----

| COMMUNITY      BANCORP. AND SUBSIDIARY                                                          |   |             |        |   |             |   |
|-------------------------------------------------------------------------------------------------|--------|------------------|-------------|--------|------------------|--------|
| Consolidated      Balance Sheets                                                                |   |             |        |   |             |   |
|                                                                                            |   | December      31 |        |   | December      31 |   |
|                                                                                            |   | 2008             |        |   | 2007             |   |
|                                                                                            |   |             |        |   |             |   |
|                                                                                            |   |             |        |   |             |   |
| ASSETS                                                                                          |   |             |        |   |             |   |
|   Cash      and due from banks                                                        |   | $                | 11,236,007  |   |             | $      | 17,486,535 |   |
|   Federal      funds sold and overnight deposits                                      |   |             | 33,621      |   |             |   | 2,785,988 |   |
|      Total      cash and cash equivalents                              |   |             | 11,269,628  |   |             |   | 20,272,523 |   |
|   Securities      held-to-maturity (fair value $38,212,000 at 12/31/08                |   |             |        |   |             |   |   |   |
|    and      $34,273,000 at 12/31/07)                                             |   |             | 37,288,357  |   |             |   | 34,310,833 |   |
|   Securities      available-for-sale                                                  |   |             | 29,449,424  |   |             |   | 46,876,771 |   |
|   Restricted      equity securities, at cost                                          |   |             | 3,906,850   |   |             |   | 3,456,850 |   |
|   Loans      held-for-sale                                                            |   |             | 1,181,844   |   |             |   | 685,876 |   |
|   Loans                                                                               |   |             | 364,811,683 |   |             |   | 355,885,207 |   |
|     Allowance      for loan losses                                          |   |             | (3,232,932  | )      |             |   | (3,026,049 | ) |
|     Unearned      net loan fees                                             |   |             | (301,004    | )      |             |   | (443,372 | ) |
|         Net      loans                                  |   |             | 361,277,747 |   |             |   | 352,415,786 |   |
|   Bank      premises and equipment, net                                               |   |             | 14,989,429  |   |             |   | 16,361,152 |   |
|   Accrued      interest receivable                                                    |   |             | 2,044,550   |   |             |   | 2,304,055 |   |
|   Bank      owned life insurance                                                      |   |             | 3,690,079   |   |             |   | 3,559,376 |   |
|   Core      deposit intangible                                                        |   |             | 3,328,800   |   |             |   | 4,161,000 |   |
|   Goodwill                                                                            |   |             | 11,574,269  |   |             |   | 10,347,455 |   |
|   Other      real estate owned                                                        |   |             | 185,000     |   |             |   | 0 |   |
|   Other      assets                                                                   |   |             | 7,613,255   |   |             |   | 7,279,941 |   |
|         Total      assets                               |   | $                | 487,799,232 |   |             | $      | 502,031,618 |   |
|                                                                                            |   |             |        |   |             |   |   |   |
| LIABILITIES      AND SHAREHOLDERS’ EQUITY                                                 |   |             |        |   |             |   |   |   |
|  LIABILITIES                                                                               |   |             |        |   |             |   |   |   |
|   Deposits:                                                                           |   |             |        |   |             |   |   |   |
|     Demand,      non-interest bearing                                       |   | $                | 50,134,874  |   |             | $      | 64,019,707 |   |
|     NOW      and money market accounts                                      |   |             | 127,500,699 |   |             |   | 120,993,657 |   |
|     Savings                                                                 |   |             | 49,266,879  |   |             |   | 46,069,943 |   |
|     Time      deposits, $100,000 and over                                   |   |             | 56,486,310  |   |             |   | 58,860,374 |   |
|     Other      time deposits                                                |   |             | 118,852,018 |   |             |   | 126,276,429 |   |
|         Total      deposits                             |   |             | 402,240,780 |   |             |   | 416,220,110 |   |
|                                                                                            |   |             |        |   |             |   |   |   |
|   Federal      funds purchased and other borrowed funds                               |   |             | 12,572,000  |   |             |   | 13,760,000 |   |
|   Repurchase      agreements                                                          |   |             | 19,086,456  |   |             |   | 17,444,933 |   |
|   Capital      lease obligations                                                      |   |             | 915,052     |   |             |   | 943,227 |   |
|   Junior      subordinated debentures                                                 |   |             | 12,887,000  |   |             |   | 12,887,000 |   |
|   Accrued      interest and other liabilities                                         |   |             | 4,825,052   |   |             |   | 5,855,988 |   |
|         Total      liabilities                          |   |             | 452,526,340 |   |             |   | 467,111,258 |   |
|                                                                                            |   |             |        |   |             |   |   |   |
| COMMITMENTS      AND CONTINGENT LIABILITIES (Notes 6, 15, 16, 17 and 20)                        |   |
|                                                                                            |   |             |        |   |             |   |   |   |
|  SHAREHOLDERS’      EQUITY                                                           |   |             |        |   |             |   |   |   |
|   Preferred      stock, 1,000,000 shares authorized, 25 shares issued and             |   |             |        |   |             |   |   |   |
|     outstanding      at 12/31/08 and 12/31/07 ($100,000 liquidation value)  |   |             | 2,500,000   |   |             |   | 2,500,000 |   |
|   Common      stock - $2.50 par value; 10,000,000 shares authorized,                  |   |             |        |   |             |   |   |   |
|     4,679,206      shares issued at 12/31/08, and 4,609,268 shares          |   |             |        |   |             |   |   |   |
|     issued      at 12/31/07                                                 |   |             | 11,698,015  |   |             |   | 11,523,171 |   |
|   Additional      paid-in capital                                                     |   |             | 25,757,516  |   |             |   | 25,006,439 |   |
|   Accumulated      deficit                                                            |   |             | (2,592,721  | )      |             |   | (1,597,682 | ) |
|   Accumulated      other comprehensive income                                         |   |             | 532,859     |   |             |   | 111,209 |   |
|   Less:      treasury stock, at cost; 210,101 shares at 12/31/08 and      12/31/07    |   |             | (2,622,777  | )      |             |   | (2,622,777 | ) |
|         Total      shareholders' equity                 |   |             | 35,272,892  |   |             |   | 34,920,360 |   |
|         Total      liabilities and shareholders' equity |   | $                | 487,799,232 |   |             | $      | 502,031,618 |   |

----

| COMMUNITY      BANCORP. AND SUBSIDIARY                                                                                  |   |   |       |   |   |   |
|-------------------------------------------------------------------------------------------------------------------------|--------|--------|------------|--------|--------|--------|
| Consolidated      Statements of Income                                                                                  |   |   |       |   |   |   |
| For      the Years Ended December 31,                                                                                   |   | 2008   |       |   | 2007   |   |
|                                                                                                                    |   |   |       |   |   |   |
|  Interest      income                                                                                              |   |   |       |   |   |   |
|    Interest      and fees on loans                                                                       |   | $      | 23,633,127 |   |   | $      | 19,118,655 |   |
|    Interest      on debt securities                                                                      |   |   |       |   |   |   |   |   |
|      Taxable                                                                                   |   |   | 1,463,702  |   |   |   | 877,497 |   |
|      Tax-exempt                                                                                |   |   | 1,740,183  |   |   |   | 1,045,524 |   |
|    Dividends                                                                                             |   |   | 186,304    |   |   |   | 170,001 |   |
|    Interest      on federal funds sold and overnight deposits                                            |   |   | 64,334     |   |   |   | 481,262 |   |
|         Total      interest income                                              |   |   | 27,087,650 |   |   |   | 21,692,939 |   |
|                                                                                                                    |   |   |       |   |   |   |   |   |
|  Interest      expense                                                                                             |   |   |       |   |   |   |   |   |
|    Interest      on deposits                                                                             |   |   | 8,829,141  |   |   |   | 7,974,061 |   |
|    Interest      on federal funds purchased and other borrowed funds                                     |   |   | 434,652    |   |   |   | 91,817 |   |
|    Interest      on repurchase agreements                                                                |   |   | 262,883    |   |   |   | 303,472 |   |
|    Interest      on junior subordinated debentures                                                       |   |   | 976,340    |   |   |   | 121,782 |   |
|         Total      interest expense                                             |   |   | 10,503,016 |   |   |   | 8,491,132 |   |
|                                                                                                                    |   |   |       |   |   |   |   |   |
|     Net      interest income                                                                        |   |   | 16,584,634 |   |   |   | 13,201,807 |   |
|     Provision      for loan losses                                                                  |   |   | 499,163    |   |   |   | 147,500 |   |
|         Net      interest income after provision for loan losses                |   |   | 16,085,471 |   |   |   | 13,054,307 |   |
|                                                                                                                    |   |   |       |   |   |   |   |   |
|  Non-interest      income                                                                                          |   |   |       |   |   |   |   |   |
|    Service      fees                                                                                     |   |   | 2,176,123  |   |   |   | 1,417,067 |   |
|    Income      on bank owned life insurance                                                              |   |   | 130,703    |   |   |   | 0 |   |
|    Other      income                                                                                     |   |   | 1,729,499  |   |   |   | 2,030,745 |   |
|         Total      non-interest income                                          |   |   | 4,036,325  |   |   |   | 3,447,812 |   |
|                                                                                                                    |   |   |       |   |   |   |   |   |
|  Non-interest      expense                                                                                         |   |   |       |   |   |   |   |   |
|    Salaries      and wages                                                                               |   |   | 5,899,851  |   |   |   | 4,525,000 |   |
|    Employee      benefits                                                                                |   |   | 2,325,363  |   |   |   | 1,794,175 |   |
|    Occupancy      expenses, net                                                                          |   |   | 3,234,601  |   |   |   | 2,303,417 |   |
|    Write      down of Fannie Mae preferred stock                                                         |   |   | 739,332    |   |   |   | 0 |   |
|    Amortization      of core deposit intangible                                                          |   |   | 832,200    |   |   |   | 0 |   |
|    Other      expenses                                                                                   |   |   | 5,213,725  |   |   |   | 3,853,442 |   |
|         Total      non-interest expense                                         |   |   | 18,245,072 |   |   |   | 12,476,034 |   |
|                                                                                                                    |   |   |       |   |   |   |   |   |
|     Income      before income taxes                                                                 |   |   | 1,876,724  |   |   |   | 4,026,085 |   |
|     Income      tax (benefit) expense                                                               |   |   | (324,622   | )      |   |   | 668,755 |   |
|         Net      Income                                                         |   | $      | 2,201,346  |   |   | $      | 3,357,330 |   |
|                                                                                                                    |   |   |       |   |   |   |   |   |
|  Earnings      per common share                                                                                    |   | $      | 0.46       |   |   | $      | 0.77 |   |
|                                                                                                                    |   |   |       |   |   |   |   |   |
|  Weighted      average number of common shares                                                                     |   |   |       |   |   |   |   |   |
|   used      in computing earnings per share                                                                   |   |   | 4,430,657  |   |   |   | 4,365,378 |   |
|                                                                                                                    |   |   |       |   |   |   |   |   |
|  Dividends      declared per common share                                                                          |   | $      | 0.68       |   |   | $      | 0.67 |   |
|                                                                                                                    |   |   |       |   |   |   |   |   |
|  Book      value per share on common shares outstanding at December    31,                                         |   | $      | 7.33       |   |   | $      | 7.37 |   |
|                                                                                                                    |   |   |       |   |   |   |   |   |
| All      share and per share data for prior periods restated to reflect a 5% stock      dividend declared in June 2007. |   |

----

| COMMUNITY      BANCORP. AND SUBSIDIARY                       |   |
|--------------------------------------------------------------|--------|
| CONSOLIDATED      STATEMENTS OF SHAREHOLDERS' EQUITY         |   |
| Years      Ended December 31, 2008 and 2007                  |   |
|                                                         |   |
|                                                         |   | ---Common      Stock--- |   |   | ---Preferred      Stock--- |   |
|                                                         |   | Shares |   |   | Amount |   |   | Shares |   |   | Amount |   |
|                                                         |   |   |   |   |   |   |   |   |   |   |   |   |
| Balances,      December 31, 2006                             |   |   | 4,130,109 |   |   | $ | 10,849,048 |   |   |   | 0 |   |   | $ | 0 |   |
|                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Comprehensive      income, net of taxes                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      income                                              |   |   | 0 |   |   |   | 0 |   |   |   | 0 |   |   |   | 0 |   |
| Net      unrealized holding gain on securities               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| available-for-sale,      net of tax, $196,723                |   |   | 0 |   |   |   | 0 |   |   |   | 0 |   |   |   | 0 |   |
|                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total      comprehensive income                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance      of preferred stock                             |   |   | 0 |   |   |   | 0 |   |   |   | 25 |   |   |   | 2,500,000 |   |
| Cash      dividends declared                                 |   |   | 0 |   |   |   | 0 |   |   |   | 0 |   |   |   | 0 |   |
| 5%      stock dividend                                       |   |   | 207,252 |   |   |   | 518,130 |   |   |   | 0 |   |   |   | 0 |   |
| Issuance      of common stock                                |   |   | 62,397 |   |   |   | 155,993 |   |   |   | 0 |   |   |   | 0 |   |
| Purchase      of treasury stock (fractional shares redeemed) |   |   | (591 | ) |   |   | 0 |   |   |   | 0 |   |   |   | 0 |   |
|                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balances,      December 31, 2007                             |   |   | 4,399,167 |   |   |   | 11,523,171 |   |   |   | 25 |   |   |   | 2,500,000 |   |
|                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Comprehensive      income, net of taxes                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      income                                              |   |   | 0 |   |   |   | 0 |   |   |   | 0 |   |   |   | 0 |   |
| Net      unrealized holding gain on securities               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| available-for-sale,      net of tax, $217,212                |   |   | 0 |   |   |   | 0 |   |   |   | 0 |   |   |   | 0 |   |
|                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total      comprehensive income                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash      dividends declared – common stock            |   |   | 0 |   |   |   | 0 |   |   |   | 0 |   |   |   | 0 |   |
| Cash      dividends declared – preferred stock         |   |   | 0 |   |   |   | 0 |   |   |   | 0 |   |   |   | 0 |   |
| Issuance      of common stock                           |   |   | 69,938 |   |   |   | 174,844 |   |   |   | 0 |   |   |   | 0 |   |
|                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balances,      December 31, 2008                             |   |   | 4,469,105 |   |   | $ | 11,698,015 |   |   |   | 25 |   |   | $ | 2,500,000 |   |
|                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

|       |       |   |         |   |       |               |   |   |     |   |   |          |       |
|------------|------------|--------|--------------|--------|------------|--------------------|--------|--------|----------|--------|--------|---------------|------------|
|       |       |   |         |   |       |               |   |   |     |   |   |          |       |
|       |       |   | Retained     |   |       | Accumulated        |   |   |     |   |   |          |       |
| Additional |       |   | earnings     |   |       | other              |   |   |     |   |   | Total         |       |
| paid-in    |       |   | (Accumulated |   |       | comprehensive      |   |   | Treasury |   |   | shareholders' |       |
| Capital    |       |   | deficit)     |   |       | income      (loss) |   |   | stock    |   |   | equity        |       |
|       |       |   |         |   |       |               |   |   |     |   |   |          |       |
| $          | 22,006,492 |   |         | $      | 760,667    |               |   | $      | (270,664 | )      |   | $             | (2,614,732 | ) |   | $ | 30,730,811 |   |
|       |       |   |         |   |       |               |   |   |     |   |   |          |       |   |   |   |   |   |
|       |       |   |         |   |       |               |   |   |     |   |   |          |       |   |   |   |   |   |
|       | 0          |   |         |   | 3,357,330  |               |   |   | 0        |   |   |          | 0          |   |   |   | 3,357,330 |   |
|       |       |   |         |   |       |               |   |   |     |   |   |          |       |   |   |   |   |   |
|       | 0          |   |         |   | 0          |               |   |   | 381,873  |   |   |          | 0          |   |   |   | 381,873 |   |
|       |       |   |         |   |       |               |   |   |     |   |   |          |       |   |   |   |   |   |
|       |       |   |         |   |       |               |   |   |     |   |   |          |       |   |   |   | 3,739,203 |   |
|       |       |   |         |   |       |               |   |   |     |   |   |          |       |   |   |   |   |   |
|       | 0          |   |         |   | 0          |               |   |   | 0        |   |   |          | 0          |   |   |   | 2,500,000 |   |
|       | 0          |   |         |   | (2,894,359 | )                  |   |   | 0        |   |   |          | 0          |   |   |   | (2,894,359 | ) |
|       | 2,303,190  |   |         |   | (2,821,320 | )                  |   |   | 0        |   |   |          | 0          |   |   |   | 0 |   |
|       | 696,757    |   |         |   | 0          |               |   |   | 0        |   |   |          | 0          |   |   |   | 852,750 |   |
|       | 0          |   |         |   | 0          |               |   |   | 0        |   |   |          | (8,045     | ) |   |   | (8,045 | ) |
|       |       |   |         |   |       |               |   |   |     |   |   |          |       |   |   |   |   |   |
|       | 25,006,439 |   |         |   | (1,597,682 | )                  |   |   | 111,209  |   |   |          | (2,622,777 | ) |   |   | 34,920,360 |   |
|       |       |   |         |   |       |               |   |   |     |   |   |          |       |   |   |   |   |   |
|       |       |   |         |   |       |               |   |   |     |   |   |          |       |   |   |   |   |   |
|       | 0          |   |         |   | 2,201,346  |               |   |   | 0        |   |   |          | 0          |   |   |   | 2,201,346 |   |
|       |       |   |         |   |       |               |   |   |     |   |   |          |       |   |   |   |   |   |
|       | 0          |   |         |   | 0          |               |   |   | 421,650  |   |   |          | 0          |   |   |   | 421,650 |   |
|       |       |   |         |   |       |               |   |   |     |   |   |          |       |   |   |   |   |   |
|       |       |   |         |   |       |               |   |   |     |   |   |          |       |   |   |   | 2,622,996 |   |
|       |       |   |         |   |       |               |   |   |     |   |   |          |       |   |   |   |   |   |
|       | 0          |   |         |   | (3,008,885 | )                  |   |   | 0        |   |   |          | 0          |   |   |   | (3,008,885 | ) |
|       | 0          |   |         |   | (187,500   | )                  |   |   | 0        |   |   |          | 0          |   |   |   | (187,500 | ) |
|       | 751,077    |   |         |   | 0          |               |   |   | 0        |   |   |          | 0          |   |   |   | 925,921 |   |
|       |       |   |         |   |       |               |   |   |     |   |   |          |       |   |   |   |   |   |
| $          | 25,757,516 |   |         | $      | (2,592,721 | )                  |   | $      | 532,859  |   |   | $             | (2,622,777 | ) |   | $ | 35,272,892 |   |
|       |       |   |         |   |       |               |   |   |     |   |   |          |       |   |   |   |   |   |

