| ● | We invested in a stronger and deeper team of mortgage and consumer loan professionals who enabled us to expand our mortgage product offerings and improve our consumer loan systems and processes.  Our mortgage team has built an infrastructure that will support our efforts to expand our loan origination activity throughout Central Connecticut. |
|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ● | We introduced new consumer deposit based products and services.  Our Pinnacle Account, a relationship based offering of services and benefits, was well received by the market.  We also introduced electronic delivery of deposit account statements and already over 25% of our online banking customers have selected e-statements as the way they prefer to receive their monthly statements.  We made online banking enrollment much easier and found other ways to use technology to make our customers’ lives easier and our staff more productive and efficient. |
|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ● | We researched a variety of alternatives to streamline our small commercial loan process.  We look forward to implementing some of these ideas for a more customer friendly loan underwriting, closing and monitoring process in 2011. |
|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ● | Finally, we focused on ensuring that our policies, processes and procedures are in strong shape for current and future business best practice and regulatory compliance standards.  We feel confident that our commitment to a compliance culture and well controlled operating environment will support our growth in the future. |
|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|   |   |   |
|--------|--------|--------|

|   |   |   |
|--------|--------|--------|

|   |   |   |
|--------|--------|--------|

----

|   |   |   |
|--------|--------|--------|

|   |
|--------|

----

| /s/ Martin J. Geitz                     | /s/ Robert J. Bogino               |
|-----------------------------------------|------------------------------------|
| Martin J. Geitz                    | Robert J. Bogino                   |
| President & Chief Executive Officer | Chairman of the Board of Directors |

----

----

----

|                                                                                                                             |   | At 12/31/10                |              |   | At 12/31/09                |   |             | At 12/31/08                |   |
|----------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------|-------------------|--------|----------------------------|--------|------------------|----------------------------|--------|
| Balance Sheet Data:                                                                                                              |   |                       |              |   |                       |   |             |                       |   |
| Total assets                                                                                                                     |   | $                          | 295,566,591       |   |                       | $      | 273,738,573      |                       |   | $ | 240,756,468 |   |
| Loans, net                                                                                                                       |   |                       | 202,792,477       |   |                       |   | 191,303,519      |                       |   |   | 178,073,758 |   |
| Investment securities                                                                                                            |   |                       | 46,948,797        |   |                       |   | 50,642,016       |                       |   |   | 33,628,012 |   |
| Federal funds sold, money market mutual    funds, and other interest-earning    deposits |   |                       |   23,707,092 |   |                       |   |   8,876,984 |                       |   |   |   7,550,417 |   |
| Deposits                                                                                                                         |   |                       | 269,279,026       |   |                       |   | 250,445,682      |                       |   |   | 220,879,117 |   |
| Stockholders’ equity                                                                                                       |   |                       | 21,967,361        |   |                       |   | 21,411,578       |                       |   |   | 16,846,649 |   |
|                                                                                                                             |   |                       |              |   |                       |   |             |                       |   |   |   |   |
|                                                                                                                             |   | For the YearEnded 12/31/10 |              |   | For the YearEnded 12/31/09 |   |             | For the YearEnded 12/31/08 |   |
| Statement of Income Data:                                                                                                        |   |                       |              |   |                       |   |             |                       |   |   |   |   |
| Total interest and dividend income                                                                                               |   | $                          | 12,054,857        |   |                       | $      | 11,791,863       |                       |   | $ | 11,064,810 |   |
| Total interest expense                                                                                                           |   |                       | 1,813,528         |   |                       |   | 2,823,394        |                       |   |   | 3,042,570 |   |
| Net interest and dividend income                                                                                                 |   |                       | 10,241,329        |   |                       |   | 8,968,469        |                       |   |   | 8,022,240 |   |
| Provision for loan losses                                                                                                        |   |                       | 755,000           |   |                       |   | 547,000          |                       |   |   | 450,000 |   |
| Net interest and dividend income after    provision for loan losses                                          |   |                       | 9,486,329         |   |                       |   | 8,421,469        |                       |   |   | 7,572,240 |   |
| Gain on loans sold, net                                                                                                          |   |                       | 226,580           |   |                       |   | 58,928           |                       |   |   | - |   |
| Write-down of available-for-sale   Securities                                                                     |   |                       | -                 |   |                       |   | -                |                       |   |   | (1,755,600 | ) |
| Other noninterest income                                                                                                         |   |                       | 1,776,981         |   |                       |   | 1,522,020        |                       |   |   | 1,601,042 |   |
| Noninterest expense                                                                                                              |   |                       | 9,754,507         |   |                       |   | 8,997,485        |                       |   |   | 8,830,965 |   |
| Income tax expense (benefit)                                                                                                     |   |                       | 362,094           |   |                       |   | 227,713          |                       |   |   | (768,459 | ) |
| Net income (loss)                                                                                                                |   |                       | 1,146,709         |   |                       |   | 718,291          |                       |   |   | (644,824 | ) |
|                                                                                                                             |   |                       |              |   |                       |   |             |                       |   |   |   |   |
| Earnings (loss) per common share                                                                                                 |   | $                          | 1.03              |   |                       | $      | 0.60             |                       |   | $ | (0.75 | ) |
| Earnings (loss) per common share,     assuming dilution                                                 |   | $                          | 1.03              |   |                       | $      | 0.60             |                       |   | $ | (0.75 | ) |
|  Other Data:                                                                                                                |   |                       |              |   |                       |   |             |                       |   |   |   |   |
| Net interest spread                                                                                                              |   |                       | 3.66              | %      |                       |   | 3.32             | %                          |   |   | 3.56 | % |
| Net interest margin                                                                                                              |   |                       | 3.82              | %      |                       |   | 3.56             | %                          |   |   | 3.95 | % |
| Return on average assets                                                                                                         |   |                       | 0.42              | %      |                       |   | 0.27             | %                          |   |   | (0.30 | )% |
| Return on average stockholders’ equity                                                                                     |   |                       | 5.16              | %      |                       |   | 3.49             | %                          |   |   | (3.71 | )% |
| Dividend payout ratio                                                                                                            |   |                       | 46.7              | %      |                       |   | 59.6             | %                          |   |   | n/a |   |
| Average stockholders’ equity to    average assets                                                      |   |                       | 7.67              | %      |                       |   | 7.63             | %                          |   |   | 8.02 | % |

----

----

----

----

| NET INTEREST INCOME                                                               |   |
|-----------------------------------------------------------------------------------|--------|
| (Dollars in thousands)                                                            |   |
|                                                                              |   |
|                                                                              |   | For the Year Ended 12/31/10 |   |
|                                                                              |   | Average Balance |   |   | (1)Interest |   |   | Yield |   |
|                                                                              |   |   |   |   |   |   |   |   |   |
| Federal funds sold and overnight deposits                                         |   | $ | 14,192 |   |   | $ | 32 |   |   |   | 0.23 | % |
|                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |
| Investments  (1)                                                        |   |   | 57,342 |   |   |   | 1,974 |   |   |   | 3.44 |   |
|                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |
| Mortgage loans                                                                    |   |   | 106,578 |   |   |   | 5,500 |   |   |   | 5.16 |   |
| Commercial loans                                                                  |   |   | 49,904 |   |   |   | 2,714 |   |   |   | 5.44 |   |
| Consumer loans                                                                    |   |   | 45,177 |   |   |   | 2,038 |   |   |   | 4.51 |   |
| Term federal funds sold                                                           |   |   | - |   |   |   | - |   |   |   | - |   |
| Total loans                                                                       |   |   | 201,659 |   |   |   | 10,252 |   |   |   | 5.08 | % |
|                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |
| Total interest-earning assets                                                     |   | $ | 273,193 |   |   | $ | 12,258 |   |   |   | 4.49 | % |
|                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |
| NOW deposits                                                                      |   | $ | 35,729 |   |   | $ | 40 |   |   |   | 0.11 | % |
| Savings deposits                                                                  |   |   | 103,179 |   |   |   | 585 |   |   |   | 0.57 |   |
| Time deposits                                                                     |   |   | 76,286 |   |   |   | 1,149 |   |   |   | 1.51 |   |
| Total interest-bearing deposits                                                   |   |   | 215,194 |   |   |   | 1,774 |   |   |   | 0.82 |   |
|                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |
| Securities sold under agreements to      repurchase |   |   | 3,434 |   |   |   | 40 |   |   |   | 1.16 |   |
| Federal Home Loan Bank advances                                                   |   |   | 51 |   |   |   | - |   |   |   | - |   |
|                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |
| Total interest-bearing liabilities                                                |   | $ | 218,679 |   |   | $ | 1,814 |   |   |   | 0.83 | % |
|                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |
| Net interest income                                                               |   |   |   |   |   | $ | 10,444 |   |   |   |   |   |
| Net interest spread                                                               |   |   |   |   |   |   |   |   |   |   | 3.66 | % |
| Net interest margin                                                               |   |   |   |   |   |   |   |   |   |   | 3.82 | % |
|                                                                              |   |   |   |
|                                                                              |   |   |   |
|                                                                              |   | For the Year Ended 12/31/09 |   |
|                                                                              |   | Average Balance |   |   | (1)Interest |   |   | Yield |   |
|                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |
| Federal funds sold and overnight deposits                                         |   | $ | 14,829 |   |   | $ | 25 |   |   |   | 0.17 | % |
|                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |
| Investments  (1)                                                        |   |   | 57,629 |   |   |   | 2,106 |   |   |   | 3.65 |   |
|                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |
| Mortgage loans                                                                    |   |   | 100,650 |   |   |   | 5,444 |   |   |   | 5.41 |   |
| Commercial loans                                                                  |   |   | 49,657 |   |   |   | 2,759 |   |   |   | 5.56 |   |
| Consumer loans                                                                    |   |   | 33,507 |   |   |   | 1,615 |   |   |   | 4.82 |   |
| Term federal funds sold                                                           |   |   | 227 |   |   |   | 3 |   |   |   | 1.32 |   |
| Total loans                                                                       |   |   | 184,041 |   |   |   | 9,821 |   |   |   | 5.34 |   |
|                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |
| Total interest-earning assets                                                     |   | $ | 256,499 |   |   | $ | 11,952 |   |   |   | 4.66 | % |
|                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |
| NOW deposits                                                                      |   | $ | 32,670 |   |   | $ | 37 |   |   |   | 0.11 | % |
| Savings deposits                                                                  |   |   | 86,423 |   |   |   | 656 |   |   |   | 0.76 |   |
| Time deposits                                                                     |   |   | 90,322 |   |   |   | 2,115 |   |   |   | 2.34 |   |
| Total interest-bearing deposits                                                   |   |   | 209,415 |   |   |   | 2,808 |   |   |   | 1.34 |   |
|                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |
| Securities sold under agreements to      repurchase |   |   | 980 |   |   |   | 8 |   |   |   | 0.82 |   |
| Federal Home Loan Bank advances                                                   |   |   | 227 |   |   |   | 7 |   |   |   | 3.08 |   |
|                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |
| Total interest-bearing liabilities                                                |   | $ | 210,622 |   |   | $ | 2,823 |   |   |   | 1.34 | % |
|                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |
| Net interest income                                                               |   |   |   |   |   | $ | 9,129 |   |   |   |   |   |
| Net interest spread                                                               |   |   |   |   |   |   |   |   |   |   | 3.32 | % |
| Net interest margin                                                               |   |   |   |   |   |   |   |   |   |   | 3.56 | % |

----

| NET INTEREST INCOME                                                               |   |
|-----------------------------------------------------------------------------------|--------|
| (Dollars in thousands)                                                            |   |
|                                                                              |   |   |   |
|                                                                              |   | For the Year Ended 12/31/08 |   |
|                                                                              |   | Average Balance |   |   | (1)Interest |   |   | Yield |   |
|                                                                              |   |   |   |   |   |   |   |   |   |
| Federal funds sold and overnight deposits                                         |   | $ | 3,812 |   |   | $ | 201 |   |   |   | 5.27 | % |
|                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |
| Investments  (1)                                                        |   |   | 33,092 |   |   |   | 1,597 |   |   |   | 4.83 |   |
|                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |
| Mortgage loans                                                                    |   |   | 78,901 |   |   |   | 4,343 |   |   |   | 5.50 |   |
| Commercial loans                                                                  |   |   | 38,528 |   |   |   | 2,747 |   |   |   | 7.13 |   |
| Consumer loans                                                                    |   |   | 39,864 |   |   |   | 2,566 |   |   |   | 6.44 |   |
| Term federal funds sold                                                           |   |   | 33 |   |   |   | 1 |   |   |   | 3.03 |   |
| Total loans                                                                       |   |   | 157,326 |   |   |   | 9,657 |   |   |   | 6.14 |   |
|                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |
| Total interest-earning assets                                                     |   | $ | 194,230 |   |   |   | 11,455 |   |   |   | 5.90 |   |
|                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |
| NOW deposits                                                                      |   | $ | 27,764 |   |   | $ | 51 |   |   |   | 0.18 | % |
| Savings deposits                                                                  |   |   | 57,754 |   |   |   | 546 |   |   |   | 0.95 |   |
| Time deposits                                                                     |   |   | 65,016 |   |   |   | 2,758 |   |   |   | 4.24 |   |
| Total interest-bearing deposits                                                   |   |   | 150,534 |   |   |   | 3,355 |   |   |   | 2.23 |   |
|                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |
| Securities sold under agreements to      repurchase |   |   | 1,529 |   |   |   | 37 |   |   |   | 2.42 |   |
| Federal Home Loan Bank advances                                                   |   |   | 1,632 |   |   |   | 85 |   |   |   | 5.21 |   |
|                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |
| Total interest-bearing liabilities                                                |   | $ | 153,695 |   |   | $ | 3,477 |   |   |   | 2.26 | % |
|                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |
| Net interest income                                                               |   |   |   |   |   | $ | 7,978 |   |   |   |   |   |
| Net interest spread                                                               |   |   |   |   |   |   |   |   |   |   | 3.64 | % |
| Net interest margin                                                               |   |   |   |   |   |   |   |   |   |   | 4.11 | % |

