----

----

| COMMUNITY      BANCORP. AND SUBSIDIARY                                                                  |   |             |        |   |             |   |
|---------------------------------------------------------------------------------------------------------|--------|------------------|-------------|--------|------------------|--------|
| Consolidated      Balance Sheets                                                                        |   |             |        |   |             |   |
|                                                                                                    |   | December      31 |        |   | December      31 |   |
|                                                                                                    |   | 2007             |        |   | 2006             |   |
| Assets                                                                                                  |   |             |        |   |             |   |
|   Cash      and due from banks                                                                |   | $                | 17,486,535  |   |             | $      | 11,292,831 |   |
|   Federal      funds sold and overnight deposits                                              |   |             | 2,785,988   |   |             |   | 8,173,779 |   |
|      Total      cash and cash equivalents                                      |   |             | 20,272,523  |   |             |   | 19,466,610 |   |
|   Securities      held-to-maturity (fair value $34,273,000 at 12/31/07                        |   |             |        |   |             |   |   |   |
|    and      $21,301,000 at 12/31/06)                                                     |   |             | 34,310,833  |   |             |   | 21,069,866 |   |
|   Securities      available-for-sale                                                          |   |             | 46,876,771  |   |             |   | 22,612,207 |   |
|   Restricted      equity securities, at cost                                                  |   |             | 3,456,850   |   |             |   | 2,828,250 |   |
|   Loans      held-for-sale                                                                    |   |             | 685,876     |   |             |   | 566,300 |   |
|   Loans                                                                                       |   |             | 355,885,207 |   |             |   | 268,729,726 |   |
|     Allowance      for loan losses                                                  |   |             | (3,026,049  | )      |             |   | (2,267,821 | ) |
|     Unearned      net loan fees                                                     |   |             | (443,372    | )      |             |   | (632,105 | ) |
|         Net      loans                                          |   |             | 352,415,786 |   |             |   | 265,829,800 |   |
|   Bank      premises and equipment, net                                                       |   |             | 16,361,152  |   |             |   | 12,334,024 |   |
|   Accrued      interest receivable                                                            |   |             | 2,304,055   |   |             |   | 1,667,135 |   |
|   Bank      owned life insurance                                                              |   |             | 3,559,376   |   |             |   | 0 |   |
|   Core      deposit intangible                                                                |   |             | 4,161,000   |   |             |   | 0 |   |
|   Goodwill                                                                                    |   |             | 10,347,455  |   |             |   | 0 |   |
|   Other      assets                                                                           |   |             | 7,279,941   |   |             |   | 5,440,350 |   |
|         Total      assets                                       |   | $                | 502,031,618 |   |             | $      | 351,814,542 |   |
|                                                                                                    |   |             |        |   |             |   |   |   |
| Liabilities      and Shareholders' Equity                                                               |   |             |        |   |             |   |   |   |
|  Liabilities                                                                                       |   |             |        |   |             |   |   |   |
|   Deposits:                                                                                   |   |             |        |   |             |   |   |   |
|     Demand,      non-interest bearing                                               |   | $                | 64,019,707  |   |             | $      | 47,402,628 |   |
|     NOW      and money market accounts                                              |   |             | 120,993,657 |   |             |   | 81,402,928 |   |
|     Savings                                                                         |   |             | 46,069,943  |   |             |   | 38,471,441 |   |
|     Time      deposits, $100,000 and over                                           |   |             | 58,860,374  |   |             |   | 33,835,057 |   |
|     Other      time deposits                                                        |   |             | 126,276,429 |   |             |   | 99,876,140 |   |
|         Total      deposits                                     |   |             | 416,220,110 |   |             |   | 300,988,194 |   |
|                                                                                                    |   |             |        |   |             |   |   |   |
|   Federal      funds purchased and other borrowed funds                                       |   |             | 13,760,000  |   |             |   | 40,000 |   |
|   Repurchase      agreements                                                                  |   |             | 17,444,933  |   |             |   | 17,083,946 |   |
|   Junior      subordinated debentures                                                         |   |             | 12,887,000  |   |             |   | 0 |   |
|   Capital      lease obligations                                                              |   |             | 943,227     |   |             |   | 0 |   |
|   Accrued      interest and other liabilities                                                 |   |             | 5,855,988   |   |             |   | 2,971,591 |   |
|         Total      liabilities                                  |   |             | 467,111,258 |   |             |   | 321,083,731 |   |
|                                                                                                    |   |             |        |   |             |   |   |   |
| 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 December 31, 2007 and no shares issued and outstanding      |   |             |        |   |             |   |   |   |
|     at      December 31, 2006                                                       |   |             | 2,500,000   |   |             |   | 0 |   |
|   Common      stock - $2.50 par value; 10,000,000 and 6,000,000 shares      authorized        |   |             |        |   |             |   |   |   |
|    at      December 31, 2007 and 2006, respectively; and 4,609,268 and      4,339,619    |   |             |        |   |             |   |   |   |
|    shares      issued at December 31, 2007 and 2006, respectively (including      16,408 |   |             |        |   |             |   |   |   |
|    and      15,222 shares issued February 1, 2008 and 2007,    respectively)             |   |             | 11,523,171  |   |             |   | 10,849,048 |   |
|   Additional      paid-in capital                                                             |   |             | 25,006,439  |   |             |   | 22,006,492 |   |
|   Retained      earnings (accumulated deficit)                                                |   |             | (1,597,682  | )      |             |   | 760,667 |   |
|   Accumulated      other comprehensive income (loss)                                          |   |             | 111,209     |   |             |   | (270,664 | ) |
|   Less:      treasury stock, at cost; 210,101 shares at December 31, 2007      and            |   |             |        |   |             |   |   |   |
|     209,510      shares at December 31, 2006                                        |   |             | (2,622,777  | )      |             |   | (2,614,732 | ) |
|         Total      shareholders' equity                         |   |             | 34,920,360  |   |             |   | 30,730,811 |   |
|                                                                                                    |   |             |        |   |             |   |   |   |
|         Total      liabilities and shareholders' equity         |   | $                | 502,031,618 |   |             | $      | 351,814,542 |   |

| COMMUNITY      BANCORP. AND SUBSIDIARY                                                                                           |   |   |       |   |   |   |
|----------------------------------------------------------------------------------------------------------------------------------|--------|--------|------------|--------|--------|--------|
| Consolidated      Statements of Income                                                                                           |   |   |       |   |   |   |
| For      the Year Ended December 31,                                                                                             |   | 2007   |       |   | 2006   |   |
|                                                                                                                             |   |   |       |   |   |   |
|  Interest      income                                                                                                       |   |   |       |   |   |   |
|    Interest      and fees on loans                                                                                |   | $      | 19,118,655 |   |   | $      | 18,471,445 |   |
|    Interest      on debt securities                                                                               |   |   |       |   |   |   |   |   |
|      Taxable                                                                                            |   |   | 877,497    |   |   |   | 1,082,241 |   |
|      Tax-exempt                                                                                         |   |   | 1,045,524  |   |   |   | 1,079,573 |   |
|    Dividends                                                                                                      |   |   | 170,001    |   |   |   | 176,610 |   |
|    Interest      on federal funds sold and overnight deposits                                                     |   |   | 481,262    |   |   |   | 165,975 |   |
|         Total      interest income                                                       |   |   | 21,692,939 |   |   |   | 20,975,844 |   |
|                                                                                                                             |   |   |       |   |   |   |   |   |
|  Interest      expense                                                                                                      |   |   |       |   |   |   |   |   |
|    Interest      on deposits                                                                                      |   |   | 7,974,061  |   |   |   | 6,684,827 |   |
|    Interest      on federal funds purchased and other borrowed funds                                              |   |   | 91,817     |   |   |   | 693,113 |   |
|    Interest      on repurchase agreements                                                                         |   |   | 303,472    |   |   |   | 325,148 |   |
|    Interest      on junior subordinated debentures                                                                |   |   | 121,782    |   |   |   | 0 |   |
|         Total      interest expense                                                      |   |   | 8,491,132  |   |   |   | 7,703,088 |   |
|                                                                                                                             |   |   |       |   |   |   |   |   |
|     Net      interest income                                                                                 |   |   | 13,201,807 |   |   |   | 13,272,756 |   |
|     Provision      for loan losses                                                                           |   |   | 147,500    |   |   |   | 137,500 |   |
|         Net      interest income after provision                                         |   |   | 13,054,307 |   |   |   | 13,135,256 |   |
|                                                                                                                             |   |   |       |   |   |   |   |   |
|  Non-interest      income                                                                                                   |   |   |       |   |   |   |   |   |
|    Service      fees                                                                                              |   |   | 1,417,067  |   |   |   | 1,322,360 |   |
|    Gain      on sale of stock                                                                                     |   |   | 0          |   |   |   | 56,875 |   |
|    Other      income                                                                                              |   |   | 2,030,745  |   |   |   | 1,744,941 |   |
|         Total      non-interest income                                                   |   |   | 3,447,812  |   |   |   | 3,124,176 |   |
|                                                                                                                             |   |   |       |   |   |   |   |   |
|  Non-interest      expense                                                                                                  |   |   |       |   |   |   |   |   |
|    Salaries      and wages                                                                                        |   |   | 4,525,000  |   |   |   | 4,562,000 |   |
|    Employee      benefits                                                                                         |   |   | 1,794,175  |   |   |   | 1,699,405 |   |
|    Occupancy      expenses, net                                                                                   |   |   | 2,303,417  |   |   |   | 2,180,336 |   |
|    Other      expenses                                                                                            |   |   | 3,853,442  |   |   |   | 3,712,629 |   |
|         Total      non-interest expense                                                  |   |   | 12,476,034 |   |   |   | 12,154,370 |   |
|                                                                                                                             |   |   |       |   |   |   |   |   |
|     Income      before income taxes                                                                          |   |   | 4,026,085  |   |   |   | 4,105,062 |   |
|     Applicable      income taxes                                                                             |   |   | 668,755    |   |   |   | 729,614 |   |
|         Net      Income                                                                  |   | $      | 3,357,330  |   |   | $      | 3,375,448 |   |
|                                                                                                                             |   |   |       |   |   |   |   |   |
|  Earnings      per share                                                                                                    |   | $      | 0.77       |   |   | $      | 0.78 |   |
|                                                                                                                             |   |   |       |   |   |   |   |   |
|  Weighted      average number of common shares                                                                              |   |   |       |   |   |   |   |   |
|   used      in computing earnings per common share                                                                     |   |   | 4,365,378  |   |   |   | 4,302,456 |   |
|                                                                                                                             |   |   |       |   |   |   |   |   |
|  Dividends      declared per common share                                                                                   |   | $      | 0.67       |   |   | $      | 0.64 |   |
|                                                                                                                             |   |   |       |   |   |   |   |   |
|  Book      value per share on common shares outstanding at December    31,                                                  |   | $      | 7.94       |   |   | $      | 7.09 |   |
|                                                                                                                             |   |   |       |   |   |   |   |   |
| All      share and per share data for prior periods has been restated to reflect a      5% stock dividend declared in June 2007. |   |

----

| COMMUNITY      BANCORP. AND SUBSIDIARY                      |   |
|-------------------------------------------------------------|--------|
| CONSOLIDATED      STATEMENTS OF SHAREHOLDERS' EQUITY        |   |
| Years      Ended December 31, 2007 and 2006                 |   |
|                                                        |   |
|                                                        |   | ---Common      Stock--- |   |   | ---Preferred      Stock--- |   |
|                                                        |   | Shares |   |   | Amount |   |   | Shares |   |   | Amount |   |
|                                                        |   |   |   |   |   |   |   |   |   |   |   |   |
| Balances,      December 31, 2005                            |   |   | 4,070,374 |   |   | $ | 10,699,709 |   |   |   | 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, $93,477                |   |   | 0 |   |   |   | 0 |   |   |   | 0 |   |   |   | 0 |   |
|                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total      comprehensive income                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Dividends      declared                                     |   |   | 0 |   |   |   | 0 |   |   |   | 0 |   |   |   | 0 |   |
| Issuance      of common stock                               |   |   | 59,736 |   |   |   | 149,339 |   |   |   | 0 |   |   |   | 0 |   |
| Purchase      of treasury stock (fractional share redeemed) |   |   | (1 | ) |   |   | 0 |   |   |   | 0 |   |   |   | 0 |   |
|                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 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 |   |
| 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                             |   |   | (591 | ) |   |   | 0 |   |   |   | 0 |   |   |   | 0 |   |
|                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balances,      December 31, 2007                            |   |   | 4,399,167 |   |   | $ | 11,523,171 |   |   |   | 25 |   |   | $ | 2,500,000 |   |
|                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

|       |       |   |         |   |       |               |   |   |     |   |   |          |       |
|------------|------------|--------|--------------|--------|------------|--------------------|--------|--------|----------|--------|--------|---------------|------------|
|       |       |   |         |   |       |               |   |   |     |   |   |          |       |
|       |       |   | Retained     |   |       | Accumulated        |   |   |     |   |   |          |       |
| Additional |       |   | earnings     |   |       | other              |   |   |     |   |   | Total         |       |
| paid-in    |       |   | (Accumulated |   |       | comprehensive      |   |   | Treasury |   |   | shareholders' |       |
| Capital    |       |   | deficit)     |   |       | income      (loss) |   |   | stock    |   |   | equity        |       |
|       |       |   |         |   |       |               |   |   |     |   |   |          |       |
| $          | 21,324,481 |   |         | $      | 165,983    |               |   | $      | (452,118 | )      |   | $             | (2,614,721 | ) |   | $ | 29,123,334 |   |
|       |       |   |         |   |       |               |   |   |     |   |   |          |       |   |   |   |   |   |
|       |       |   |         |   |       |               |   |   |     |   |   |          |       |   |   |   |   |   |
|       | 0          |   |         |   | 3,375,448  |               |   |   | 0        |   |   |          | 0          |   |   |   | 3,375,448 |   |
|       |       |   |         |   |       |               |   |   |     |   |   |          |       |   |   |   |   |   |
|       | 0          |   |         |   | 0          |               |   |   | 181,454  |   |   |          | 0          |   |   |   | 181,454 |   |
|       |       |   |         |   |       |               |   |   |     |   |   |          |       |   |   |   |   |   |
|       |       |   |         |   |       |               |   |   |     |   |   |          |       |   |   |   | 3,556,902 |   |
|       |       |   |         |   |       |               |   |   |     |   |   |          |       |   |   |   |   |   |
|       | 0          |   |         |   | (2,780,764 | )                  |   |   | 0        |   |   |          | 0          |   |   |   | (2,780,764 | ) |
|       | 682,011    |   |         |   | 0          |               |   |   | 0        |   |   |          | 0          |   |   |   | 831,350 |   |
|       | 0          |   |         |   | 0          |               |   |   | 0        |   |   |          | (11        | ) |   |   | (11 | ) |
|       |       |   |         |   |       |               |   |   |     |   |   |          |       |   |   |   |   |   |
|       | 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 |   |
|       |       |   |         |   |       |               |   |   |     |   |   |          |       |   |   |   |   |   |