----

| COMMUNITY BANCORP. ANDSUBSIDIARY                                                                      |   |   |        |   |   |   |
|-------------------------------------------------------------------------------------------------------|--------|--------|-------------|--------|--------|--------|
| Consolidated      Statements of Cash Flows                                                            |   |   |        |   |   |   |
| For      the Years Ended December 31,                                                                 |   | 2008   |        |   | 2007   |   |
|                                                                                                  |   |   |        |   |   |   |
| CASH      FLOWS FROM OPERATING ACTIVITIES:                                                            |   |   |        |   |   |   |
|   Net      Income                                                                           |   | $      | 2,201,346   |   |   | $      | 3,357,330 |   |
| Adjustments      to Reconcile Net Income to Net Cash Provided by Operating      Activities:           |   |
|   Depreciation      and amortization                                                        |   |   | 1,131,854   |   |   |   | 936,847 |   |
|   Provision      for loan losses                                                            |   |   | 499,163     |   |   |   | 147,500 |   |
|   Deferred      income taxes                                                                |   |   | (798,728    | )      |   |   | (33,081 | ) |
|   Net      gain on sale of loans                                                            |   |   | (317,598    | )      |   |   | (300,119 | ) |
|   Loss      on sale or disposal of fixed assets                                             |   |   | 36,173      |   |   |   | 13,127 |   |
|   Gain      on Trust LLC                                                                    |   |   | (983        | )      |   |   | (108,009 | ) |
|   Amortization      (accretion) of bond premium (discount), net                             |   |   | (51,943     | )      |   |   | 15,925 |   |
|   Writedown      of Fannie Mae preferred stock                                              |   |   | 739,332     |   |   |   | 0 |   |
|   Proceeds      from sales of loans held for sale                                           |   |   | 27,211,457  |   |   |   | 28,146,040 |   |
|   Originations      of loans held for sale                                                  |   |   | (27,389,827 | )      |   |   | (27,965,497 | ) |
|   Decrease      in taxes payable                                                            |   |   | (321,735    | )      |   |   | (98,164 | ) |
|   Decrease      (increase) in interest receivable                                           |   |   | 259,505     |   |   |   | (115,230 | ) |
|   Decrease      (increase) in mortgage servicing rights                                     |   |   | 30,055      |   |   |   | (73,211 | ) |
|   Decrease      (increase) in other assets                                                  |   |   | 592,063     |   |   |   | (751,035 | ) |
|   Increase      in bank owned life insurance                                                |   |   | (130,703    | )      |   |   | 0 |   |
|   Amortization      of core deposit intangible                                              |   |   | 832,200     |   |   |   | 0 |   |
|   Amortization      of limited partnerships                                                 |   |   | 371,084     |   |   |   | 381,588 |   |
|   Decrease      in unamortized loan fees                                                    |   |   | (142,368    | )      |   |   | (188,733 | ) |
|   Decrease      in interest payable                                                         |   |   | (43,381     | )      |   |   | (53,682 | ) |
|   Increase      (decrease) in accrued expenses                                              |   |   | 146,295     |   |   |   | (40,657 | ) |
|   (Decrease)      increase in other liabilities                                             |   |   | (2,570,895  | )      |   |   | 65,027 |   |
|      Net      cash provided by operating activities                          |   |   | 2,282,366   |   |   |   | 3,335,966 |   |
|                                                                                                  |   |   |        |   |   |   |   |   |
| CASH      FLOWS FROM INVESTING ACTIVITIES:                                                            |   |   |        |   |   |   |   |   |
|   Investments      - held to maturity                                                       |   |   |        |   |   |   |   |   |
|     Maturities      and paydowns                                                  |   |   | 36,362,788  |   |   |   | 23,897,224 |   |
|     Purchases                                                                     |   |   | (39,340,313 | )      |   |   | (37,138,191 | ) |
|   Investments      - available for sale                                                     |   |   |        |   |   |   |   |   |
|     Maturities,      calls, sales and paydowns                                    |   |   | 17,802,162  |   |   |   | 6,000,000 |   |
|     Purchases                                                                     |   |   | (1,079,688  | )      |   |   | (6,160,000 | ) |
|   (Purchase      of) proceeds from restricted equity securities                             |   |   | (450,000    | )      |   |   | 378,100 |   |
|   Investment      in Capital Trust                                                          |   |   | 0           |   |   |   | (387,000 | ) |
|   Decrease      in limited partnership contributions payable                                |   |   | 0           |   |   |   | (236,094 | ) |
|   Investments      in limited partnership                                                   |   |   | (5,000      | )      |   |   | (264,800 | ) |
|   (Increase)      decrease in loans, net                                                    |   |   | (9,514,092  | )      |   |   | 8,283,286 |   |
|   Capital      expenditures, net of proceeds from sales of bank premises and      equipment |   |   | 651,776     |   |   |   | (617,587 | ) |
|   Cash      paid for LyndonBank, net of cash received                                       |   |   | 0           |   |   |   | (14,638,059 | ) |
|   Recoveries      of loans charged off                                                      |   |   | 110,336     |   |   |   | 70,945 |   |
|      Net      cash provided by (used in) investing activities                |   |   | 4,537,969   |   |   |   | (20,812,176 | ) |
|                                                                                                  |   |   |        |   |   |   |   |   |
|  CASH      FLOWS FROM FINANCING ACTIVITIES:                                                      |   |   |        |   |   |   |   |   |
|   Net      (decrease) increase in demand, NOW, money market and savings      accounts       |   |   | (4,180,855  | )      |   |   | 7,096,201 |   |
|   Net      decrease in time deposits                                                        |   |   | (9,798,475  | )      |   |   | (1,989,977 | ) |
|   Net      increase (decrease) in repurchase agreements                                     |   |   | 1,641,523   |   |   |   | (5,908,924 | ) |
|   Net      increase in short-term borrowings                                                |   |   | 6,812,000   |   |   |   | 5,750,000 |   |
|   Repayments      on long-term borrowings                                                   |   |   | (8,000,000  | )      |   |   | (30,000 | ) |
|   Proceeds      from issuance of junior subordinated debentures                             |   |   | 0           |   |   |   | 12,887,000 |   |
|   Proceeds      from issuance of preferred stock                                            |   |   | 0           |   |   |   | 2,500,000 |   |
|   Decrease      in capital lease obligations                                                |   |   | (28,175     | )      |   |   | 0 |   |
|   Dividends      paid on preferred stock                                                    |   |   | (187,500    | )      |   |   | 0 |   |
|   Payments      to acquire treasury stock                                                   |   |   | 0           |   |   |   | (8,045 | ) |
|   Dividends      paid on common stock                                                       |   |   | (2,081,748  | )      |   |   | (2,014,132 | ) |
|      Net      cash (used in) provided by financing activities                |   |   | (15,823,230 | )      |   |   | 18,282,123 |   |

|                                                                                    |   | 2008   |       |   | 2007   |   |
|-----------------------------------------------------------------------------------------|--------|--------|------------|--------|--------|--------|
|                                                                                    |   |   |       |   |   |   |
|      Net      (decrease) increase in cash and cash equivalents |   |   | (9,002,895 | )      |   |   | 805,913 |   |
|   Cash      and cash equivalents:                                             |   |   |       |   |   |   |   |   |
|           Beginning                   |   |   | 20,272,523 |   |   |   | 19,466,610 |   |
|           Ending                      |   | $      | 11,269,628 |   |   | $      | 20,272,523 |   |
|                                                                                    |   |   |       |   |   |   |   |   |
|  SUPPLEMENTAL      SCHEDULE OF CASH PAID DURING THE YEAR                           |   |   |       |   |   |   |   |   |
|   Interest                                                                    |   | $      | 11,378,597 |   |   | $      | 8,666,596 |   |
|   Income      taxes                                                           |   | $      | 755,000    |   |   | $      | 800,000 |   |
|                                                                                    |   |   |       |   |   |   |   |   |
|  SUPPLEMENTAL      SCHEDULE OF NONCASH INVESTING AND                               |   |   |       |   |   |   |   |   |
|   FINANCING      ACTIVITIES:                                                  |   |   |       |   |   |   |   |   |
|   Change      in unrealized gain on securities available-for-sale             |   | $      | 638,862    |   |   | $      | 578,596 |   |
|                                                                                    |   |   |       |   |   |   |   |   |
|   Other      real estate owned acquired in settlement of loans                |   | $      | 185,000    |   |   | $      | 0 |   |
|                                                                                    |   |   |       |   |   |   |   |   |
|   Fair      value adjustment of Fannie Mae preferred stock                    |   | $      | 656,347    |   |   | $      | 0 |   |
|                                                                                    |   |   |       |   |   |   |   |   |
|   Fair      value adjustment on acquired bank premises and equipment          |   | $      | 452,535    |   |   | $      | 0 |   |
|                                                                                    |   |   |       |   |   |   |   |   |
|   Investments      in limited partnership                                     |   |   |       |   |   |   |   |   |
|     Increase      in limited partnerships                           |   | $      | (1,462,000 | )      |   | $      | (264,800 | ) |
|     Decrease      (increase) in contributions payable               |   | $      | 1,457,000  |   |   | $      | (236,094 | ) |
|                                                                                    |   | $      | (5,000     | )      |   | $      | (500,894 | ) |
|                                                                                    |   |   |       |   |   |   |   |   |
|  Common      Shares Dividends Paid                                                 |   |   |       |   |   |   |   |   |
|   Dividends      declared                                                     |   | $      | 3,008,885  |   |   | $      | 2,894,359 |   |
|   Increase      in dividends payable attributable to dividends declared       |   |   | (1,216     | )      |   |   | (27,477 | ) |
|   Dividends      reinvested                                                   |   |   | (925,921   | )      |   |   | (852,750 | ) |
|                                                                                    |   | $      | 2,081,748  |   |   | $      | 2,014,132 |   |
|                                                                                    |   |   |       |   |   |   |   |   |
|   Stock      Dividend                                                         |   | $      | 0          |   |   | $      | 2,821,320 |   |

----

----

----

----

----

----

|                                                                                  |   | 2008   |      |   | 2007   |   |
|---------------------------------------------------------------------------------------|--------|--------|-----------|--------|--------|--------|
|                                                                                  |   |   |      |   |   |   |
| Net      income before write down of Fannie Mae preferred stock                       |   | $      | 2,689,305 |   |   | $      | 3,357,330 |   |
|   and      tax effect thereof                                               |   |   |      |   |   |   |   |   |
| Realized      loss on write down of Fannie Mae preferred stock                        |   |   | 739,332   |   |   |   | 0 |   |
|   Tax      effect                                                           |   |   | (251,373  | )      |   |   | 0 |   |
|     Net      income after realized loss                           |   |   | 2,201,346 |   |   |   | 3,357,330 |   |
|                                                                                  |   |   |      |   |   |   |   |   |
| Other      comprehensive income, net of tax:                                          |   |   |      |   |   |   |   |   |
|     Change      in unrealized holding gains on available-         |   |   |      |   |   |   |   |   |
|      for-sale      securities arising during the period      |   |   | 638,862   |   |   |   | 578,596 |   |
|        Tax      effect                             |   |   | (217,212  | )      |   |   | (196,723 | ) |
|        Other      comprehensive income, net of tax |   |   | 421,650   |   |   |   | 381,873 |   |
|      Total      comprehensive income                         |   | $      | 2,622,996 |   |   | $      | 3,739,203 |   |

----

|                                                              |   | 2008   |      |   | 2007   |   |
|-------------------------------------------------------------------|--------|--------|-----------|--------|--------|--------|
|                                                              |   |   |      |   |   |   |
| Net      income, as reported                                      |   | $      | 2,201,346 |   |   | $      | 3,357,330 |   |
| Less:      dividends to preferred shareholders                    |   |   | 187,500   |   |   |   | 0 |   |
| Net      income available to common shareholders                  |   | $      | 2,013,846 |   |   | $      | 3,357,330 |   |
|                                                              |   |   |      |   |   |   |   |   |
| Weighted      average number of common shares used in calculating |   |   |      |   |   |   |   |   |
|  earnings      per share                                     |   |   | 4,430,657 |   |   |   | 4,365,378 |   |
| Earnings      per common share                                    |   | $      | 0.46      |   |   | $      | 0.77 |   |