| (1)   | On a fully taxable equivalent basis based on a tax rate of 34%.  Interest income on investments includes a fully taxable equivalent adjustment of $203,000 in 2010, $161,000 in 2009, and $143,000 in 2008. |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                                                                     |   | Year Ended December 31, 2010Compared toYear Ended December 31, 2009 |   |   | Year Ended December 31, 2009Compared toYear Ended December 31, 2008 |   |
|------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------|--------|--------|---------------------------------------------------------------------|--------|
|                                                                                     |   | Increase (Decrease)Due to                                           |   |   |                                                                |   |   | Increase (Decrease)Due to |   |   |   |   |
|                                                                                     |   | Volume                                                              |   |   | Rate                                                                |   |   | Net |   |   | Volume |   |   | Rate |   |   | Net |   |
|                                                                                     |   | (In thousands)                                                      |   |
| Interest and dividend income:                                                            |   |                                                                |   |   |                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Federal funds sold and overnight                                       |   |                                                                |   |   |                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |
|        deposits                                       |   | $                                                                   | (1     | )      |                                                                | $      | 9 |   |   | $ | 8 |   |   | $ | 175 |   |   | $ | (294 | ) |   | $ | (119 | ) |
|    Investments                                                            |   |                                                                | (10    | )      |                                                                |   | (122 | ) |   |   | (132 | ) |   |   | 1,090 |   |   |   | (235 | ) |   |   | 855 |   |
|    Loans                                                                  |   |                                                                | 785    |   |                                                                |   | (354 | ) |   |   | 431 |   |   |   | 396 |   |   |   | (387 | ) |   |   | 9 |   |
|          Total interest-earning assets      |   |                                                                | 774    |   |                                                                |   | (467 | ) |   |   | 307 |   |   |   | 1,661 |   |   |   | (916 | ) |   |   | 745 |   |
|                                                                                     |   |                                                                |   |   |                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest expense:                                                                        |   |                                                                |   |   |                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    NOW deposits                                                           |   |                                                                | 3      |   |                                                                |   | - |   |   |   | 3 |   |   |   | 5 |   |   |   | (13 | ) |   |   | (8 | ) |
|    Savings deposits                                                       |   |                                                                | 233    |   |                                                                |   | (304 | ) |   |   | (71 | ) |   |   | (1,765 | ) |   |   | 1,704 |   |   |   | (61 | ) |
|    Time deposits                                                          |   |                                                                | (293   | )      |                                                                |   | (673 | ) |   |   | (966 | ) |   |   | (536 | ) |   |   | 437 |   |   |   | (99 | ) |
|         Total interest-bearing deposits          |   |                                                                | (57    | )      |                                                                |   | (977 | ) |   |   | (1,034 | ) |   |   | (2,296 | ) |   |   | 2,128 |   |   |   | (168 | ) |
|                                                                                     |   |                                                                |   |   |                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Securities sold under agreements to                                    |   |                                                                |   |   |                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|           repurchase                   |   |                                                                | 27     |   |                                                                |   | 5 |   |   |   | 32 |   |   |   | (17 | ) |   |   | (23 | ) |   |   | (40 | ) |
|    FHLB advances                                                          |   |                                                                | (2     | )      |                                                                |   | (4 | ) |   |   | (6 | ) |   |   | (11 | ) |   |   | 1 |   |   |   | (10 | ) |
|          Total interest-bearing liabilities |   |                                                                | (32    | )      |                                                                |   | (976 | ) |   |   | (1,008 | ) |   |   | (2,324 | ) |   |   | 2,106 |   |   |   | (218 | ) |
|    Net change in interest income                                          |   | $                                                                   | 806    |   |                                                                | $      | 509 |   |   | $ | 1,315 |   |   | $ | 3,985 |   |   | $ | (3,022 | ) |   | $ | 963 |   |

----

| NONINTEREST INCOME (CHARGES) |
|------------------------------|

|                                                                               |   | For Year Ended 12/31/10 |           |   | % of Incomeexcluding Write-down |   |   | For Year Ended 12/31/09 |   |   | % of Incomeexcluding Write-down |   |   | For Year Ended 12/31/08 |   |   | % of Incomeexcluding Write-down |   |
|------------------------------------------------------------------------------------|--------|-------------------------|----------------|--------|---------------------------------|--------|--------|-------------------------|--------|--------|---------------------------------|--------|--------|-------------------------|--------|--------|---------------------------------|--------|
|                                                                               |   |                    |           |   |                            |   |   |                    |   |   |                            |   |   |                    |   |   |                            |   |
| Service charges on    deposit accounts                         |   | $                       | 523,770        |   |                            |   | 29.5   | %                       |   | $      | 544,054                         |   |   |                    | 35.7   | %      |                            | $      | 479,210 |   |   |   | 29.9 | % |
| Safe deposit fees                                                                  |   |                    | 80,230         |   |                            |   | 4.5    |                    |   |   | 80,968                          |   |   |                    | 5.3    |   |                            |   | 74,039 |   |   |   | 4.6 |   |
| Business manager income                                                            |   |                    | 116,338        |   |                            |   | 6.5    |                    |   |   | 109,425                         |   |   |                    | 7.2    |   |                            |   | 129,232 |   |   |   | 8.1 |   |
| Gain on loans sold, net                                                            |   |                    | 226,580        |   |                            |   | 12.8   |                    |   |   | 58,928                          |   |   |                    | 3.9    |   |                            |   | - |   |   |   | - |   |
| SBT Investment Services, Inc                                                       |   |                    | 114,046        |   |                            |   | 6.4    |                    |   |   | 100,910                         |   |   |                    | 6.6    |   |                            |   | 82,295 |   |   |   | 5.2 |   |
| Other income                                                                       |   |                    | 716,017        |   |                            |   | 40.3   |                    |   |   | 627,735                         |   |   |                    | 41.3   |   |                            |   | 836,266 |   |   |   | 52.2 |   |
| Noninterest incomeexcludes write-down                                              |   |                    | 1,776,981      |   |                            |   | 100.0  | %                       |   |   | 1,522,020                       |   |   |                    | 100.0  | %      |                            |   | 1,601,042 |   |   |   | 100.0 | % |
| Write-down of securities available- for-sale                                       |   |                    |    - |   |                            |   |   |                    |   |   |    -                  |   |   |                    |   |   |                            |   | (1,755,600 | ) |   |   |   |   |
|         Total noninterest income (charges) |   | $                       | 1,776,981      |   |                            |   |   |                    |   | $      | 1,522,020                       |   |   |                    |   |   |                            | $      | (154,558 | ) |   |   |   |   |

| NONINTEREST EXPENSE |
|---------------------|

|                           |   | For Year Ended 12/31/10 |      |   | % ofTotal |   |   | For Year Ended12/31/09 |   |   | % ofTotal |   |   | For Year Ended 12/31/08 |   |    | % ofTotal |   |
|--------------------------------|--------|-------------------------|-----------|--------|-----------|--------|--------|-----------------------------|--------|--------|-----------|--------|--------|------------------------------|--------|---------|-----------|--------|
|                           |   |                    |      |   |      |   |   |                        |   |   |      |   |   |                         |   |    |      |   |
| Salaries and employee benefits |   | $                       | 4,818,836 |   |      |   | 49.4   | %                           |   | $      | 4,165,247 |   |   |                         | 46.3   | %       |      | $      | 4,284,603 |   |   |   | 48.5 | % |
| Occupancy expense              |   |                    | 1,133,024 |   |      |   | 11.6   |                        |   |   | 1,128,436 |   |   |                         | 12.5   |    |      |   | 1,287,076 |   |   |   | 14.5 |   |
| Equipment expense              |   |                    | 287,414   |   |      |   | 2.9    |                        |   |   | 349,935   |   |   |                         | 3.7    |    |      |   | 411,703 |   |   |   | 4.7 |   |
| Impairment of operating lease  |   |                    | -         |   |      |   | -      |                        |   |   | -         |   |   |                         | -      |    |      |   | 298,657 |   |   |   | 3.4 |   |
| Professional fees              |   |                    | 722,772   |   |      |   | 7.4    |                        |   |   | 513,000   |   |   |                         | 5.7    |    |      |   | 407,597 |   |   |   | 4.6 |   |
| Advertising and promotions     |   |                    | 407,944   |   |      |   | 4.2    |                        |   |   | 398,365   |   |   |                         | 4.4    |    |      |   | 384,404 |   |   |   | 4.4 |   |
| Forms and supplies             |   |                    | 146,103   |   |      |   | 1.5    |                        |   |   | 185,882   |   |   |                         | 2.1    |    |      |   | 152,212 |   |   |   | 1.7 |   |
| Insurance                      |   |                    | 471,606   |   |      |   | 4.8    |                        |   |   | 575,120   |   |   |                         | 6.4    |    |      |   | 200,750 |   |   |   | 2.3 |   |
| Loan expenses                  |   |                    | 199,443   |   |      |   | 2.0    |                        |   |   | 94,742    |   |   |                         | 1.1    |    |      |   | 68,393 |   |   |   | 0.8 |   |
| Postage                        |   |                    | 97,779    |   |      |   | 1.0    |                        |   |   | 103,912   |   |   |                         | 1.2    |    |      |   | 151,522 |   |   |   | 1.7 |   |
| Other expenses                 |   |                    | 1,469,586 |   |      |   | 15.2   |                        |   |   | 1,482,846 |   |   |                         | 16.6   |    |      |   | 1,184,048 |   |   |   | 13.4 |   |
| Total                          |   | $                       | 9,754,507 |   |      |   | 100.0  | %                      |   | $      | 8,997,485 |   |   |                         | 100.0  | %  |      | $      | 8,830,965 |   |   |   | 100.0 | %  |

----

| Distribution of Assets, Liabilities and Stockholders’ Equity |
|--------------------------------------------------------------------|
| (Dollars in thousands)                                             |

|                                                                                |   | For the Year Ended 12/31/10 |        |   | For the Year Ended 12/31/09 |   |      | For the Year Ended 12/31/08 |   |
|-------------------------------------------------------------------------------------|--------|-----------------------------|-------------|--------|-----------------------------|--------|-----------|-----------------------------|--------|
|                                                                                |   | Average Balance             |        |   | Percent of Total Assets     |   |      | Average Balance             |   |   | Percent ofTotal Assets |   |   | Average Balance |   |   | Percent ofTotal Assets |   |
| Assets                                                                              |   |                        |        |   |                        |   |      |                        |   |   |   |   |   |   |   |   |   |   |
| Cash and due from banks                                                             |   | $                           | 8,221       |   |                        |   | 2.8       | %                           |   | $ | 7,280 |   |   |   | 2.7 | % |   | $ | 7,682 |   |   |   | 3.6 | % |
| Investment securities                                                               |   |                        | 58,211      |   |                        |   | 20.1      |                        |   |   | 57,881 |   |   |   | 21.4 |   |   |   | 22,873 |   |   |   | 10.5 |   |
| Federal funds sold and overnight     deposits              |   |                        | 14,086      |   |                        |   | 4.9       |                        |   |   | 14,829 |   |   |   | 5.5 |   |   |   | 9,717 |   |   |   | 4.5 |   |
| Loans, net                                                                          |   |                        | 199,358     |   |                        |   | 68.8      |                        |   |   | 181,929 |   |   |   | 67.5 |   |   |   | 171,723 |   |   |   | 79.1 |   |
| Premises and equipment                                                              |   |                        | 643         |   |                        |   | 0.2       |                        |   |   | 787 |   |   |   | 0.3 |   |   |   | 1,072 |   |   |   | 0.5 |   |
| Accrued interest and other assets                                                   |   |                        | 9,081       |   |                        |   | 3.2       |                        |   |   | 6,909 |   |   |   | 2.6 |   |   |   | 3,960 |   |   |   | 1.8 |   |
|                                                                                |   |                        |        |   |                        |   |      |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total assets                                                                        |   | $                           | 289,600     |   |                        |   | 100.0     | %                           |   | $ | 269,615 |   |   |   | 100.0 | % |   | $ | 217,027 |   |   |   | 100.0 | % |
|                                                                                |   |                        |        |   |                        |   |      |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Liabilities and Stockholders' Equity                                                |   |                        |        |   |                        |   |      |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Deposits                                                                            |   |                        |        |   |                        |   |      |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Demand and NOW deposits                                                             |   | $                           | 83,348      |   |                        |   | 28.8      | %                           |   | $ | 70,154 |   |   |   | 26.0 | % |   | $ | 64,953 |   |   |   | 29.9 | % |
| Savings deposits                                                                    |   |                        | 103,179     |   |                        |   | 35.6      |                        |   |   | 86,423 |   |   |   | 32.1 |   |   |   | 65,706 |   |   |   | 30.3 |   |
| Time deposits                                                                       |   |                        | 76,286      |   |                        |   | 26.4      |                        |   |   | 90,322 |   |   |   | 33.5 |   |   |   | 65,755 |   |   |   | 30.3 |   |
| Total deposits                                                                      |   |                        | 262,813     |   |                        |   | 90.8      |                        |   |   | 246,899 |   |   |   | 91.6 |   |   |   | 196,414 |   |   |   | 90.5 |   |
| Accrued interest and other liabilities                                              |   |                        | 4,576       |   |                        |   | 1.6       |                        |   |   | 2,146 |   |   |   | 0.8 |   |   |   | 3,210 |   |   |   | 1.5 |   |
|                                                                                |   |                        |        |   |                        |   |      |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total liabilities                                                                   |   |                        | 267,389     |   |                        |   | 92.4      |                        |   |   | 249,045 |   |   |   | 92.4 |   |   |   | 199,624 |   |   |   | 92.0 |   |
|                                                                                |   |                        |        |   |                        |   |      |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Stockholders’ equity:                                                         |   |                        |        |   |                        |   |      |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Preferred stock                                                                     |   |                        | 4,049       |   |                        |   | 1.4       |                        |   |   | 3,079 |   |   |   | 1.1 |   |   |   | - |   |   |   | - |   |
| Common stock                                                                        |   |                        | 9,380       |   |                        |   | 3.2       |                        |   |   | 9,353 |   |   |   | 3.5 |   |   |   | 9,177 |   |   |   | 4.2 |   |
| Retained earnings and other      comprehensive income |   |                        |  8,782 |   |                        |   |  3.0 |                        |   |   |  8,138 |   |   |   |  3.0 |   |   |   |  8,226 |   |   |   |  3.8 |   |
| Total stockholders’ equity                                                    |   |                        | 22,211      |   |                        |   | 7.6       |                        |   |   | 20,570 |   |   |   | 7.6 |   |   |   | 17,403 |   |   |   | 8.0 |   |
|                                                                                |   |                        |        |   |                        |   |      |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total liabilities and   stockholders’ equity                   |   | $                           | 289,600     |   |                        |   | 100.0     | %                           |   | $ | 269,615 |   |   |   | 100.0 | % |   | $ | 217,027 |   |   |   | 100.0 | % |