----

| COMMUNITY      BANCORP. AND SUBSIDIARY                                                       |   |
|----------------------------------------------------------------------------------------------|--------|
| CONSOLIDATED      STATEMENTS OF CASH FLOWS                                                   |   |
| Years      Ended December 31, 2007 and 2006                                                  |   |
|                                                                                         |   |
|                                                                                         |   |
|                                                                                         |   | 2007 |   |   | 2006 |   |
|                                                                                         |   |   |   |   |   |   |
| CASH      FLOWS FROM OPERATING ACTIVITIES                                                    |   |   |   |   |   |   |
|  Net      income                                                                        |   | $ | 3,357,330 |   |   | $ | 3,375,448 |   |
|  Adjustments      to reconcile net income to net                                        |   |   |   |   |   |   |   |   |
|   cash      provided by operating activities:                                      |   |   |   |   |   |   |   |   |
|    Depreciation      and amortization                                         |   |   | 936,847 |   |   |   | 874,564 |   |
|    Provision      for loan losses                                             |   |   | 147,500 |   |   |   | 137,500 |   |
|    Provision      for deferred income taxes                                   |   |   | (33,081 | ) |   |   | (28,349 | ) |
|    Net      gain on sale of securities                                        |   |   | 0 |   |   |   | (56,875 | ) |
|    Net      gain on sale of loans                                             |   |   | (300,119 | ) |   |   | (314,850 | ) |
|    Loss      on disposal or sale of bank premises and equipment               |   |   | 13,127 |   |   |   | 6,589 |   |
|    Gain      on Trust LLC                                                     |   |   | (128,709 | ) |   |   | (60,409 | ) |
|    Amortization      of bond premium, net                                     |   |   | 15,925 |   |   |   | 84,650 |   |
|    Proceeds      from sales of loans held for sale                            |   |   | 28,146,040 |   |   |   | 30,058,562 |   |
|    Originations      of loans held for sale                                   |   |   | (27,835,497 | ) |   |   | (28,723,430 | ) |
|    (Increase)      decrease in interest receivable                            |   |   | (115,230 | ) |   |   | 122,116 |   |
|    Increase      in mortgage servicing rights                                 |   |   | (73,211 | ) |   |   | (166,799 | ) |
|    Increase      in other assets                                              |   |   | (730,335 | ) |   |   | (210,815 | ) |
|    Amortization      of limited partnerships                                  |   |   | 381,588 |   |   |   | 354,156 |   |
|    Decrease      in unamortized loan fees                                     |   |   | (188,733 | ) |   |   | (52,001 | ) |
|    (Decrease)      increase in taxes payable                                  |   |   | (98,164 | ) |   |   | 7,963 |   |
|    (Decrease)      increase in interest payable                               |   |   | (53,682 | ) |   |   | 128,579 |   |
|    (Decrease)      increase in accrued expenses                               |   |   | (40,657 | ) |   |   | 4,140 |   |
|    Increase      in other liabilities                                         |   |   | 65,027 |   |   |   | 95,410 |   |
|                                                                                         |   |   |   |   |   |   |   |   |
|       Net      cash provided by operating activities           |   |   | 3,465,966 |   |   |   | 5,636,149 |   |
|                                                                                         |   |   |   |   |   |   |   |   |
| CASH      FLOWS FROM INVESTING ACTIVITIES                                                    |   |   |   |   |   |   |   |   |
|   Securities      held-to-maturity                                                 |   |   |   |   |   |   |   |   |
|    Maturities      and paydowns                                               |   |   | 23,897,224 |   |   |   | 43,144,522 |   |
|    Purchases                                                                  |   |   | (37,138,191 | ) |   |   | (35,822,723 | ) |
|   Securities      available-for-sale                                               |   |   |   |   |   |   |   |   |
|    Sales      and maturities                                                  |   |   | 6,000,000 |   |   |   | 15,089,375 |   |
|    Purchases                                                                  |   |   | (6,160,000 | ) |   |   | (1,000,000 | ) |
|   Proceeds      from redemption of restricted equity securities                    |   |   | 378,100 |   |   |   | 423,900 |   |
|   Investment      in Capital Trust                                                 |   |   | (387,000 | ) |   |   | 0 |   |
|   Decrease      in limited partnership contributions payable                       |   |   | (236,094 | ) |   |   | (301,625 | ) |
|   Decrease      (increase) in loans, net                                           |   |   | 8,153,286 |   |   |   | (18,234,097 | ) |
|   Capital      expenditures, net                                                   |   |   | (617,587 | ) |   |   | (1,598,059 | ) |
|   Investments      in limited partnerships, net                                    |   |   | (264,800 | ) |   |   | 0 |   |
|   Cash      paid for acquisition of LyndonBank, net of cash received               |   |   | (14,638,059 | ) |   |   | 0 |   |
|   Recoveries      of loans charged off                                             |   |   | 70,945 |   |   |   | 68,460 |   |
|                                                                                         |   |   |   |   |   |   |   |   |
|       Net      cash (used in) provided by investing activities |   |   | (20,942,176 | ) |   |   | 1,769,753 |   |
|                                                                                         |   |   |   |   |   |   |   |   |

----

|                                                                                             |   | 2007   |       |   | 2006   |   |
|--------------------------------------------------------------------------------------------------|--------|--------|------------|--------|--------|--------|
| CASH      FLOWS FROM FINANCING ACTIVITIES                                                        |   |   |       |   |   |   |
|   Net      increase (decrease) in demand, NOW, savings, and money market      accounts |   |   | 7,096,201  |   |   |   | (23,932,373 | ) |
|   Net      (decrease) increase in time deposits                                        |   |   | (1,989,977 | )      |   |   | 30,608,156 |   |
|   Net      decrease in repurchase agreements                                           |   |   | (5,908,924 | )      |   |   | (263,194 | ) |
|   Net      increase (decrease) in short-term borrowings                                |   |   | 5,750,000  |   |   |   | (2,000,000 | ) |
|   Advances      in long-term borrowings                                                |   |   | 0          |   |   |   | 20,000,000 |   |
|   Repayments      in long-term borrowings                                              |   |   | (30,000    | )      |   |   | (28,000,000 | ) |
|   Proceeds      from issuance of junior subordinated debentures                        |   |   | 12,887,000 |   |   |   | 0 |   |
|   Proceeds      from issuance of preferred stock                                       |   |   | 2,500,000  |   |   |   | 0 |   |
|   Purchase      of treasury stock                                                      |   |   | (8,045     | )      |   |   | (11 | ) |
|   Dividends      paid                                                                  |   |   | (2,014,132 | )      |   |   | (1,926,809 | ) |
|                                                                                             |   |   |       |   |   |   |   |   |
|       Net      cash provided by (used in) financing activities     |   |   | 18,282,123 |   |   |   | (5,514,231 | ) |
|       Net      increase in cash and cash equivalents               |   |   | 805,913    |   |   |   | 1,891,671 |   |
|   Cash      and cash equivalents                                                       |   |   |       |   |   |   |   |   |
|      Beginning                                                          |   |   | 19,466,610 |   |   |   | 17,574,939 |   |
|      Ending                                                             |   | $      | 20,272,523 |   |   | $      | 19,466,610 |   |
|                                                                                             |   |   |       |   |   |   |   |   |
| SUPPLEMENTAL      SCHEDULE OF CASH PAID DURING THE YEAR                                          |   |   |       |   |   |   |   |   |
|   Interest                                                                             |   | $      | 8,666,596  |   |   | $      | 7,574,509 |   |
|   Income      taxes                                                                    |   | $      | 800,000    |   |   | $      | 750,000 |   |
|                                                                                             |   |   |       |   |   |   |   |   |
| SUPPLEMENTAL      SCHEDULE OF NONCASH INVESTING                                                  |   |   |       |   |   |   |   |   |
|  AND      FINANCING ACTIVITIES                                                              |   |   |       |   |   |   |   |   |
|   Change      in unrealized gain on securities available-for-sale                      |   | $      | 578,596    |   |   | $      | 274,931 |   |
|                                                                                             |   |   |       |   |   |   |   |   |
|   Dividends      paid:                                                                 |   |   |       |   |   |   |   |   |
|    Dividends      declared                                                        |   | $      | 2,894,359  |   |   | $      | 2,780,764 |   |
|    Increase      in dividends payable                                             |   |   |       |   |   |   |   |   |
|     attributable      to dividends declared                                  |   |   | (27,477    | )      |   |   | (7,585 | ) |
|    Dividends      reinvested                                                      |   |   | (852,750   | )      |   |   | (846,370 | ) |
|                                                                                             |   | $      | 2,014,132  |   |   | $      | 1,926,809 |   |
|                                                                                             |   |   |       |   |   |   |   |   |
|   Stock      dividend                                                                  |   | $      | 2,821,320  |   |   | $      | 0 |   |

----

|                                                                                  |   | 2007   |      |   | 2006   |   |
|---------------------------------------------------------------------------------------|--------|--------|-----------|--------|--------|--------|
|                                                                                  |   |   |      |   |   |   |
| Net      income                                                                       |   | $      | 3,357,330 |   |   | $      | 3,375,448 |   |
| Other      comprehensive income, net of tax:                                          |   |   |      |   |   |   |   |   |
|     Change      in unrealized holding losses on available-        |   |   |      |   |   |   |   |   |
|      for-sale      securities arising during the period      |   |   | 578,596   |   |   |   | 331,806 |   |
|     Reclassification      adjustment for gains realized in income |   |   | 0         |   |   |   | (56,875 | ) |
|        Net      unrealized gain                    |   |   | 578,596   |   |   |   | 274,931 |   |
|        Tax      effect                             |   |   | (196,723  | )      |   |   | (93,477 | ) |
|        Other      comprehensive income, net of tax |   |   | 381,873   |   |   |   | 181,454 |   |
|      Total      comprehensive income                         |   | $      | 3,739,203 |   |   | $      | 3,556,902 |   |

|                                                  |   |      |       |   | Gross      |   |    | Gross      |   |   |    |   |
|-------------------------------------------------------|--------|-----------|------------|--------|------------|--------|---------|------------|--------|--------|---------|--------|
|                                                  |   | Amortized |       |   | Unrealized |   |    | Unrealized |   |   | Fair    |   |
| Securities      AFS                                   |   | Cost      |       |   | Gains      |   |    | Losses     |   |   | Value   |   |
|                                                  |   |      |       |   |       |   |    |       |   |   |    |   |
| 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 |   |
|                                                  |   |      |       |   |       |   |    |       |   |   |    |   |   |   |   |   |
| December      31, 2006                                |   |      |       |   |       |   |    |       |   |   |    |   |   |   |   |   |
| U.      S. Government sponsored enterprise securities |   | $         | 19,030,313 |   |       | $      | 0       |       |   | $      | 382,168 |   |   | $ | 18,648,145 |   |
| U.      S. Government securities                      |   |      | 3,991,991  |   |       |   | 5,068   |       |   |   | 32,997  |   |   |   | 3,964,062 |   |
|                                                  |   | $         | 23,022,304 |   |       | $      | 5,068   |       |   | $      | 415,165 |   |   | $ | 22,612,207 |   |
|                                                  |   |      |       |   |       |   |    |       |   |   |    |   |   |   |   |   |
| Securities      HTM                                   |   |      |       |   |       |   |    |       |   |   |    |   |   |   |   |   |
|                                                  |   |      |       |   |       |   |    |       |   |   |    |   |   |   |   |   |
| December      31, 2007                                |   |      |       |   |       |   |    |       |   |   |    |   |   |   |   |   |
| States      and political subdivisions                |   | $         | 34,310,833 |   |       | $      | 0       |       |   | $      | 37,833  |   |   | $ | 34,273,000 |   |
|                                                  |   |      |       |   |       |   |    |       |   |   |    |   |   |   |   |   |
| December      31, 2006                                |   |      |       |   |       |   |    |       |   |   |    |   |   |   |   |   |
| States      and political subdivisions                |   | $         | 21,069,866 |   |       | $      | 231,134 |       |   | $      | 0       |   |   | $ | 21,301,000 |   |

|                            |   | Amortized |       |   | Fair   |   |
|---------------------------------|--------|-----------|------------|--------|--------|--------|
|                            |   | Cost      |       |   | Value  |   |
|                            |   |      |       |   |   |   |
| Due      in one year or less    |   | $         | 10,003,765 |   |   | $      | 9,977,521 |   |
| Due      from one to five years |   |      | 14,156,218 |   |   |   | 14,350,961 |   |
| Due      from five to ten years |   |      | 1,984,354  |   |   |   | 1,984,354 |   |
| Due      after ten years        |   |      | 1,157,042  |   |   |   | 1,157,042 |   |
| Mortgage-backed      securities |   |      | 17,868,386 |   |   |   | 17,868,386 |   |
|                            |   | $         | 45,169,765 |   |   | $      | 45,338,264 |   |