----

----

|                                                  |   |      |       |   | Gross      |   |    | Gross      |   |   |    |   |
|-------------------------------------------------------|--------|-----------|------------|--------|------------|--------|---------|------------|--------|--------|---------|--------|
|                                                  |   | Amortized |       |   | Unrealized |   |    | Unrealized |   |   | Fair    |   |
| Securities      AFS                                   |   | Cost      |       |   | Gains      |   |    | Losses     |   |   | Value   |   |
|                                                  |   |      |       |   |       |   |    |       |   |   |    |   |
| December      31, 2008                                |   |      |       |   |       |   |    |       |   |   |    |   |
| U.      S. Government sponsored enterprise securities |   | $         | 8,172,304  |   |       | $      | 274,452 |       |   | $      | 0       |   |   | $ | 8,446,756 |   |
| U.      S. Government securities                      |   |      | 4,047,338  |   |       |   | 152,975 |       |   |   | 0       |   |   |   | 4,200,313 |   |
| States      and political subdivisions                |   |      | 1,142,876  |   |       |   | 20,012  |       |   |   | 0       |   |   |   | 1,162,888 |   |
| Mortgage-backed      securities                       |   |      | 15,116,934 |   |       |   | 491,129 |       |   |   | 7,140   |   |   |   | 15,600,923 |   |
| Preferred      stock                                  |   |      | 162,610    |   |       |   | 0       |       |   |   | 124,066 |   |   |   | 38,544 |   |
|                                                  |   | $         | 28,642,062 |   |       | $      | 938,568 |       |   | $      | 131,206 |   |   | $ | 29,449,424 |   |
|                                                  |   |      |       |   |       |   |    |       |   |   |    |   |   |   |   |   |
| December      31, 2007                                |   |      |       |   |       |   |    |       |   |   |    |   |   |   |   |   |
| U.      S. Government sponsored enterprise securities |   | $         | 22,170,488 |   |       | $      | 125,655 |       |   | $      | 29,869  |   |   | $ | 22,266,274 |   |
| U.      S. Government securities                      |   |      | 3,973,849  |   |       |   | 72,713  |       |   |   | 0       |   |   |   | 4,046,562 |   |
| States      and political subdivisions                |   |      | 1,157,042  |   |       |   | 0       |       |   |   | 0       |   |   |   | 1,157,042 |   |
| Mortgage-backed      securities                       |   |      | 17,868,386 |   |       |   | 0       |       |   |   | 0       |   |   |   | 17,868,386 |   |
| Preferred      stock                                  |   |      | 1,538,507  |   |       |   | 0       |       |   |   | 0       |   |   |   | 1,538,507 |   |
|                                                  |   | $         | 46,708,272 |   |       | $      | 198,368 |       |   | $      | 29,869  |   |   | $ | 46,876,771 |   |
|                                                  |   |      |       |   |       |   |    |       |   |   |    |   |   |   |   |   |
| Securities      HTM                                   |   |      |       |   |       |   |    |       |   |   |    |   |   |   |   |   |
|                                                  |   |      |       |   |       |   |    |       |   |   |    |   |   |   |   |   |
| December      31, 2008                                |   |      |       |   |       |   |    |       |   |   |    |   |   |   |   |   |
| States      and political subdivisions                |   | $         | 37,288,357 |   |       | $      | 923,643 |       |   | $      | 0       |   |   | $ | 38,212,000 |   |
|                                                  |   |      |       |   |       |   |    |       |   |   |    |   |   |   |   |   |
| December      31, 2007                                |   |      |       |   |       |   |    |       |   |   |    |   |   |   |   |   |
| States      and political subdivisions                |   | $         | 34,310,833 |   |       | $      | 0       |       |   | $      | 37,833  |   |   | $ | 34,273,000 |   |

----

|                            |   | Amortized |       |   | Fair   |   |
|---------------------------------|--------|-----------|------------|--------|--------|--------|
|                            |   | Cost      |       |   | Value  |   |
|                            |   |      |       |   |   |   |
| Due      in one year or less    |   | $         | 6,000,531  |   |   | $      | 6,148,594 |   |
| Due      from one to five years |   |      | 6,219,111  |   |   |   | 6,498,474 |   |
| Due      after ten years        |   |      | 1,142,876  |   |   |   | 1,162,889 |   |
| Mortgage-backed      securities |   |      | 15,116,934 |   |   |   | 15,600,923 |   |
|                            |   | $         | 28,479,452 |   |   | $      | 29,410,880 |   |

|                            |   | Amortized |       |   | Fair   |   |
|---------------------------------|--------|-----------|------------|--------|--------|--------|
|                            |   | Cost      |       |   | Value* |   |
|                            |   |      |       |   |   |   |
| Due      in one year or less    |   | $         | 28,693,461 |   |   | $      | 28,694,000 |   |
| Due      from one to five years |   |      | 3,934,674  |   |   |   | 4,165,000 |   |
| Due      from five to ten years |   |      | 1,414,255  |   |   |   | 1,645,000 |   |
| Due      after ten years        |   |      | 3,245,968  |   |   |   | 3,708,000 |   |
|                            |   | $         | 37,288,357 |   |   | $      | 38,212,000 |   |

| December      31, 2008          |   | Less      than 12 months |    |   | 12      months or more |   |    | Total  |   |
|---------------------------------|--------|--------------------------|---------|--------|------------------------|--------|---------|--------|--------|
|                            |   | Fair                     |    |   | Unrealized             |   |    | Fair   |   |   | Unrealized |   |   | Fair |   |   | Unrealized |   |
|                            |   | Value                    |    |   | Loss                   |   |    | Value  |   |   | Loss |   |   | Value |   |   | Loss |   |
|                            |   |                     |    |   |                   |   |    |   |   |   |   |   |   |   |   |   |   |   |
| Mortgage-backed      securities |   | $                        | 749,010 |   |                   | $      | 7,140   |   |   | $ | 0 |   |   | $ | 0 |   |   | $ | 749,010 |   |   | $ | 7,140 |   |
| Fannie      Mae preferred stock |   |                     | 38,544  |   |                   |   | 124,066 |   |   |   | 0 |   |   |   | 0 |   |   |   | 38,544 |   |   |   | 124,066 |   |
|                            |   | $                        | 787,554 |   |                   | $      | 131,206 |   |   | $ | 0 |   |   | $ | 0 |   |   | $ | 787,554 |   |   | $ | 131,206 |   |

----

| December      31, 2007         |   | Less      than 12 months |       |   | 12      months or more |   |   | Total  |   |
|--------------------------------|--------|--------------------------|------------|--------|------------------------|--------|--------|--------|--------|
|                           |   | Fair                     |       |   | Unrealized             |   |   | Fair   |   |   | Unrealized |   |   | Fair |   |   | Unrealized |   |
|                           |   | Value                    |       |   | Loss                   |   |   | Value  |   |   | Loss |   |   | Value |   |   | Loss |   |
| U.S.      Government sponsored |   |                     |       |   |                   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| enterprise      securities     |   | $                        | 0          |   |                   | $      | 0      |   |   | $ | 8,980,624 |   |   | $ | 29,869 |   |   | $ | 8,980,624 |   |   | $ | 29,869 |   |
| States      and political      |   |                     |       |   |                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| subdivisions                   |   |                     | 34,273,000 |   |                   |   | 37,833 |   |   |   | 0 |   |   |   | 0 |   |   |   | 34,273,000 |   |   |   | 37,833 |   |
|                           |   | $                        | 34,273,000 |   |                   | $      | 37,833 |   |   | $ | 8,980,624 |   |   | $ | 29,869 |   |   | $ | 43,253,624 |   |   | $ | 67,702 |   |

|                                  |   | 2008   |        |   | 2007   |   |
|---------------------------------------|--------|--------|-------------|--------|--------|--------|
|                                  |   |   |        |   |   |   |
| Commercial                            |   | $      | 24,190,792  |   |   | $      | 33,688,910 |   |
| Real      estate – Construction |   |   | 15,203,826  |   |   |   | 15,263,531 |   |
| Real      estate – Mortgage     |   |   | 309,177,362 |   |   |   | 288,013,935 |   |
| Installment      and other            |   |   | 16,239,703  |   |   |   | 18,918,831 |   |
|                                  |   |   | 364,811,683 |   |   |   | 355,885,207 |   |
| Deduct:                               |   |   |        |   |   |   |   |   |
| Allowance      for loan losses        |   |   | 3,232,932   |   |   |   | 3,026,049 |   |
| Unearned      net loan fees           |   |   | 301,004     |   |   |   | 443,372 |   |
|                                  |   |   | 3,469,421   |   |   |   | 3,469,421 |   |
|    Net      Loans      |   | $      | 361,277,747 |   |   | $      | 352,415,786 |   |

----

|                                         |   | 2008   |      |   | 2007   |   |
|----------------------------------------------|--------|--------|-----------|--------|--------|--------|
|                                         |   |   |      |   |   |   |
| Balance      at beginning of year            |   | $      | 1,186,818 |   |   | $      | 1,113,607 |   |
| Mortgage      servicing rights capitalized   |   |   | 218,098   |   |   |   | 290,113 |   |
| Less:                                        |   |   |      |   |   |   |   |   |
| Mortgage      servicing rights amortized     |   |   | 230,196   |   |   |   | 216,902 |   |
| Impairment      of mortgage servicing rights |   |   | 214,610   |   |   |   | 0 |   |
| Balance      at end of year                  |   | $      | 960,110   |   |   | $      | 1,186,818 |   |

----

|                                                   |   | 2008   |      |   | 2007   |   |
|--------------------------------------------------------|--------|--------|-----------|--------|--------|--------|
|                                                   |   |   |      |   |   |   |
| Balance,      beginning of year                        |   | $      | 3,026,049 |   |   | $      | 2,267,821 |   |
| Provision      for loan losses                         |   |   | 499,163   |   |   |   | 147,500 |   |
| Recoveries      of amounts charged off                 |   |   | 110,336   |   |   |   | 70,945 |   |
|                                                   |   |   | 3,635,548 |   |   |   | 2,486,266 |   |
| Amounts      charged off                               |   |   | (402,616  | )      |   |   | (247,390 | ) |
| Allowance      for loan losses acquired through Merger |   |   | 0         |   |   |   | 787,173 |   |
| Balance,      end of year                              |   | $      | 3,232,932 |   |   | $      | 3,026,049 |   |

|                                                |   | 2008   |       |   | 2007   |   |
|-----------------------------------------------------|--------|--------|------------|--------|--------|--------|
|                                                |   |   |       |   |   |   |
| Buildings      and improvements                     |   | $      | 10,944,863 |   |   | $      | 11,710,364 |   |
| Land      and land improvements                     |   |   | 2,706,812  |   |   |   | 2,546,615 |   |
| Furniture      and equipment                        |   |   | 5,966,673  |   |   |   | 6,208,835 |   |
| Leasehold      improvements                         |   |   | 1,267,766  |   |   |   | 1,196,525 |   |
| Capital      leases                                 |   |   | 927,889    |   |   |   | 927,889 |   |
| Other      prepaid assets                           |   |   | 17,014     |   |   |   | 121,295 |   |
|                                                |   |   | 21,831,017 |   |   |   | 22,711,523 |   |
| Less      accumulated depreciation and amortization |   |   | (6,841,588 | )      |   |   | (6,350,371 | ) |
|                                                |   | $      | 14,989,429 |   |   | $      | 16,361,152 |   |

| 2009                    |   | $      | 207,364   |   |
|-------------------------|--------|--------|-----------|--------|
| 2010                    |   |   | 180,822   |   |
| 2011                    |   |   | 162,364   |   |
| 2012                    |   |   | 167,864   |   |
| 2013                    |   |   | 167,864   |   |
| Subsequent      to 2013 |   |   | 342,473   |   |
|                    |   | $      | 1,228,750 |   |

----

| 2009                                             |   | $      | 110,983   |   |
|--------------------------------------------------|--------|--------|-----------|--------|
| 2010                                             |   |   | 110,983   |   |
| 2011                                             |   |   | 113,482   |   |
| 2012                                             |   |   | 116,982   |   |
| 2013                                             |   |   | 116,982   |   |
| Subsequent      to 2013                          |   |   | 888,317   |   |
| Total      minimum lease payments                |   |   | 1,457,729 |   |
| Less      amount representing interest           |   |   | (542,677  | )      |
| Present      value of net minimum lease payments |   | $      | 915,052   |   |

----

| At December 31, 2008                        |   |
|---------------------------------------------|--------|
|                                        |   |   |   |
| Cash      and cash equivalents              |   | $ | 12,052,971 |   |
| FHLBB      Stock                            |   |   | 1,006,700 |   |
| Investments                                 |   |   | 22,885,546 |   |
| Loans,      net                             |   |   | 94,871,768 |   |
| Bank      premises and equipment            |   |   | 3,774,657 |   |
| Prepaid      expenses and other assets      |   |   | 4,773,431 |   |
| Identified      intangible assets           |   |   | 4,161,000 |   |
| Goodwill                                    |   |   | 11,574,269 |   |
| Deposits                                    |   |   | (110,044,422 | ) |
| Borrowings                                  |   |   | (14,269,911 | ) |
| Long-term      debt                         |   |   | (943,227 | ) |
| Accrued      expenses and other liabilities |   |   | (3,124,959 | ) |
| Total      acquisition cost                 |   | $ | 26,717,823 |   |

| 2009                                       |   | $      | 665,760   |   |
|--------------------------------------------|--------|--------|-----------|--------|
| 2010                                       |   |   | 532,608   |   |
| 2011                                       |   |   | 426,086   |   |
| 2012                                       |   |   | 340,869   |   |
| 2013                                       |   |   | 272,695   |   |
| Thereafter                                 |   |   | 1,090,782 |   |
| Total      core deposit intangible expense |   | $      | 3,328,800 |   |

| For      the Year Ended December 31, 2007                                      |   |   |       |
|--------------------------------------------------------------------------------|--------|--------|------------|
|                                                                           |   |   |       |
| Interest      income                                                           |   |   |       |
|   Loans,      including fees                                         |   | $      | 27,056,470 |   |
|   Investment      income                                             |   |   | 4,068,404  |   |
|      Total      interest income                       |   |   | 31,124,874 |   |
|                                                                           |   |   |       |   |
| Interest      expense                                                          |   |   |       |   |
|   Deposits                                                           |   |   | 12,224,430 |   |
|   Other      borrowings                                              |   |   | 2,581,098  |   |
|      Total      interest expense                      |   |   | 14,805,528 |   |
| Net      interest income                                                       |   |   | 16,319,346 |   |
| Provision      for loan losses                                                 |   |   | 197,500    |   |
| Net      interest income after provision for loan losses                       |   |   | 16,121,846 |   |
|                                                                           |   |   |       |   |
| Non-interest      income                                                       |   |   |       |   |
|   Service      charges on deposit accounts                           |   |   | 1,951,901  |   |
|   Securities      gains, net                                         |   |   | 51,449     |   |
|   Increase      in cash surrender value of bank owned life insurance |   |   | 127,555    |   |
|   Other      income                                                  |   |   | 2,497,787  |   |
|      Total      non-interest income                   |   |   | 4,628,692  |   |
| Non-interest      expense                                                      |   |   |       |   |
|   Salaries      and employee benefits                                |   |   | 10,348,493 |   |
|   Occupancy      and equipment expense                               |   |   | 3,649,653  |   |
|   Other      operating expenses                                      |   |   | 6,114,021  |   |
|      Total      non-interest expense                  |   |   | 20,112,167 |   |
| Income      before income taxes                                                |   |   | 638,371    |   |
| Income      tax benefit                                                        |   |   | (465,536   | ) |
|     Net      income                                        |   | $      | 1,103,907  |   |
|                                                                           |   |   |       |   |
| Earnings      per common share                                                 |   | $      | 0.25       |   |
| Weighted      average common shares outstanding                                |   |   | 4,365,378  |   |

----

| 2009       |   | $      | 124,862,408 |   |
|------------|--------|--------|-------------|--------|
| 2010       |   |   | 13,018,222  |   |
| 2011       |   |   | 11,402,773  |   |
| 2012       |   |   | 22,396,627  |   |
| Thereafter |   |   | 3,658,298   |   |
| Total      |   | $      | 175,338,328 |   |

----

|                                                                 |   | 2008   |       |   | 2007   |   |
|----------------------------------------------------------------------|--------|--------|------------|--------|--------|--------|
|                                                                 |   |   |       |   |   |   |
| Long-Term      Borrowings                                            |   |   |       |   |   |   |
| FHLBB      term borrowing, 5.05% fixed rate, due March 28, 2008      |   | $      | 0          |   |   | $      | 8,000,000 |   |
| Community      Investment Program borrowing, 7.67%                   |   |   |       |   |   |   |   |   |
|  fixed      rate, due November 16, 2012                         |   |   | 10,000     |   |   |   | 10,000 |   |
|                                                                 |   |   | 10,000     |   |   |   | 8,010,000 |   |
|                                                                 |   |   |       |   |   |   |   |   |
| Overnight      Borrowings                                            |   |   |       |   |   |   |   |   |
| Federal      funds purchased (FHLBB), 0.375% and 4.10%, respectively |   |   | 12,562,000 |   |   |   | 3,750,000 |   |
| Federal      funds purchased (correspondent bank), 4.50%             |   |   | 0          |   |   |   | 2,000,000 |   |
|                                                                 |   |   | 12,562,000 |   |   |   | 5,750,000 |   |
|                                                                 |   |   |       |   |   |   |   |   |
|      Total      borrowings                  |   | $      | 12,572,000 |   |   | $      | 13,760,000 |   |

----

|                           |   | 2008   |     |   | 2007   |   |
|--------------------------------|--------|--------|----------|--------|--------|--------|
|                           |   |   |     |   |   |   |
| Currently      paid or payable |   | $      | 474,106  |   |   | $      | 701,836 |   |
| Deferred                       |   |   | (798,728 | )      |   |   | (33,081 | ) |
|                           |   | $      | (324,622 | )      |   | $      | 668,755 |   |

|                               |   | 2008   |     |   | 2007   |   |
|------------------------------------|--------|--------|----------|--------|--------|--------|
|                               |   |   |     |   |   |   |
| Computed      expected tax expense |   | $      | 638,086  |   |   | $      | 1,368,869 |   |
| Tax      exempt interest           |   |   | (610,785 | )      |   |   | (355,478 | ) |
| Disallowed      interest           |   |   | 62,443   |   |   |   | 42,170 |   |
| Tax      exempt dividend           |   |   | (16,385  | )      |   |   | 0 |   |
| Partnership      tax credits       |   |   | (402,780 | )      |   |   | (390,965 | ) |
| Other                              |   |   | 4,799    |   |   |   | 4,159 |   |
|                               |   | $      | (324,622 | )      |   | $      | 668,755 |   |