----

| INVESTMENT PORTFOLIO   |
|------------------------|
| (Dollars in thousands) |

|                                        |   | December 31, 2010 |   |
|---------------------------------------------|--------|-------------------|--------|
|                                        |   | Amortized Cost    |   |   | FairValue |   |   | Yield |   |
| AVAILABLE-FOR-SALE SECURITIES               |   |              |   |   |   |   |   |   |   |
| U.S. government and agency securities       |   |              |   |   |   |   |   |   |   |
| Due after one to five years                 |   | $                 | 10,750 |   |   | $ | 10,791 |   |   |   | 1.77 | % |
| Total U.S. government and agency securities |   |              | 10,750 |   |   |   | 10,791 |   |   |   | 1.77 |   |
| State and municipal securities              |   |              |   |   |   |   |   |   |   |   |   |   |
| Due within one year                         |   |              | 497    |   |   |   | 497 |   |   |   | 0.85 |   |
| Due after one to five years                 |   |              | 499    |   |   |   | 507 |   |   |   | 5.10 |   |
| Due after five to ten years                 |   |              | 3,426  |   |   |   | 3,486 |   |   |   | 3.57 |   |
| Due after ten to fifteen years              |   |              | 5,294  |   |   |   | 5,203 |   |   |   | 3.90 |   |
| Due beyond fifteen years                    |   |              | 1,891  |   |   |   | 1,873 |   |   |   | 4.10 |   |
| Total state and municipal securities        |   |              | 11,607 |   |   |   | 11,566 |   |   |   | 3.76 |   |
| Corporate debt securities                   |   |              |   |   |   |   |   |   |   |   |   |   |
| Due after one to five years                 |   |              | 1,003  |   |   |   | 1,022 |   |   |   | 3.65 |   |
| Total corporate debt securities             |   |              | 1,003  |   |   |   | 1,022 |   |   |   | 3.65 |   |
| Mortgage-backed securities                  |   |              |   |   |   |   |   |   |   |   |   |   |
| WARM* within one year                       |   |              | 3      |   |   |   | 3 |   |   |   | 5.65 |   |
| WARM* after one to five years               |   |              | 838    |   |   |   | 861 |   |   |   | 3.68 |   |
| WARM* after five to ten years               |   |              | 5,060  |   |   |   | 5,192 |   |   |   | 3.63 |   |
| WARM* after ten to fifteen years            |   |              | 7,944  |   |   |   | 8,042 |   |   |   | 3.12 |   |
| WARM* beyond fifteen years                  |   |              | 7,181  |   |   |   | 7,209 |   |   |   | 3.80 |   |
| Total mortgage-backed securities            |   |              | 21,026 |   |   |   | 21,307 |   |   |   | 3.50 |   |
| SBA loan pool                               |   |              |   |   |   |   |   |   |   |   |   |   |
|  Due after one to five years           |   |              | 194    |   |   |   | 203 |   |   |   | 4.63 |   |
|  Due after five to ten years           |   |              | 1,265  |   |   |   | 1,365 |   |   |   | 5.14 |   |
| Total SBA loan pool                         |   |              | 1,459  |   |   |   | 1,568 |   |   |   | 5.07 |   |
|                                        |   |              |   |   |   |   |   |   |   |   |   |   |
| Preferred stocks                            |   |              | 17     |   |   |   | 35 |   |   |   | 0.00 |   |
| Total available-for-sale securities         |   | $                 | 45,862 |   |   | $ | 46,289 |   |   |   | 3.46 | % |
|                                        |   |              |   |   |   |   |   |   |   |   |   |   |
| * - Weighted-Average Remaining Maturity     |   |              |   |   |   |   |   |   |   |   |   |   |

| INVESTMENT PORTFOLIO   |
|------------------------|
| (Dollars in thousands) |

|                                        |   | December 31, 2009 |   |
|---------------------------------------------|--------|-------------------|--------|
|                                        |   | Amortized Cost    |   |   | FairValue |   |   |   Yield |   |
| AVAILABLE-FOR-SALE SECURITIES               |   |              |   |   |   |   |   |   |   |
| U.S. Government and Agency securities       |   |              |   |   |   |   |   |   |   |
| Due after one to five years                 |   | $                 | 15,723 |   |   | $ | 15,767 |   |   |   | 2.44 | % |
| Total U.S. Government and Agency securities |   |              | 15,723 |   |   |   | 15,767 |   |   |   | 2.44 |   |
| State and municipal securities              |   |              |   |   |   |   |   |   |   |   |   |   |
| Due after one to five years                 |   |              | 1,493  |   |   |   | 1,537 |   |   |   | 5.39 |   |
| Due after five to ten years                 |   |              | 1,847  |   |   |   | 1,883 |   |   |   | 5.41 |   |
| Due after ten to fifteen years              |   |              | 3,920  |   |   |   | 3,918 |   |   |   | 3.88 |   |
| Due beyond fifteen years                    |   |              | 2,717  |   |   |   | 2,764 |   |   |   | 4.18 |   |
| Total state and municipal securities        |   |              | 9,977  |   |   |   | 10,102 |   |   |   | 4.10 |   |
| Corporate debt securities                   |   |              |   |   |   |   |   |   |   |   |   |   |
| Due after one to five years                 |   |              | 509    |   |   |   | 536 |   |   |   | 5.00 |   |
| Total corporate debt securities             |   |              | 509    |   |   |   | 536 |   |   |   | 5.00 |   |
| Mortgage -backed securities                 |   |              |   |   |   |   |   |   |   |   |   |   |
| WARM* within one year                       |   |              | 110    |   |   |   | 111 |   |   |   | 3.60 |   |
| WARM* after one to five years               |   |              | 1,497  |   |   |   | 1,528 |   |   |   | 3.73 |   |
| WARM* after five to ten years               |   |              | 4,165  |   |   |   | 4,279 |   |   |   | 4.07 |   |
| WARM* after ten to fifteen years            |   |              | 8,047  |   |   |   | 8,090 |   |   |   | 3.95 |   |
| WARM* beyond fifteen years                  |   |              | 7,953  |   |   |   | 7,834 |   |   |   | 4.14 |   |
| Total mortgage-backed securities            |   |              | 21,772 |   |   |   | 21,842 |   |   |   | 4.03 |   |

|                                |
|-------------------------------------|
| SBA loan pool                       |
| Due after one to five years         |   |   | 195 |   |   |   | 202 |   |   |   | 4.63 |   |
| Due after five to ten years         |   |   | 1,445 |   |   |   | 1,505 |   |   |   | 5.18 |   |
| Total SBA loan pool                 |   |   | 1,640 |   |   |   | 1,707 |   |   |   | 5.11 |   |
| Preferred stocks                    |   |   | 17 |   |   |   | 57 |   |   |   | - |   |
| Total available-for-sale securities |   | $ | 49,638 |   |   | $ | 50,011 |   |   |   | 3.58 | % |

----

| INVESTMENT PORTFOLIO   |
|------------------------|
| (Dollars in thousands) |

|                                        |   | December 31, 2008 |   |
|---------------------------------------------|--------|-------------------|--------|
|                                        |   | AmortizedCost     |   |   | FairValue |   |   | Yield |   |
| AVAILABLE-FOR-SALE SECURITIES               |   |              |   |   |   |   |   |   |   |
| U.S. Government and Agency securities       |   |              |   |   |   |   |   |   |   |
| Due within one year                         |   | $                 | 500    |   |   | $ | 503 |   |   |   | 4.91 | % |
| Due after one to five years                 |   |              | 5,272  |   |   |   | 5,351 |   |   |   | 3.25 |   |
| Total U.S. Government and Agency securities |   |              | 5,772  |   |   |   | 5,854 |   |   |   | 3.40 |   |
| State and municipal securities              |   |              |   |   |   |   |   |   |   |   |   |   |
| Due after one to five years                 |   |              | 1,493  |   |   |   | 1,546 |   |   |   | 5.39 |   |
| Due after five to ten years                 |   |              | 231    |   |   |   | 237 |   |   |   | 5.41 |   |
| Due after ten to fifteen years              |   |              | 1,851  |   |   |   | 1,822 |   |   |   | 3.92 |   |
| Due beyond fifteen years                    |   |              | 2,373  |   |   |   | 2,249 |   |   |   | 4.12 |   |
| Total state and municipal securities        |   |              | 5,948  |   |   |   | 5,854 |   |   |   | 4.43 |   |
| Corporate debt securities                   |   |              |   |   |   |   |   |   |   |   |   |   |
| Due within one year                         |   |              | 2,159  |   |   |   | 2,176 |   |   |   | 6.00 |   |
| Due after one to five years                 |   |              | 512    |   |   |   | 514 |   |   |   | 5.00 |   |
| Total corporate debt securities             |   |              | 2,671  |   |   |   | 2,690 |   |   |   | 5.78 |   |
| Mortgage -backed securities                 |   |              |   |   |   |   |   |   |   |   |   |   |
| WARM* within one year                       |   |              | 234    |   |   |   | 234 |   |   |   | 3.72 |   |
| WARM* after one to five years               |   |              | 2,216  |   |   |   | 2,236 |   |   |   | 3.88 |   |
| WARM* after five to ten years               |   |              | 3,472  |   |   |   | 3,469 |   |   |   | 4.55 |   |
| WARM* after ten to fifteen years            |   |              | 4,219  |   |   |   | 4,231 |   |   |   | 4.77 |   |
| WARM* beyond fifteen years                  |   |              | 6,658  |   |   |   | 6,533 |   |   |   | 5.22 |   |
| Total mortgage-backed securities            |   |              | 16,799 |   |   |   | 16,703 |   |   |   | 4.77 |   |
| SBA loan pool                               |   |              |   |   |   |   |   |   |   |   |   |   |
| Due within one year                         |   |              | 17     |   |   |   | 18 |   |   |   | 8.80 |   |
| Due after one to five years                 |   |              | 230    |   |   |   | 231 |   |   |   | 4.63 |   |
| Due after five to ten years                 |   |              | -      |   |   |   | - |   |   |   | - |   |
| Due after ten to fifteen years              |   |              | 1,583  |   |   |   | 1,630 |   |   |   | 5.11 |   |
| Total SBA loan pool                         |   |              | 1,830  |   |   |   | 1,879 |   |   |   | 5.09 |   |
|                                        |   |              |   |   |   |   |   |   |   |   |   |   |
| Preferred stocks                            |   |              | 17     |   |   |   | 17 |   |   |   | - |   |
| Total available-for-sale securities         |   | $                 | 33,037 |   |   | $ | 32,997 |   |   |   | 4.64 | % |
|                                        |   |              |   |   |   |   |   |   |   |   |   |   |
| * - Weighted-Average Remaining Maturity     |   |              |   |   |   |   |   |   |   |   |   |   |

