 353      |   |   | $ | 385 |   |
|                                                  |   |                        |   |   |     |   |   |     |   |   |     |   |   |   |   |   |
| Total      nonperforming loans                        |   | $                           | 1,063  |   |     | $      | 481    |     |   | $      | 619      |   |   | $ | 695 |   |
|                                                  |   |                        |   |   |     |   |   |     |   |   |     |   |   |   |   |   |
| Allowance      for loan losses                        |   | $                           | 4,571  |   |     | $      | 4,457  |     |   | $      | 4,249    |   |   | $ | 4,181 |   |
|                                                  |   |                        |   |   |     |   |   |     |   |   |     |   |   |   |   |   |
| Nonaccrual      loans to total loans                  |   |                        | 0.08   | %      |     |   | 0.11   | %        |   |   | 0.06     | %      |   |   | 0.08 | % |
| Nonperforming      loans to total loans               |   |                        | 0.25   | %      |     |   | 0.11   | %        |   |   | 0.07     | %      |   |   | 0.08 | % |
| Nonperforming      loans to total assets              |   |                        | 0.18   | %      |     |   | 0.08   | %        |   |   | 0.05     | %      |   |   | 0.06 | % |
| Nonperforming      assets to total assets             |   |                        | 0.18   | %      |     |   | 0.08   | %        |   |   | 0.11     | %      |   |   | 0.13 | % |
| Allowance      for loan losses to total loans         |   |                        | 1.07   | %      |     |   | 1.06   | %        |   |   | 1.07     | %      |   |   | 1.09 | % |
| Allowance      for loan losses to nonperforming loans |   |                        | 430.13 | %      |     |   | 926.61 | %        |   |   | 1,597.4  | %      |   |   | 1,348.7 | % |

----

Index

----

Index

|                    |   | Required |   |   | Actual |   |   | Excess |   |
|-------------------------|--------|----------|--------|--------|--------|--------|--------|--------|--------|
| Risk-based      Capital |   |     |   |   |   |   |   |   |   |
| Tier      1             |   |     | 4.00   | %      |   |   | 10.74  | %      |   |   | 6.74 | % |
| Total                   |   |     | 8.00   | %      |   |   | 11.76  | %      |   |   | 3.76 | % |
| Leverage      Ratio     |   |     | 4.00   | %      |   |   | 8.42   | %      |   |   | 4.42 | % |

----

Index

uantit

ontr

|   | (a) | Evaluation      of internal controls and procedures. |
|--------|-----|------------------------------------------------------|

|   | (b)  | Management's      Report on Internal Control over Financial  Reporting |
|--------|-----------|------------------------------------------------------------------------|

|   | (c) | Changes      in internal controls. |
|--------|-----|------------------------------------|

----

Index

n

RiskFactors

xhibi

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

----

Index

GNA

| Date:  | May 15, 2008 |   | By:    | /s/ Paul Van Ostenbridge                          |   |
|--------|--------------|--------|--------|---------------------------------------------------|--------|
|   |         |   |   | Paul      Van Ostenbridge                         |   |
|   |         |   |   | President      and Chief Executive Officer        |   |
|   |         |   |   | (authorized      officer on behalf of registrant) |   |
|   |         |   |   |                                              |   |
|   |         |   |   |                                              |   |
|   |         |   |   |                                              |   |
|   |         |   |   |                                              |   |
| Date:  | May 15, 2008 |   | By:    | /s/ Julie E. Holland                              |   |
|   |         |   |   | Julie      E. Holland                             |   |
|   |         |   |   | Senior      Vice President and Treasurer          |   |
|   |         |   |   | (principal      accounting officer)               |   |

----

Index

XHI

| EXHIBITNUMBER |   |  DESCRIPTION                                                                                                                                                                             |
|---------------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|          |   |                                                                                                                                                                                          |
| 31.1          |   | Certification      of Paul Van Ostenbridge required by Rule 13a-14(a) or Rule      15d-14(a)                                                                                                  |
|          |   |                                                                                                                                                                                          |
| 31.2          |   | Certification      of Julie Holland required by Rule 13a-14(a) or Rule    15d-14(a)                                                                                                           |
|          |   |                                                                                                                                                                                          |
| 32.1          |   | Certification      of Paul Van Ostenbridge and Julie Holland required by Rule 13a-14(b) or      Rule 15d-14(b) and Section 906 of the Sarbanes-Oxley Act of 2002, 18      U.S.C. Section 1350 |

----