----

|                                       |   | 2008   |     |   | 2007   |   |
|--------------------------------------------|--------|--------|----------|--------|--------|--------|
|                                       |   |   |     |   |   |   |
| Depreciation                               |   | $      | 139,402  |   |   | $      | (32,853 | ) |
| Mortgage      servicing                    |   |   | (77,081  | )      |   |   | 24,892 |   |
| Deferred      compensation                 |   |   | 41,281   |   |   |   | (27,031 | ) |
| Bad      debts                             |   |   | (70,341  | )      |   |   | 9,841 |   |
| Non-accrual      loan interest             |   |   | 16,359   |   |   |   | (7,869 | ) |
| Core      deposit intangible               |   |   | (282,948 | )      |   |   | 0 |   |
| Loan      fair value                       |   |   | (96,919  | )      |   |   | 0 |   |
| Time      deposit fair value               |   |   | (88,400  | )      |   |   | 0 |   |
| Securities      valuation                  |   |   | 146,069  |   |   |   | 0 |   |
| Fannie      Mae preferred stock write down |   |   | (510,414 | )      |   |   | 0 |   |
| Other                                      |   |   | (15,736  | )      |   |   | (61 | ) |
|                                       |   | $      | (798,728 | )      |   | $      | (33,081 | ) |

|                                                                             |   | 2008   |      |   | 2007   |   |
|----------------------------------------------------------------------------------|--------|--------|-----------|--------|--------|--------|
| Components      of the deferred tax asset:                                       |   |   |      |   |   |   |
|   Bad      debts                                                       |   | $      | 925,021   |   |   | $      | 854,680 |   |
|   Nonaccrual      loan interest                                        |   |   | 24,804    |   |   |   | 41,163 |   |
|   Deferred      compensation                                           |   |   | 352,674   |   |   |   | 393,956 |   |
|   Contingent      liability – MPF program                        |   |   | 31,167    |   |   |   | 31,167 |   |
|   Fair      value adjustment on acquired securities available-for-sale |   |   | 454,662   |   |   |   | 341,689 |   |
|   Fannie      Mae preferred stock write down                           |   |   | 251,373   |   |   |   | 0 |   |
|   Accrued      stay on bonuses                                         |   |   | 0         |   |   |   | 44,098 |   |
|   Alternative      minimum tax                                         |   |   | 59,031    |   |   |   | 59,031 |   |
|   Fair      value adjustment on acquired premises & equipment      |   |   | 153,862   |   |   |   | 0 |   |
|   Other                                                                |   |   | 140,711   |   |   |   | 127,411 |   |
|        Total      deferred tax asset          |   |   | 2,393,305 |   |   |   | 1,893,195 |   |
|                                                                             |   |   |      |   |   |   |   |   |
| Components      of the deferred tax liability:                                   |   |   |      |   |   |   |   |   |
|   Depreciation                                                         |   |   | 372,682   |   |   |   | 316,292 |   |
|   Limited      partnerships                                            |   |   | 255,280   |   |   |   | 255,280 |   |
|   Mortgage      servicing rights                                       |   |   | 326,437   |   |   |   | 403,518 |   |
|   Unrealized      gain on securities available-for-sale                |   |   | 274,503   |   |   |   | 57,290 |   |
|   Core      deposit intangible                                         |   |   | 1,131,792 |   |   |   | 1,414,740 |   |
|   Fair      value adjustment on acquired loans                         |   |   | 168,737   |   |   |   | 265,656 |   |
|   Fair      value adjustment on acquired deposits                      |   |   | 150,280   |   |   |   | 238,680 |   |
|   Other                                                                |   |   | 0         |   |   |   | 2,436 |   |
|        Total      deferred tax liability      |   |   | 2,679,711 |   |   |   | 2,953,892 |   |
|         Net      deferred tax liability  |   | $      | (286,406  | )      |   | $      | (1,060,697 | ) |

----

----

|                                                            |   | Contract      or         |       |
|-----------------------------------------------------------------|--------|--------------------------|------------|
|                                                            |   | --Notional      Amount-- |       |
|                                                            |   | 2008                     |       |   | 2007 |   |
|                                                            |   |                     |       |   |   |   |
| Unused      portions of construction lines of credit            |   | $                        | 4,896,780  |   |   | $ | 4,232,061 |   |
| Unused      portions of home equity lines of credit             |   |                     | 14,847,871 |   |   |   | 14,673,608 |   |
| Other      commitments to extend credit                         |   |                     | 25,172,214 |   |   |   | 31,110,697 |   |
| Standby      letters of credit and commercial letters of credit |   |                     | 353,013    |   |   |   | 580,400 |   |
| Recourse      on sale of credit card portfolio                  |   |                     | 940,900    |   |   |   | 1,311,950 |   |
| MPF      credit enhancement obligation, net (See Note 16)       |   |                     | 1,437,570  |   |   |   | 1,280,817 |   |

----

|                                                |   | 2008   |      |   | 2007   |   |
|-----------------------------------------------------|--------|--------|-----------|--------|--------|--------|
|                                                |   |   |      |   |   |   |
| Balance,      beginning                             |   | $      | 3,668,049 |   |   | $      | 1,385,497 |   |
| Loans      to Directors acquired from merger        |   |   | 0         |   |   |   | 137,738 |   |
| Loans      – New Principal Officers/Directors |   |   | 129,050   |   |   |   | 2,795,713 |   |
| New      loans to existing Officers/Directors       |   |   | 467,627   |   |   |   | 500,741 |   |
| Retirement      of Director                         |   |   | 0         |   |   |   | (306,883 | ) |
| Repayment*                                          |   |   | (521,895  | )      |   |   | (844,757 | ) |
| Balance,      ending                                |   | $      | 3,742,831 |   |   | $      | 3,668,049 |   |
| *Includes      loans sold to secondary market       |   |   |      |   |   |   |   |   |

----

|                                |   | 2008   |   |   | 2007   |   |
|-------------------------------------|--------|--------|--------|--------|--------|--------|
|                                |   |   |   |   |   |   |
| Newport                             |   | $      | 23,570 |   |   | $      | 22,099 |   |
| Lyndonville                         |   |   | 1,979  |   |   |   | 0 |   |
| Barre                               |   |   | 2,460  |   |   |   | 2,375 |   |
|      Total |   | $      | 28,009 |   |   | $      | 24,474 |   |

|                 |   | 2008   |    |   | 2007   |   |
|----------------------|--------|--------|---------|--------|--------|--------|
|                 |   |   |    |   |   |   |
| Management      fees |   | $      | 37,432p |   |   | $      | 37,717 |   |

----

|                                           |    |                    |                    |                   | Minimum            |
|------------------------------------------------|---------|-------------------------|-------------------------|------------------------|--------------------|
|                                           |    |                    |                    |                   | To      Be Well    |
|                                           |    |                    | Minimum                 | Capitalized      Under |
|                                           |    |                    | For      Capital        | Prompt      Corrective |
|                                           | Actual  | Adequacy      Purposes: | Action      Provisions: |
|                                           | Amount  | Ratio              | Amount                  | Ratio                  | Amount             | Ratio |
| As      of December 31, 2008:                  |    |                    |                    |                   |               |   |
| Total      capital (to risk-weighted assets)   |    |                    |                    |                   |               |   |
|    Consolidated                 | $36,765 | 11.04%                  | $26,639                 | 8.0%                   | N/A                | N/A |
|    Bank                         | $37,355 | 11.25%                  | $26,571                 | 8.0%                   | $33,214            | 10.0% |
| Tier      I capital (to risk-weighted assets)  |    |                    |                    |                   |               |   |
|    Consolidated                 | $33,532 | 10.07%                  | $13,319                 | 4.0%                   | N/A                | N/A |
|    Bank                         | $34,122 | 10.27%                  | $13,285                 | 4.0%                   | $19,928            | 6.0% |
| Tier      I capital (to average assets)        |    |                    |                    |                   |               |   |
|    Consolidated                 | $33,532 | 7.08%                   | $18,948                 | 4.0%                   | N/A                | N/A |
|    Bank                         | $34,122 | 7.22%                   | $18,917                 | 4.0%                   | $23,569            | 5.0% |
|                                           |    |                    |                    |                   |               |   |
| As      of December 31, 2007:                  |    |                    |                    |                   |               |   |
| Total      capital (to risk-weighted assets)   |    |                    |                    |                   |               |   |
|    Consolidated*                | $36,975 | 15.48%                  | $19,104                 | 8.0%                   | N/A                | N/A |
|    Community      National Bank | $48,506 | 20.41%                  | $19,013                 | 8.0%                   | $23,766            | 10.0% |
|    Former      LyndonBank       | $13,536 | 12.94%                  | $  8,365      | 8.0%                   | $10,457            | 10.0% |
| Tier      I capital (to risk-weighted assets)  |    |                    |                    |                   |               |   |
|    Consolidated*                | $34,736 | 14.55%                  | $ 9,552            | 4.0%                   | N/A                | N/A |
|    Community      National Bank | $46,267 | 19.47%                  | $ 9,506            | 4.0%                   | $14,260            | 6.0% |
|    Former      LyndonBank       | $12,749 | 12.19%                  | $ 4,183            | 4.0%                   | $  6,274 | 6.0% |
| Tier      I capital (to average assets)        |    |                    |                    |                   |               |   |
|    Consolidated*                | $34,736 | 9.40%                   | $14,785                 | 4.0%                   | N/A                | N/A |
|    Community      National Bank | $46,267 | 12.54%                  | $14,752                 | 4.0%                   | $18,440            | 5.0% |
|    Former      LyndonBank       | $12,749 | 8.26%                   | $  6,153      | 4.0%                   | $  7,691 | 5.0% |

----

| Level      1 | Quoted      prices in active markets for identical assets or      liabilities.  Level 1 assets and liabilities include debt and      equity securities and derivative contracts that are traded in an active      exchange market, as well as U.S. Treasury, other U.S. Government and      agency mortgage-backed debt securities that are highly liquid and are      actively traded in over-the-countermarkets. |
|--------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Level      2 | Observable      inputs other than Level 1 prices such as quoted prices for similar assets      and liabilities; quoted prices in markets that are not active; or other      inputs that are observable or can be corroborated by observable market      data for substantially the full term of the assets or      liabilities.  Level 2 assets and liabilities include debt      securities with quoted prices that are traded less frequently than      exchange-traded instruments and derivative contracts whose value is      determined using a pricing model with inputs that are observable in the      market or can be derived principally from or corroborated by observable      market data.  This category generally includes certain      derivative contracts, residential mortgage servicing rights, and impaired      loans. |
|--------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| Level      3 | Unobservable      inputs that are supported by little or no market activity and that are      significant to the fair value of the assets or      liabilities.  Level 3 assets and liabilities include financial      instruments whose value is determined using pricing models, discounted      cash flow methodologies, or similar techniques, as well as instruments for      which the determination of fair value requires significant management      judgment or estimation.  For example, this category generally      includes certain private equity investments, retained residual interest in      securitizations, and highly-structured or long-term derivative      contracts. |
|--------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                               |   | Level      1 |      |   | Level      2 |   |       | Level      3 |   |   | Fair      Value |   |
|------------------------------------|--------|--------------|-----------|--------|--------------|--------|------------|--------------|--------|--------|-----------------|--------|
| Assets:                            |   |         |      |   |         |   |       |         |   |   |            |   |
| Securities      available-for-sale |   | $            | 4,214,717 |   |         | $      | 25,234,707 |         |   | $      | 0               |   |   | $ | 29,449,424 |   |

|                                          |   | Level      1 |   |   | Level      2 |   |      | Level      3 |   |   | Fair      Value |   |
|-----------------------------------------------|--------|--------------|--------|--------|--------------|--------|-----------|--------------|--------|--------|-----------------|--------|
| Loans      held-for-sale                      |   | $            | 0      |   |         | $      | 1,181,844 |         |   | $      | 0               |   |   | $ | 1,181,844 |   |
| Mortgage      servicing rights                |   |         | 0      |   |         |   | 956,891   |         |   |   | 0               |   |   |   | 956,891 |   |
| Impaired      loans, net of related allowance |   |         | 0      |   |         |   | 1,748,715 |         |   |   | 0               |   |   |   | 1,748,715 |   |
|    Total                       |   | $            | 0      |   |         | $      | 3,887,450 |         |   | $      | 0               |   |   | $ | 3,887,450 |   |

----

----

|                                                  |   | December      31, 2008 |    |   | December      31, 2007 |   |
|-------------------------------------------------------|--------|------------------------|---------|--------|------------------------|--------|
|                                                  |   | Carrying               |    |   | Fair                   |   |   | Carrying |   |   | Fair |   |
|                                                  |   | Amount                 |    |   | Value                  |   |   | Amount |   |   | Value |   |
|                                                  |   |                   |    |   | (in      thousands)    |   |   |   |   |
| Financial      assets:                                |   |                   |    |   |                   |   |   |   |   |   |   |   |
| Cash      and cash equivalents                        |   | $                      | 11,270  |   |                   | $      | 11,270 |   |   | $ | 20,273 |   |   | $ | 20,273 |   |
| Securities      held-to-maturity                      |   |                   | 37,288  |   |                   |   | 38,212 |   |   |   | 34,311 |   |   |   | 34,273 |   |
| Securities      available-for-sale                    |   |                   | 29,449  |   |                   |   | 29,449 |   |   |   | 46,877 |   |   |   | 46,877 |   |
|                                                  |   |                   |    |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| Loans      and loans held-for-sale, net               |   |                   | 362,460 |   |                   |   | 368,043 |   |   |   | 353,102 |   |   |   | 360,088 |   |
| Mortgage      servicing rights                        |   |                   | 960     |   |                   |   | 957 |   |   |   | 1,187 |   |   |   | 1,238 |   |
| Accrued      interest receivable                      |   |                   | 2,045   |   |                   |   | 2,045 |   |   |   | 2,304 |   |   |   | 2,304 |   |
|                                                  |   |                   |    |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| Financial      liabilities:                           |   |                   |    |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| Deposits                                              |   |                   | 402,241 |   |                   |   | 405,236 |   |   |   | 416,220 |   |   |   | 411,718 |   |
| Federal      funds purchased and other borrowed funds |   |                   | 12,572  |   |                   |   | 12,574 |   |   |   | 13,760 |   |   |   | 13,762 |   |
| Repurchase      agreements                            |   |                   | 19,086  |   |                   |   | 19,086 |   |   |   | 17,445 |   |   |   | 17,445 |   |
| Subordinated      debentures                          |   |                   | 12,887  |   |                   |   | 12,242 |   |   |   | 12,887 |   |   |   | 12,242 |   |
| Capital      lease obligations                        |   |                   | 915     |   |                   |   | 915 |   |   |   | 943 |   |   |   | 943 |   |
| Accrued      interest payable                         |   |                   | 313     |   |                   |   | 313 |   |   |   | 291 |   |   |   | 291 |   |