----

| LOAN PORTFOLIO         |
|------------------------|
| (Dollars in thousands) |

|                                                                                                     |   | December 31, 2010 |    |   | December 31, 2009 |   |   | December 31, 2008 |   |
|----------------------------------------------------------------------------------------------------------|--------|-------------------|---------|--------|-------------------|--------|--------|-------------------|--------|
|                                                                                                     |   | Balance           |    |   | % Total Loans     |   |   | Balance           |   |   | % TotalLoans |   |   | Balance |   |   | % TotalLoans |   |
|                                                                                                     |   |              |    |   |              |   |   |              |   |   |   |   |   |   |   |   |   |   |
| Commercial, financial and agricultural *                                                                 |   | $                 | 13,568  |   |              |   | 6.6    | %                 |   | $ | 12,901 |   |   |   | 6.7 | % |   | $ | 15,742 |   |   |   | 8.7 | % |
| Real estate – construction and land development                                                    |   |              | 4,987   |   |              |   | 2.4    |              |   |   | 6,745 |   |   |   | 3.5 |   |   |   | 8,871 |   |   |   | 4.9 |   |
| Real estate – residential                                                                          |   |              | 148,396 |   |              |   | 72.5   |              |   |   | 138,409 |   |   |   | 71.6 |   |   |   | 126,042 |   |   |   | 70.1 |   |
| Real estate – commercial                                                                           |   |              | 31,294  |   |              |   | 15.3   |              |   |   | 28,721 |   |   |   | 14.9 |   |   |   | 22,962 |   |   |   | 12.8 |   |
| Municipal                                                                                                |   |              | 2,034   |   |              |   | 1.0    |              |   |   | 2,015 |   |   |   | 1.0 |   |   |   | 2,082 |   |   |   | 1.2 |   |
| Consumer                                                                                                 |   |              | 4,512   |   |              |   | 2.2    |              |   |   | 4,474 |   |   |   | 2.3 |   |   |   | 4,125 |   |   |   | 2.3 |   |
|                                                                                                     |   |              |    |   |              |   |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total loans                                                                                              |   |              | 204,791 |   |              |   | 100.0  | %                 |   |   | 193,265 |   |   |   | 100.0 | % |   |   | 179,824 |   |   |   | 100.0 | % |
|                                                                                                     |   |              |    |   |              |   |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Allowance for loan losses                                                                                |   |              | (2,326  | )      |              |   |   |              |   |   | (2,211 | ) |   |   |   |   |   |   | (2,017 | ) |   |   |   |   |
| Deferred costs, net                                                                                      |   |              | 327     |   |              |   |   |              |   |   | 250 |   |   |   |   |   |   |   | 267 |   |   |   |   |   |
|                                                                                                     |   |              |    |   |              |   |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net loans                                                                                                |   | $                 | 202,792 |   |              |   |   |              |   | $ | 191,304 |   |   |   |   |   |   | $ | 178,074 |   |   |   |   |   |
|                                                                                                     |   |              |    |   |              |   |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| * - Includes term federal funds sold of $0 at 12/31/2010, $0 at 12/31/2009 and $2,000,000 at 12/31/2008. |   |

|                                                                                   |   | December 31, 2007 |    |   | December 31, 2006 |   |
|----------------------------------------------------------------------------------------|--------|-------------------|---------|--------|-------------------|--------|
|                                                                                   |   | Balance           |    |   | % TotalLoans      |   |   | Balance |   |   | % TotalLoans |   |
|                                                                                   |   |              |    |   |              |   |   |   |   |   |   |   |
| Commercial, financial and agricultural *                                               |   | $                 | 16,585  |   |              |   | 10.0 | % |   | $ | 10,947 |   |   |   | 7.0 | % |
| Real estate – construction and land development                                  |   |              | 10,756  |   |              |   | 6.5 |   |   |   | 11,113 |   |   |   | 7.1 |   |
| Real estate – residential                                                        |   |              | 113,629 |   |              |   | 68.7 |   |   |   | 106,375 |   |   |   | 67.7 |   |
| Real estate – commercial                                                         |   |              | 15,135  |   |              |   | 9.1 |   |   |   | 15,974 |   |   |   | 10.2 |   |
| Municipal                                                                              |   |              | 1,916   |   |              |   | 1.2 |   |   |   | 987 |   |   |   | 0.6 |   |
| Consumer                                                                               |   |              | 7,427   |   |              |   | 4.5 |   |   |   | 11,582 |   |   |   | 7.4 |   |
|                                                                                   |   |              |    |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Total loans                                                                            |   |              | 165,448 |   |              |   | 100.0 | % |   |   | 156,978 |   |   |   | 100.0 | % |
|                                                                                   |   |              |    |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Allowance for loan losses                                                              |   |              | (1,925  | )      |              |   |   |   |   |   | (1,698 | ) |   |   |   |   |
| Deferred costs, net                                                                    |   |              | 242     |   |              |   |   |   |   |   | 233 |   |   |   |   |   |
|                                                                                   |   |              |    |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Net loans                                                                              |   | $                 | 163,765 |   |              |   |   |   |   | $ | 155,513 |   |   |   |   |   |
|                                                                                   |   |              |    |   |              |   |   |   |   |   |   |   |   |   |   |   |
| * - Includes term federal funds sold of $3,000,000 at 12/31/2007 and $0 at 12/31/2006. |   |

----

| MATURITIES AND RATE SENSITIVITY OF LOANS |
|------------------------------------------|
| As of December 31, 2010                  |
| (In thousands)                           |

|                                                                                                        |   | One Yearor Less |   |   | Over One toFive Years |   |   | Over Five Years |   |   |  Total |   |
|-------------------------------------------------------------------------------------------------------------|--------|-----------------|--------|--------|-----------------------|--------|--------|----------------------|--------|--------|-------------|--------|
|                                                                                                        |   |            |   |   |                  |   |   |                 |   |   |        |   |
| Commercial, financial and agricultural                                                                      |   | $               | 5,656  |   |                  | $      | 7,912  |                 |   | $      | -           |   |   | $ | 13,568 |   |
| Real estate - construction and land development                                                             |   |            | 4,987  |   |                  |   | -      |                 |   |   | -           |   |   |   | 4,987 |   |
| Real estate – residential                                                                             |   |            | 41,528 |   |                  |   | 63,515 |                 |   |   | 43,353      |   |   |   | 148,396 |   |
| Real estate – commercial                                                                              |   |            | 26,379 |   |                  |   | 2,393  |                 |   |   | 2,522       |   |   |   | 31,294 |   |
| Municipal                                                                                                   |   |            | 2,035  |   |                  |   | -      |                 |   |   | -           |   |   |   | 2,035 |   |
| Consumer                                                                                                    |   |            | 1,868  |   |                  |   | 2,644  |                 |   |   | -           |   |   |   | 4,512 |   |
|                 Total loans |   | $               | 82,453 |   |                  | $      | 76,464 |                 |   | $      | 45,875      |   |   | $ | 204,792 |   |
|                                                                                                        |   |            |   |   |                  |   |   |                 |   |   |        |   |   |   |   |   |
| Loans with fixed interest rates                                                                             |   | $               | 23,748 |   |                  | $      | 68,340 |                 |   | $      | 44,877      |   |   | $ | 136,929 |   |
|                                                                                                        |   |            |   |   |                  |   |   |                 |   |   |        |   |   |   |   |   |
| Loans with variable interest rates                                                                          |   |            | 58,705 |   |                  |   | 8,160  |                 |   |   | 998         |   |   |   | 67,863 |   |
| Total loans                                                                                                 |   | $               | 82,453 |   |                  | $      | 76,464 |                 |   | $      | 45,875      |   |   | $ | 204,792 |   |

----

| LOAN COMMITMENTS AND STANDBY LETTERS OF CREDIT |
|------------------------------------------------|
| (In thousands)                                 |

|                                   |   | 12/31/10 |   |   | 12/31/09 |   |   | 12/31/08 |   |
|----------------------------------------|--------|----------|--------|--------|----------|--------|--------|----------|--------|
|                                   |   |     |   |   |     |   |   |     |   |
| Commitments to originate loans         |   | $        | 2,701  |   |     | $      | 1,498  |     |   | $ | 1,273 |   |
| Standby letters of credit              |   |     | 233    |   |     |   | 337    |     |   |   | 337 |   |
| Unadvanced portion of loans:           |   |     |   |   |     |   |   |     |   |   |   |   |
| Construction                           |   |     | 4,322  |   |     |   | 3,474  |     |   |   | 5,987 |   |
| Commercial lines of credit             |   |     | 7,858  |   |     |   | 7,744  |     |   |   | 9,479 |   |
| Consumer                               |   |     | 735    |   |     |   | 701    |     |   |   | 715 |   |
| Home  equity lines of credit |   |     | 24,120 |   |     |   | 24,232 |     |   |   | 22,894 |   |
| Commercial real estate, land           |   |     | -      |   |     |   | -      |     |   |   | - |   |
|                                   |   |     |   |   |     |   |   |     |   |   |   |   |
| Total                                  |   | $        | 39,969 |   |     | $      | 37,986 |     |   | $ | 40,685 |   |

----

|                                                                 |   | At or For the Year Ended 12/31/10 |    |   | At or For the Year Ended 12/31/09 |   |
|----------------------------------------------------------------------|--------|----------------------------------------|---------|--------|----------------------------------------|--------|
|                                                                 |   |                                   |    |   |                                   |   |
| ALLOWANCE FOR LOAN LOSSES                                            |   |                                   |    |   |                                   |   |
| Balance at beginning of period                                       |   | $                                      | 2,211   |   |                                   | $      | 2,017 |   |
| Charge-offs:                                                         |   |                                   |    |   |                                   |   |   |   |
|      Commercial, financial and agricultural |   |                                   | (627    | )      |                                   |   | (226 | ) |
|      Installment loans to individuals       |   |                                   | (20     | )      |                                   |   | (132 | ) |
|      Total charge-offs                      |   |                                   | (647    | )      |                                   |   | (358 | ) |
| Recoveries:                                                          |   |                                   |    |   |                                   |   |   |   |
|      Commercial, financial and agricultural |   |                                   | 1       |   |                                   |   | 3 |   |
|      Installment loans to individuals       |   |                                   | 6       |   |                                   |   | 2 |   |
|      Total recoveries                       |   |                                   | 7       |   |                                   |   | 5 |   |
|                                                                 |   |                                   |    |   |                                   |   |   |   |
| Net loans (charged-off) recovered                                    |   |                                   | (640    | )      |                                   |   | (353 | ) |
| Provision for loan losses                                            |   |                                   | 755     |   |                                   |   | 547 |   |
| Balance at end of period                                             |   | $                                      | 2,326   |   |                                   | $      | 2,211 |   |
|                                                                 |   |                                   |    |   |                                   |   |   |   |
| BALANCES                                                             |   |                                   |    |   |                                   |   |   |   |
| Average total loans                                                  |   | $                                      | 202,181 |   |                                   | $      | 184,089 |   |
| Total loans at end of period                                         |   |                                   | 204,792 |   |                                   |   | 193,265 |   |
|                                                                 |   |                                   |    |   |                                   |   |   |   |
| RATIOS                                                               |   |                                   |    |   |                                   |   |   |   |
| Allowance for loan losses to average loans                           |   |                                   | 1.15    | %      |                                   |   | 1.20 | % |
| Allowance for loan losses to loans at end of period                  |   |                                   | 1.14    |   |                                   |   | 1.14 |   |

----

|                                                                 |   | At or For the Year Ended 12/31/08 |    |   | At or For the Year Ended 12/31/07 |   |
|----------------------------------------------------------------------|--------|----------------------------------------|---------|--------|----------------------------------------|--------|
|                                                                 |   |                                   |    |   |                                   |   |
| ALLOWANCE FOR LOAN LOSSES                                            |   |                                   |    |   |                                   |   |
| Balance at beginning of period                                       |   | $                                      | 1,924   |   |                                   | $      | 1,698 |   |
| Charge-offs:                                                         |   |                                   |    |   |                                   |   |   |   |
|      Commercial, financial and agricultural |   |                                   | (130    | )      |                                   |   | (3 | ) |
|      Installment loans to individuals       |   |                                   | (229    | )      |                                   |   | (21 | ) |
|      Total charge-offs                      |   |                                   | (359    | )      |                                   |   | (24 | ) |
| Recoveries:                                                          |   |                                   |    |   |                                   |   |   |   |
|      Commercial, financial and agricultural |   |                                   | 2       |   |                                   |   | - |   |
|      Installment loans to individuals       |   |                                   | -       |   |                                   |   | - |   |
|      Total recoveries                       |   |                                   | 2       |   |                                   |   | - |   |
|                                                                 |   |                                   |    |   |                                   |   |   |   |
| Net loans (charged-off) recovered                                    |   |                                   | (357    | )      |                                   |   | (24 | ) |
| Provision for loan losses                                            |   |                                   | 450     |   |                                   |   | 250 |   |
| Balance at end of period                                             |   | $                                      | 2,017   |   |                                   | $      | 1,924 |   |
|                                                                 |   |                                   |    |   |                                   |   |   |   |
| BALANCES                                                             |   |                                   |    |   |                                   |   |   |   |
| Average total loans                                                  |   | $                                      | 173,168 |   |                                   | $      | 157,326 |   |
| Total loans at end of period                                         |   |                                   | 179,824 |   |                                   |   | 165,448 |   |
|                                                                 |   |                                   |    |   |                                   |   |   |   |
| RATIOS                                                               |   |                                   |    |   |                                   |   |   |   |
| Allowance for loan losses to average loans                           |   |                                   | 1.17    | %      |                                   |   | 1.22 | % |
| Allowance for loan losses to loans at end of period                  |   |                                   | 1.12    |   |                                   |   | 1.16 |   |

|                                                 |   | At or For the Year Ended 12/31/06 |    |
|------------------------------------------------------|--------|----------------------------------------|---------|
| ALLOWANCE FOR LOAN LOSSES                            |   |                                   |    |
| Balance at beginning of period                       |   |                                   |    |
| Total charge-offs (installment loans to individuals) |   | $                                      | 1,720   |   |
| Total recoveries (installment loans to individuals)  |   |                                   | (22     | ) |
| Net loans (charged-off) recovered                    |   |                                   | -       |   |
| Provision for loan losses                            |   |                                   | (22     | ) |
| Balance at end of period                             |   |                                   | -       |   |
|                                                 |   | $                                      | 1,698   |   |
| BALANCES                                             |   |                                   |    |   |
| Average total loans                                  |   |                                   |    |   |
| Total loans at end of period                         |   | $                                      | 151,822 |   |
|                                                 |   |                                   | 156,978 |   |
| RATIOS                                               |   |                                   |    |   |
| RATIOS                                               |   |                                   |    |   |
| Allowance for loan losses to average loans           |   |                                   | 1.12    | % |
| Allowance for loan losses to loans at end of period  |   |                                   | 1.08    |   |

|                   | ALLOCATION OF ALLOWANCE FOR LOAN LOSSES |
|------------------------|-----------------------------------------|
| (Dollars in thousands) |