|                            |   | Amortized |       |   | Fair   |   |
|---------------------------------|--------|-----------|------------|--------|--------|--------|
|                            |   | Cost      |       |   | Value* |   |
|                            |   |      |       |   |   |   |
| Due      in one year or less    |   | $         | 29,716,589 |   |   | $      | 29,717,000 |   |
| Due      from one to five years |   |      | 1,698,920  |   |   |   | 1,689,000 |   |
| Due      from five to ten years |   |      | 2,290,116  |   |   |   | 2,281,000 |   |
| Due      after ten years        |   |      | 605,208    |   |   |   | 586,000 |   |
|                            |   | $         | 34,310,833 |   |   | $      | 34,273,000 |   |

| 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 |   |

| December      31, 2006         |   | 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     |   | $                        | 999,836   |   |                   | $      | 163    |   |   | $ | 17,648,309 |   |   | $ | 382,005 |   |   | $ | 18,648,145 |   |   | $ | 382,168 |   |
| U.S.      Government           |   |                     |      |   |                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| securities                     |   |                     | 993,438   |   |                   |   | 4,841  |   |   |   | 1,968,437 |   |   |   | 28,156 |   |   |   | 2,961,875 |   |   |   | 32,997 |   |
|                           |   | $                        | 1,993,274 |   |                   | $      | 5,004  |   |   | $ | 19,616,746 |   |   | $ | 410,161 |   |   | $ | 21,610,020 |   |   | $ | 415,165 |   |

|                                  |   | 2007   |        |   | 2006   |   |
|---------------------------------------|--------|--------|-------------|--------|--------|--------|
| Commercial                            |   | $      | 33,688,665  |   |   | $      | 22,217,047 |   |
| Real      estate – Construction |   |   | 12,896,803  |   |   |   | 11,889,203 |   |
| Real      estate – Mortgage     |   |   | 290,380,076 |   |   |   | 213,894,135 |   |
| Installment      and other            |   |   | 18,920,860  |   |   |   | 20,729,341 |   |
|                                  |   |   | 355,886,404 |   |   |   | 268,729,726 |   |
| Deduct:                               |   |   |        |   |   |   |   |   |
| Allowance      for loan losses        |   |   | 3,026,049   |   |   |   | 2,267,821 |   |
| Unearned      net loan fees           |   |   | 443,372     |   |   |   | 632,105 |   |
|                                  |   |   | 3,469,421   |   |   |   | 2,899,926 |   |
|                                  |   | $      | 352,415,786 |   |   | $      | 265,829,800 |   |

|                                       |   | Years      Ended December 31, |    |
|--------------------------------------------|--------|-------------------------------|---------|
|                                       |   | 2007                          |    |   | 2006 |   |
|                                       |   |                          |    |   |   |   |
| Mortgage      servicing rights capitalized |   | $                             | 290,113 |   |   | $ | 447,939 |   |
| Mortgage      servicing rights amortized   |   | $                             | 216,902 |   |   | $ | 281,140 |   |

|                                                   |   | 2007   |      |   | 2006   |   |
|--------------------------------------------------------|--------|--------|-----------|--------|--------|--------|
|                                                   |   |   |      |   |   |   |
| Balance,      beginning of year                        |   | $      | 2,267,821 |   |   | $      | 2,189,187 |   |
| Provision      for loan losses                         |   |   | 147,500   |   |   |   | 137,500 |   |
| Recoveries      of amounts charged off                 |   |   | 70,945    |   |   |   | 68,460 |   |
|                                                   |   |   | 2,486,266 |   |   |   | 2,395,147 |   |
| Amounts      charged off                               |   |   | (247,390  | )      |   |   | (127,326 | ) |
| Allowance      for loan losses acquired through Merger |   |   | 787,173   |   |   |   | 0 |   |
| Balance,      end of year                              |   | $      | 3,026,049 |   |   | $      | 2,267,821 |   |

|                                                |   | 2007   |       |   | 2006   |   |
|-----------------------------------------------------|--------|--------|------------|--------|--------|--------|
|                                                |   |   |       |   |   |   |
| Land      and land improvements                     |   | $      | 2,546,615  |   |   | $      | 2,315,414 |   |
| Buildings      and improvements                     |   |   | 11,710,364 |   |   |   | 9,746,666 |   |
| Furniture      and equipment                        |   |   | 6,208,835  |   |   |   | 5,282,007 |   |
| Leasehold      improvements                         |   |   | 1,196,525  |   |   |   | 623,621 |   |
| Capital      lease                                  |   |   | 927,889    |   |   |   | 0 |   |
| Other      prepaid assets                           |   |   | 121,295    |   |   |   | 94,688 |   |
|                                                |   |   | 22,711,523 |   |   |   | 18,062,396 |   |
| Less      accumulated depreciation and amortization |   |   | (6,350,371 | )      |   |   | (5,728,372 | ) |
|                                                |   | $      | 16,361,152 |   |   | $      | 12,334,024 |   |

| 2008                    |   | $      | 226,022   |   |
|-------------------------|--------|--------|-----------|--------|
| 2009                    |   |   | 227,371   |   |
| 2010                    |   |   | 200,601   |   |
| 2011                    |   |   | 181,574   |   |
| 2012                    |   |   | 182,074   |   |
| Subsequent      to 2012 |   |   | 707,013   |   |
|                    |   | $      | 1,724,655 |   |

| 2008                                             |   | $      | 107,482   |   |
|--------------------------------------------------|--------|--------|-----------|--------|
| 2009                                             |   |   | 110,983   |   |
| 2010                                             |   |   | 110,983   |   |
| 2011                                             |   |   | 113,482   |   |
| 2012                                             |   |   | 116,982   |   |
| Subsequent      to 2012                          |   |   | 1,001,300 |   |
| Total      minimum lease payments                |   |   | 1,561,212 |   |
| Less      amount representing interest           |   |   | (617,985  | )      |
| Present      value of net minimum lease payments |   | $      | 943,227   |   |

| At December 31, 2007                        |   |
|---------------------------------------------|--------|
| Cash      and cash equivalents              |   | $ | 12,079,764 |   |
| FHLB      Stock                             |   |   | 1,006,700 |   |
| Investments                                 |   |   | 23,541,893 |   |
| Loans,      net                             |   |   | 94,898,984 |   |
| Bank      premises and equipment            |   |   | 4,359,515 |   |
| Prepaid      expenses and other assets      |   |   | 4,785,076 |   |
| Identified      intangible assets           |   |   | 4,161,000 |   |
| Goodwill                                    |   |   | 10,347,455 |   |
| Deposits                                    |   |   | (110,125,692 | ) |
| Borrowings                                  |   |   | (14,269,911 | ) |
| Long-term      debt                         |   |   | (943,227 | ) |
| Accrued      expenses and other liabilities |   |   | (3,123,734 | ) |
| Total      acquisition cost                 |   | $ | 26,717,823 |   |

|                                                                           |   | For      the Years Ended December 31, |       |
|--------------------------------------------------------------------------------|--------|---------------------------------------|------------|
|                                                                           |   |                                  |       |   |   |   |
|                                                                           |   | 2007                                  |       |   | 2006 |   |
| Interest      income                                                           |   |                                  |       |   |   |   |
|   Loans,      including fees                                         |   | $                                     | 27,056,470 |   |   | $ | 25,630,764 |   |
|   Investment      income                                             |   |                                  | 4,068,404  |   |   |   | 4,177,072 |   |
|      Total      interest income                       |   |                                  | 31,124,874 |   |   |   | 29,807,836 |   |
|                                                                           |   |                                  |       |   |   |   |   |   |
| Interest      expense                                                          |   |                                  |       |   |   |   |   |   |
|   Deposits                                                           |   |                                  | 12,224,430 |   |   |   | 10,351,760 |   |
|   Other      borrowings                                              |   |                                  | 2,581,098  |   |   |   | 2,799,489 |   |
|      Total      interest expense                      |   |                                  | 14,805,528 |   |   |   | 13,151,249 |   |
| Net      interest income                                                       |   |                                  | 16,319,346 |   |   |   | 16,656,587 |   |
| Provision      for loan losses                                                 |   |                                  | 197,500    |   |   |   | 137,500 |   |
| Net      interest income after provision                                       |   |                                  | 16,121,846 |   |   |   | 16,519,087 |   |
|                                                                           |   |                                  |       |   |   |   |   |   |
| Non-interest      income                                                       |   |                                  |       |   |   |   |   |   |
|   Service      charges on deposit accounts                           |   |                                  | 1,951,901  |   |   |   | 1,884,713 |   |
|   Securities      gains, net                                         |   |                                  | 51,449     |   |   |   | 56,875 |   |
|   Increase      in cash surrender value of bank owned life insurance |   |                                  | 127,555    |   |   |   | 118,956 |   |
|   Other      income                                                  |   |                                  | 2,497,787  |   |   |   | 2,119,402 |   |
|      Total      non-interest income                   |   |                                  | 4,628,692  |   |   |   | 4,179,946 |   |
| Non-interest      expense                                                      |   |                                  |       |   |   |   |   |   |
|   Salaries      and employee benefits                                |   |                                  | 10,348,493 |   |   |   | 9,419,174 |   |
|   Occupancy      and equipment expense                               |   |                                  | 3,649,653  |   |   |   | 3,243,015 |   |
|   Other      operating expenses                                      |   |                                  | 6,114,021  |   |   |   | 5,241,047 |   |
|      Total      non-interest expense                  |   |                                  | 20,112,167 |   |   |   | 17,903,236 |   |
| Income      before income taxes                                                |   |                                  | 638,371    |   |   |   | 2,795,797 |   |
| Income      tax (benefit) expense                                              |   |                                  | (465,536   | ) |   |   | 18,576 |   |
|     Net      income                                        |   | $                                     | 1,103,907  |   |   | $ | 2,777,221 |   |
|                                                                           |   |                                  |       |   |   |   |   |   |
| Earnings      per share                                                        |   | $                                     | 0.25       |   |   | $ | 0.65 |   |
| Weighted      average shares outstanding                                       |   |                                  | 4,365,378  |   |   |   | 4,302,456 |   |

| 2008                                       |   | $      | 832,200   |   |
|--------------------------------------------|--------|--------|-----------|--------|
| 2009                                       |   |   | 665,760   |   |
| 2010                                       |   |   | 532,608   |   |
| 2011                                       |   |   | 426,086   |   |
| 2012                                       |   |   | 340,869   |   |
| Thereafter                                 |   |   | 1,363,477 |   |
| Total      core deposit intangible expense |   | $      | 4,161,000 |   |

| 2008  |   | $      | 159,243,480 |   |
|-------|--------|--------|-------------|--------|
| 2009  |   |   | 13,194,517  |   |
| 2010  |   |   | 4,235,293   |   |
| 2011  |   |   | 6,824,824   |   |
| 2012  |   |   | 1,638,689   |   |
| Total |   | $      | 185,136,803 |   |

|                                                               |   | 2007   |       |   | 2006   |   |
|--------------------------------------------------------------------|--------|--------|------------|--------|--------|--------|
|                                                               |   |   |       |   |   |   |
| FHLB      term borrowing, 5.05% fixed rate, payable March 28, 2008 |   | $      | 8,000,000  |   |   | $      | 0 |   |
| Community      Investment Program borrowing, 7.57%                 |   |   |       |   |   |   |   |   |
|  fixed      rate, payable November 16, 2007                   |   |   | 0          |   |   |   | 30,000 |   |
| Community      Investment Program borrowing, 7.67%                 |   |   |       |   |   |   |   |   |
|  fixed      rate, payable November 16, 2012                   |   |   | 10,000     |   |   |   | 10,000 |   |
|                                                               |   |   | 8,010,000  |   |   |   | 40,000 |   |
|                                                               |   |   |       |   |   |   |   |   |
| Federal      Funds Purchased (FHLB), 4.10%                         |   |   | 3,750,000  |   |   |   | 0 |   |
| Federal      Funds Purchased (BOA), 4.50%                          |   |   | 2,000,000  |   |   |   | 0 |   |
|                                                               |   |   | 5,750,000  |   |   |   | 0 |   |
|                                                               |   |   |       |   |   |   |   |   |
|      Total      Borrowings                |   | $      | 13,760,000 |   |   | $      | 40,000 |   |

| 2008   |   | $      | 8,000,000 |   |
|--------|--------|--------|-----------|--------|
| 2012   |   |   | 10,000    |   |
|   |   | $      | 8,010,000 |   |

|                           |   | 2007   |    |   | 2006   |   |
|--------------------------------|--------|--------|---------|--------|--------|--------|
|                           |   |   |    |   |   |   |
| Currently      paid or payable |   | $      | 701,836 |   |   | $      | 757,963 |   |
| Deferred                       |   |   | (33,081 | )      |   |   | (28,349 | ) |
|                           |   | $      | 668,755 |   |   | $      | 729,614 |   |

|                               |   | 2007   |      |   | 2006   |   |
|------------------------------------|--------|--------|-----------|--------|--------|--------|
| Computed      expected tax expense |   | $      | 1,368,869 |   |   | $      | 1,395,721 |   |
| Tax      exempt interest           |   |   | (355,478  | )      |   |   | (367,055 | ) |
| Disallowed      interest           |   |   | 42,170    |   |   |   | 42,257 |   |
| Partnership      tax credits       |   |   | (390,965  | )      |   |   | (345,522 | ) |
| Other                              |   |   | 4,159     |   |   |   | 4,213 |   |
|                               |   | $      | 668,755   |   |   | $      | 729,614 |   |