----

| COMMUNITY      BANCORP. (PARENT COMPANY ONLY)                                                        |   |
|------------------------------------------------------------------------------------------------------|--------|
| CONDENSED      BALANCE SHEETS                                                                        |   |
| December      31, 2008 and 2007                                                                      |   |
|                                                                                                 |   |   |   |   |   |   |
| ASSETS                                                                                               |   | 2008 |   |   | 2007 |   |
|                                                                                                 |   |   |   |   |   |   |
|   Cash                                                                                     |   | $ | 217,055 |   |   | $ | 739,883 |   |
|   Investment      in subsidiary - Community National Bank                                  |   |   | 47,620,153 |   |   |   | 46,451,386 |   |
|   Investment      in Capital Trust                                                         |   |   | 387,000 |   |   |   | 387,000 |   |
|   Other      assets                                                                        |   |   | 462,489 |   |   |   | 754,680 |   |
|        Total      assets                                          |   | $ | 48,686,697 |   |   | $ | 48,332,949 |   |
|                                                                                                 |   |   |   |   |   |   |   |   |
| LIABILITIES      AND SHAREHOLDERS' EQUITY                                                            |   |   |   |   |   |   |   |   |
| Liabilities                                                                                          |   |   |   |   |   |   |   |   |
|   Junior      subordinated debentures                                                      |   | $ | 12,887,000 |   |   | $ | 12,887,000 |   |
|   Dividends      payable                                                                   |   |   | 526,805 |   |   |   | 525,589 |   |
|       Total      liabilities                                           |   |   | 13,413,805 |   |   |   | 13,412,589 |   |
|                                                                                                 |   |   |   |   |   |   |   |   |
| Shareholders'      equity                                                                            |   |   |   |   |   |   |   |   |
|   Preferred      stock, 1,000,000 shares authorized, 25 shares issued and      outstanding |   |   |   |   |   |   |   |   |
|    at      December 31, 2008 and 2007 ($100,000 liquidation value)                    |   |   | 2,500,000 |   |   |   | 2,500,000 |   |
|   Common      stock - $2.50 par value; 10,000,000 shares authorized at December      31,   |   |   |   |   |   |   |   |   |
|    2008      and 2007; and 4,679,206 and 4,609,268 shares issued at December      31, |   |   |   |   |   |   |   |   |
|    2008      and 2007, respectively (including 22,105 and 16,408 shares      issued   |   |   |   |   |   |   |   |   |
|    February      1, 2009 and 2008, respectively)                                      |   |   | 11,698,015 |   |   |   | 11,523,171 |   |
|   Additional      paid-in capital                                                          |   |   | 25,757,516 |   |   |   | 25,006,439 |   |
|   Accumulated      deficit                                                                 |   |   | (2,592,721 | ) |   |   | (1,597,682 | ) |
|   Accumulated      other comprehensive income                                              |   |   | 532,859 |   |   |   | 111,209 |   |
|   Less      treasury stock, at cost (2008 and 2007 - 210,101 shares)                       |   |   | (2,622,777 | ) |   |   | (2,622,777 | ) |
|        Total      shareholders' equity                            |   |   | 35,272,892 |   |   |   | 34,920,360 |   |
|        Total      liabilities and shareholders' equity            |   | $ | 48,686,697 |   |   | $ | 48,332,949 |   |

----

| COMMUNITY      BANCORP. (PARENT COMPANY ONLY)                       |   |
|---------------------------------------------------------------------|--------|
| CONDENSED      STATEMENTS OF INCOME                                 |   |
| Years      Ended December 31, 2008 and 2007                         |   |
|                                                                |   | 2008 |   |   | 2007 |   |
|                                                                |   |   |   |   |   |   |
| Income                                                              |   |   |   |   |   |   |
|   Bank      subsidiary distributions                      |   | $ | 2,352,000 |   |   | $ | 3,150,000 |   |
|   Dividends      on Capital Trust                         |   |   | 29,257 |   |   |   | 3,657 |   |
|     Total      income                           |   |   | 2,381,257 |   |   |   | 3,153,657 |   |
|                                                                |   |   |   |   |   |   |   |   |
| Expense                                                             |   |   |   |   |   |   |   |   |
|   Interest      on junior subordinated debentures         |   |   | 976,340 |   |   |   | 121,782 |   |
|   Administrative      and other                           |   |   | 413,178 |   |   |   | 418,604 |   |
|       Total      expense              |   |   | 1,389,518 |   |   |   | 540,386 |   |
|                                                                |   |   |   |   |   |   |   |   |
| Income      before applicable income tax benefit and equity in      |   |   |   |   |   |   |   |   |
|  undistributed      net income of subsidiary                   |   |   | 991,739 |   |   |   | 2,613,271 |   |
| Applicable      income tax benefit                                  |   |   | 462,489 |   |   |   | 182,488 |   |
|                                                                |   |   |   |   |   |   |   |   |
| Income      before equity in undistributed net income of subsidiary |   |   | 1,454,228 |   |   |   | 2,795,759 |   |
| Equity      in undistributed net income of subsidiary               |   |   | 747,118 |   |   |   | 561,571 |   |
|                                                                |   |   |   |   |   |   |   |   |
|       Net      income                 |   | $ | 2,201,346 |   |   | $ | 3,357,330 |   |

----

| COMMUNITY      BANCORP. (PARENT COMPANY ONLY)                                                      |   |
|----------------------------------------------------------------------------------------------------|--------|
| CONDENSED      STATEMENTS OF CASH FLOWS                                                            |   |
| Years      Ended December 31, 2008 and 2007                                                        |   |
|                                                                                               |   |
|                                                                                               |   | 2008 |   |   | 2007 |   |
|                                                                                               |   |   |   |   |   |   |
| CASH      FLOWS FROM OPERATING ACTIVITIES                                                          |   |   |   |   |   |   |
|  Net      income                                                                              |   | $ | 2,201,346 |   |   | $ | 3,357,330 |   |
|   Adjustments      to reconcile net income to net cash (used in)                         |   |   |   |   |   |   |   |   |
|    provided      by operating activities                                            |   |   |   |   |   |   |   |   |
|   Equity      in undistributed net income of subsidiary                                  |   |   | (747,118 | ) |   |   | (561,571 | ) |
|   Decrease      (increase) in prepaid assets                                             |   |   | 120,132 |   |   |   | (120,133 | ) |
|   Increase      in income taxes receivable                                               |   |   | (280,000 | ) |   |   | (96,756 | ) |
|        Net      cash (used in) provided by operating activities |   |   | (1,294,360 | ) |   |   | 2,578,870 |   |
|                                                                                               |   |   |   |   |   |   |   |   |
| CASH      FLOWS FROM INVESTING ACTIVITIES                                                          |   |   |   |   |   |   |   |   |
|   Investment      in subsidiary – Community National Bank                          |   |   | 0 |   |   |   | (15,000,000 | ) |
|   Decrease      (increase) in other assets                                               |   |   | 452,060 |   |   |   | (452,060 | ) |
|   Investment      in Trust                                                               |   |   | 0 |   |   |   | (387,000 | ) |
|        Net      cash provided by (used in) investing activities |   |   | 452,060 |   |   |   | (15,839,060 | ) |
|                                                                                               |   |   |   |   |   |   |   |   |
| CASH      FLOWS FROM FINANCING ACTIVITIES                                                          |   |   |   |   |   |   |   |   |
|   Proceeds      from issuance of junior subordinated debentures                          |   |   | 0 |   |   |   | 12,887,000 |   |
|   Proceeds      from issuance of preferred stock                                         |   |   | 0 |   |   |   | 2,500,000 |   |
|   Purchase      of treasury stock                                                        |   |   | 0 |   |   |   | (8,045 | ) |
|   Dividends      paid on preferred stock                                                 |   |   | (187,500 | ) |   |   | 0 |   |
|   Dividends      paid on common stock                                                    |   |   | (2,081,748 | ) |   |   | (2,014,132 | ) |
|        Net      cash (used in) provided by financing activities |   |   | (2,269,248 | ) |   |   | 13,364,823 |   |
|        Net      (decrease) increase in cash                     |   |   | (522,828 | ) |   |   | 104,633 |   |
|                                                                                               |   |   |   |   |   |   |   |   |
| Cash                                                                                               |   |   |   |   |   |   |   |   |
|   Beginning                                                                              |   |   | 739,883 |   |   |   | 635,250 |   |
|   Ending                                                                                 |   | $ | 217,055 |   |   | $ | 739,883 |   |
|                                                                                               |   |   |   |   |   |   |   |   |
| CASH      RECEIVED FOR INCOME TAXES                                                                |   | $ | 182,488 |   |   | $ | 85,732 |   |
|                                                                                               |   |   |   |   |   |   |   |   |
| CASH      PAID FOR INTEREST                                                                        |   | $ | 976,340 |   |   | $ | 121,782 |   |
|                                                                                               |   |   |   |   |   |   |   |   |
| SUPPLEMENTAL      SCHEDULE OF NONCASH INVESTING                                                    |   |   |   |   |   |   |   |   |
| AND      FINANCING ACTIVITIES                                                                      |   |   |   |   |   |   |   |   |
|   Change      in unrealized gain on securities available-for-sale                        |   | $ | 638,862 |   |   | $ | 578,596 |   |
|   Dividends      paid:                                                                   |   |   |   |   |   |   |   |   |
|    Dividends      declared                                                          |   | $ | 3,008,885 |   |   | $ | 2,894,359 |   |
|    Increase      in dividends payable attributable to dividends declared            |   |   | (1,216 | ) |   |   | (27,477 | ) |
|    Dividends      reinvested                                                        |   |   | (925,921 | ) |   |   | (852,750 | ) |
|                                                                                               |   | $ | 2,081,748 |   |   | $ | 2,014,132 |   |
|                                                                                               |   |   |   |   |   |   |   |   |
|   Stock      dividend                                                                    |   | $ | 0 |   |   | $ | 2,821,320 |   |

----

|                            |   | Quarters      in 2008 ended |      |
|---------------------------------|--------|-----------------------------|-----------|
|                            |   | March      31,              |      |   | June      30, |   |   | Sept.      30, |   |   | Dec.      31, |   |
|                            |   |                        |      |   |   |   |   |   |   |   |   |   |
| Interest      income            |   | $                           | 7,136,088 |   |   | $ | 6,700,723 |   |   | $ | 6,742,377 |   |   | $ | 6,508,462 |   |
| Interest      expense           |   |                        | 3,212,513 |   |   |   | 2,607,213 |   |   |   | 2,380,223 |   |   |   | 2,303,067 |   |
| Provision      for loan losses  |   |                        | 62,499    |   |   |   | 62,499 |   |   |   | 112,499 |   |   |   | 261,666 |   |
| Non-interest      income        |   |                        | 895,774   |   |   |   | 1,217,005 |   |   |   | 1,083,974 |   |   |   | 839,572 |   |
| Non-interest      expense       |   |                        | 4,785,170 |   |   |   | 4,301,975 |   |   |   | 4,851,610 |   |   |   | 4,306,317 |   |
| Net      income                 |   |                        | 217,048   |   |   |   | 873,561 |   |   |   | 314,613 |   |   |   | 796,124 |   |
| Earnings      per common share* |   |                        | 0.05      |   |   |   | 0.18 |   |   |   | 0.06 |   |   |   | 0.17 |   |
|                            |   |                        |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                            |   | Quarters      in 2007 ended |      |
|                            |   | March      31,              |      |   | June      30, |   |   | Sept.      30, |   |   | Dec.      31, |   |
|                            |   |                        |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest      income            |   | $                           | 5,259,958 |   |   | $ | 5,362,011 |   |   | $ | 5,424,004 |   |   | $ | 5,646,966 |   |
| Interest      expense           |   |                        | 1,993,189 |   |   |   | 2,012,453 |   |   |   | 2,100,145 |   |   |   | 2,385,345 |   |
| Provision      for loan losses  |   |                        | 37,500    |   |   |   | 37,500 |   |   |   | 47,500 |   |   |   | 25,000 |   |
| Non-interest      income        |   |                        | 703,346   |   |   |   | 894,482 |   |   |   | 1,110,358 |   |   |   | 739,626 |   |
| Non-interest      expense       |   |                        | 3,149,994 |   |   |   | 3,155,671 |   |   |   | 3,247,046 |   |   |   | 2,923,323 |   |
| Net      income                 |   |                        | 675,256   |   |   |   | 857,883 |   |   |   | 927,172 |   |   |   | 897,019 |   |
| Earnings      per common share* |   |                        | 0.16      |   |   |   | 0.20 |   |   |   | 0.21 |   |   |   | 0.20 |   |

| *Per      share data for March 31, 2007 has been restated to reflect a 5% stock      dividend declared in June2007. |
|---------------------------------------------------------------------------------------------------------------------|

|                                                         |   | 2008   |    |   | 2007   |   |
|--------------------------------------------------------------|--------|--------|---------|--------|--------|--------|
| Income                                                       |   |   |    |   |   |   |
|                                                         |   |   |    |   |   |   |
|   Income      from sold loans, net of amortization |   | $      | 90,889  |   |   | $      | 373,330 |   |
|   Income      from sale of credit card portfolio   |   |   | 0       |   |   |   | 257,836 |   |
|   Commissions      from insurance company          |   |   | 444,583 |   |   |   | 107,705 |   |
|                                                         |   |   |    |   |   |   |   |   |
| Expenses                                                     |   |   |    |   |   |   |   |   |
|                                                         |   |   |    |   |   |   |   |   |
|   Advertising                                      |   | $      | 414,902 |   |   | $      | 237,808 |   |
|   State      deposit tax                           |   |   | 465,996 |   |   |   | 327,996 |   |
|   Loss      on limited partnerships                |   |   | 371,084 |   |   |   | 381,588 |   |

----

----

----

----

----

----

|                                        |   | December      31, |   |
|---------------------------------------------|--------|-------------------|--------|
|                                        |   | 2008              |   |   | 2007 |   |
|                                        |   |              |   |   |   |   |
| Return      on Average Assets               |   |              | 0.45   | % |   |   | 0.97 | % |
| Return      on Average Equity               |   |              | 6.30   | % |   |   | 10.67 | % |
| Dividend      Payout Ratio(1)               |   |              | 151.11 | % |   |   | 87.01 | % |
| Average      Equity to Average Assets Ratio |   |              | 7.10   | % |   |   | 9.05 | % |

|                                     |   | For      the years ended    |   |
|------------------------------------------|--------|-----------------------------|--------|
|                                     |   | December      31,           |   |
|                                     |   | 2008                        |   |   | 2007 |   |
|                                     |   | (Dollars      in Thousands) |   |
|                                     |   |                        |   |
| Net      interest income as presented    |   | $                           | 16,584 |   |   | $ | 13,202 |   |
| Effect      of tax-exempt income         |   |                        | 884    |   |   |   | 539 |   |
| Net      interest income, tax equivalent |   | $                           | 17,468 |   |   | $ | 13,741 |   |