|                                                                         |   | December 31, 2010       |   |   | December 31, 2009      |   |   | December 31, 2008       |   |
|------------------------------------------------------------------------------|--------|-------------------------|--------|--------|------------------------|--------|--------|-------------------------|--------|
|                                                                         |   | Allocation of Allowance |   |   | % of Loans by Category |   |   | Allocation of Allowance |   |   | % ofLoans byCategory |   |   | Allocation of Allowance |   |   | % ofLoans byCategory |   |
|                                                                         |   |                    |   |   |                   |   |   |                    |   |   |   |   |   |   |   |   |   |   |
| Real estate - residential                                                    |   | $                       | 1,198  |   |                   |   | 72.5   | %                       |   | $ | 1,229 |   |   |   | 71.6 | % |   | $ | 639 |   |   |   | 70.1 | % |
| Real estate -  commercial                                          |   |                    | 465    |   |                   |   | 15.3   |                    |   |   | 450 |   |   |   | 14.9 |   |   |   | 823 |   |   |   | 12.8 |   |
| Real estate – construction and land    development |   |                    | 68     |   |                   |   | 2.4    |                    |   |   | 106 |   |   |   | 3.5 |   |   |   | 77 |   |   |   | 4.9 |   |
| Commercial, financial and agricultural                                       |   |                    | 377    |   |                   |   | 6.6    |                    |   |   | 341 |   |   |   | 6.7 |   |   |   | 345 |   |   |   | 8.8 |   |
| Municipal                                                                    |   |                    | 34     |   |                   |   | 1.0    |                    |   |   | 38 |   |   |   | 1.0 |   |   |   | 33 |   |   |   | 1.2 |   |
| Consumer                                                                     |   |                    | 91     |   |                   |   | 2.2    |                    |   |   | 47 |   |   |   | 2.3 |   |   |   | 100 |   |   |   | 2.2 |   |
| Unallocated                                                                  |   |                    | 93     |   |                   |   | -      |                    |   |   | - |   |   |   |  - |   |   |   | - |   |   |   |  - |   |
|                                                                         |   |                    |   |   |                   |   |   |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                                                                        |   | $                       | 2,326  |   |                   |   | 100.0  | %                       |   | $ | 2,211 |   |   |   | 100.0 | % |   | $ | 2,017 |   |   |   | 100.0 | % |

----

|                                                                         |   | December 31, 2007       |   |   | December 31, 2006    |   |
|------------------------------------------------------------------------------|--------|-------------------------|--------|--------|----------------------|--------|
|                                                                         |   | Allocation of Allowance |   |   | % ofLoans byCategory |   |   | Allocation of Allowance |   |   | % ofLoans byCategory |   |
|                                                                         |   |                    |   |   |                 |   |   |   |   |   |   |   |
| Real estate - residential                                                    |   | $                       | 563    |   |                 |   | 68.7 | % |   | $ | 464 |   |   |   | 67.7 | % |
| Real estate -  commercial                                          |   |                    | 316    |   |                 |   | 9.1 |   |   |   | 465 |   |   |   | 10.2 |   |
| Real estate – construction and land    development |   |                    | 464    |   |                 |   | 6.5 |   |   |   | 212 |   |   |   | 7.1 |   |
| Commercial, financial and agricultural                                       |   |                    | 363    |   |                 |   | 10.0 |   |   |   | 331 |   |   |   | 7.0 |   |
| Municipal                                                                    |   |                    | 31     |   |                 |   | 1.2 |   |   |   | 9 |   |   |   | 0.6 |   |
| Consumer                                                                     |   |                    | 188    |   |                 |   | 4.5 |   |   |   | 217 |   |   |   | 7.4 |   |
|                                                                         |   |                    |   |   |                 |   |   |   |   |   |   |   |   |   |   |   |
| Total                                                                        |   | $                       | 1,925  |   |                 |   | 100.0 | % |   | $ | 1,698 |   |   |   | 100.0 | % |

| AVERAGE DEPOSITS       |
|------------------------|
| (Dollars in thousands) |

|                   |   | For the Year EndedDecember 31, 2010 |    |   | For the Year EndedDecember 31, 2009 |   |   | For the Year EndedDecember 31, 2008 |   |
|------------------------|--------|-------------------------------------|---------|--------|-------------------------------------|--------|--------|-------------------------------------|--------|
|                   |   | Average Balance                     |    |   | Average Rate                   |   |   | Average Balance                     |   |   | Average Rate |   |   | Average Balance |   |   | AverageRate |   |
|                   |   |                                |    |   |                                |   |   |                                |   |   |   |   |   |   |   |   |   |   |
| Demand deposits        |   | $                                   | 47,618  |   |                                |   | 0.00   | %                                   |   | $ | 37,484 |   |   |   | 0.00 | % |   | $ | 34,963 |   |   |   | 0.00 | % |
| NOW deposits           |   |                                | 35,729  |   |                                |   | 0.11   |                                |   |   | 32,670 |   |   |   | 0.11 |   |   |   | 29,990 |   |   |   | 0.15 |   |
| Savings deposits       |   |                                | 103,179 |   |                                |   | 0.57   |                                |   |   | 86,423 |   |   |   | 0.76 |   |   |   | 65,706 |   |   |   | 1.09 |   |
| Time deposits          |   |                                | 76,286  |   |                                |   | 1.51   |                                |   |   | 90,323 |   |   |   | 2.34 |   |   |   | 65,755 |   |   |   | 3.37 |   |
|                   |   |                                |    |   |                                |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total average deposits |   | $                                   | 262,812 |   |                                |   | 0.68   | %                                   |   | $ | 246,900 |   |   |   | 1.14 | % |   | $ | 196,414 |   |   |   | 1.51 | % |

----

| SCHEDULED MATURITY OF TIME DEPOSITS OF $100,000 OR MORE |
|---------------------------------------------------------|
| (Dollars in thousands)                                  |

|                           |   | December 31, 2010 |   |   | December 31, 2009 |   |   | December 31, 2008 |   |
|--------------------------------|--------|-------------------|--------|--------|-------------------|--------|--------|-------------------|--------|
|                           |   | Balance           |   |   | % of Total   |   |   | Balance           |   |   | % of Total |   |   | Balance |   |   | % of Total |   |
|                           |   |              |   |   |              |   |   |              |   |   |   |   |   |   |   |   |   |   |
| Three months or less           |   | $                 | 12,126 |   |              |   | 37.6   | %                 |   | $ | 14,342 |   |   |   | 41.4 | % |   | $ | 21,148 |   |   |   | 62.6 | % |
| Over three through six months  |   |              | 6,166  |   |              |   | 19.1   |              |   |   | 6,984 |   |   |   | 20.1 |   |   |   | 5,180 |   |   |   | 15.4 |   |
| Over six through twelve months |   |              | 3,277  |   |              |   | 10.2   |              |   |   | 5,983 |   |   |   | 17.2 |   |   |   | 3,923 |   |   |   | 11.6 |   |
| Over twelve months             |   |              | 10,673 |   |              |   | 33.1   |              |   |   | 7,369 |   |   |   | 21.3 |   |   |   | 3,503 |   |   |   | 10.4 |   |
|                           |   |              |   |   |              |   |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total Time Deposits            |   | $                 | 32,242 |   |              |   | 100.0  | %                 |   | $ | 34,678 |   |   |   | 100.0 | % |   | $ | 33,754 |   |   |   | 100.0 | % |

----

| INTEREST RATE SENSITIVITY |
|---------------------------|
| (Dollars in thousands)    |

|                                                                        |   | December 31, 2010                 |        |
|-----------------------------------------------------------------------------|--------|-----------------------------------|-------------|
|                                                                        |   | Due within Three Months |        |   | Due in Three to Twelve Months |   |   | Due after OneYear to FiveYears |   |   | Due afterFiveYears |   |   | Total |   |
| Rate sensitive assets                                                       |   |                              |        |   |   |   |   |   |   |   |   |   |   |   |   |
| Federal funds sold and overnight     deposits      |   | $                                 | 2,787       |   |   | $ | - |   |   | $ | - |   |   | $ | - |   |   | $ | 2,787 |   |
| Available-for-sale securities                                               |   |                              | 2,109       |   |   |   | 13,541 |   |   |   | 16,409 |   |   |   | 14,230 |   |   |   | 46,289 |   |
| Total loans                                                                 |   |                              | 62,256      |   |   |   | 20,195 |   |   |   | 76,464 |   |   |   | 45,876 |   |   |   | 204,791 |   |
| Total                                                                       |   | $                                 | 67,152      |   |   | $ | 33,736 |   |   | $ | 92,873 |   |   | $ | 60,106 |   |   | $ | 253,867 |   |
|                                                                        |   |                              |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Rate sensitive liabilities                                                  |   |                              |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| NOW deposits                                                                |   | $                                 | 1,800       |   |   | $ | - |   |   | $ | - |   |   | $ | 34,190 |   |   | $ | 35,990 |   |
| Savings deposits                                                            |   |                              | 69,053      |   |   |   | - |   |   |   | - |   |   |   | 31,165 |   |   |   | 100,218 |   |
| Time deposits                                                               |   |                              | 23,508      |   |   |   | 32,156 |   |   |   | 22,068 |   |   |   | - |   |   |   | 77,732 |   |
| Securities sold under agreements to     repurchase |   |                              |  3,235 |   |   |   |  - |   |   |   |  - |   |   |   |  - |   |   |   |  3,235 |   |
| Total                                                                       |   | $                                 | 97,596      |   |   | $ | 32,156 |   |   | $ | 22,068 |   |   | $ | 65,355 |   |   | $ | 217,175 |   |
|                                                                        |   |                              |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest rate sensitivity gap                                               |   |                              | (30,444     | ) |   |   | 1,580 |   |   |   | 70,805 |   |   |   | (5,249 | ) |   | $ | 36,692 |   |
| Cumulative gap                                                              |   | $                                 | (30,444     | ) |   | $ | (28,864 | ) |   | $ | 41,941 |   |   | $ | 36,692 |   |   |   |   |   |
|                                                                        |   |                              |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cumulative gap ratio to total assets                                        |   |                              | (10         | )% |   |   | (10 | )% |   |   | 14 | % |   |   | 12 | % |   |   |   |   |

|                                                                        |   | December 31, 2009                 |      |
|-----------------------------------------------------------------------------|--------|-----------------------------------|-----------|
|                                                                        |   | Due within Three Months |      |   | Due inThree to Twelve Months |   |   | Due after OneYear to FiveYears |   |   | Due afterFiveYears |   |   |  Total |   |
| Rate sensitive assets                                                       |   |                              |      |   |   |   |   |   |   |   |   |   |   |   |   |
| Federal funds sold and overnight deposits                                   |   | $                                 | 4,916     |   |   | $ | - |   |   | $ | - |   |   | $ | - |   |   | $ | 4,916 |   |
| Available-for-sale securities                                               |   |                              | 5,334     |   |   |   | 15,943 |   |   |   | 18,458 |   |   |   | 10,276 |   |   |   | 50,011 |   |
| Total loans                                                                 |   |                              | 60,116    |   |   |   | 22,411 |   |   |   | 68,026 |   |   |   | 42,712 |   |   |   | 193,265 |   |
| Total                                                                       |   | $                                 | 70,366    |   |   | $ | 38,354 |   |   | $ | 86,484 |   |   | $ | 52,988 |   |   | $ | 248,192 |   |
|                                                                        |   |                              |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Rate sensitive liabilities                                                  |   |                              |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| NOW deposits                                                                |   | $                                 | 1,751     |   |   | $ | - |   |   | $ | - |   |   | $ | 33,262 |   |   | $ | 35,013 |   |
| Savings deposits                                                            |   |                              | 59,814    |   |   |   | - |   |   |   | - |   |   |   | 29,655 |   |   |   | 89,469 |   |
| Time deposits                                                               |   |                              | 26,534    |   |   |   | 38,805 |   |   |   | 16,738 |   |   |   | - |   |   |   | 82,077 |   |
| Securities sold under agreements to     repurchase |   |                              |  913 |   |   |   |  - |   |   |   |  - |   |   |   |  - |   |   |   |  913 |   |
| Total                                                                       |   | $                                 | 89,012    |   |   | $ | 38,805 |   |   | $ | 16,738 |   |   | $ | 62,917 |   |   | $ | 207,472 |   |
|                                                                        |   |                              |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest rate sensitivity gap                                               |   |                              | (18,646   | ) |   |   | (451 | ) |   |   | 69,746 |   |   |   | (9,929 | ) |   | $ | 40,720 |   |
| Cumulative gap                                                              |   | $                                 | (18, 646  | ) |   | $ | (19,097 | ) |   | $ | 50,649 |   |   | $ | 40,720 |   |   |   |   |   |
|                                                                        |   |                              |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cumulative gap ratio to total assets                                        |   |                              | (7        | )% |   |   | (7 | )% |   |   | 19 | % |   |   | 15 | % |   |   |   |   |