|                           |   | 2007   |    |   | 2006   |   |
|--------------------------------|--------|--------|---------|--------|--------|--------|
|                           |   |   |    |   |   |   |
| Depreciation                   |   | $      | (32,853 | )      |   | $      | (20,178 | ) |
| Loan      fees                 |   |   | 1,430   |   |   |   | 1,814 |   |
| Mortgage      servicing        |   |   | 24,892  |   |   |   | 56,711 |   |
| Deferred      compensation     |   |   | (27,031 | )      |   |   | (36,458 | ) |
| Bad      debts                 |   |   | 9,841   |   |   |   | (26,735 | ) |
| Non-accrual      loan interest |   |   | (7,869  | )      |   |   | (8,661 | ) |
| Other                          |   |   | (1,491  | )      |   |   | 5,158 |   |
|                           |   | $      | (33,081 | )      |   | $      | (28,349 | ) |

|                                                                                     |   | 2007   |       |   | 2006   |   |
|------------------------------------------------------------------------------------------|--------|--------|------------|--------|--------|--------|
| Components      of the deferred tax asset:                                               |   |   |       |   |   |   |
|   Bad      debts                                                               |   | $      | 854,680    |   |   | $      | 596,883 |   |
|   Nonaccrual      loan interest                                                |   |   | 41,163     |   |   |   | 11,003 |   |
|   Deferred      compensation                                                   |   |   | 393,956    |   |   |   | 366,925 |   |
|   Contingent      liability – Mortgage Partnership Finance (MPF) program |   |   | 31,167     |   |   |   | 31,167 |   |
|   Fair      value acquired securities available-for-sale                       |   |   | 341,689    |   |   |   | 139,433 |   |
|   Accrued      stay on bonuses                                                 |   |   | 44,098     |   |   |   | 0 |   |
|   Alternative      minimum tax                                                 |   |   | 59,031     |   |   |   | 0 |   |
|   Other                                                                        |   |   | 127,411    |   |   |   | 68,268 |   |
|        Total      deferred tax asset                  |   |   | 1,893,195  |   |   |   | 1,213,679 |   |
|                                                                                     |   |   |       |   |   |   |   |   |
| Components      of the deferred tax liability:                                           |   |   |       |   |   |   |   |   |
|   Depreciation                                                                 |   |   | 316,292    |   |   |   | 284,941 |   |
|   Limited      partnerships                                                    |   |   | 255,280    |   |   |   | 255,280 |   |
|   Mortgage      servicing rights                                               |   |   | 403,518    |   |   |   | 378,627 |   |
|   Unrealized      gain on securities available-for-sale                        |   |   | 57,290     |   |   |   | 139,433 |   |
|   Core      deposit intangibles                                                |   |   | 1,414,740  |   |   |   | 0 |   |
|   Fair      value on acquired loans                                            |   |   | 265,656    |   |   |   | 0 |   |
|   Fair      value on acquired deposits                                         |   |   | 238,680    |   |   |   | 0 |   |
|   Other                                                                        |   |   | 2,436      |   |   |   | 0 |   |
|        Total      deferred tax liability              |   |   | 2,953,892  |   |   |   | 918,848 |   |
|         Net      deferred tax (liability) asset  |   | $      | (1,060,697 | )      |   | $      | 294,831 |   |

|                                                            |   | Contract      or         |       |
|-----------------------------------------------------------------|--------|--------------------------|------------|
|                                                            |   | --Notional      Amount-- |       |
|                                                            |   | 2007                     |       |   | 2006 |   |
|                                                            |   |                     |       |   |   |   |
| Unused      portions of construction lines of credit            |   | $                        | 4,232,061  |   |   | $ | 4,011,034 |   |
| Unused      portions of home equity lines of credit             |   |                     | 14,673,608 |   |   |   | 11,212,136 |   |
| Other      commitments to extend credit                         |   |                     | 31,110,697 |   |   |   | 19,087,572 |   |
| Standby      letters of credit and commercial letters of credit |   |                     | 580,400    |   |   |   | 1,004,200 |   |
| Credit      card arrangements                                   |   |                     | 0          |   |   |   | 9,086,665 |   |
| MPF      credit enhancement obligation, net (See Note 16)       |   |                     | 1,280,817  |   |   |   | 1,130,949 |   |

|                                         |   | 2007   |      |   | 2006   |   |
|----------------------------------------------|--------|--------|-----------|--------|--------|--------|
|                                         |   |   |      |   |   |   |
| Balance,      beginning                      |   | $      | 1,385,497 |   |   | $      | 520,675 |   |
| Loans      – New Directors             |   |   | 2,795,713 |   |   |   | 749,441 |   |
| New      loans                               |   |   | 500,741   |   |   |   | 784,933 |   |
| Retirement      of Director                  |   |   | (306,883  | )      |   |   | 0 |   |
| Repayment*                                   |   |   | (844,757  | )      |   |   | (669,552 | ) |
| Balance,      ending                         |   | $      | 3,530,311 |   |   | $      | 1,385,497 |   |
| *Includes      loan sold to secondary market |   |   |      |   |   |   |   |   |

|                                |   | 2007   |   |   | 2006   |   |
|-------------------------------------|--------|--------|--------|--------|--------|--------|
|                                |   |   |   |   |   |   |
| Newport                             |   | $      | 22,099 |   |   | $      | 18,635 |   |
| Barre                               |   |   | 2,375  |   |   |   | 2,313 |   |
|      Total |   | $      | 24,474 |   |   | $      | 20,948 |   |

|                 |   | 2007   |   |   | 2006   |   |
|----------------------|--------|--------|--------|--------|--------|--------|
|                 |   |   |   |   |   |   |
| Management      fees |   | $      | 37,717 |   |   | $      | 36,841 |   |

----

|                                           |    |        |                    |                    | Minimum            |
|------------------------------------------------|---------|-------------|-------------------------|-------------------------|--------------------|
|                                           |    |        |                    |                    | To      Be Well    |
|                                           |    |        | Minimum                 | Capitalized      Under  |
|                                           |    |        | For      Capital        | Prompt      Corrective  |
|                                           |    |        | Adequacy      Purposes: | Action      Provisions: |
|                                           | Actual  |        |                    |                    |               |
|                                           | Amount  | Ratio  | Amount                  | Ratio                   | Amount             | Ratio |
|                                           |    |        |                    |                    |               |   |
| 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% |
| As      of December 31, 2006:                  |    |        |                    |                    |               |   |
| Total      capital (to risk-weighted assets)   |    |        |                    |                    |               |   |
|    Consolidated                 | $33,270 | 14.10%      | $18,879                 | 8.0%                    | N/A                | N/A |
|    Bank                         | $33,047 | 14.01%      | $18,872                 | 8.0%                    | $23,590            | 10.0% |
| Tier      I capital (to risk-weighted assets)  |    |        |                    |                    |               |   |
|    Consolidated                 | $31,002 | 13.14%      | $ 9,439            | 4.0%                    | N/A                | N/A |
|    Bank                         | $30,779 | 13.05%      | $ 9,436            | 4.0%                    | $14,154            | 6.0% |
| Tier      I capital (to average assets)        |    |        |                    |                    |               |   |
|    Consolidated                 | $31,002 | 8.59%       | $14,434                 | 4.0%                    | N/A                | N/A |
|    Bank                         | $30,779 | 8.53%       | $14,430                 | 4.0%                    | $18,038            | 5.0% |

----

|                                                  |   | December      31, 2007 |    |   | December      31, 2006 |   |
|-------------------------------------------------------|--------|------------------------|---------|--------|------------------------|--------|
|                                                  |   | Carrying               |    |   | Fair                   |   |   | Carrying |   |   | Fair |   |
|                                                  |   | Amount                 |    |   | Value                  |   |   | Amount |   |   | Value |   |
|                                                  |   |                   |    |   | (in      thousands)    |   |   |   |   |
| Financial      assets:                                |   |                   |    |   |                   |   |   |   |   |   |   |   |
| Cash      and cash equivalents                        |   | $                      | 20,273  |   |                   | $      | 20,273 |   |   | $ | 19,467 |   |   | $ | 19,467 |   |
| Securities      held-to-maturity                      |   |                   | 34,311  |   |                   |   | 34,273 |   |   |   | 21,070 |   |   |   | 21,301 |   |
| Securities      available-for-sale                    |   |                   | 46,877  |   |                   |   | 46,877 |   |   |   | 22,612 |   |   |   | 22,612 |   |
| Restricted      equity securities                     |   |                   | 3,457   |   |                   |   | 3,457 |   |   |   | 2,828 |   |   |   | 2,828 |   |
| Loans      and loans held-for-sale, net               |   |                   | 353,102 |   |                   |   | 360,088 |   |   |   | 266,396 |   |   |   | 266,361 |   |
| Accrued      interest receivable                      |   |                   | 2,304   |   |                   |   | 2,304 |   |   |   | 1,667 |   |   |   | 1,667 |   |
| Bank      owned life insurance                        |   |                   | 3,559   |   |                   |   | 3,559 |   |   |   | 0 |   |   |   | 0 |   |
|                                                  |   |                   |    |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| Financial      liabilities:                           |   |                   |    |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| Deposits                                              |   |                   | 416,220 |   |                   |   | 411,718 |   |   |   | 300,988 |   |   |   | 299,670 |   |
| Federal      funds purchased and other borrowed funds |   |                   | 13,760  |   |                   |   | 13,762 |   |   |   | 40 |   |   |   | 42 |   |
| Repurchase      agreements                            |   |                   | 17,445  |   |                   |   | 17,445 |   |   |   | 17,084 |   |   |   | 17,072 |   |
| Subordinated      debentures                          |   |                   | 12,887  |   |                   |   | 12,242 |   |   |   | 0 |   |   |   | 0 |   |
| Capital      lease obligations                        |   |                   | 943     |   |                   |   | 943 |   |   |   | 0 |   |   |   | 0 |   |
| Accrued      interest payable                         |   |                   | 291     |   |                   |   | 291 |   |   |   | 345 |   |   |   | 345 |   |

----

| COMMUNITY      BANCORP. (PARENT COMPANY ONLY)                                                           |   |
|---------------------------------------------------------------------------------------------------------|--------|
| CONDENSED      BALANCE SHEETS                                                                           |   |
| DECEMBER      31, 2007 AND 2006                                                                         |   |
|                                                                                                    |   |
| ASSETS                                                                                                  |   | 2007 |   |   | 2006 |   |
|                                                                                                    |   |   |   |   |   |   |
|   Cash                                                                                        |   | $ | 739,883 |   |   | $ | 635,250 |   |
|   Investment      in subsidiary - Community National Bank                                     |   |   | 46,451,386 |   |   |   | 30,507,941 |   |
|   Investment      in Capital Trust                                                            |   |   | 387,000 |   |   |   | 0 |   |
|   Other      assets                                                                           |   |   | 754,680 |   |   |   | 85,732 |   |
|        Total      assets                                             |   | $ | 48,332,949 |   |   | $ | 31,228,923 |   |
|                                                                                                    |   |   |   |   |   |   |   |   |
| LIABILITIES      AND SHAREHOLDERS' EQUITY                                                               |   |   |   |   |   |   |   |   |
| Liabilities                                                                                             |   |   |   |   |   |   |   |   |
|   Junior      subordinated debentures                                                         |   | $ | 12,887,000 |   |   | $ | 0 |   |
|   Dividends      payable                                                                      |   |   | 525,589 |   |   |   | 498,112 |   |
|       Total      liabilities                                              |   |   | 13,412,589 |   |   |   | 498,112 |   |
|                                                                                                    |   |   |   |   |   |   |   |   |
| Shareholders'      equity                                                                               |   |   |   |   |   |   |   |   |
|   Preferred      stock, 1,000,000 shares authorized at December 31, 2007, 25      shares      |   |   |   |   |   |   |   |   |
|    issued      and outstanding at December 31, 2007 and no shares issued    and          |   |   |   |   |   |   |   |   |
|    outstanding      at December 31, 2006                                                 |   |   | 2,500,000 |   |   |   | 0 |   |
|   Common      stock - $2.50 par value; 10,000,000 and 6,000,000 shares      authorized        |   |   |   |   |   |   |   |   |
|    at      December 31, 2007 and 2006, respectively; and 4,609,268 and      4,339,619    |   |   |   |   |   |   |   |   |
|    shares      issued at December 31, 2007 and 2006, respectively (including      16,408 |   |   |   |   |   |   |   |   |
|    and      15,222 shares issued February 1, 2008 and 2007,    respectively)             |   |   | 11,523,171 |   |   |   | 10,849,048 |   |
|   Additional      paid-in capital                                                             |   |   | 25,006,439 |   |   |   | 22,006,492 |   |
|   Retained      earnings (accumulated deficit)                                                |   |   | (1,597,682 | ) |   |   | 760,667 |   |
|   Accumulated      other comprehensive income (loss)                                          |   |   | 111,209 |   |   |   | (270,664 | ) |
|   Less      treasury stock, at cost (2007 - 210,101 shares; 2006 - 209,510      shares)       |   |   | (2,622,777 | ) |   |   | (2,614,732 | ) |
|        Total      shareholders' equity                               |   |   | 34,920,360 |   |   |   | 30,730,811 |   |
|        Total      liabilities and shareholders' equity               |   | $ | 48,332,949 |   |   | $ | 31,228,923 |   |