----

| Table      A                                                                                                                                                                                     |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| AVERAGE      BALANCES AND INTEREST RATES                                                                                                                                                         |   |
|                                                                                                                                                                                             |   |
|                                                                                                                                                                                             |   | 2008 |   |   | 2007 |   |
|                                                                                                                                                                                             |   | Average |   |   | Income/ |   |   | Rate/ |   |   | Average |   |   | Income/ |   |   | Rate/ |   |
|                                                                                                                                                                                             |   | Balance |   |   | Expense |   |   | Yield |   |   | Balance |   |   | Expense |   |   | Yield |   |
|                                                                                                                                                                                             |   | (Dollars      in Thousands) |   |
|                                                                                                                                                                                             |   |
| Interest-Earning      Assets (1)                                                                                                                                                                 |   |
|                                                                                                                                                                                             |   |
|  Loans      (2)                                                                                                                                                                             |   | $ | 358,127 |   |   | $ | 23,633 |   |   |   | 6.60 | % |   | $ | 263,597 |   |   | $ | 19,119 |   |   |   | 7.25 | % |
|  Taxable      Investment Securities                                                                                                                                                         |   |   | 31,875 |   |   |   | 1,464 |   |   |   | 4.59 | % |   |   | 22,567 |   |   |   | 877 |   |   |   | 3.89 | % |
|  Tax-exempt      Investment Securities                                                                                                                                                      |   |   | 45,077 |   |   |   | 2,624 |   |   |   | 5.82 | % |   |   | 25,384 |   |   |   | 1,584 |   |   |   | 6.24 | % |
|  Federal      Funds Sold & Overnight Deposits                                                                                                                                           |   |   | 1,734 |   |   |   | 64 |   |   |   | 3.69 | % |   |   | 10,203 |   |   |   | 482 |   |   |   | 4.72 | % |
|  Other      Investments                                                                                                                                                                     |   |   | 4,162 |   |   |   | 186 |   |   |   | 4.47 | % |   |   | 2,456 |   |   |   | 170 |   |   |   | 6.92 | % |
|       TOTAL                                                                                                                                                        |   | $ | 440,975 |   |   | $ | 27,971 |   |   |   | 6.34 | % |   | $ | 324,207 |   |   | $ | 22,232 |   |   |   | 6.86 | % |
|                                                                                                                                                                                             |   |
| Interest-Bearing      Liabilities (1)                                                                                                                                                            |   |
|                                                                                                                                                                                             |   |
|  NOW      and Money Market Funds                                                                                                                                                            |   | $ | 123,203 |   |   | $ | 2,069 |   |   |   | 1.68 | % |   | $ | 77,431 |   |   | $ | 2,079 |   |   |   | 2.68 | % |
|  Savings      Deposits                                                                                                                                                                      |   |   | 50,087 |   |   |   | 184 |   |   |   | 0.37 | % |   |   | 39,005 |   |   |   | 136 |   |   |   | 0.35 | % |
|  Time      Deposits                                                                                                                                                                         |   |   | 176,916 |   |   |   | 6,576 |   |   |   | 3.72 | % |   |   | 132,293 |   |   |   | 5,759 |   |   |   | 4.35 | % |
|  Other      Borrowed Funds                                                                                                                                                                  |   |   | 14,662 |   |   |   | 435 |   |   |   | 2.97 | % |   |   | 1,685 |   |   |   | 92 |   |   |   | 5.46 | % |
|  Repurchase      Agreements                                                                                                                                                                 |   |   | 16,319 |   |   |   | 263 |   |   |   | 1.61 | % |   |   | 13,825 |   |   |   | 303 |   |   |   | 2.19 | % |
|  Junior      Subordinated Debentures                                                                                                                                                        |   |   | 12,887 |   |   |   | 976 |   |   |   | 7.57 | % |   |   | 2,154 |   |   |   | 122 |   |   |   | 5.66 | % |
|     TOTAL                                                                                                                                                                    |   | $ | 394,074 |   |   | $ | 10,503 |   |   |   | 2.67 | % |   | $ | 266,493 |   |   | $ | 8,491 |   |   |   | 3.19 | % |
|                                                                                                                                                                                             |   |
|  Net      Interest Income                                                                                                                                                                   |   |   |   |   |   | $ | 17,468 |   |   |   |   |   |   |   |   |   |   | $ | 13,741 |   |   |   |   |   |
|  Net      Interest Spread(3)                                                                                                                                                                |   |   |   |   |   |   |   |   |   |   | 3.67 | % |   |   |   |   |   |   |   |   |   |   | 3.67 | % |
|  Interest      Margin(4)                                                                                                                                                                    |   |   |   |   |   |   |   |   |   |   | 3.96 | % |   |   |   |   |   |   |   |   |   |   | 4.24 | % |
|                                                                                                                                                                                             |   |
| (1) Assets      and liabilities acquired from LyndonBank as of the close of business on      December 31, 2007 are not included in average balances for 2007 because      there would be no |   |
|            impact on yields.                                                                                                                                            |   |
| (2) Included      in gross loans are non-accrual loans with an average balance of $1,186,511      for 2008 and $822,354 for 2007.                                                           |   |
| (3) Net      interest spread is the difference between the yield on earning assets and      the rate paid on interest-bearing liabilities.                                                  |   |
| (4) Interest      margin is net interest income divided by average earning      assets.                                                                                                     |   |

----

| Table      B                                         |   |
|------------------------------------------------------|--------|
| CHANGES      IN INTEREST INCOME AND INTEREST EXPENSE |   |
|                                                 |   |   |   |   |   |   |   |   |   |
|                                                 |   |   |   |   |   |   |   |   |   |
|                                                 |   | 2008 vs. 2007 |   |
| RATE      VOLUME                                     |   | Variance      Due to(1) |   |   | Total |   |
|                                                 |   | Rate |   |   | Volume |   |   | Variance |   |
|                                                 |   | (Dollars      in Thousands) |   |
| Interest-Earning      Assets                         |   |   |   |   |   |   |   |   |   |
|                                                 |   |   |   |   |   |   |   |   |   |
| Loans(2)                                             |   | $ | (2,342 | ) |   | $ | 6,856 |   |   | $ | 4,514 |   |
| Taxable      Investment Securities                   |   |   | 225 |   |   |   | 362 |   |   |   | 587 |   |
| Tax-exempt      Investment Securities                |   |   | (189 | ) |   |   | 1,229 |   |   |   | 1,040 |   |
| Federal      Funds Sold & Overnight Deposits     |   |   | (105 | ) |   |   | (313 | ) |   |   | (418 | ) |
| Other      Investments                               |   |   | (102 | ) |   |   | 118 |   |   |   | 16 |   |
| Total      Interest Earnings                         |   | $ | (2,513 | ) |   | $ | 8,252 |   |   | $ | 5,739 |   |
|                                                 |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-Bearing      Liabilities                    |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                 |   |   |   |   |   |   |   |   |   |   |   |   |
| NOW      and Money Market Funds                      |   | $ | (1,239 | ) |   | $ | 1,229 |   |   | $ | ( 10 | ) |
| Savings      Deposits                                |   |   | 9 |   |   |   | 39 |   |   |   | 48 |   |
| Time      Deposits                                   |   |   | (1,120 | ) |   |   | 1,937 |   |   |   | 817 |   |
| Other      Borrowed Funds                            |   |   | (366 | ) |   |   | 709 |   |   |   | 343 |   |
| Repurchase      Agreements                           |   |   | (95 | ) |   |   | 55 |   |   |   | (40 | ) |
| Junior      Subordinated Debentures                  |   |   | 246 |   |   |   | 608 |   |   |   | 854 |   |
|    Total      Interest Expense        |   | $ | (2,565 | ) |   | $ | 4,577 |   |   | $ | 2,012 |   |
|                                                 |   |   |   |   |   |   |   |   |   |   |   |   |
|   Change      in Net Interest Income       |   | $ | 52 |   |   | $ | 3,675 |   |   | $ | 3,727 |   |
|                                                 |   |   |   |   |   |   |   |   |   |   |   |   |

| (1)  Items      which have shown a year-to-year increase in volume have variances      allocated as follows:                           |
|--------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                             | Variance      due to rate = Change in rate x new volume |
|                                                                                                                                             | Variance      due to volume = Change in volume x old rate |
|       Items      which have shown a year-to-year decrease in volume have variances      allocated as follows:      |
|                                                                                                                                             | Variance      due to rate = Change in rate x old volume |
|                                                                                                                                             | Variance      due to volume = Change in volume x new rate |
| (2)  Loans      are stated before deduction of unearned discount ($301,004 in 2008 and      $443,372 in 2007)                          |
|       and      allowance for loan losses.  Interest on non-accrual loans is      excluded from income.   |
|       The      principal balances of non-accrual loans are included in the calculation of      the yield on loans. |

----

----

----

| DISTRIBUTION      OF ASSETS, LIABILITIES AND SHAREHOLDERS' EQUITY                                                                           |   |
|---------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                                                        |   |
|                                                                                                                                        |   | Years      ended December 31, |   |
|                                                                                                                                        |   | 2008 |   |   | 2007 |   |   | 2006 |   |
| AVERAGE      ASSETS                                                                                                                         |   | Balance |   |   | % |   |   | Balance |   |   | % |   |   | Balance |   |   | % |   |
|                                                                                                                                        |   | (Dollars      in Thousands) |   |
| Cash      and Due from Banks                                                                                                                |   |
|  Non-Interest      Bearing                                                                                                             |   | $ | 9,504 |   |   |   | 1.93 | % |   | $ | 7,004 |   |   |   | 2.01 | % |   | $ | 8,724 |   |   |   | 2.46 | % |
|  Overnight      Deposits                                                                                                               |   |   | 1,726 |   |   |   | 0.35 | % |   |   | 10,137 |   |   |   | 2.91 | % |   |   | 3,052 |   |   |   | 0.86 | % |
| Federal      Funds Sold                                                                                                                     |   |   | 8 |   |   |   | 0.00 | % |   |   | 66 |   |   |   | 0.02 | % |   |   | 263 |   |   |   | 0.07 | % |
| Taxable      Investment Securities(1)                                                                                                       |   |   | 31,875 |   |   |   | 6.49 | % |   |   | 22,567 |   |   |   | 6.49 | % |   |   | 30,174 |   |   |   | 8.53 | % |
| Tax-exempt      Investment Securities(1)                                                                                                    |   |   | 45,077 |   |   |   | 9.17 | % |   |   | 25,384 |   |   |   | 7.30 | % |   |   | 28,529 |   |   |   | 8.06 | % |
| Other      Securities(1)                                                                                                                    |   |   | 3,775 |   |   |   | 0.77 | % |   |   | 2,391 |   |   |   | 0.69 | % |   |   | 3,161 |   |   |   | 0.89 | % |
|   Total      Investment Securities                                                                                                |   |   | 80,727 |   |   |   | 16.42 | % |   |   | 50,342 |   |   |   | 14.48 | % |   |   | 61,864 |   |   |   | 17.48 | % |
| Gross      Loans                                                                                                                            |   |   | 358,127 |   |   |   | 72.86 | % |   |   | 263,597 |   |   |   | 75.78 | % |   |   | 263,901 |   |   |   | 74.55 | % |
| Reserve      for Loan Losses and Accrued Fees                                                                                               |   |   | (3,399 | ) |   |   | -0.69 | % |   |   | (2,852 | ) |   |   | -0.82 | % |   |   | (2,923 | ) |   |   | -0.83 | % |
| Premises      and Equipment                                                                                                                 |   |   | 15,570 |   |   |   | 3.17 | % |   |   | 12,111 |   |   |   | 3.48 | % |   |   | 11,876 |   |   |   | 3.36 | % |
| Other      Real Estate Owned                                                                                                                |   |   | 63 |   |   |   | 0.01 | % |   |   | 0 |   |   |   | 0.00 | % |   |   | 0 |   |   |   | 0.00 | % |
| Investment      in Capital Trust                                                                                                            |   |   | 387 |   |   |   | 0.08 | % |   |   | 65 |   |   |   | 0.02 | % |   |   | 0 |   |   |   | 0.00 | % |
| Bank      owned life insurance                                                                                                              |   |   | 3,622 |   |   |   | 0.74 | % |   |   | 0 |   |   |   | 0.00 | % |   |   | 0 |   |   |   | 0.00 | % |
| Core      deposit intangible                                                                                                                |   |   | 3,710 |   |   |   | 0.57 | % |   |   | 0 |   |   |   | 0.00 | % |   |   | 0 |   |   |   | 0.00 | % |
| Goodwill                                                                                                                                    |   |   | 10,785 |   |   |   | 1.69 | % |   |   | 0 |   |   |   | 0.00 | % |   |   | 0 |   |   |   | 0.00 | % |
| Other      Assets                                                                                                                           |   |   | 10,685 |   |   |   | 2.86 | % |   |   | 7,364 |   |   |   | 2.12 | % |   |   | 7,238 |   |   |   | 2.05 | % |
|           Total      Average Assets                                                       |   | $ | 491,495 |   |   |   | 100 | % |   | $ | 347,834 |   |   |   | 100 | % |   | $ | 353,995 |   |   |   | 100 | % |
|                                                                                                                                        |   |
| AVERAGE      LIABILITIES                                                                                                                    |   |
|                                                                                                                                        |   |
| Demand      Deposits                                                                                                                        |   | $ | 55,053 |   |   |   | 11.20 | % |   | $ | 47,614 |   |   |   | 13.69 | % |   | $ | 46,964 |   |   |   | 13.27 | % |
| Now      and Money Market Accounts                                                                                                          |   |   | 123,203 |   |   |   | 25.07 | % |   |   | 77,431 |   |   |   | 22.26 | % |   |   | 80,348 |   |   |   | 22.70 | % |
| Savings      Accounts                                                                                                                       |   |   | 50,087 |   |   |   | 10.19 | % |   |   | 39,005 |   |   |   | 11.21 | % |   |   | 43,563 |   |   |   | 12.30 | % |
| Time      Deposits                                                                                                                          |   |   | 176,916 |   |   |   | 36.00 | % |   |   | 132,393 |   |   |   | 38.06 | % |   |   | 121,691 |   |   |   | 34.38 | % |
|           Total      Average Deposits                                                     |   |   | 405,259 |   |   |   | 82.46 | % |   |   | 296,443 |   |   |   | 85.22 | % |   |   | 292,566 |   |   |   | 82.65 | % |
|                                                                                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other      Borrowed Funds                                                                                                                   |   |   | 14,662 |   |   |   | 2.98 | % |   |   | 1,685 |   |   |   | 0.49 | % |   |   | 13,236 |   |   |   | 3.74 | % |
| Repurchase      Agreements                                                                                                                  |   |   | 16,319 |   |   |   | 3.32 | % |   |   | 13,825 |   |   |   | 3.97 | % |   |   | 15,688 |   |   |   | 4.43 | % |
| Junior      Subordinated Debentures                                                                                                         |   |   | 12,887 |   |   |   | 2.62 | % |   |   | 2,154 |   |   |   | 0.62 | % |   |   | 0 |   |   |   | 0.00 | % |
| Other      Liabilities                                                                                                                      |   |   | 7,452 |   |   |   | 1.52 | % |   |   | 2,255 |   |   |   | 0.65 | % |   |   | 2,780 |   |   |   | 0.78 | % |
|           Total      Average Liabilities                                                  |   |   | 456,579 |   |   |   | 92.90 | % |   |   | 316,362 |   |   |   | 90.95 | % |   |   | 324,270 |   |   |   | 91.60 | % |
|                                                                                                                                        |   |
| AVERAGE      SHAREHOLDERS' EQUITY                                                                                                           |   |
|                                                                                                                                        |   |
| Preferred      Stock                                                                                                                        |   |   | 2,500 |   |   |   | 0.51 | % |   |   | 109 |   |   |   | 0.03 | % |   |   | 0 |   |   |   | 0.00 | % |
| Common      Stock                                                                                                                           |   |   | 11,601 |   |   |   | 2.36 | % |   |   | 11,222 |   |   |   | 3.23 | % |   |   | 10,783 |   |   |   | 3.05 | % |
| Surplus                                                                                                                                     |   |   | 25,488 |   |   |   | 5.19 | % |   |   | 23,659 |   |   |   | 6.80 | % |   |   | 21,663 |   |   |   | 6.12 | % |
| Retained      Earnings                                                                                                                      |   |   | (2,060 | ) |   |   | -0.42 | % |   |   | (741 | ) |   |   | -0.21 | % |   |   | 300 |   |   |   | 0.08 | % |
| Less:      Treasury Stock                                                                                                                   |   |   | (2,623 | ) |   |   | -0.54 | % |   |   | (2,618 | ) |   |   | -0.75 | % |   |   | (2,600 | ) |   |   | -0.73 | % |
| Accumulated      Other Comprehensive                                                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Income      (Loss) (1)                                                                                                                |   |   | 10 |   |   |   | 0.00 | % |   |   | (159 | ) |   |   | -0.05 | % |   |   | (421 | ) |   |   | -0.12 | % |
|           Total      Average Shareholders' Equity                                         |   |   | 34,916 |   |   |   | 7.10 | % |   |   | 31,472 |   |   |   | 9.05 | % |   |   | 29,725 |   |   |   | 8.40 | % |
|           Total      Average Liabilities and                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|             Shareholders'      Equity                                           |   | $ | 491,495 |   |   |   | 100 | % |   | $ | 347,834 |   |   |   | 100 | % |   | $ | 353,995 |   |   |   | 100 | % |
| (1) In      accordance with FASB No. 115, securities classified as held to      maturity are carried at book value and securities |   |
| classified      as available for sale are carried at fair value with the unrealized gain      (loss), net of applicable income taxes,       |   |
| reported      as a net amount in accumulated other comprehensive income (loss). The      Company does not carry, nor                   |   |
| does      it intend to carry, securities classified as trading.                                                                             |   |

----

| Maturity      Date            |   | (Dollars      in Thousands) |   |
|-------------------------------|--------|-----------------------------|--------|
|                          |   |                        |   |
| 3      Months or Less         |   | $                           | 14,602 |   |
| Over      3 through 6 Months  |   |                        | 9,457  |   |
| Over      6 through 12 Months |   |                        | 13,542 |   |
| Over      12 Months           |   |                        | 18,885 |   |
|     Total |   | $                           | 56,486 |   |