----

|                                            |
|-------------------------------------------------|
| INTEREST RATE SENSITIVITY(Dollars in thousands) |

|                                      |   | December 31, 2008                 |    |
|-------------------------------------------|--------|-----------------------------------|---------|
|                                      |   | Due within Three Months |    |   | Due inThree to TwelveMonths |   |   | Due after OneYear to FiveYears |   |   | Due afterFiveYears |   |   |  Total |   |
| Rate sensitive assets                     |   |                              |    |   |   |   |   |   |   |   |   |   |   |   |   |
| Federal funds sold and overnight deposits |   | $                                 | 3,800   |   |   | $ | - |   |   | $ | - |   |   | $ | - |   |   | $ | 3,800 |   |
| Available-for-sale securities             |   |                              | 1,099   |   |   |   | 1,872 |   |   |   | 13,206 |   |   |   | 16,820 |   |   |   | 32,997 |   |
| Total loans                               |   |                              | 58,283  |   |   |   | 14,914 |   |   |   | 69,182 |   |   |   | 37,445 |   |   |   | 179,824 |   |
| Total                                     |   | $                                 | 63,182  |   |   | $ | 16,786 |   |   | $ | 82,388 |   |   | $ | 54,265 |   |   | $ | 216,621 |   |
|                                      |   |                              |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Rate sensitive liabilities                |   |                              |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| NOW deposits                              |   | $                                 | 1,608   |   |   | $ | - |   |   | $ | - |   |   | $ | 30,549 |   |   | $ | 32,157 |   |
| Savings deposits                          |   |                              | 41,121  |   |   |   | - |   |   |   | - |   |   |   | 24,986 |   |   |   | 66,107 |   |
| Time deposits                             |   |                              | 44,349  |   |   |   | 29,977 |   |   |   | 10,001 |   |   |   | - |   |   |   | 84,327 |   |
| Borrowings                                |   |                              | 1,000   |   |   |   |   |   |   |   |   |   |   |   | - |   |   |   | 1,000 |   |
| Securities sold under agreements to       |   |                              |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   repurchase                    |   |                              | 577     |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 577 |   |
| Total                                     |   | $                                 | 88,655  |   |   | $ | 29,977 |   |   | $ | 10,001 |   |   | $ | 55,535 |   |   | $ | 184,168 |   |
|                                      |   |                              |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest rate sensitivity gap             |   |                              | (25,473 | ) |   | $ | (13,191 | ) |   | $ | 72,387 |   |   | $ | (1,270 | ) |   | $ | 32,453 |   |
| Cumulative gap                            |   | $                                 | (25,473 | ) |   | $ | (38,664 | ) |   | $ | 33,723 |   |   | $ | 32,453 |   |   |   |   |   |
|                                      |   |                              |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cumulative gap ratio to total assets      |   |                              | (11     | )% |   |   | (16 | )% |   |   | 14 | % |   |   | 13 | % |   |   |   |   |

----

| CAPITAL RATIOS |
|----------------|
|           |

|                                     |   |   | Actual12/31/10 |   |   |   | Actual12/31/09 |   |   |   | Actual12/31/08 |   |   |   | MinimumRegulatoryRequirements |   |   |   | Well-Capitalized |   |
|------------------------------------------|--------|--------|----------------|--------|--------|--------|----------------|--------|--------|--------|----------------|--------|--------|--------|-------------------------------|--------|--------|--------|------------------|--------|
| Bank:                                    |   |   |           |   |   |   |           |   |   |   |           |   |   |   |                          |   |   |   |             |   |
| Total capital (to risk weighted assets)  |   |   | 12.66%         |   |   |   | 13.97%         |   |   |   | 12.13%         |   |   |   | 8.00%                         |   |   |   | 10.00%           |   |
| Tier 1 capital (to risk weighted assets) |   |   | 11.41%         |   |   |   | 12.71%         |   |   |   | 10.88%         |   |   |   | 4.00%                         |   |   |   | 6.00%            |   |
| Tier 1 capital (to average assets)       |   |   | 7.00%          |   |   |   | 7.35%          |   |   |   | 7.00%          |   |   |   | 4.00%                         |   |   |   | 5.00%            |   |

----

|                                                                                                                             |   |     Number ofsecurities to beissued uponexercise ofoutstanding options(a) |          |   |       Weighted-averageexercise price ofoutstanding options(b) |   |     | Number ofsecurities remainingavailable for futureissuance underequitycompensation plans (excludingsecurities reflectedin column (a))(c) |   |
|----------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------------------------------|---------------|--------|---------------------------------------------------------------------------------------------|--------|----------|----------------------------------------------------------------------------------------------------------------------------------------------|--------|
| Equity compensation plans      approved by security      holders     |   |                                                                                          |   49,875 |   |                                                                                        | $      | 30.21    |                                                                                                                                         |   |   |   0 |   |
| Equity compensation plans not      approved by security      holders |   |                                                                                          |   0      |   |                                                                                        |   |   0 |                                                                                                                                         |   |   |   0 |   |
|                  Total                      |   |                                                                                          | 49,875        |   |                                                                                        | $      | 30.21    |                                                                                                                                         |   |   | 0 |   |

----

|   |  /s/ |    |
|--------|-----------|--------------|

|                                      |   |   |   | SHATSWELL, MacLEOD & COMPANY, P.C. |
|-------------------------------------------|--------|--------|--------|----------------------------------------|
|                                      |   |
| West Peabody, MassachusettsMarch 16, 2011 |   |

----

| ASSETS                                                                                                                                                        |   | 2010   |        |   | 2009   |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|-------------|--------|--------|--------|
| Cash and due from banks                                                                                                                                       |   | $      | 7,164,252   |   |   | $      | 8,212,425 |   |
| Interest-bearing deposits with the Federal Reserve Bank                                                                                                       |   |   |        |   |   |   |   |   |
|     and Federal Home Loan Bank                                                                                                                 |   |   | 12,577,125  |   |   |   | 5,108,273 |   |
| Money market mutual funds                                                                                                                                     |   |   | 8,342,967   |   |   |   | 1,352,711 |   |
| Federal funds sold                                                                                                                                            |   |   | 2,787,000   |   |   |   | 2,416,000 |   |
|                     Cash and cash equivalents                  |   |   | 30,871,344  |   |   |   | 17,089,409 |   |
| Interest-bearing time deposits with other banks                                                                                                               |   |   | 5,963,426   |   |   |   | 5,488,037 |   |
| Investments in available-for-sale securities (at fair value)                                                                                                  |   |   | 46,289,197  |   |   |   | 50,011,316 |   |
| Federal Home Loan Bank stock, at cost                                                                                                                         |   |   | 659,600     |   |   |   | 630,700 |   |
|                                                                                                                                                          |   |   |        |   |   |   |   |   |
| Loans                                                                                                                                                         |   |   | 205,118,164 |   |   |   | 193,514,820 |   |
|     Less allowance for loan losses                                                                                                             |   |   | 2,325,687   |   |   |   | 2,211,301 |   |
|                     Loans, net                                 |   |   | 202,792,477 |   |   |   | 191,303,519 |   |
|                                                                                                                                                          |   |   |        |   |   |   |   |   |
| Premises and equipment                                                                                                                                        |   |   | 561,713     |   |   |   | 684,294 |   |
| Accrued interest receivable                                                                                                                                   |   |   | 904,896     |   |   |   | 977,350 |   |
| Other real estate owned                                                                                                                                       |   |   | 350,121     |   |   |   | - |   |
| Bank owned life insurance                                                                                                                                     |   |   | 4,013,099   |   |   |   | 3,846,083 |   |
| Other assets                                                                                                                                                  |   |   | 3,160,718   |   |   |   | 3,707,865 |   |
|                     Total assets                               |   | $      | 295,566,591 |   |   | $      | 273,738,573 |   |
|                                                                                                                                                          |   |   |        |   |   |   |   |   |
|                                                                                                                                                          |   |   |        |   |   |   |   |   |
| LIABILITIES AND STOCKHOLDERS' EQUITY                                                                                                                          |   |   |        |   |   |   |   |   |
| Deposits:                                                                                                                                                     |   |   |        |   |   |   |   |   |
|     Demand deposits                                                                                                                            |   | $      | 55,338,463  |   |   | $      | 43,886,928 |   |
|     Savings and NOW deposits                                                                                                                   |   |   | 136,208,224 |   |   |   | 124,482,134 |   |
|     Time deposits                                                                                                                              |   |   | 77,732,339  |   |   |   | 82,076,620 |   |
|                     Total deposits                             |   |   | 269,279,026 |   |   |   | 250,445,682 |   |
| Securities sold under agreements to repurchase                                                                                                                |   |   | 3,235,083   |   |   |   | 912,849 |   |
| Other liabilities                                                                                                                                             |   |   | 1,085,121   |   |   |   | 968,464 |   |
|                     Total liabilities                          |   |   | 273,599,230 |   |   |   | 252,326,995 |   |
| Stockholders' equity:                                                                                                                                         |   |   |        |   |   |   |   |   |
|     Preferred stock, fixed rate cumulative perpetual, Series A, no par;                                                                        |   |   |        |   |   |   |   |   |
|         4,000 shares issued in 2009; liquidation value of $1,000 per share                                                 |   |   | 3,850,500   |   |   |   | 3,804,500 |   |
|     Preferred stock, fixed rate cumulative perpetual, Series B, no par;                                                                        |   |   |        |   |   |   |   |   |
|         200 shares issued in 2009; liquidation value of $1,000 per share                                                   |   |   | 219,500     |   |   |   | 225,500 |   |
|     Common stock, no par value; authorized 2,000,000 shares; issued                                                                            |   |   |        |   |   |   |   |   |
|         and outstanding 864,976 shares on 2010 and 2009                                                                    |   |   | 9,381,535   |   |   |   | 9,372,068 |   |
|     Retained earnings                                                                                                                          |   |   | 8,255,217   |   |   |   | 7,781,696 |   |
|     Accumulated other comprehensive income                                                                                                     |   |   | 260,609     |   |   |   | 227,814 |   |
|                     Total stockholders' equity                 |   |   | 21,967,361  |   |   |   | 21,411,578 |   |
|                     Total liabilities and stockholders' equity |   | $      | 295,566,591 |   |   | $      | 273,738,573 |   |

----

|                                                                                                                                                                                |   | 2010   |       |   | 2009   |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|------------|--------|--------|--------|
| Interest and dividend income:                                                                                                                                                       |   |   |       |   |   |   |
|     Interest and fees on loans                                                                                                                                       |   | $      | 10,251,583 |   |   | $      | 9,821,472 |   |
|     Interest on debt securities:                                                                                                                                     |   |   |       |   |   |   |   |   |
|         Taxable                                                                                                                                  |   |   | 1,315,932  |   |   |   | 1,596,380 |   |
|         Tax-exempt                                                                                                                               |   |   | 455,493    |   |   |   | 348,612 |   |
| Other interest                                                                                                                                                                      |   |   | 31,849     |   |   |   | 25,399 |   |
|                 Total interest and dividend income                                                       |   |   | 12,054,857 |   |   |   | 11,791,863 |   |
| Interest expense:                                                                                                                                                                   |   |   |       |   |   |   |   |   |
|     Interest on deposits                                                                                                                                             |   |   | 1,773,383  |   |   |   | 2,807,793 |   |
|     Interest on Federal Home Loan Bank advances                                                                                                                      |   |   | 175        |   |   |   | 7,309 |   |
|     Interest on securities sold under agreements to repurchase                                                                                                       |   |   | 39,970     |   |   |   | 8,292 |   |
|                     Total interest expense                                           |   |   | 1,813,528  |   |   |   | 2,823,394 |   |
|                     Net interest and dividend income                                 |   |   | 10,241,329 |   |   |   | 8,968,469 |   |
| Provision for loan losses                                                                                                                                                           |   |   | 755,000    |   |   |   | 547,000 |   |
|                     Net interest and dividend income after provision for loan losses |   |   | 9,486,329  |   |   |   | 8,421,469 |   |
| Noninterest income:                                                                                                                                                                 |   |   |       |   |   |   |   |   |
|     Service charges on deposit accounts                                                                                                                              |   |   | 523,770    |   |   |   | 544,054 |   |
|     Gain on sales and calls of available-for-sale securities                                                                                                         |   |   | -          |   |   |   | 39,491 |   |
|     Gain on sale of mortgages                                                                                                                                        |   |   | 226,580    |   |   |   | 58,928 |   |
|     Investment services fees and commissions                                                                                                                         |   |   | 114,046    |   |   |   | 100,910 |   |
|     Other service charges and fees                                                                                                                                   |   |   | 644,351    |   |   |   | 562,036 |   |
|     Increase in cash surrender value of life insurance policies                                                                                                      |   |   | 167,016    |   |   |   | 142,390 |   |
|     Other income                                                                                                                                                     |   |   | 101,218    |   |   |   | 74,211 |   |
|                     Total noninterest income                                         |   |   | 1,776,981  |   |   |   | 1,522,020 |   |
| Noninterest expense:                                                                                                                                                                |   |   |       |   |   |   |   |   |
|     Salaries and employee benefits                                                                                                                                   |   |   | 4,818,836  |   |   |   | 4,165,247 |   |
|     Occupancy expense                                                                                                                                                |   |   | 1,133,024  |   |   |   | 1,128,436 |   |
|     Equipment expense                                                                                                                                                |   |   | 287,414    |   |   |   | 349,935 |   |
|     Professional fees                                                                                                                                                |   |   | 722,772    |   |   |   | 513,000 |   |
|     Advertising and promotions                                                                                                                                       |   |   | 407,944    |   |   |   | 398,365 |   |
|     Forms and supplies                                                                                                                                               |   |   | 146,103    |   |   |   | 185,882 |   |
|     Correspondent charges                                                                                                                                            |   |   | 290,468    |   |   |   | 272,475 |   |
|     FDIC assessment                                                                                                                                                  |   |   | 402,837    |   |   |   | 516,200 |   |
|     Postage                                                                                                                                                          |   |   | 97,779     |   |   |   | 103,912 |   |
|     Directors’ fees                                                                                                                                            |   |   | 146,233    |   |   |   | 132,000 |   |
|     Data processing                                                                                                                                                  |   |   | 394,585    |   |   |   | 364,921 |   |
|     Other expense                                                                                                                                                    |   |   | 906,512    |   |   |   | 867,112 |   |
|                     Total noninterest expense                                        |   |   | 9,754,507  |   |   |   | 8,997,485 |   |
|                     Income before income tax expense                                 |   |   | 1,508,803  |   |   |   | 946,004 |   |
| Income tax expense                                                                                                                                                                  |   |   | 362,094    |   |   |   | 227,713 |   |
|                     Net income                                                       |   | $      | 1,146,709  |   |   | $      | 718,291 |   |
|                     Net income available to common stockholders                      |   | $      | 888,709    |   |   | $      | 522,369 |   |
|                                                                                                                                                                                |   |   |       |   |   |   |   |   |
| Earnings per common share                                                                                                                                                           |   | $      | 1.03       |   |   | $      | 0.60 |   |
| Earnings per common share, assuming dilution                                                                                                                                        |   | $      | 1.03       |   |   | $      | 0.60 |   |
|                                                                                                                                                                                |   |   |       |   |   |   |   |   |