----

| COMMUNITY      BANCORP. (PARENT COMPANY ONLY)                          |   |
|------------------------------------------------------------------------|--------|
| CONDENSED      STATEMENTS OF INCOME                                    |   |
| Years      Ended December 31, 2007 and 2006                            |   |
|                                                                   |   | 2007 |   |   | 2006 |   |
|                                                                   |   |   |   |   |   |   |
| Interest      income                                                   |   |   |   |   |   |   |
|   Interest      on Capital Trust                             |   | $ | 3,657 |   |   | $ | 0 |   |
|                                                                   |   |   |   |   |   |   |   |   |
| Interest      expense                                                  |   |   |   |   |   |   |   |   |
|   Interest      on junior subordinated debentures            |   |   | 121,782 |   |   |   | 0 |   |
|                                                                   |   |   |   |   |   |   |   |   |
|       Net      interest expense          |   |   | (118,125 | ) |   |   | 0 |   |
|                                                                   |   |   |   |   |   |   |   |   |
| Revenues                                                               |   |   |   |   |   |   |   |   |
|   Dividends                                                  |   |   |   |   |   |   |   |   |
|     Bank      subsidiary - Community National Bank |   |   | 3,150,000 |   |   |   | 2,611,000 |   |
|     Other      dividend income                     |   |   | 0 |   |   |   | 300 |   |
|       Total      revenues                |   |   | 3,150,000 |   |   |   | 2,611,300 |   |
|                                                                   |   |   |   |   |   |   |   |   |
| Other      non-interest income                                         |   |   |   |   |   |   |   |   |
|     Gain      on sale of stock                     |   |   | 0 |   |   |   | 56,875 |   |
|       Total      non-interest income     |   |   | 0 |   |   |   | 56,875 |   |
|                                                                   |   |   |   |   |   |   |   |   |
| Expenses                                                               |   |   |   |   |   |   |   |   |
|   Administrative      and other                              |   |   | 418,604 |   |   |   | 309,329 |   |
|       Total      expenses                |   |   | 418,604 |   |   |   | 309,329 |   |
|                                                                   |   |   |   |   |   |   |   |   |
| Income      before applicable income tax and equity in                 |   |   |   |   |   |   |   |   |
|  undistributed      net income of subsidiary                      |   |   | 2,613,271 |   |   |   | 2,358,846 |   |
| Applicable      income tax benefit                                     |   |   | 182,488 |   |   |   | 85,732 |   |
|                                                                   |   |   |   |   |   |   |   |   |
| Income      before equity in undistributed net income of subsidiary    |   |   | 2,795,759 |   |   |   | 2,444,578 |   |
| Equity      in undistributed net income of subsidiary                  |   |   | 561,571 |   |   |   | 930,870 |   |
|                                                                   |   |   |   |   |   |   |   |   |
|       Net      income                    |   | $ | 3,357,330 |   |   | $ | 3,375,448 |   |

----

| COMMUNITY      BANCORP. (PARENT COMPANY ONLY)                                                      |   |
|----------------------------------------------------------------------------------------------------|--------|
| CONDENSED      STATEMENTS OF CASH FLOWS                                                            |   |
| Years      Ended December 31, 2007 and 2006                                                        |   |
|                                                                                               |   |
|                                                                                               |   | 2007 |   |   | 2006 |   |
|                                                                                               |   |   |   |   |   |   |
| CASH      FLOWS FROM OPERATING ACTIVITIES                                                          |   |   |   |   |   |   |
|  Net      income                                                                              |   | $ | 3,357,330 |   |   | $ | 3,375,448 |   |
|   Adjustments      to reconcile net income to net cash                                   |   |   |   |   |   |   |   |   |
|    provided      by operating activities                                            |   |   |   |   |   |   |   |   |
|   Equity      in undistributed net income of subsidiary                                  |   |   | (561,571 | ) |   |   | (930,870 | ) |
|   Net      gain on sale of investments                                                   |   |   | 0 |   |   |   | (56,875 | ) |
|   Increase      in prepaid assets                                                        |   |   | (120,133 | ) |   |   | 0 |   |
|   Increase      in income taxes receivable                                               |   |   | (96,756 | ) |   |   | (28,975 | ) |
|        Net      cash provided by operating activities           |   |   | 2,578,870 |   |   |   | 2,358,728 |   |
|                                                                                               |   |   |   |   |   |   |   |   |
| CASH      FLOWS FROM INVESTING ACTIVITIES                                                          |   |   |   |   |   |   |   |   |
|   Investment      in subsidiary – Community National Bank                          |   |   | (15,000,000 | ) |   |   | 0 |   |
|   Increase      in other assets                                                          |   |   | (452,060 | ) |   |   | 0 |   |
|   Investment      in Capital Trust                                                       |   |   | (387,000 | ) |   |   | 0 |   |
|   Proceeds      from sale of investments available-for-sale                              |   |   | 0 |   |   |   | 89,375 |   |
|        Net      cash (used in) provided by investing activities |   |   | (15,839,060 | ) |   |   | 89,375 |   |
|                                                                                               |   |   |   |   |   |   |   |   |
| CASH      FLOWS FROM FINANCING ACTIVITIES                                                          |   |   |   |   |   |   |   |   |
|   Proceeds      from issuance of junior subordinated debentures                          |   |   | 12,887,000 |   |   |   | 0 |   |
|   Proceeds      from issuance of preferred stock                                         |   |   | 2,500,000 |   |   |   | 0 |   |
|   Purchase      of treasury stock                                                        |   |   | (8,045 | ) |   |   | (11 | ) |
|   Dividends      paid                                                                    |   |   | (2,014,132 | ) |   |   | (1,926,809 | ) |
|        Net      cash provided by (used in) financing activities |   |   | 13,364,823 |   |   |   | (1,926,820 | ) |
|        Net      increase in cash                                |   |   | 104,633 |   |   |   | 521,283 |   |
|                                                                                               |   |   |   |   |   |   |   |   |
| Cash                                                                                               |   |   |   |   |   |   |   |   |
|   Beginning                                                                              |   |   | 635,250 |   |   |   | 113,967 |   |
|   Ending                                                                                 |   | $ | 739,883 |   |   | $ | 635,250 |   |
|                                                                                               |   |   |   |   |   |   |   |   |
| CASH      RECEIVED FOR INCOME TAXES                                                                |   | $ | 85,732 |   |   | $ | 56,757 |   |
|                                                                                               |   |   |   |   |   |   |   |   |
| CASH      PAID FOR INTEREST                                                                        |   | $ | 121,782 |   |   | $ | 0 |   |
|                                                                                               |   |   |   |   |   |   |   |   |
| SUPPLEMENTAL      SCHEDULE OF NONCASH INVESTING                                                    |   |   |   |   |   |   |   |   |
| AND      FINANCING ACTIVITIES                                                                      |   |   |   |   |   |   |   |   |
|   Change      in unrealized gain on securities available-for-sale                        |   | $ | 578,596 |   |   | $ | 274,931 |   |
|   Dividends      paid:                                                                   |   |   |   |   |   |   |   |   |
|    Dividends      declared                                                          |   | $ | 2,894,359 |   |   | $ | 2,780,764 |   |
|    Increase      in dividends payable attributable to dividends declared            |   |   | (27,477 | ) |   |   | (7,585 | ) |
|    Dividends      reinvested                                                        |   |   | (852,750 | ) |   |   | (846,370 | ) |
|                                                                                               |   | $ | 2,014,132 |   |   | $ | 1,926,809 |   |
|                                                                                               |   |   |   |   |   |   |   |   |
|   Stock      dividend                                                                    |   | $ | 2,821,320 |   |   | $ | 0 |   |

----

| COMMUNITY      BANCORP. AND SUBSIDIARY |   |
|----------------------------------------|--------|
|                                   |   |
|                                   |   | 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 |   |
|                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                   |   | Quarters      in 2006 ended |   |
|                                   |   | March      31, |   |   | June      30, |   |   | Sept.      30, |   |   | Dec.      31, |   |
|                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest      income                   |   | $ | 4,874,446 |   |   | $ | 5,188,141 |   |   | $ | 5,293,321 |   |   | $ | 5,619,936 |   |
| Interest      expense                  |   |   | 1,616,977 |   |   |   | 1,847,419 |   |   |   | 2,078,793 |   |   |   | 2,159,899 |   |
| Provision      for loan losses         |   |   | 37,500 |   |   |   | 37,500 |   |   |   | 37,500 |   |   |   | 25,000 |   |
| Securities      gains                  |   |   | 0 |   |   |   | 0 |   |   |   | 0 |   |   |   | 56,875 |   |
| Non-interest      income               |   |   | 669,624 |   |   |   | 838,393 |   |   |   | 791,409 |   |   |   | 824,750 |   |
| Non-interest      expense              |   |   | 3,113,226 |   |   |   | 3,120,224 |   |   |   | 3,061,570 |   |   |   | 2,859,350 |   |
| Net      income                        |   |   | 665,942 |   |   |   | 832,100 |   |   |   | 764,064 |   |   |   | 1,113,342 |   |
| Earnings      per common share*        |   |   | 0.16 |   |   |   | 0.19 |   |   |   | 0.18 |   |   |   | 0.25 |   |

|                                                         |   | 2007   |    |   | 2006   |   |
|--------------------------------------------------------------|--------|--------|---------|--------|--------|--------|
| Income                                                       |   |   |    |   |   |   |
|                                                         |   |   |    |   |   |   |
|   Income      from sold loans, net of amortization |   | $      | 373,330 |   |   | $      | 481,649 |   |
|   Income      from sale of credit card portfolio   |   |   | 257,836 |   |   |   | 0 |   |
|                                                         |   |   |    |   |   |   |   |   |
| Expenses                                                     |   |   |    |   |   |   |   |   |
|                                                         |   |   |    |   |   |   |   |   |
|   State      deposit tax                           |   | $      | 327,996 |   |   | $      | 280,805 |   |
|   Loss      on limited partnerships                |   |   | 381,588 |   |   |   | 354,156 |   |

----

|                                        |   |                               December 31, |   |
|---------------------------------------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                                        |   | 2007                                                                                                                                                               |   |   | 2006 |   |
|                                        |   |                                                                                                                                                               |   |   |   |   |
| Return      on Average Assets               |   |                                                                                                                                                               | 0.97   | % |   |   | 0.95 | % |
| Return      on Average Equity               |   |                                                                                                                                                               | 10.69  | % |   |   | 11.35 | % |
| Dividend      Payout Ratio                  |   |                                                                                                                                                               | 87.01  | % |   |   | 81.01 | % |
| Average      Equity to Average Assets Ratio |   |                                                                                                                                                               | 9.08   | % |   |   | 8.40 | % |

|                                     |   | For      the year ended December 31, |   |
|------------------------------------------|--------|--------------------------------------|--------|
|                                     |   | 2007                                 |   |   | 2006 |   |
|                                     |   | (Dollars      in Thousands)          |   |
|                                     |   |                                 |   |
| Net      interest income as presented    |   | $                                    | 13,202 |   |   | $ | 13,273 |   |
| Effect      of tax-exempt income         |   |                                 | 539    |   |   |   | 556 |   |
| Net      interest income, tax equivalent |   | $                                    | 13,741 |   |   | $ | 13,829 |   |