----

| One      Year Horizon                                      | Two      Year Horizon      |
|------------------------------------------------------------|----------------------------|
| Rate      Change        | Percent      Change in NII | Rate      Change      | Percent      Change in NII |
|                                                       |                       |   |   |
| Down      100 basis points                                 | -1.40%                     | Down      100 basis points | -11.00% |
| Up      200 basis points                                   | -0.10%                     | Up      200 basis points |    3.00% |

| COMPOSITION      OF LOAN PORTFOLIO             |   |
|------------------------------------------------|--------|
|                                           |   |
|                                           |   | 2008 |   |   | 2007 |   |   | 2006 |   |   | 2005 |   |   | 2004 |   |
|                                           |   | TOTAL |   |   | %      OF |   |   | TOTAL |   |   | %      OF |   |   | TOTAL |   |   | %      OF |   |   | TOTAL |   |   | %      OF |   |   | TOTAL |   |   | %      OF |   |
|                                           |   | LOANS |   |   | TOTAL |   |   | LOANS |   |   | TOTAL |   |   | LOANS |   |   | TOTAL |   |   | LOANS |   |   | TOTAL |   |   | LOANS |   |   | TOTAL |   |
|                                           |   | (Dollars      in Thousands) |   |
| Real      Estate Loans                         |   |
| Construction      & Land                   |   |
|   Development                        |   | $ | 15,204 |   |   |   | 4.15 | % |   | $ | 12,896 |   |   |   | 3.62 | % |   | $ | 11,889 |   |   |   | 4.42 | % |   | $ | 13,931 |   |   |   | 5.52 | % |   | $ | 11,646 |   |   |   | 5.07 | % |
|  Farm      Land                           |   |   | 8,534 |   |   |   | 2.33 | % |   |   | 9,646 |   |   |   | 2.71 | % |   |   | 3,217 |   |   |   | 1.19 | % |   |   | 2,870 |   |   |   | 1.14 | % |   |   | 2,496 |   |   |   | 1.09 | % |
|  1-4      Family Residential              |   |   | 213,279 |   |   |   | 58.27 | % |   |   | 195,845 |   |   |   | 54.92 | % |   |   | 157,008 |   |   |   | 58.30 | % |   |   | 144,777 |   |   |   | 57.40 | % |   |   | 127,555 |   |   |   | 55.55 | % |
|  Commercial      Real Estate              |   |   | 88,547 |   |   |   | 24.19 | % |   |   | 85,576 |   |   |   | 24.00 | % |   |   | 54,236 |   |   |   | 20.14 | % |   |   | 48,505 |   |   |   | 19.23 | % |   |   | 43,610 |   |   |   | 18.99 | % |
| Loans      to Finance                          |   |
|  Agricultural      Production             |   |   | 884 |   |   |   | 0.24 | % |   |   | 2,431 |   |   |   | 0.68 | % |   |   | 224 |   |   |   | 0.08 | % |   |   | 214 |   |   |   | 0.09 | % |   |   | 443 |   |   |   | 0.19 | % |
| Commercial      & Industrial               |   |   | 23,307 |   |   |   | 6.37 | % |   |   | 31,258 |   |   |   | 8.77 | % |   |   | 21,993 |   |   |   | 8.17 | % |   |   | 20,049 |   |   |   | 7.95 | % |   |   | 21,592 |   |   |   | 9.40 | % |
| Consumer      Loans                            |   |   | 15,922 |   |   |   | 4.35 | % |   |   | 18,461 |   |   |   | 5.18 | % |   |   | 20,588 |   |   |   | 7.65 | % |   |   | 21,296 |   |   |   | 8.44 | % |   |   | 21,716 |   |   |   | 9.46 | % |
| All      Other Loans                           |   |   | 317 |   |   |   | 0.09 | % |   |   | 459 |   |   |   | 0.13 | % |   |   | 141 |   |   |   | 0.05 | % |   |   | 567 |   |   |   | 0.23 | % |   |   | 575 |   |   |   | 0.25 | % |
|                                           |   |
|      Gross      Loans |   |   | 365,994 |   |   |   | 100 | % |   |   | 356,572 |   |   |   | 100 | % |   |   | 269,296 |   |   |   | 100 | % |   |   | 252,209 |   |   |   | 100 | % |   |   | 229,633 |   |   |   | 100 | % |
| Less:                                          |   |
|  Allowance      for Loan Losses           |   |   | (3,233 | ) |   |   | -0.88 | % |   |   | (3,026 | ) |   |   | -0.85 | % |   |   | (2,268 | ) |   |   | -0.84 | % |   |   | (2,189 | ) |   |   | -0.87 | % |   |   | (2,153 | ) |   |   | -0.94 | % |
|  Unearned      net Loan Fees              |   |   | (301 | ) |   |   | -0.08 | % |   |   | (443 | ) |   |   | -0.12 | % |   |   | (632 | ) |   |   | -0.24 | % |   |   | (684 | ) |   |   | -0.27 | % |   |   | (764 | ) |   |   | -0.33 | % |
|                                           |   |
|      Net      Loans   |   | $ | 362,460 |   |   |   | 99.04 | % |   | $ | 353,103 |   |   |   | 99.03 | % |   | $ | 266,396 |   |   |   | 98.92 | % |   | $ | 249,336 |   |   |   | 98.86 | % |   | $ | 226,716 |   |   |   | 98.73 | % |

----

| Maturity      Schedule                               |   |
|------------------------------------------------------|--------|
|                                                 |   |   |   |   |   |   |
|                                                 |   | Fixed Rate Loans |   |   | Variable Rate Loans |   |
|                                                 |   | Within |   |   |   | 1      - 5 |   |   | After |   |   |   |   |   | Within |   |   |   | 1      - 5 |   |   | After |   |   |   |   |
|                                                 |   | 1      Year |   |   | Years |   |   | 5      years |   |   | Total |   |   | 1      Year |   |   | Years |   |   | 5      years |   |   | Total |   |
|                                                 |   | (Dollars      in Thousands) |   |
| Real      Estate                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Construction      & Land Development |   | $ | 3,483 |   |   | $ | 915 |   |   | $ | 4,252 |   |   | $ | 8,650 |   |   | $ | 4,234 |   |   | $ | 1,449 |   |   | $ | 871 |   |   | $ | 6,554 |   |
|   Secured      by Farm Land                |   |   | 62 |   |   |   | 677 |   |   |   | 3,765 |   |   |   | 4,504 |   |   |   | 2,302 |   |   |   | 1,728 |   |   |   | 0 |   |   |   | 4,030 |   |
|   Commercial      Real Estate              |   |   | 3,835 |   |   |   | 6,105 |   |   |   | 15,200 |   |   |   | 25,140 |   |   |   | 19,620 |   |   |   | 32,707 |   |   |   | 11,080 |   |   |   | 63,407 |   |
| Loans      to Finance Agricultural Production        |   |   | 16 |   |   |   | 334 |   |   |   | 92 |   |   |   | 442 |   |   |   | 442 |   |   |   | 0 |   |   |   | 0 |   |   |   | 442 |   |
| Commercial      & Industrial Loans               |   |   | 1,176 |   |   |   | 8,766 |   |   |   | 1,420 |   |   |   | 11,362 |   |   |   | 8,650 |   |   |   | 2,962 |   |   |   | 333 |   |   |   | 11,945 |   |
|                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                                                |   | $ | 8,572 |   |   | $ | 16,797 |   |   | $ | 24,729 |   |   | $ | 50,098 |   |   | $ | 35,248 |   |   | $ | 38,846 |   |   | $ | 12,284 |   |   | $ | 86,378 |   |

----

| SUMMARY      OF LOAN LOSS EXPERIENCE (1)                          |   |
|-------------------------------------------------------------------|--------|
|                                                              |   |
| December      31,                                                 |   | 2008 |   |   | 2007 |   |   | 2006 |   |   | 2005 |   |   | 2004 |   |
|                                                              |   | (Dollars      in Thousands) |   |
|                                                              |   |
| Loans      Outstanding End of Period                              |   | $ | 365,994 |   |   | $ | 356,572 |   |   | $ | 269,296 |   |   | $ | 252,209 |   |   | $ | 229,633 |   |
|                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Average      Loans Outstanding During Period                      |   | $ | 358,127 |   |   | $ | 263,597 |   |   | $ | 263,901 |   |   | $ | 238,376 |   |   | $ | 212,460 |   |
|                                                              |   |
| Loan      Loss Reserve, Beginning of Period                       |   | $ | 3,026 |   |   | $ | 2,268 |   |   | $ | 2,189 |   |   | $ | 2,153 |   |   | $ | 2,199 |   |
|                                                              |   |
| Loans      Charged Off:                                           |   |
|   Residential      Real Estate                          |   |   | 162 |   |   |   | 0 |   |   |   | 6 |   |   |   | 5 |   |   |   | 26 |   |
|   Commercial      Real Estate                           |   |   | 16 |   |   |   | 51 |   |   |   | 17 |   |   |   | 0 |   |   |   | 0 |   |
|   Commercial                                            |   |   | 109 |   |   |   | 25 |   |   |   | 13 |   |   |   | 45 |   |   |   | 54 |   |
|   Consumer                                              |   |   | 115 |   |   |   | 172 |   |   |   | 91 |   |   |   | 130 |   |   |   | 189 |   |
|           Total |   |   | 402 |   |   |   | 248 |   |   |   | 127 |   |   |   | 180 |   |   |   | 269 |   |
|                                                              |   |
| Recoveries:                                                       |   |
|   Residential      Real Estate                          |   |   | 7 |   |   |   | 14 |   |   |   | 1 |   |   |   | 1 |   |   |   | 1 |   |
|   Commercial      Real Estate                           |   |   | 2 |   |   |   | 12 |   |   |   | 6 |   |   |   | 0 |   |   |   | 0 |   |
|   Commercial                                            |   |   | 21 |   |   |   | 3 |   |   |   | 3 |   |   |   | 6 |   |   |   | 12 |   |
|   Consumer                                              |   |   | 80 |   |   |   | 42 |   |   |   | 58 |   |   |   | 59 |   |   |   | 115 |   |
|           Total |   |   | 110 |   |   |   | 71 |   |   |   | 68 |   |   |   | 66 |   |   |   | 128 |   |
|                                                              |   |
| Net      Loans Charged Off                                        |   |   | 292 |   |   |   | 177 |   |   |   | 59 |   |   |   | 114 |   |   |   | 141 |   |
| Provision      Charged to Income                                  |   |   | 499 |   |   |   | 148 |   |   |   | 138 |   |   |   | 150 |   |   |   | 95 |   |
|                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Allowance      for loan loss of acquired bank                     |   |   | 0 |   |   |   | 787 |   |   |   | 0 |   |   |   | 0 |   |   |   | 0 |   |
| Loan      Loss Reserve, End of Period                             |   | $ | 3,233 |   |   | $ | 3,026 |   |   | $ | 2,268 |   |   | $ | 2,189 |   |   | $ | 2,153 |   |
|                                                              |   |
| Net      Charge Offs as a Percent of Average Loans                |   |   | 0.08 | % |   |   | 0.07 | % |   |   | 0.02 | % |   |   | 0.05 | % |   |   | 0.07 | % |
| Provision      Charged to Income as a Percent                     |   |
|   of      Average Loans                                 |   |   | 0.14 | % |   |   | 0.06 | % |   |   | 0.05 | % |   |   | 0.06 | % |   |   | 0.04 | % |
| At      End of Period:                                            |   |
| Loan      Loss Reserve as a Percent of                            |   |
|    Outstanding      Loans                          |   |   | 0.88 | % |   |   | 0.85 | % |   |   | 0.84 | % |   |   | 0.87 | % |   |   | 0.94 | % |

----

| NON-PERFORMING      ASSETS (1)                  |   |
|-------------------------------------------------|--------|
|                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| December      31,                               |   | 2008 |   |   | 2007 |   |   | 2006 |   |   | 2005 |   |   | 2004 |   |
|                                            |   | (Dollars      in Thousands) |   |
| Accruing      Loans Past Due 90 Days or More:   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Consumer                                  |   | $ | 2 |   |   | $ | 11 |   |   | $ | 32 |   |   | $ | 8 |   |   | $ | 7 |   |
|  Commercial                                |   |   | 0 |   |   |   | 0 |   |   |   | 60 |   |   |   | 0 |   |   |   | 50 |   |
|  Commercial      Real Estate               |   |   | 0 |   |   |   | 70 |   |   |   | 0 |   |   |   | 0 |   |   |   | 0 |   |
|  Residential      Real Estate              |   |   | 245 |   |   |   | 57 |   |   |   | 113 |   |   |   | 169 |   |   |   | 137 |   |
|   Total      Past Due 90 Days or More |   |   | 247 |   |   |   | 138 |   |   |   | 205 |   |   |   | 177 |   |   |   | 194 |   |
|                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Non-accrual      Loans                          |   |   | 2,119 |   |   |   | 1,338 |   |   |   | 721 |   |   |   | 436 |   |   |   | 865 |   |
|                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total      Non-accrual, Past Due Loans          |   |   | 2,366 |   |   |   | 1,476 |   |   |   | 926 |   |   |   | 613 |   |   |   | 1,059 |   |
| Other      Real Estate Owned                    |   |   | 185 |   |   |   | 0 |   |   |   | 0 |   |   |   | 0 |   |   |   | 83 |   |
|                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Total      Non Performing Loans     |   | $ | 2,551 |   |   | $ | 1,476 |   |   | $ | 926 |   |   | $ | 613 |   |   | $ | 1,142 |   |
|                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Percent      of Gross Loans                     |   |   | 0.70 | % |   |   | 0.41 | % |   |   | 0.34 | % |   |   | 0.24 | % |   |   | 0.50 | % |
| Reserve      Coverage of Non performing Loans   |   |   | 126.73 | % |   |   | 205.01 | % |   |   | 244.92 | % |   |   | 357.10 | % |   |   | 188.53 | % |

----

| ALLOWANCE      FOR LOAN LOSSES (1)                                |   |
|-------------------------------------------------------------------|--------|
| December      31,                                                 |   | 2008 |   |   | % |   |   | 2007 |   |   | % |   |   | 2006 |   |   | % |   |   | 2005 |   |   | % |   |   | 2004 |   |   | % |   |
|                                                              |   | (Dollars      in Thousands) |   |
| Domestic                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Residential      Real Estate                                |   | $ | 1,404 |   |   |   | 58 | % |   | $ | 1,258 |   |   |   | 55 | % |   | $ | 1,055 |   |   |   | 58 | % |   | $ | 973 |   |   |   | 57 | % |   | $ | 725 |   |   |   | 55 | % |
|  Commercial      (2)                                         |   |   | 1,497 |   |   |   | 37 | % |   |   | 1,486 |   |   |   | 40 | % |   |   | 956 |   |   |   | 34 | % |   |   | 858 |   |   |   | 34 | % |   |   | 936 |   |   |   | 35 | % |
|  Consumer                                                    |   |   | 255 |   |   |   | 5 | % |   |   | 248 |   |   |   | 5 | % |   |   | 204 |   |   |   | 8 | % |   |   | 229 |   |   |   | 9 | % |   |   | 260 |   |   |   | 10 | % |
| Unallocated                                                       |   |   | 77 |   |   |   | 0 | % |   |   | 34 |   |   |   | 0 | % |   |   | 53 |   |   |   | 0 | % |   |   | 129 |   |   |   | 0 | % |   |   | 232 |   |   |   | 0 | % |
|                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|           Total |   | $ | 3,233 |   |   |   | 100 | % |   | $ | 3,026 |   |   |   | 100 | % |   | $ | 2,268 |   |   |   | 100 | % |   | $ | 2,189 |   |   |   | 100 | % |   | $ | 2,153 |   |   |   | 100 | % |

| (1)  Does      not include loan loss allowance information for the acquired LyndonBank      for 2004 through 2007. |
|------------------------------------------------------------------------------------------------------------------------------|
| (2)  Includes      commercial loans secured by real estate, as well as unsecured commercial      loans and those   |
|         secured      by other types of collateral                                    |