----

|                                                                                                      |   |            |      |   |     |   |    |     |   |   |          |    |   | Accumulated   |      |    |   |   |
|-----------------------------------------------------------------------------------------------------------|--------|-----------------|-----------|--------|----------|--------|---------|----------|--------|--------|---------------|---------|--------|---------------|-----------|---------|--------|--------|
|                                                                                                      |   |            |      |   |     |   |    |     |   |   |          |    |   | Other         |      |    |   |   |
|                                                                                                      |   | Preferred Stock |      |   | Common   |   |    | Retained |   |   | Comprehensive |    |   |          |      |
|                                                                                                      |   | Series A        |      |   | Series B |   |    | Stock    |   |   | Earnings      |    |   | Income (Loss) |      |    | Total  |   |
| Balance, December 31, 2008                                                                                |   | $               | -         |   |     | $      | -       |     |   | $      | 9,328,313     |    |   | $             | 7,542,863 |    |   | $      | (24,527 | ) |   | $ | 16,846,649 |   |
| Comprehensive income:                                                                                     |   |            |      |   |     |   |    |     |   |   |          |    |   |          |      |    |   |   |   |   |   |   |   |   |
|      Net income                                                                       |   |            | -         |   |     |   | -       |     |   |   | -             |    |   |          | 718,291   |    |   |   | - |   |   |   | - |   |
|      Net change in unrealized holding loss on available-for-sale                      |   |            |      |   |     |   |    |     |   |   |          |    |   |          |      |    |   |   |   |   |   |   |   |   |
|           securities, net of tax effect                      |   |            | -         |   |     |   | -       |     |   |   | -             |    |   |          | -         |    |   |   | 252,341 |   |   |   | - |   |
|                Comprehensive income |   |            | -         |   |     |   | -       |     |   |   | -             |    |   |          | -         |    |   |   | - |   |   |   | 970,632 |   |
| Preferred stock issuance                                                                                  |   |            | 3,770,000 |   |     |   | 230,000 |     |   |   | -             |    |   |          | -         |    |   |   | - |   |   |   | 4,000,000 |   |
| Preferred stock dividends                                                                                 |   |            | -         |   |     |   | -       |     |   |   | -             |    |   |          | (138,067  | )       |   |   | - |   |   |   | (138,067 | ) |
| Preferred stock amortization (accretion)                                                                  |   |            | 34,500    |   |     |   | (4,500  | )        |   |   | -             |    |   |          | (30,000   | )       |   |   | - |   |   |   | - |   |
| Stock based compensation                                                                                  |   |            | -         |   |     |   | -       |     |   |   | 43,755        |    |   |          | -         |    |   |   | - |   |   |   | 43,755 |   |
| Dividends declared common stock ($0.36 per share)                                                         |   |            | -         |   |     |   | -       |     |   |   | -             |    |   |          | (311,391  | )       |   |   | - |   |   |   | (311,391 | ) |
| Balance, December 31, 2009                                                                                |   |            | 3,804,500 |   |     |   | 225,500 |     |   |   | 9,372,068     |    |   |          | 7,781,696 |    |   |   | 227,814 |   |   |   | 21,411,578 |   |
| Comprehensive income:                                                                                     |   |            |      |   |     |   |    |     |   |   |          |    |   |          |      |    |   |   |   |   |   |   |   |   |
|      Net income                                                                       |   |            | -         |   |     |   | -       |     |   |   | -             |    |   |          | 1,146,709 |    |   |   | - |   |   |   | - |   |
|      Net change in unrealized holding gain on available-for-sale                      |   |            |      |   |     |   |    |     |   |   |          |    |   |          |      |    |   |   |   |   |   |   |   |   |
|           securities, net of tax effect                      |   |            | -         |   |     |   | -       |     |   |   | -             |    |   |          | -         |    |   |   | 32,795 |   |   |   | - |   |
|                Comprehensive income |   |            |      |   |     |   |    |     |   |   |          |    |   |          |      |    |   |   |   |   |   |   | 1,179,504 |   |
| Preferred stock dividends                                                                                 |   |            | -         |   |     |   | -       |     |   |   | -             |    |   |          | (218,000  | )       |   |   | - |   |   |   | (218,000 | ) |
| Preferred stock amortization (accretion)                                                                  |   |            | 46,000    |   |     |   | (6,000  | )        |   |   | -             |    |   |          | (40,000   | )       |   |   | - |   |   |   | - |   |
| Stock based compensation                                                                                  |   |            | -         |   |     |   | -       |     |   |   | 9,467         |    |   |          | -         |    |   |   | - |   |   |   | 9,467 |   |
| Dividends declared common stock ($0.48 per share)                                                         |   |            | -         |   |     |   | -       |     |   |   | -             |    |   |          | (415,188  | )       |   |   | - |   |   |   | (415,188 | ) |
| Balance, December 31, 2010                                                                                |   | $               | 3,850,500 |   |     | $      | 219,500 |     |   | $      | 9,381,535     |    |   | $             | 8,255,217 |    |   | $      | 260,609 |   |   | $ | 21,967,361 |   |
|                                                                                                      |   |            |      |   |     |   |    |     |   |   |          |    |   |          |      |    |   |   |   |   |   |   |   |   |
| Reclassification disclosure for the years ended December 31:                                              |   |            |      |   |     |   |    |     |   |   |          |    |   |          |      |    |   |   |   |   |   |
|                                                                                                      |   |            |      |   |     |   |    |     |   |   |          |    |   |          | 2010      |    |   |   | 2009 |   |   |   |   |   |
| Net unrealized holding gains on available-for-sale securities                                             |   |            |      |   |     |   |    |     |   |   | $             | 53,719  |   |          | $         | 452,826 |   |   |   |   |   |
| Reclassification adjustment for realized gains losses in net income                                       |   |            |      |   |     |   |    | -        |   |   |          | (39,491 | )      |          |      |    |   |
|      Other comprehensive income before income tax effect                              |   |            |      |   |     |   |    |     |   |   |          | 53,719  |   |          |      | 413,335 |   |   |   |   |   |
| Income tax expense                                                                                        |   |            |      |   |     |   |    |     |   |   |          |    |   |          | (20,924   | )       |   |   | (160,994 | ) |   |   |   |   |
|           Other comprehensive income, net of tax             |   |            |      |   |     |   |    |     |   |   |          |    |   | $             | 32,795    |    |   | $      | 252,341 |   |   |   |   |   |

----

|                                                                        |   | 2010   |        |   | 2009   |   |
|-----------------------------------------------------------------------------|--------|--------|-------------|--------|--------|--------|
|  Cash flows from operating activities:                                 |   |   |        |   |   |   |
| Net income                                                                  |   | $      | 1,146,709   |   |   | $      | 718,291 |   |
| Adjustments to reconcile net income to net cash provided (used in) by       |   |   |        |   |   |   |   |   |
| operating activities:                                                       |   |   |        |   |   |   |   |   |
| Interest capitalized on interest-bearing time deposits with other banks     |   |   | (189,772    | )      |   |   | (167,603 | ) |
| Amortization of securities, net                                             |   |   | 192,264     |   |   |   | 141,845 |   |
| Gain on sales and calls of available-for-sale securities, net               |   |   | -           |   |   |   | (39,491 | ) |
| Change in deferred loan costs, net                                          |   |   | (76,917     | )      |   |   | 16,589 |   |
| Provision for loan losses                                                   |   |   | 755,000     |   |   |   | 547,000 |   |
| Depreciation and amortization                                               |   |   | 229,536     |   |   |   | 265,282 |   |
| Accretion on impairment of operating lease                                  |   |   | (44,246     | )      |   |   | (44,246 | ) |
| Decrease (increase) in other assets                                         |   |   | 363,274     |   |   |   | (1,443,200 | ) |
| Decrease (increase) in interest receivable                                  |   |   | 72,454      |   |   |   | (141,791 | ) |
| Decrease in taxes receivable                                                |   |   | 164,094     |   |   |   | 120,466 |   |
| Increase in cash surrender value of bank owned life insurance               |   |   | (167,016    | )      |   |   | (142,390 | ) |
| Stock based compensation                                                    |   |   | 9,467       |   |   |   | 43,755 |   |
| Increase (decrease) in other liabilities                                    |   |   | 159,936     |   |   |   | (437,389 | ) |
| Increase (decrease) in interest payable                                     |   |   | 967         |   |   |   | (3,670 | ) |
| Deferred tax benefit                                                        |   |   | -           |   |   |   | (17,753 | ) |
|                                                                        |   |   |        |   |   |   |   |   |
| Net cash (used in) provided by operating activities                         |   |   | 2,615,750   |   |   |   | (584,305 | ) |
|                                                                        |   |   |        |   |   |   |   |   |
|  Cash flows from investing activities:                                 |   |   |        |   |   |   |   |   |
| Purchases of interest-bearing time deposits with other banks                |   |   | (285,617    | )      |   |   | (3,000,000 | ) |
| Proceeds from maturities of interest-bearing time deposits with other banks |   |   | -           |   |   |   | 5,000,000 |   |
| Purchases of available-for-sale securities                                  |   |   | (18,775,486 | )      |   |   | (31,867,586 | ) |
| Proceeds from sales of available-for-sale securities                        |   |   | -           |   |   |   | 1,170,316 |   |
| Proceeds from maturities of available-for-sale securities                   |   |   | 22,359,060  |   |   |   | 13,994,247 |   |
| Loan originations and principal collections, net                            |   |   | (10,011,392 | )      |   |   | (1,565,172 | ) |
| Loans purchased                                                             |   |   | (2,511,917  | )      |   |   | (12,233,431 | ) |
| Recoveries of loans previously charged off                                  |   |   | 6,147       |   |   |   | 5,253 |   |
| Capital expenditures                                                        |   |   | (108,100    | )      |   |   | (118,348 | ) |
| Purchase of life insurance policies                                         |   |   | -           |   |   |   | (2,500,000 | ) |
| Purchases of Federal Home Loan Bank stock                                   |   |   | (28,900     | )      |   |   | - |   |
|                                                                        |   |   |        |   |   |   |   |   |
| Net cash used in investing activities                                       |   |   | (9,356,205  | )      |   |   | (31,114,721 | ) |
|                                                                        |   |   |        |   |   |   |   |   |
|                                                                        |   |   |        |   |   |   |   |   |
|  Cash flows from financing activities:                                 |   |   |        |   |   |   |   |   |
| Net increase in demand deposits, NOW and savings accounts                   |   |   | 23,177,625  |   |   |   | 31,816,986 |   |
| Decrease in time deposits                                                   |   |   | (4,344,281  | )      |   |   | (2,250,421 | ) |
| Payment of long-term advances from Federal Home Loan Bank                   |   |   | -           |   |   |   | (1,000,000 | ) |
| Net increase in securities sold under agreements to repurchase              |   |   | 2,322,234   |   |   |   | 335,916 |   |
| Proceeds from issuance of preferred stock                                   |   |   | -           |   |   |   | 4,000,000 |   |
| Dividends paid - preferred stock                                            |   |   | (218,000    | )      |   |   | (138,067 | ) |
| Dividends paid - common stock                                               |   |   | (415,188    | )      |   |   | (311,391 | ) |
|                                                                        |   |   |        |   |   |   |   |   |
| Net cash provided by financing activities                                   |   |   | 20,522,390  |   |   |   | 32,453,023 |   |
|  Net increase in cash and cash equivalents                             |   |   | 13,781,935  |   |   |   | 753,997 |   |
|  Cash and cash equivalents at beginning of year                        |   |   | 17,089,409  |   |   |   | 16,335,412 |   |
|  Cash and cash equivalents at end of year                              |   | $      | 30,871,344  |   |   | $      | 17,089,409 |   |
|                                                                        |   |   |        |   |   |   |   |   |
|  Supplemental disclosures:                                             |   |   |        |   |   |   |   |   |
| Interest paid                                                               |   | $      | 1,812,561   |   |   | $      | 2,827,064 |   |
| Income taxes paid                                                           |   |   | 198,000     |   |   |   | 125,000 |   |
| Loans transferred to other real estate owned                                |   |   | 350,121     |   |   |   | - |   |

----

----

|   | -- | Held-to-maturity securities are measured at amortized cost in the consolidated balance sheets.  Unrealized holding gains and losses are not included in earnings, or in a separate component of capital.  They are merely disclosed in the notes to the consolidated financial statements. |
|--------|----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | -- | Available-for-sale securities are carried at fair value on the consolidated balance sheets.  Unrealized holding gains and losses are not included in earnings but are reported as a net amount (less expected tax) in a separate component of capital until realized. |
|--------|----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | -- | Trading securities are carried at fair value on the consolidated balance sheets.  Unrealized holding gains and losses for trading securities are included in earnings. |
|--------|----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