----

| Table      A                                                                                                                |   |
|-----------------------------------------------------------------------------------------------------------------------------|--------|
| AVERAGE BALANCES AND INTEREST RATES                                                                                         |   |
|                                                                                                                        |   |
|                                                                                                                        |   | 2007 |   |   | 2006 |   |
|                                                                                                                        |   | Average |   |   | Income/ |   |   | Rate/ |   |   | Average |   |   | Income/ |   |   | Rate/ |   |
|                                                                                                                        |   | Balance |   |   | Expense |   |   | Yield |   |   | Balance |   |   | Expense |   |   | Yield |   |
|                                                                                                                        |   | (Dollars      in Thousands) |   |
|                                                                                                                        |   |
| Interest-Earning      Assets(1)                                                                                             |   |
|                                                                                                                        |   |
| Loans      (2)                                                                                                              |   | $ | 263,597 |   |   | $ | 19,119 |   |   |   | 7.25 | % |   | $ | 263,901 |   |   | $ | 18,471 |   |   |   | 7.00 | % |
| Taxable      Investment Securities                                                                                          |   |   | 22,567 |   |   |   | 877 |   |   |   | 3.89 | % |   |   | 30,174 |   |   |   | 1,082 |   |   |   | 3.59 | % |
| Tax-exempt      Investment Securities                                                                                       |   |   | 25,384 |   |   |   | 1,584 |   |   |   | 6.24 | % |   |   | 28,529 |   |   |   | 1,636 |   |   |   | 5.73 | % |
| Federal      Funds Sold                                                                                                     |   |   | 66 |   |   |   | 3 |   |   |   | 4.55 | % |   |   | 263 |   |   |   | 10 |   |   |   | 3.80 | % |
| Overnight      Deposits                                                                                                     |   |   | 8,215 |   |   |   | 479 |   |   |   | 5.83 | % |   |   | 3,052 |   |   |   | 156 |   |   |   | 5.11 | % |
| Other      Investments                                                                                                      |   |   | 2,456 |   |   |   | 170 |   |   |   | 6.92 | % |   |   | 3,161 |   |   |   | 177 |   |   |   | 5.60 | % |
|     TOTAL                                                                                               |   | $ | 322,285 |   |   | $ | 22,232 |   |   |   | 6.90 | % |   | $ | 329,080 |   |   | $ | 21,532 |   |   |   | 6.54 | % |
|                                                                                                                        |   |
| Interest-Bearing      Liabilities(1)                                                                                        |   |
|                                                                                                                        |   |
| Savings      Deposits                                                                                                       |   | $ | 39,005 |   |   | $ | 136 |   |   |   | 0.35 | % |   | $ | 43,563 |   |   | $ | 152 |   |   |   | 0.35 | % |
| NOW      and Money Market Funds                                                                                             |   |   | 77,431 |   |   |   | 2,079 |   |   |   | 2.68 | % |   |   | 80,348 |   |   |   | 1,698 |   |   |   | 2.11 | % |
| Time      Deposits                                                                                                          |   |   | 132,293 |   |   |   | 5,759 |   |   |   | 4.35 | % |   |   | 121,691 |   |   |   | 4,835 |   |   |   | 3.97 | % |
| Other      Borrowed Funds                                                                                                   |   |   | 1,685 |   |   |   | 92 |   |   |   | 5.46 | % |   |   | 13,236 |   |   |   | 693 |   |   |   | 5.24 | % |
| Junior      Subordinated Debentures                                                                                         |   |   | 2,154 |   |   |   | 122 |   |   |   | 5.66 | % |   |   | 0 |   |   |   | 0 |   |   |   | 0 | % |
| Repurchase      Agreements                                                                                                  |   |   | 13,825 |   |   |   | 303 |   |   |   | 2.19 | % |   |   | 15,688 |   |   |   | 325 |   |   |   | 2.07 | % |
|     TOTAL                                                                                               |   | $ | 266,393 |   |   | $ | 8,491 |   |   |   | 3.19 | % |   | $ | 274,526 |   |   | $ | 7,703 |   |   |   | 2.81 | % |
|                                                                                                                        |   |
|  Net      Interest Income                                                                                              |   |   |   |   |   | $ | 13,741 |   |   |   |   |   |   |   |   |   |   | $ | 13,829 |   |   |   |   |   |
|  Net      Interest Spread(3)                                                                                           |   |   |   |   |   |   |   |   |   |   | 3.71 | % |   |   |   |   |   |   |   |   |   |   | 3.73 | % |
|  Interest      Margin(4)                                                                                               |   |   |   |   |   |   |   |   |   |   | 4.26 | % |   |   |   |   |   |   |   |   |   |   | 4.20 | % |
|                                                                                                                        |   |
| (1) Assets      and liabilities acquired from LyndonBank as of the close of business on      December 31, 2007 are not |   |
|             included in average balance because there would be no impact on      yields.      |   |
| (2) Included      in gross loans are non-accrual loans with an average balance of $822,354      for 2007 and           |   |
|             $1,070,518 for 2006.                                                              |   |
| (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 |   |
|                                                 |   |
|                                                 |   | 2007 vs. 2006 |   |
| RATE      VOLUME                                     |   | Variance      Due to(1) |   |   | Total |   |
|                                                 |   | Rate |   |   | Volume |   |   | Variance |   |
|                                                 |   | (Dollars      in Thousands) |   |
| Interest-Earning      Assets                         |   |   |   |
|                                                 |   |
| Loans(2)                                             |   | $ | 670 |   |   | $ | ( 22 | ) |   | $ | 648 |   |
| Taxable      Investment Securities                   |   |   | 91 |   |   |   | (296 | ) |   |   | (205 | ) |
| Tax-exempt      Investment Securities                |   |   | 144 |   |   |   | (196 | ) |   |   | (52 | ) |
| Federal      Funds Sold                              |   |   | 2 |   |   |   | (9 | ) |   |   | (7 | ) |
| Overnight      Deposits                              |   |   | 59 |   |   |   | 264 |   |   |   | 323 |   |
| Other      Investments                               |   |   | 42 |   |   |   | (49 | ) |   |   | (7 | ) |
| Total      Interest Earnings                         |   | $ | 1,008 |   |   | $ | (308 | ) |   | $ | 700 |   |
|                                                 |   |
| Interest-Bearing      Liabilities                    |   |   |   |
|                                                 |   |
| Savings      Deposits                                |   | $ | 0 |   |   | $ | ( 16 | ) |   | $ | ( 16 | ) |
| NOW      and Money Market Funds                      |   |   | 459 |   |   |   | (78 | ) |   |   | 381 |   |
| Time      Deposits                                   |   |   | 503 |   |   |   | 421 |   |   |   | 924 |   |
| Other      Borrowed Funds                            |   |   | 30 |   |   |   | (631 | ) |   |   | (601 | ) |
| Repurchase      Agreements                           |   |   | 19 |   |   |   | (41 | ) |   |   | (22 | ) |
| Junior      Subordinated Debentures                  |   |   | 122 |   |   |   | 0 |   |   |   | 122 |   |
|    Total      Interest Expense        |   | $ | 1,130 |   |   | $ | (345 | ) |   | $ | 788 |   |
|                                                 |   |
|   Change      in Net Interest Income       |   | $ | (125 | ) |   | $ | 37 |   |   | $ | (88 | ) |

|  (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 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 onloans.                                                                            |

| DISTRIBUTION OF ASSETS, LIABILITIES AND STOCKHOLDERS'      EQUITY                                                                           |   |
|---------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                                                        |   |   |   |
|                                                                                                                                        |   | Year      ended December 31, |   |
|                                                                                                                                        |   | 2007 |   |   | 2006 |   |   | 2005 |   |
| AVERAGE      ASSETS                                                                                                                         |   | Balance |   |   | % |   |   | Balance |   |   | % |   |   | Balance |   |   | % |   |
|                                                                                                                                        |   | (Dollars      in Thousands) |   |
| Cash      and Due from Banks                                                                                                                |   |   |   |
|  Non-Interest      Bearing                                                                                                             |   | $ | 7,004 |   |   |   | 2.02 | % |   | $ | 8,724 |   |   |   | 2.46 | % |   | $ | 8,618 |   |   |   | 2.53 | % |
| Overnight      Deposits                                                                                                                     |   |   | 8,215 |   |   |   | 2.37 | % |   |   | 3,052 |   |   |   | 0.86 | % |   |   | 591 |   |   |   | 0.17 | % |
| Federal      Funds Sold                                                                                                                     |   |   | 66 |   |   |   | 0.02 | % |   |   | 263 |   |   |   | 0.07 | % |   |   | 465 |   |   |   | 0.14 | % |
| Taxable      Investment Securities(1)                                                                                                       |   |   | 22,567 |   |   |   | 6.52 | % |   |   | 30,174 |   |   |   | 8.53 | % |   |   | 44,243 |   |   |   | 12.99 | % |
| Tax-exempt      Investment Securities(1)                                                                                                    |   |   | 25,384 |   |   |   | 7.34 | % |   |   | 28,529 |   |   |   | 8.06 | % |   |   | 32,092 |   |   |   | 9.42 | % |
| Other      Securities(1)                                                                                                                    |   |   | 2,391 |   |   |   | 0.69 | % |   |   | 3,161 |   |   |   | 0.89 | % |   |   | 3,014 |   |   |   | 0.88 | % |
|   Total      Investment Securities                                                                                                |   |   | 50,342 |   |   |   | 14.55 | % |   |   | 61,864 |   |   |   | 17.48 | % |   |   | 79,349 |   |   |   | 23.29 | % |
| Gross      Loans                                                                                                                            |   |   | 263,597 |   |   |   | 76.20 | % |   |   | 263,901 |   |   |   | 74.55 | % |   |   | 238,376 |   |   |   | 69.97 | % |
| Reserve      for Loan Losses and Accrued Fees                                                                                               |   |   | (2,852 | ) |   |   | -0.82 | % |   |   | (2,923 | ) |   |   | -0.83 | % |   |   | (2,892 | ) |   |   | -0.85 | % |
| Premises      and Equipment                                                                                                                 |   |   | 12,111 |   |   |   | 3.50 | % |   |   | 11,876 |   |   |   | 3.36 | % |   |   | 7,602 |   |   |   | 2.23 | % |
| Other      Real Estate Owned                                                                                                                |   |   | 0 |   |   |   | 0.00 | % |   |   | 0 |   |   |   | 0.00 | % |   |   | 5 |   |   |   | 0.00 | % |
| Stock      in Capital Trust                                                                                                                 |   |   | 65 |   |   |   | 0.02 | % |   |   | 0 |   |   |   | 0.00 | % |   |   | 0 |   |   |   | 0.00 | % |
| Other      Assets                                                                                                                           |   |   | 7,364 |   |   |   | 2.13 | % |   |   | 7,238 |   |   |   | 2.05 | % |   |   | 8,579 |   |   |   | 2.52 | % |
|           Total      Average Assets                                                       |   | $ | 345,912 |   |   |   | 100 | % |   | $ | 353,995 |   |   |   | 100 | % |   | $ | 340,693 |   |   |   | 100 | % |
|                                                                                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| AVERAGE      LIABILITIES                                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Demand      Deposits                                                                                                                        |   | $ | 46,944 |   |   |   | 13.58 | % |   | $ | 46,964 |   |   |   | 13.27 | % |   | $ | 46,078 |   |   |   | 13.53 | % |
| Now      and Money Market Accounts                                                                                                          |   |   | 77,431 |   |   |   | 22.38 | % |   |   | 80,348 |   |   |   | 22.70 | % |   |   | 88,152 |   |   |   | 25.87 | % |
| Savings      Accounts                                                                                                                       |   |   | 39,005 |   |   |   | 11.28 | % |   |   | 43,563 |   |   |   | 12.30 | % |   |   | 46,722 |   |   |   | 13.71 | % |
| Time      Deposits                                                                                                                          |   |   | 132,293 |   |   |   | 38.24 | % |   |   | 121,691 |   |   |   | 34.38 | % |   |   | 99,042 |   |   |   | 29.07 | % |
|           Total      Average Deposits                                                     |   |   | 295,673 |   |   |   | 85.48 | % |   |   | 292,566 |   |   |   | 82.65 | % |   |   | 279,994 |   |   |   | 82.18 | % |
|                                                                                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other      Borrowed Funds                                                                                                                   |   |   | 1,685 |   |   |   | 0.48 | % |   |   | 13,236 |   |   |   | 3.74 | % |   |   | 16,106 |   |   |   | 4.73 | % |
| Repurchase      Agreements                                                                                                                  |   |   | 13,825 |   |   |   | 4.00 | % |   |   | 15,688 |   |   |   | 4.43 | % |   |   | 13,987 |   |   |   | 4.11 | % |
| Junior      Subordinated Debentures                                                                                                         |   |   | 2,154 |   |   |   | 0.62 | % |   |   |        0 |   |   |   | 0 | % |   |   | 0 |   |   |   | 0 | % |
| Other      Liabilities                                                                                                                      |   |   | 1,182 |   |   |   | 0.34 | % |   |   | 2,780 |   |   |   | 0.78 | % |   |   | 2,215 |   |   |   | 0.65 | % |
|           Total      Average Liabilities                                                  |   | $ | 314,519 |   |   |   | 90.92 | % |   | $ | 324,270 |   |   |   | 91.60 | % |   | $ | 312,302 |   |   |   | 91.67 | % |
|                                                                                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| AVERAGE      SHAREHOLDERS’ EQUITY                                                                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common      Stock                                                                                                                           |   | $ | 11,222 |   |   |   | 3.24 | % |   | $ | 10,783 |   |   |   | 3.05 | % |   | $ | 10,430 |   |   |   | 3.06 | % |
| Surplus                                                                                                                                     |   |   | 23,659 |   |   |   | 6.84 | % |   |   | 21,663 |   |   |   | 6.12 | % |   |   | 19,754 |   |   |   | 5.80 | % |
| Retained      Earnings (Accumulated Deficit)                                                                                                |   |   | (741 | ) |   |   | -0.21 | % |   |   | 300 |   |   |   | 0.08 | % |   |   | 1,054 |   |   |   | 0.31 | % |
| Less:      Treasury Stock                                                                                                                   |   |   | (2,618 | ) |   |   | -0.75 | % |   |   | (2,600 | ) |   |   | -0.73 | % |   |   | (2,483 | ) |   |   | -0.73 | % |
| Accumulated      Other Comprehensive Loss (1)                                                                                               |   |   | (129 | ) |   |   | -0.04 | % |   |   | (421 | ) |   |   | -0.12 | % |   |   | (364 | ) |   |   | -0.11 | % |
|           Total      Average Shareholders' Equity                                         |   |   | 31,393 |   |   |   | 9.08 | % |   |   | 29,725 |   |   |   | 8.40 | % |   |   | 28,391 |   |   |   | 8.33 | % |
|           Total      Average Liabilities and                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|             Shareholders'      Equity                                           |   | $ | 345,912 |   |   |   | 100 | % |   | $ | 353,995 |   |   |   | 100 | % |   | $ | 340,693 |   |   |   | 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 loss. The Company      does not carry, nor does it                    |   |
| intend      to carry, securities classified as trading.                                                                                     |   |

| One      Year Horizon                                      | Two      Year Horizon      |
|------------------------------------------------------------|----------------------------|
| Rate      Change        | Percent      Change in NII | Rate      Change      | Percent      Change in NII |
|                                                       |                       |   |   |
| Down      200 basis points                                 | -5.89%                     | Down      200 basis points | -22.16% |
| Up      200 basis points                                   | -0.60%                     | Up      200 basis points | -1.19% |