----

----

|                                                              |   |                        |   |   | Gross      |   |   | Gross      |   |   |   |   |
|-------------------------------------------------------------------|--------|-----------------------------|--------|--------|------------|--------|--------|------------|--------|--------|--------|--------|
|                                                              |   | Amortized                   |   |   | Unrealized |   |   | Unrealized |   |   | Fair   |   |
|                                                              |   | Cost                        |   |   | Gains      |   |   | Losses     |   |   | Value  |   |
|                                                              |   | (Dollars      in Thousands) |   |
| December      31, 2008                                            |   |
|                                                              |   |
| Available-for-Sale                                                |   |
| U.      S. Government sponsored enterprise securities             |   | $                           | 8,172  |   |       | $      | 274    |       |   | $      | 0      |   |   | $ | 8,446 |   |
| U.      S. Government securities                                  |   |                        | 4,047  |   |       |   | 153    |       |   |   | 0      |   |   |   | 4,200 |   |
| States      and political subdivisions                            |   |                        | 1,143  |   |       |   | 20     |       |   |   | 0      |   |   |   | 1,163 |   |
| Mortgage-backed      securities                                   |   |                        | 15,117 |   |       |   | 491    |       |   |   | 7      |   |   |   | 15,601 |   |
| Preferred      stock                                              |   |                        | 163    |   |       |   | 0      |       |   |   | 124    |   |   |   | 39 |   |
|                                                              |   | $                           | 28,642 |   |       | $      | 938    |       |   | $      | 131    |   |   | $ | 29,449 |   |
|                                                              |   |
| Held-to-Maturity                                                  |   |
| States      and political subdivisions                            |   | $                           | 37,288 |   |       | $      | 924    |       |   | $      | 0      |   |   | $ | 38,212 |   |
|                                                              |   |
| Restricted      Equity Securities (1)                             |   | $                           | 3,907  |   |       | $      | 0      |       |   | $      | 0      |   |   | $ | 3,907 |   |
|                                                              |   |                        |   |   |       |   |   |       |   |   |   |   |   |   |   |   |
|           Total |   | $                           | 69,837 |   |       | $      | 1,862  |       |   | $      | 131    |   |   | $ | 71,568 |   |
|                                                              |   |
| December      31, 2007                                            |   |
|                                                              |   |                        |   |   |       |   |   |       |   |   |   |   |   |   |   |   |
| Available-for-Sale                                                |   |                        |   |   |       |   |   |       |   |   |   |   |   |   |   |   |
|   U.      S. Government sponsored enterprise securities |   | $                           | 22,170 |   |       | $      | 126    |       |   | $      | 30     |   |   | $ | 22,266 |   |
|   U.      S. Government securities                      |   |                        | 3,974  |   |       |   | 73     |       |   |   | 0      |   |   |   | 4,047 |   |
|   States      and political subdivisions                |   |                        | 1,157  |   |       |   | 0      |       |   |   | 0      |   |   |   | 1,157 |   |
|   Mortgage-backed      securities                       |   |                        | 17,868 |   |       |   | 0      |       |   |   | 0      |   |   |   | 17,868 |   |
|   Preferred      stock                                  |   |                        | 1,539  |   |       |   | 0      |       |   |   | 0      |   |   |   | 1,539 |   |
|                                                              |   | $                           | 46,708 |   |       | $      | 199    |       |   | $      | 30     |   |   | $ | 46,877 |   |
|                                                              |   |                        |   |   |       |   |   |       |   |   |   |   |   |   |   |   |
| Held-to-Maturity                                                  |   |                        |   |   |       |   |   |       |   |   |   |   |   |   |   |   |
| States      and political subdivisions                            |   | $                           | 34,311 |   |       | $      | 0      |       |   | $      | 38     |   |   | $ | 34,273 |   |
|                                                              |   |                        |   |   |       |   |   |       |   |   |   |   |   |   |   |   |
| Restricted      Equity Securities (1)                             |   | $                           | 3,457  |   |       | $      | 0      |       |   | $      | 0      |   |   | $ | 3,457 |   |
|                                                              |   |                        |   |   |       |   |   |       |   |   |   |   |   |   |   |   |
|           Total |   | $                           | 84,476 |   |       | $      | 199    |       |   | $      | 68     |   |   | $ | 84.607 |   |
|                                                              |   |

----

| MATURITIES AND YIELDS OF INVESTMENT      PORTFOLIO(1)  |   |
|--------------------------------------------------------|--------|
|                                                   |   |
| December      31,                                      |   | 2008 |   |   | 2007 |   |   | 2006 |   |
|                                                   |   |   |   |   | Weighted |   |   |   |   |   | Weighted |   |   |   |   |   | Weighted |   |
|                                                   |   | Fair    |   |   | Average |   |   | Fair   |   |   | Average |   |   | Fair   |   |   | Average |   |
|                                                   |   | Value      (2) |   |   | Yield(3) |   |   | Value      (2) |   |   | Yield(3) |   |   | Value      (2) |   |   | Yield(3) |   |
|                                                   |   | (Dollars      in Thousands) |   |
| Available-for-Sale                                     |   |
|                                                   |   |
| U.S.      Treasury & Agency Obligations            |   |
| Due      within 1 year                                 |   | $ | 6,149 |   |   |   | 4.44 | % |   | $ | 9,978 |   |   |   | 6.16 | % |   | $ | 4,949 |   |   |   | 3.23 | % |
| Due      after 1 year within 5 years                   |   |   | 6,498 |   |   |   | 4.40 | % |   |   | 14,351 |   |   |   | 4.44 | % |   |   | 17,663 |   |   |   | 3.75 | % |
| Due      after 5 years within 10 years                 |   |   | 0 |   |   |   | 0.00 | % |   |   | 1,984 |   |   |   | 5.06 | % |   |   | 0 |   |   |   | 0.00 | % |
|    Total                                |   | $ | 12,647 |   |   |   | 4.42 | % |   | $ | 26,313 |   |   |   | 5.14 | % |   | $ | 22,612 |   |   |   | 3.64 | % |
|                                                   |   |
| Tax-exempt      Municipals                             |   |
| Due      after 10 years                                |   | $ | 1,163 |   |   |   | 5.22 | % |   | $ | 1,157 |   |   |   | 5.19 | % |   | $ | 0 |   |   |   | 0.00 | % |
|    Total                                |   | $ | 1,163 |   |   |   | 5.22 | % |   | $ | 1,157 |   |   |   | 5.19 | % |   | $ | 0 |   |   |   | 0.00 | % |
|                                                   |   |
| Mortgage      Backed Securities                        |   | $ | 13,883 |   |   |   | 4.70 | % |   | $ | 15,766 |   |   |   | 4.80 | % |   | $ | 0 |   |   |   | 0.00 | % |
| Collateralized      Mortgage Obligations               |   | $ | 1,718 |   |   |   | 3.80 | % |   | $ | 2,102 |   |   |   | 4.48 | % |   | $ | 0 |   |   |   | 0.00 | % |
| Restricted      Equity Securities (4)                  |   | $ | 3,907 |   |   |   | 3.03 | % |   | $ | 3,457 |   |   |   | 6.47 | % |   | $ | 2,828 |   |   |   | 5.76 | % |
| Preferred      Stock                                   |   | $ | 39 |   |   |   | 0.00 | % |   | $ | 1,538 |   |   |   | 8.43 | % |   | $ | 0 |   |   |   | 0.00 | % |
|                                                   |   |
| Held-to-Maturity                                       |   |
|                                                   |   |
| Obligations      of State & Political Subdivisions |   |
| Due      within 1 year                                 |   | $ | 28,694 |   |   |   | 4.65 | % |   | $ | 29,717 |   |   |   | 5.46 | % |   | $ | 17,254 |   |   |   | 5.40 | % |
| Due      after 1 year within 5 years                   |   |   | 3,934 |   |   |   | 5.32 | % |   |   | 1,699 |   |   |   | 6.42 | % |   |   | 1,444 |   |   |   | 6.34 | % |
| Due      after 5 years within 10 years                 |   |   | 1,414 |   |   |   | 5.86 | % |   |   | 2,290 |   |   |   | 7.81 | % |   |   | 1,744 |   |   |   | 7.42 | % |
| Due      after 10 years                                |   |   | 3,246 |   |   |   | 8.24 | % |   |   | 605 |   |   |   | 10.81 | % |   |   | 628 |   |   |   | 10.88 | % |
|    Total                                |   | $ | 37,288 |   |   |   | 5.08 | % |   | $ | 34,311 |   |   |   | 5.76 | % |   | $ | 21,070 |   |   |   | 5.79 | % |

| (1)  2006      does not include information for the acquired  LyndonBank.                                                                                            |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2)       Investments classified as available-for-sale are presented at fair      value, and investments classified as held-to-maturity are presented at      book value. |
| (3) The      yield on Obligations of State and Political Subdivisions is calculated on      a tax equivalent basis assuming a 34 percent tax rate.                        |
| (4)      Required equity purchases for membership in the Federal Reserve System and      Federal Home Loan BankSystem.                                                         |

----

|                                                |   | 2008                        |   |   | 2007   |   |
|-----------------------------------------------------|--------|-----------------------------|--------|--------|--------|--------|
|                                                |   | (Dollars      in Thousands) |   |
|                                                |   |                        |   |   |   |   |
| Buildings      and improvements                     |   | $                           | 10,945 |   |   | $      | 11,710 |   |
| Land      and land improvements                     |   |                        | 2,707  |   |   |   | 2,547 |   |
| Furniture      and equipment                        |   |                        | 5,966  |   |   |   | 6,209 |   |
| Leasehold      improvements                         |   |                        | 1,268  |   |   |   | 1,196 |   |
| Capital      leases                                 |   |                        | 928    |   |   |   | 928 |   |
| Other      prepaid assets                           |   |                        | 17     |   |   |   | 121 |   |
|                                                |   |                        | 21,831 |   |   |   | 22,711 |   |
| Less      accumulated depreciation and amortization |   |                        | (6,842 | )      |   |   | (6,350 | ) |
|                                                |   | $                           | 14,989 |   |   | $      | 16,361 |   |

|                                                              |   | Contract      or            |   |
|-------------------------------------------------------------------|--------|-----------------------------|--------|
|                                                              |   | --Notional      Amount--    |   |
|                                                              |   | 2008                        |   |   | 2007 |   |
|                                                              |   | (Dollars      in Thousands) |   |
|                                                              |   |                        |   |   |   |   |
| Unused      portions of construction lines of credit              |   | $                           | 4,897  |   |   | $ | 4,232 |   |
| Unused      portions of home equity lines of credit               |   |                        | 14,848 |   |   |   | 14,674 |   |
| Other      commitments to extend credit                           |   |                        | 25,172 |   |   |   | 31,111 |   |
| Standby      letters of credit and commercial letters of credit   |   |                        | 353    |   |   |   | 580 |   |
| Recourse      on sale of credit card portfolio                    |   |                        | 941    |   |   |   | 1,312 |   |
| MPF      credit enhancement obligation, net of recorded liability |   |                        | 1,438  |   |   |   | 1,281 |   |

----

----

|                    |   | Annual     |   |                     |                   | Principal |   |
|-------------------------|--------|------------|--------|--------------------------|------------------------|-----------|--------|
| Purchase      Date      |   | Rate  |   |  Maturity      Date |                   | Balance   |   |
|                    |   |       |   |                     |                   |      |   |
| Long-Term      Advances |   |       |   |                     |                   |      |   |
| November      16, 1992  |   |       | 7.67   | %                        | November      16, 2012 |      | $      | 10,000 |   |
|                    |   |       |   |                     |                   |      |   |   |   |
| Overnight      Funds    |   |       |   |                     |                   |      |   |   |   |
| December      31, 2008  |   |       | .0375  | %                        | January      2, 2009   |      | $      | 12,562,000 |   |

| Balance      at December 31, 2007 (book value $7.37 per common share)                               |   | $      | 34,920,360 |   |
|-----------------------------------------------------------------------------------------------------|--------|--------|------------|--------|
|   Net      income                                                                         |   |   | 2,201,346  |   |
|   Issuance      of common stock (dividend reinvestment)                                   |   |   | 925,921    |   |
|   Total      dividends declared on common stock                                           |   |   | (3,008,885 | )      |
|   Total      dividends declared on preferred stock                                        |   |   | (187,500   | )      |
|   Change      in unrealized loss on available-for-sale securities, net of      tax        |   |   | 421,650    |   |
|      Balance      at December 31, 2008 (book value $7.33 per common share) |   | $      | 35,272,892 |   |

----

|                                           |                        |                    |                    |                   | Minimum      To Be Well |
|------------------------------------------------|-----------------------------|-------------------------|-------------------------|------------------------|-------------------------|
|                                           |                        |                    | Minimum                 | Capitalized      Under |
|                                           |                        |                    | For      Capital        | Prompt      Corrective |
|                                           | Actual                      | Adequacy      Purposes: | Action      Provisions: |
|                                           | Amount                      | Ratio              | Amount                  | Ratio                  | Amount                  | Ratio |
|                                           | (Dollars      in Thousands) |
| As      of December 31, 2008:                  |                        |                    |                    |                   |                    |   |
| Total      capital (to risk-weighted assets)   |                        |                    |                    |                   |                    |   |
|    Consolidated                 | $36,765                     | 11.04%                  | $26,639                 | 8.00%                  | N/A                     | N/A |
|    Bank                         | $37,355                     | 11.25%                  | $26,571                 | 8.00%                  | $33,214                 | 10.00% |
| Tier      I capital (to risk-weighted assets)  |                        |                    |                    |                   |                    |   |
|    Consolidated                 | $33,532                     | 10.07%                  | $13,319                 | 4.00%                  | N/A                     | N/A |
|    Bank                         | $34,122                     | 10.27%                  | $13,285                 | 4.00%                  | $19,928                 | 6.00% |
| Tier      I capital (to average assets)        |                        |                    |                    |                   |                    |   |
|    Consolidated                 | $33,532                     | 7.08%                   | $18,948                 | 4.00%                  | N/A                     | N/A |
|    Bank                         | $34,122                     | 7.22%                   | $18,917                 | 4.00%                  | $23,569                 | 5.00% |
|                                           |                        |                    |                    |                   |                    |   |
| As      of December 31, 2007:                  |                        |                    |                    |                   |                    |   |
| Total      capital (to risk-weighted assets)   |                        |                    |                    |                   |                    |   |
|    Consolidated*                | $36,975                     | 15.48%                  | $19,104                 | 8.00%                  | N/A                     | N/A |
|    Community      National Bank | $48,506                     | 20.41%                  | $19,013                 | 8.00%                  | $23,766                 | 10.00% |
|    Former      LyndonBank       | $13,536                     | 12.94%                  | $  8,365      | 8.00%                  | $10,457                 | 10.00% |
| Tier      I capital (to risk-weighted assets)  |                        |                    |                    |                   |                    |   |
|    Consolidated*                | $34,736                     | 14.55%                  | $ 9,552            | 4.00%                  | N/A                     | N/A |
|    Community      National Bank | $46,267                     | 19.47%                  | $ 9,506            | 4.00%                  | $14,260                 | 6.00% |
|    Former      LyndonBank       | $12,749                     | 12.19%                  | $ 4,183            | 4.00%                  | $  6,274      | 6.00% |
| Tier      I capital (to average assets)        |                        |                    |                    |                   |                    |   |
|    Consolidated*                | $34,736                     | 9.40%                   | $14,785                 | 4.00%                  | N/A                     | N/A |
|    Community      National Bank | $46,267                     | 12.54%                  | $14,752                 | 4.00%                  | $18,440                 | 5.00% |
|    Former      LyndonBank       | $12,749                     | 8.26%                   | $  6,153      | 4.00%                  | $  7,691      | 5.00% |

----

|                         | 2008        | 2007   |
|------------------------------|-------------|--------|
|                         | First  | Second | Third  | Fourth | First  | Second | Third  | Fourth |
| Trade      Price             |        |   |   |   |   |   |   |   |
| High                         | $14.75      | $14.75 | $14.10 | $11.00 | $14.00 | $15.15  | $14.00 | $13.73 |
| Low                          | $13.00      | $13.00 | $10.50 | $  8.00 | $12.95 | $11.88  | $12.11 | $12.45 |
|                         |        |   |   |   |   |   |   |   |
|                         | 2008        | 2007   |
|                         | First  | Second | Third  | Fourth | First  | Second | Third  | Fourth |
| Bid      Price               |        |   |   |   |   |   |   |   |
| High                         | $14.00      | $14.50 | $14.00 | $10.75 | $13.30 | $14.96  | $12.83 | $13.59 |
| Low                          | $12.95      | $13.00 | $10.05 | $  7.10 | $12.30 | $11.88  | $11.64 | $12.45 |
|                         |        |   |   |   |   |   |   |   |
| Cash      Dividends Declared | $0.17       | $0.17  | $0.17 | $0.17 | $0.16 | $0.17  | $0.17 | $0.17 |

----

| Silverlake      Wealth Management          | Winslow,      Evans & Crocker           | A.G.      Edwards                            |
|--------------------------------------------|---------------------------------------------|----------------------------------------------|
| Wachovia      Securities Financial Network | 175      Federal Street                     | 1184      Main Street, Suite 1               |
| 1795      Williston Road                   | Boston,      Massachusetts  02110 | St.      Johnsbury, Vermont  05819 |
| South      Burlington, VT  05403 | (800)      556-8600                         | (800)      457-1002                          |
| (888)      235-0435                        |                                        |                                         |

----