| COMPOSITION      OF LOAN PORTFOLIO             |   |
|------------------------------------------------|--------|
|                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                           |   | 2007 |   |   | 2006 |   |   | 2005 |   |   | 2004 |   |   | 2003 |   |
|                                           |   | 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                        |   | $ | 12,896 |   |   |   | 3.62 | % |   | $ | 11,889 |   |   |   | 4.42 | % |   | $ | 13,931 |   |   |   | 5.52 | % |   | $ | 11,646 |   |   |   | 5.07 | % |   | $ | 8,929 |   |   |   | 4.32 | % |
|  Farm      Land                           |   |   | 9,646 |   |   |   | 2.70 | % |   |   | 3,217 |   |   |   | 1.19 | % |   |   | 2,870 |   |   |   | 1.14 | % |   |   | 2,496 |   |   |   | 1.09 | % |   |   | 2,783 |   |   |   | 1.35 | % |
|  1-4      Family Residential              |   |   | 195,845 |   |   |   | 54.92 | % |   |   | 157,008 |   |   |   | 58.30 | % |   |   | 144,777 |   |   |   | 57.40 | % |   |   | 127,555 |   |   |   | 55.55 | % |   |   | 120,848 |   |   |   | 58.51 | % |
|  Commercial      Real Estate              |   |   | 85,576 |   |   |   | 24.00 | % |   |   | 54,236 |   |   |   | 20.14 | % |   |   | 48,505 |   |   |   | 19.23 | % |   |   | 43,610 |   |   |   | 18.99 | % |   |   | 33,422 |   |   |   | 16.18 | % |
| Loans      to Finance                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Agricultural      Production             |   |   | 2,431 |   |   |   | 0.68 | % |   |   | 224 |   |   |   | 0.08 | % |   |   | 214 |   |   |   | 0.09 | % |   |   | 443 |   |   |   | 0.19 | % |   |   | 529 |   |   |   | 0.26 | % |
| Commercial      & Industrial               |   |   | 31,258 |   |   |   | 8.77 | % |   |   | 21,993 |   |   |   | 8.17 | % |   |   | 20,049 |   |   |   | 7.95 | % |   |   | 21,592 |   |   |   | 9.40 | % |   |   | 16,951 |   |   |   | 8.21 | % |
| Consumer      Loans                            |   |   | 18,461 |   |   |   | 5.18 | % |   |   | 20,588 |   |   |   | 7.65 | % |   |   | 21,296 |   |   |   | 8.44 | % |   |   | 21,716 |   |   |   | 9.46 | % |   |   | 22,517 |   |   |   | 10.90 | % |
| All      Other Loans                           |   |   | 459 |   |   |   | 0.13 | % |   |   | 141 |   |   |   | 0.05 | % |   |   | 567 |   |   |   | 0.23 | % |   |   | 575 |   |   |   | 0.25 | % |   |   | 552 |   |   |   | 0.27 | % |
|                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|      Gross      Loans |   |   | 356,572 |   |   |   | 100 | % |   |   | 269,296 |   |   |   | 100 | % |   |   | 252,209 |   |   |   | 100 | % |   |   | 229,633 |   |   |   | 100 | % |   |   | 206,531 |   |   |   | 100 | % |
| Less:                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Reserve      for Loan Losses       |   |   | (3,026 | ) |   |   | -0.85 | % |   |   | (2,268 | ) |   |   | -0.84 | % |   |   | (2,189 | ) |   |   | -0.87 | % |   |   | (2,153 | ) |   |   | -0.94 | % |   |   | (2,199 | ) |   |   | -1.06 | % |
|   Unearned      Loan Fees            |   |   | (443 | ) |   |   | -0.12 | % |   |   | (632 | ) |   |   | -0.24 | % |   |   | (684 | ) |   |   | -0.27 | % |   |   | (764 | ) |   |   | -0.33 | % |   |   | (805 | ) |   |   | -0.39 | % |
|                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|      Net      Loans   |   | $ | 353,103 |   |   |   | 99.03 | % |   | $ | 266,396 |   |   |   | 98.92 | % |   | $ | 249,336 |   |   |   | 98.86 | % |   | $ | 226,716 |   |   |   | 98.73 | % |   | $ | 203,527 |   |   |   | 98.55 | % |

|                                                 |   | 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 |   |
| Real      Estate                                     |   |                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Construction      & Land Development |   |                   | 5,697  |   |   |   | 21 |   |   |   | 1,572 |   |   |   | 7,290 |   |   |   | 3,058 |   |   |   | 871 |   |   |   | 1,677 |   |   |   | 5,606 |   |
|   Secured      by Farm Land                |   |                   | 440    |   |   |   | 166 |   |   |   | 3,713 |   |   |   | 4,319 |   |   |   | 2,949 |   |   |   | 1,203 |   |   |   | 1,175 |   |   |   | 5,327 |   |
|   Commercial      Real Estate              |   |                   | 1,440  |   |   |   | 3,564 |   |   |   | 20,699 |   |   |   | 25,703 |   |   |   | 16,984 |   |   |   | 20,225 |   |   |   | 22,664 |   |   |   | 59,873 |   |
| Loans      to Finance Agricultural Production        |   |                   | 479    |   |   |   | 207 |   |   |   | 125 |   |   |   | 811 |   |   |   | 722 |   |   |   | 258 |   |   |   | 640 |   |   |   | 1,620 |   |
| Commercial      & Industrial Loans               |   |                   | 1,729  |   |   |   | 8,934 |   |   |   | 2,676 |   |   |   | 13,339 |   |   |   | 12,989 |   |   |   | 3,490 |   |   |   | 1,440 |   |   |   | 17,919 |   |
|                                                 |   |                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                                                |   |                   | 9,785  |   |   |   | 12,892 |   |   |   | 28,785 |   |   |   | 51,462 |   |   |   | 36,702 |   |   |   | 26,047 |   |   |   | 27,596 |   |   |   | 90,345 |   |

| SUMMARY      OF LOAN LOSS EXPERIENCE                                                         |   |
|----------------------------------------------------------------------------------------------|--------|
|                                                                                         |   |
| December      31,                                                                            |   | 2007 |   |   | 2006 |   |   | 2005 |   |   | 2004 |   |   | 2003 |   |
|                                                                                         |   | (Dollars      in Thousands) |   |
|                                                                                         |   |
| Loans      Outstanding End of Period                                                         |   |   | 356,572 |   |   |   | 269,296 |   |   |   | 252,209 |   |   |   | 229,633 |   |   |   | 206,531 |   |
|                                                                                         |   |
| Average      Loans Outstanding During Period                                                 |   |   | 263,597 |   |   |   | 263,901 |   |   |   | 238,376 |   |   |   | 212,460 |   |   |   | 205,237 |   |
|                                                                                         |   |
| Loan      Loss Reserve, Beginning of Period                                                  |   |   | 2,268 |   |   |   | 2,189 |   |   |   | 2,153 |   |   |   | 2,199 |   |   |   | 2,156 |   |
|                                                                                         |   |
| Loans      Charged Off:                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Residential      Real Estate                                                     |   |   | 0 |   |   |   | 6 |   |   |   | 5 |   |   |   | 26 |   |   |   | 2 |   |
|   Commercial      Real Estate                                                      |   |   | 51 |   |   |   | 17 |   |   |   | 0 |   |   |   | 0 |   |   |   | 10 |   |
|   Commercial                                                                       |   |   | 25 |   |   |   | 13 |   |   |   | 45 |   |   |   | 54 |   |   |   | 0 |   |
|   Consumer                                                                         |   |   | 172 |   |   |   | 91 |   |   |   | 130 |   |   |   | 189 |   |   |   | 185 |   |
|           Total                            |   |   | 248 |   |   |   | 127 |   |   |   | 180 |   |   |   | 269 |   |   |   | 197 |   |
|                                                                                         |   |
| Recoveries:                                                                                  |   |
|   Residential      Real Estate                                                     |   |   | 14 |   |   |   | 1 |   |   |   | 1 |   |   |   | 1 |   |   |   | 4 |   |
|   Commercial      Real Estate                                                      |   |   | 12 |   |   |   | 6 |   |   |   | 0 |   |   |   | 0 |   |   |   | 0 |   |
|   Commercial                                                                       |   |   | 3 |   |   |   | 3 |   |   |   | 6 |   |   |   | 12 |   |   |   | 3 |   |
|   Consumer                                                                         |   |   | 42 |   |   |   | 58 |   |   |   | 59 |   |   |   | 115 |   |   |   | 110 |   |
|           Total                            |   |   | 71 |   |   |   | 68 |   |   |   | 66 |   |   |   | 128 |   |   |   | 117 |   |
|                                                                                         |   |
| Net      Loans Charged Off                                                                   |   |   | 177 |   |   |   | 59 |   |   |   | 114 |   |   |   | 141 |   |   |   | 80 |   |
| Provision      Charged to Income                                                             |   |   | 148 |   |   |   | 138 |   |   |   | 150 |   |   |   | 95 |   |   |   | 123 |   |
|                                                                                         |   |
| Allowance      for loan loss of acquired bank*                                               |   |   | 787 |   |   |   | 0 |   |   |   | 0 |   |   |   | 0 |   |   |   | 0 |   |
| Loan      Loss Reserve, End of Period                                                        |   |   | 3,026 |   |   |   | 2,268 |   |   |   | 2,189 |   |   |   | 2,153 |   |   |   | 2,199 |   |
|                                                                                         |   |
| Net      Losses as a Percent of Average Loans                                                |   |   | 0.07 | % |   |   | 0.02 | % |   |   | 0.05 | % |   |   | 0.07 | % |   |   | 0.04 | % |
| Provision Charged to Income as a                                    |   |
|    Percent      of Average Loans                                              |   |   | 0.06 | % |   |   | 0.05 | % |   |   | 0.06 | % |   |   | 0.04 | % |   |   | 0.06 | % |
| At      End of Period:                                                                       |   |
| Loan      Loss Reserve as a Percent of                                                       |   |
|    Outstanding      Loans                                                     |   |   | 0.85 | % |   |   | 0.84 | % |   |   | 0.87 | % |   |   | 0.94 | % |   |   | 1.06 | % |
|                                                                                         |   |
| *This      table does not include the loan loss experience for the acquired      LyndonBank. |   |

----

| NON-PERFORMING      ASSETS                                        |   |
|-------------------------------------------------------------------|--------|
|                                                              |   |
| December      31,                                                 |   | 2007 |   |   | 2006 |   |   | 2005 |   |   | 2004 |   |   | 2003 |   |
|                                                              |   | (Dollars      in Thousands) |   |
| Accruing      Loans Past Due 90 Days or More:                     |   |
|   Consumer                                              |   |   | 11 |   |   |   | 32 |   |   |   | 8 |   |   |   | 7 |   |   |   | 4 |   |
|   Commercial                                            |   |   | 0 |   |   |   | 60 |   |   |   | 0 |   |   |   | 50 |   |   |   | 0 |   |
|   Commercial      Real Estate                           |   |   | 70 |   |   |   | 0 |   |   |   | 0 |   |   |   | 0 |   |   |   | 0 |   |
|   Residential      Real Estate                          |   |   | 57 |   |   |   | 113 |   |   |   | 169 |   |   |   | 137 |   |   |   | 15 |   |
|      Total      Past Due 90 Days or More |   |   | 138 |   |   |   | 205 |   |   |   | 177 |   |   |   | 194 |   |   |   | 19 |   |
|                                                              |   |
| Non-accrual      Loans                                            |   |   | 1,338 |   |   |   | 721 |   |   |   | 436 |   |   |   | 865 |   |   |   | 1,295 |   |
|                                                              |   |
| Total      Non-accrual, Past Due Loans                            |   |   | 1,476 |   |   |   | 926 |   |   |   | 613 |   |   |   | 1,059 |   |   |   | 1,314 |   |
| Other      Real Estate Owned                                      |   |   | 0 |   |   |   | 0 |   |   |   | 0 |   |   |   | 83 |   |   |   | 88 |   |
|                                                              |   |
|    Total      Non Performing Loans                 |   |   | 1,476 |   |   |   | 926 |   |   |   | 613 |   |   |   | 1,142 |   |   |   | 1,402 |   |
|                                                              |   |
| Percent      of Gross Loans                                       |   |   | 0.41 | % |   |   | 0.34 | % |   |   | 0.24 | % |   |   | 0.50 | % |   |   | 0.68 | % |
| Reserve      Coverage of Non performing Loans                     |   |   | 205.02 | % |   |   | 244.92 | % |   |   | 357.10 | % |   |   | 188.53 | % |   |   | 156.85 | % |

----

| December      31,                                                 |   | 2007                        |   |   | %      |   |   | 2006 |   |   | %     |   |   | 2005   |   |   | %      |   |   | 2004   |   |   | %   |   |   | 2003   |   |   | %      |   |
|-------------------------------------------------------------------|--------|-----------------------------|--------|--------|--------|--------|--------|------|--------|--------|-------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|-----|--------|--------|--------|--------|--------|--------|--------|
|                                                              |   | (Dollars      in Thousands) |   |
| Domestic                                                          |   |
|  Residential      Real Estate                                |   | $                           | 1,258  |   |   |   | 55     | %    |   | $      | 1,055 |   |   |   | 58     | %      |   | $      | 973    |   |   |   | 57  | %      |   | $      | 725    |   |   |   | 56 | % |   | $ | 809 |   |   |   | 59 | % |
|  Commercial                                                  |   |                        | 1,486  |   |   |   | 39     | %    |   |   | 956   |   |   |   | 34     | %      |   |   | 858    |   |   |   | 34  | %      |   |   | 936    |   |   |   | 35 | % |   |   | 786 |   |   |   | 30 | % |
|  Consumer                                                    |   |                        | 248    |   |   |   | 6      | %    |   |   | 204   |   |   |   | 8      | %      |   |   | 229    |   |   |   | 9   | %      |   |   | 260    |   |   |   | 10 | % |   |   | 325 |   |   |   | 11 | % |
| Unallocated                                                       |   |                        | 34     |   |   |   | 0      | %    |   |   | 53    |   |   |   | 0      | %      |   |   | 129    |   |   |   | 0   | %      |   |   | 232    |   |   |   | 0 | % |   |   | 279 |   |   |   | 0 | % |
|           Total |   | $                           | 3,026  |   |   |   | 100    | %    |   | $      | 2,268 |   |   |   | 100    | %      |   | $      | 2,189  |   |   |   | 100 | %      |   | $      | 2,153  |   |   |   | 100 | % |   | $ | 2,199 |   |   |   | 100 | % |

| (1)  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, 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                                 |   | $                           | 3,457  |   |       | $      | 0      |       |   | $      | 0      |   |   | $ | 3,457 |   |
|                                                              |   |                        |   |   |       |   |   |       |   |   |   |   |   |   |   |   |
|           Total |   | $                           | 84.476 |   |       | $      | 199    |       |   | $      | 68     |   |   | $ | 84.607 |   |
|                                                              |   |
| December      31, 2006                                            |   |
|                                                              |   |                        |   |   |       |   |   |       |   |   |   |   |   |   |   |   |
| Available-for-Sale                                                |   |                        |   |   |       |   |   |       |   |   |   |   |   |   |   |   |
| U.      S. Government sponsored enterprise securities             |   | $                           | 19,030 |   |       | $      | 0      |       |   | $      | 382    |   |   | $ | 18,648 |   |
| U.      S. Government securities                                  |   |                        | 3,992  |   |       |   | 5      |       |   |   | 33     |   |   |   | 3,964 |   |
|                                                              |   | $                           | 23,022 |   |       | $      | 5      |       |   | $      | 415    |   |   | $ | 22,612 |   |
|                                                              |   |
| Held-to-Maturity                                                  |   |
| States      and political subdivisions                            |   | $                           | 21,070 |   |       | $      | 231    |       |   | $      | 0      |   |   | $ | 21,301 |   |
|                                                              |   |
| Restricted      Equity Securities                                 |   | $                           | 2,828  |   |       | $      | 0      |       |   | $      | 0      |   |   | $ | 2,828 |   |
|                                                              |   |                        |   |   |       |   |   |       |   |   |   |   |   |   |   |   |
|           Total |   | $                           | 46.920 |   |       | $      | 236    |       |   | $      | 415    |   |   | $ | 46.741 |   |

----

| MATURITIES AND YIELDS OF INVESTMENT      PORTFOLIO     |   |
|--------------------------------------------------------|--------|
|                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                   |   | December      31, |   |
|                                                   |   | 2007 |   |   | 2006 |   |   | 2005 |   |
|                                                   |   |   |   |   | Weighted |   |   |   |   |   | Weighted |   |   |   |   |   | Weighted |   |
|                                                   |   | Fair |   |   | Average |   |   | Fair |   |   | Average |   |   | Fair |   |   | Average |   |
|                                                   |   | Value      (1) |   |   | Rate |   |   | Value      (1) |   |   | Rate |   |   | Value      (1) |   |   | Rate |   |
|                                                   |   | (Dollars      in Thousands) |   |
| Available for Sale                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| U.S.      Treasury & Agency Obligations            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Due      within 1 year                                 |   | $ | 9,978 |   |   |   | 6.16 | % |   | $ | 4,949 |   |   |   | 3.23 | % |   | $ | 10,939 |   |   |   | 2.92 | % |
| Due      after 1 year within 5 years                   |   |   | 14,351 |   |   |   | 4.44 | % |   |   | 17,663 |   |   |   | 3.75 | % |   |   | 23,472 |   |   |   | 3.47 | % |
| Due      after 5 years within 10 years                 |   |   | 1,984 |   |   |   | 5.06 | % |   |   | 0 |   |   |   | 0.00 | % |   |   | 1,006 |   |   |   | 5.31 | % |
|    Total                                |   | $ | 26,313 |   |   |   | 5.14 | % |   | $ | 22,612 |   |   |   | 3.64 | % |   | $ | 35,417 |   |   |   | 3.35 | % |
|                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Tax-exempt      Municipals                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Due      after 10 years                                |   | $ | 1,157 |   |   |   | 5.19 | % |   | $ | 0 |   |   |   | 0.00 | % |   | $ | 0 |   |   |   | 0.00 | % |
|    Total                                |   | $ | 1,157 |   |   |   | 5.19 | % |   | $ | 0 |   |   |   | 0.00 | % |   | $ | 0 |   |   |   | 0.00 | % |
|                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Corporate      Bonds                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Due      within 1 year                                 |   | $ | 0 |   |   |   | 0.00 | % |   | $ | 0 |   |   |   | 0.00 | % |   | $ | 1,005 |   |   |   | 5.86 | % |
|    Total                                |   | $ | 0 |   |   |   | 0.00 | % |   | $ | 0 |   |   |   | 0.00 | % |   | $ | 1,005 |   |   |   | 5.86 | % |
|                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Mortgage      Backed Securities                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Due      after 10 years                                |   | $ | 15,766 |   |   |   | 4.80 | % |   | $ | 0 |   |   |   | 0.00 | % |   | $ | 0 |   |   |   | 0.00 | % |
|    Total                                |   | $ | 15,766 |   |   |   | 4.80 | % |   | $ | 0 |   |   |   | 0.00 | % |   | $ | 0 |   |   |   | 5.86 | % |
|                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| CMO                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Due      after 5 years within 10 years                 |   | $ | 826 |   |   |   | 4.51 | % |   | $ | 0 |   |   |   | 0.00 | % |   | $ | 0 |   |   |   | 0.00 | % |
| Due      after 10 years                                |   |   | 1,276 |   |   |   | 4.47 | % |   |   | 0 |   |   |   | 0.00 | % |   |   | 0 |   |   |   | 0.00 | % |
|    Total                                |   | $ | 2,102 |   |   |   | 4.48 | % |   | $ | 0 |   |   |   | 0.00 | % |   | $ | 0 |   |   |   | 0.00 | % |
|                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Restricted      Equity Securities                      |   | $ | 3,457 |   |   |   | 6.47 | % |   | $ | 2,828 |   |   |   | 5.76 | % |   | $ | 3,252 |   |   |   | 4.90 | % |
|                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Preferred      Stock                                   |   | $ | 1,539 |   |   |   | 8.43 | % |   | $ | 0 |   |   |   | 0.00 | % |   | $ | 0 |   |   |   | 0.00 | % |
|                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Held to Maturity                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Obligations      of State & Political Subdivisions |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Due      within 1 year                                 |   | $ | 29,717 |   |   |   | 5.46 | % |   | $ | 17,254 |   |   |   | 5.40 | % |   | $ | 25,638 |   |   |   | 5.04 | % |
| Due      after 1 year within 5 years                   |   |   | 1,699 |   |   |   | 6.42 | % |   |   | 1,444 |   |   |   | 6.34 | % |   |   | 1,409 |   |   |   | 5.73 | % |
| Due      after 5 years within 10 years                 |   |   | 2,290 |   |   |   | 7.81 | % |   |   | 1,744 |   |   |   | 7.42 | % |   |   | 697 |   |   |   | 7.09 | % |
| Due      after 10 years                                |   |   | 605 |   |   |   | 10.81 | % |   |   | 628 |   |   |   | 10.88 | % |   |   | 648 |   |   |   | 10.90 | % |
|    Total                                |   | $ | 34,311 |   |   |   | 5.76 | % |   | $ | 21,070 |   |   |   | 5.79 | % |   | $ | 28,392 |   |   |   | 5.25 | % |

| (1)       Investments classified as available-for-sale are presented at fair      value, and investments classified as held-to- |
|--------------------------------------------------------------------------------------------------------------------------------------|
|        maturity      are presented at book value.                                                 |
| (2) Income      on Obligations of State and Political Subdivisions is stated on a tax      equivalent basis assuming a 34       |
|       percent      tax rate.                                                                           |

----

|                                                |   | 2007                        |   |   | 2006   |   |
|-----------------------------------------------------|--------|-----------------------------|--------|--------|--------|--------|
|                                                |   | (Dollars      in Thousands) |   |
|                                                |   |                        |   |   |   |   |
| Land      and land improvements                     |   | $                           | 2,547  |   |   | $      | 2,315 |   |
| Buildings      and improvements                     |   |                        | 11,710 |   |   |   | 9,747 |   |
| Furniture      and equipment                        |   |                        | 6,209  |   |   |   | 5,282 |   |
| Leasehold      improvements                         |   |                        | 1,196  |   |   |   | 623 |   |
| Capital      lease                                  |   |                        | 928    |   |   |   | 0 |   |
| Other      prepaid assets                           |   |                        | 121    |   |   |   | 95 |   |
|                                                |   |                        | 22,711 |   |   |   | 18,062 |   |
| Less      accumulated depreciation and amortization |   |                        | (6,350 | )      |   |   | (5,728 | ) |
|                                                |   | $                           | 16,361 |   |   | $      | 12,334 |   |

|                                                              |   | Contract      or             |   |
|-------------------------------------------------------------------|--------|------------------------------|--------|
|                                                              |   | ----Notional      Amount---- |   |
|                                                              |   | 2007                         |   |   | 2006 |   |
|                                                              |   | (Dollars      in Thousands)  |   |
|                                                              |   |                         |   |   |   |   |
| Unused      portions of construction lines of credit              |   | $                            | 4,232  |   |   | $ | 4,011 |   |
| Unused      portions of home equity lines of credit               |   |                         | 14,674 |   |   |   | 11,212 |   |
| Other      commitments to extend credit                           |   |                         | 31,111 |   |   |   | 19,088 |   |
| Standby      letters of credit and commercial letters of credit   |   |                         | 580    |   |   |   | 1,004 |   |
| Credit      card arrangements                                     |   |                         | 0      |   |   |   | 9,087 |   |
| MPF      credit enhancement obligation, net of liability recorded |   |                         | 1,281  |   |   |   | 1,131 |   |

|                                       |   | Annual |   |   |                                             |                   | Principal |   |
|--------------------------------------------|--------|--------|--------|--------|--------------------------------------------------|------------------------|-----------|--------|
|     Purchase      Date |   | Rate   |   |   |      Maturity      Date |                   | Balance   |   |
|                                       |   |   |   |   |                                             |                   |      |   |
| March      28, 2007                        |   |   | 5.05   | %      |                                             | March      28, 2008    |      | $      | 8,000,000 |   |
| November      16, 1992                     |   |   | 7.67   | %      |                                             | November      16, 2012 |      |   | 10,000 |   |
| Total      Long-term Advances              |   |   |   |   | $                                                | 8,010,000              |      |

| Balance      at December 31, 2006 (book value $7.09 per common share)                               |   | $      | 30,730,811 |   |
|-----------------------------------------------------------------------------------------------------|--------|--------|------------|--------|
|   Net      income                                                                         |   |   | 3,357,330  |   |
|   Issuance      of common stock                                                           |   |   | 852,750    |   |
|   Issuance      of preferred stock                                                        |   |   | 2,500,000  |   |
|   Purchase      of treasury stock                                                         |   |   | (8,045     | )      |
|   Total      dividends declared                                                           |   |   | (2,894,359 | )      |
|   Change      in unrealized loss on available-for-sale securities, net of      tax        |   |   | 381,873    |   |
|      Balance      at December 31, 2007 (book value $7.94 per common share) |   | $      | 34,920,360 |   |

----

|                                           |    |        |                    |                    | Minimum            |
|------------------------------------------------|---------|-------------|-------------------------|-------------------------|--------------------|
|                                           |    |        |                    |                    | To      Be Well    |
|                                           |    |        | Minimum                 | Capitalized      Under  |
|                                           |    |        | For      Capital        | Prompt      Corrective  |
|                                           |    |        | Adequacy      Purposes: | Action      Provisions: |
|                                           | Actual  |        |                    |                    |               |
|                                           | Amount  | Ratio  | Amount                  | Ratio                   | Amount             | Ratio |
|                                           |    |        |                    |                    |               |   |
| 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% |
| As      of December 31, 2006:                  |    |        |                    |                    |               |   |
| Total      capital (to risk-weighted assets)   |    |        |                    |                    |               |   |
|    Consolidated                 | $33,270 | 14.10%      | $18,879                 | 8.0%                    | N/A                | N/A |
|    Bank                         | $33,047 | 14.01%      | $18,872                 | 8.0%                    | $23,590            | 10.0% |
| Tier      I capital (to risk-weighted assets)  |    |        |                    |                    |               |   |
|    Consolidated                 | $31,002 | 13.14%      | $ 9,439            | 4.0%                    | N/A                | N/A |
|    Bank                         | $30,779 | 13.05%      | $ 9,436            | 4.0%                    | $14,154            | 6.0% |
| Tier      I capital (to average assets)        |    |        |                    |                    |               |   |
|    Consolidated                 | $31,002 | 8.59%       | $14,434                 | 4.0%                    | N/A                | N/A |
|    Bank                         | $30,779 | 8.53%       | $14,430                 | 4.0%                    | $18,038            | 5.0% |

|                    |   | 2007   |   |   | 2006   |   |
|------------------------------|--------|--------|--------|--------|--------|--------|
|                         |   | First  |   |   | Second |   |   | Third |   |   | Fourth |   |   | First |   |   | Second |   |   | Third |   |   | Fourth |   |
| Trade      Price             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| High                         |   | $      | 14.00  |   |   | $      | 15.75 |   |   | $ | 14.15 |   |   | $ | 15.00 |   |   | $ | 15.24 |   |   | $ | 15.15 |   |   | $ | 14.00 |   |   | $ | 13.73 |   |
| Low                          |   | $      | 12.95  |   |   | $      | 13.20 |   |   | $ | 13.50 |   |   | $ | 13.50 |   |   | $ | 13.82 |   |   | $ | 11.88 |   |   | $ | 12.11 |   |   | $ | 12.45 |   |
|                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                         |   | 2007   |   |   | 2006   |   |
|                         |   | First  |   |   | Second |   |   | Third |   |   | Fourth |   |   | First |   |   | Second |   |   | Third |   |   | Fourth |   |
| Bid      Price               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| High                         |   | $      | 13.30  |   |   | $      | 13.90 |   |   | $ | 14.00 |   |   | $ | 14.50 |   |   | $ | 14.97 |   |   | $ | 14.96 |   |   | $ | 12.83 |   |   | $ | 13.59 |   |
| Low                          |   | $      | 12.30  |   |   | $      | 12.49 |   |   | $ | 12.75 |   |   | $ | 13.50 |   |   | $ | 14.39 |   |   | $ | 11.88 |   |   | $ | 11.64 |   |   | $ | 12.45 |   |
|                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash      Dividends Declared |   | $      | 0.16   |   |   | $      | 0.17 |   |   | $ | 0.17 |   |   | $ | 0.17 |   |   | $ | 0.16 |   |   | $ | 0.16 |   |   | $ | 0.16 |   |   | $ | 0.16 |   |

----

| 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                          |
| (800)      235-0435                        |                                        |                                         |

----