----

----

----

----

----

|                                                                                            |   |                     |       |   |                             |   |    |                              |   |   |                  |   |
|-------------------------------------------------------------------------------------------------|--------|--------------------------|------------|--------|----------------------------------|--------|---------|-----------------------------------|--------|--------|-----------------------|--------|
|                                                                                            |   |  AmortizedCostBasis |       |   |   GrossUnrealizedGains |   |    |   GrossUnrealizedLosses |   |   |   FairValue |   |
| December 31, 2010:                                                                              |   |                     |       |   |                             |   |    |                              |   |   |                  |   |
| Debt securities issued by the U.S. Treasury and other U.S. government corporations and agencies |   | $                        | 10,749,626 |   |                             | $      | 76,693  |                              |   | $      | 35,297                |   |   | $ | 10,791,022 |   |
| Obligations of states and municipalities                                                        |   |                     | 11,607,144 |   |                             |   | 94,764  |                              |   |   | 135,763               |   |   |   | 11,566,145 |   |
| Corporate debt securities                                                                       |   |                     | 1,003,447  |   |                             |   | 21,281  |                              |   |   | 2,633                 |   |   |   | 1,022,095 |   |
| Mortgage-backed securities                                                                      |   |                     | 21,026,171 |   |                             |   | 453,027 |                              |   |   | 172,085               |   |   |   | 21,307,113 |   |
| SBA loan pools                                                                                  |   |                     | 1,459,431  |   |                             |   | 108,893 |                              |   |   | -                     |   |   |   | 1,568,324 |   |
| U.S. government sponsored enterprises perpetual/callable preferred stocks                       |   |                     | 16,500     |   |                             |   | 17,998  |                              |   |   | -                     |   |   |   | 34,498 |   |
| Marketable equity securities                                                                    |   |                     | 8,342,967  |   |                             |   | -       |                              |   |   | -                     |   |   |   | 8,342,967 |   |
|                                                                                            |   |                     | 54,205,286 |   |                             |   | 772,656 |                              |   |   | 345,778               |   |   |   | 54,632,164 |   |
| Money market mutual funds included in cash and cash equivalents                                 |   |                     | (8,342,967 | )      |                             |   | -       |                              |   |   | -                     |   |   |   | (8,342,967 | ) |
| Total available-for-sale securities                                                             |   | $                        | 45,862,319 |   |                             | $      | 772,656 |                              |   | $      | 345,778               |   |   | $ | 46,289,197 |   |

|                                                                                            |   |                     |       |   |                       |   |    |                        |   |   |            |   |
|-------------------------------------------------------------------------------------------------|--------|--------------------------|------------|--------|----------------------------|--------|---------|-----------------------------|--------|--------|-----------------|--------|
|                                                                                            |   |  AmortizedCostBasis |       |   |  GrossUnrealizedGains |   |    |  GrossUnrealizedLosses |   |   |  FairValue |   |
| December 31, 2009:                                                                              |   |                     |       |   |                       |   |    |                        |   |   |            |   |
| Debt securities issued by the U.S. Treasury and other U.S. government corporations and agencies |   | $                        | 15,723,378 |   |                       | $      | 56,246  |                        |   | $      | 12,563          |   |   | $ | 15,767,061 |   |
| Obligations of states and municipalities                                                        |   |                     | 9,977,623  |   |                       |   | 159,024 |                        |   |   | 34,238          |   |   |   | 10,102,409 |   |
| Corporate debt securities                                                                       |   |                     | 508,673    |   |                       |   | 27,012  |                        |   |   | -               |   |   |   | 535,685 |   |
| Mortgage-backed securities                                                                      |   |                     | 21,772,298 |   |                       |   | 322,668 |                        |   |   | 253,165         |   |   |   | 21,841,801 |   |
| SBA loan pools                                                                                  |   |                     | 1,639,685  |   |                       |   | 67,480  |                        |   |   | -               |   |   |   | 1,707,165 |   |
| U.S. government sponsored enterprises perpetual/callable preferred stocks                       |   |                     | 16,500     |   |                       |   | 40,695  |                        |   |   | -               |   |   |   | 57,195 |   |
| Marketable equity securities                                                                    |   |                     | 1,352,711  |   |                       |   | -       |                        |   |   | -               |   |   |   | 1,352,711 |   |
|                                                                                            |   |                     | 50,990,868 |   |                       |   | 673,125 |                        |   |   | 299,966         |   |   |   | 51,364,027 |   |
| Money market mutual funds included in cash and cash equivalents                                 |   |                     | (1,352,711 | )      |                       |   | -       |                        |   |   | -               |   |   |   | (1,352,711 | ) |
| Total available-for-sale securities                                                             |   | $                        | 49,638,157 |   |                       | $      | 673,125 |                        |   | $      | 299,966         |   |   | $ | 50,011,316 |   |

|                                   |   |   | FairValue  |   |
|----------------------------------------|--------|--------|-----------------|--------|
| Due within one year                    |   | $      | 497,536         |   |
| Due after one year through five years  |   |   | 12,319,807      |   |
| Due after five years through ten years |   |   | 3,486,090       |   |
| Due after ten years                    |   |   | 7,110,327       |   |
| SBA loan pools                         |   |   | 1,568,324       |   |
| Mortgage-backed securities             |   |   | 21,307,113      |   |
|                                   |   | $      | 46,289,197      |   |

----

|                                                                                                              |   |  Less than 12 Months |       |   |  12 Months or Longer |   |    |  Total     |   |
|-------------------------------------------------------------------------------------------------------------------|--------|---------------------------|------------|--------|---------------------------|--------|---------|-----------------|--------|
|                                                                                                              |   |  FairValue           |       |   |  UnrealizedLosses    |   |    |  FairValue |   |   |  UnrealizedLosses |   |   |  FairValue |   |   |  UnrealizedLosses |   |
| December 31, 2010:                                                                                                |   |                      |       |   |                      |   |    |            |   |   |   |   |   |   |   |   |   |   |
| Debt securities issued by the U.S. Treasury and other U.S. government corporations and    agencies |   | $                         | 5,214,703  |   |                      | $      | 35,297  |            |   | $ | - |   |   | $ | - |   |   | $ | 5,214,703 |   |   | $ | 35,297 |   |
| Obligations of states and municipalities                                                                          |   |                      | 3,759,853  |   |                      |   | 135,763 |            |   |   | - |   |   |   | - |   |   |   | 3,759,853 |   |   |   | 135,763 |   |
| Corporate debt securities                                                                                         |   |                      | 496,130    |   |                      |   | 2,633   |            |   |   | - |   |   |   | - |   |   |   | 496,130 |   |   |   | 2,633 |   |
| Mortgage-backed securities                                                                                        |   |                      | 3,900,106  |   |                      |   | 61,665  |            |   |   | 847,756 |   |   |   | 110,420 |   |   |   | 4,747,862 |   |   |   | 172,085 |   |
| Total temporarily impaired securities                                                                             |   | $                         | 13,370,792 |   |                      | $      | 235,358 |            |   | $ | 847,756 |   |   | $ | 110,420 |   |   | $ | 14,218,548 |   |   | $ | 345,778 |   |

|                                                                                                              |   |  Less than 12 Months |      |   |   12 Months or Longer |   |   |   Total |   |
|-------------------------------------------------------------------------------------------------------------------|--------|---------------------------|-----------|--------|---------------------------------|--------|--------|-------------------|--------|
|                                                                                                              |   |  FairValue           |      |   |  UnrealizedLosses          |   |   |  FairValue   |   |   |  UnrealizedLosses |   |   |  FairValue |   |   |  UnrealizedLosses |   |
| December 31, 2009:                                                                                                |   |                      |      |   |                            |   |   |              |   |   |   |   |   |   |   |   |   |   |
| Debt securities issued by the U.S. Treasury and other U.S. government corporations and    agencies |   | $                         | 2,988,620 |   |                            | $      | 12,563 |              |   | $ | - |   |   | $ | - |   |   | $ | 2,988,620 |   |   | $ | 12,563 |   |
| Obligations of states and municipalities                                                                          |   |                      | 3,044,480 |   |                            |   | 34,238 |              |   |   | - |   |   |   | - |   |   |   | 3,044,480 |   |   |   | 34,238 |   |
| Mortgage-backed securities                                                                                        |   |                      | 2,227,512 |   |                            |   | 17,610 |              |   |   | 1,317,233 |   |   |   | 235,555 |   |   |   | 3,544,745 |   |   |   | 253,165 |   |
| Total temporarily impaired securities                                                                             |   | $                         | 8,260,612 |   |                            | $      | 64,411 |              |   | $ | 1,317,233 |   |   | $ | 235,555 |   |   | $ | 9,577,845 |   |   | $ | 299,966 |   |

----

|                                            |   | 2010   |        |   | 2009   |   |
|-------------------------------------------------|--------|--------|-------------|--------|--------|--------|
| Commercial, financial and agricultural          |   | $      | 13,568,271  |   |   | $      | 12,900,649 |   |
| Real estate - construction and land development |   |   | 4,986,546   |   |   |   | 6,744,569 |   |
| Real estate - residential                       |   |   | 148,396,036 |   |   |   | 138,408,956 |   |
| Real estate - commercial                        |   |   | 31,293,763  |   |   |   | 28,721,564 |   |
| Municipal                                       |   |   | 2,034,597   |   |   |   | 2,015,318 |   |
| Consumer                                        |   |   | 4,512,092   |   |   |   | 4,473,822 |   |
|                                            |   |   | 204,791,305 |   |   |   | 193,264,878 |   |
| Allowance for loan losses                       |   |   | (2,325,687  | )      |   |   | (2,211,301 | ) |
| Deferred costs, net                             |   |   | 326,859     |   |   |   | 249,942 |   |
| Net loans                                       |   | $      | 202,792,477 |   |   | $      | 191,303,519 |   |

|                                       |   | 2010   |      |   | 2009   |   |
|--------------------------------------------|--------|--------|-----------|--------|--------|--------|
| Balance at beginning of year               |   | $      | 2,211,301 |   |   | $      | 2,017,145 |   |
| Provision for loan losses                  |   |   | 755,000   |   |   |   | 547,000 |   |
| Charge offs                                |   |   | (646,761  | )      |   |   | (358,097 | ) |
| Recoveries of loans previously charged off |   |   | 6,147     |   |   |   | 5,253 |   |
| Balance at end of year                     |   | $      | 2,325,687 |   |   | $      | 2,211,301 |   |

|                                  |   |              |        |   |             |   |       |                                   |   |   |              |   |   |                             |       |   |           |   |       |              |   |   |        |   |
|---------------------------------------|--------|-------------------|-------------|--------|------------------|--------|------------|----------------------------------------|--------|--------|-------------------|--------|--------|----------------------------------|------------|--------|----------------|--------|------------|-------------------|--------|--------|-------------|--------|
|                                  |   | Real Estate:      |        |   |             |   |       |                                   |   |   |              |   |   |                             |       |
|                                  |   |  Residential |        |   |  Commercial |   |       |  Construction andLand Development |   |   |  Home Equity |   |   |  Commerical& Industrial |       |   |  Consumer |   |       |  Unallocated |   |   |  Total |   |
| Allowance:                            |   |              |        |   |             |   |       |                                   |   |   |              |   |   |                             |       |   |           |   |       |              |   |   |        |   |
| Ending balance:                       |   |              |        |   |             |   |       |                                   |   |   |              |   |   |                             |       |   |           |   |       |              |   |   |        |   |
| Individually evaluated for impairment |   | $                 | 79,000      |   |             | $      | -          |                                   |   | $      | -                 |   |   | $                                | 600        |   |           | $      | -          |              |   | $      | -           |   |   | $ | - |   |   | $ | 79,600 |   |
|                                  |   |              |        |   |             |   |       |                                   |   |   |              |   |   |                             |       |   |           |   |       |              |   |   |        |   |   |   |   |   |   |   |   |   |
| Ending balance:                       |   |              |        |   |             |   |       |                                   |   |   |              |   |   |                             |       |   |           |   |       |              |   |   |        |   |   |   |   |   |   |   |   |   |
| Collectively evaluated for impairment |   |              | 759,321     |   |             |   | 464,526    |                                   |   |   | 67,655            |   |   |                             | 359,680    |   |           |   | 410,355    |              |   |   | 93,579      |   |   |   | 90,971 |   |   |   | 2,246,087 |   |
|                                  |   |              |        |   |             |   |       |                                   |   |   |              |   |   |                             |       |   |           |   |       |              |   |   |        |   |   |   |   |   |   |   |   |   |
| Total allowance                       |   |              |        |   |             |   |       |                                   |   |   |              |   |   |                             |       |   |           |   |       |              |   |   |        |   |   |   |   |   |   |   |   |   |
| for loan lease loss ending balance    |   | $                 | 838,321     |   |             | $      | 464,526    |                                   |   | $      | 67,655            |   |   | $                                | 360,280    |   |           | $      | 410,355    |              |   | $      | 93,579      |   |   | $ | 90,971 |   |   | $ | 2,325,687 |   |
|                                  |   |              |        |   |             |   |       |                                   |   |   |              |   |   |                             |       |   |           |   |       |              |   |   |        |   |   |   |   |   |   |   |   |   |
| Loans:                                |   |              |        |   |             |   |       |                                   |   |   |              |   |   |                             |       |   |           |   |       |              |   |   |        |   |   |   |   |   |   |   |   |   |
| Ending balance:                       |   |              |        |   |             |   |       |                                   |   |   |              |   |   |                             |       |   |           |   |       |              |   |   |        |   |   |   |   |   |   |   |   |   |
| Individually evaluated for impairment |   | $                 | 384,094     |   |             | $      | 326,406    |                                   |   | $      | 1,000,743         |   |   | $                                | 7,802      |   |           | $      | -          |              |   | $      | -           |   |   | $ | - |   |   | $ | 1,719,045 |   |
|                                  |   |              |        |   |             |   |       |                                   |   |   |              |   |   |                             |       |   |           |   |       |              |   |   |        |   |   |   |   |   |   |   |   |   |
| Ending balance:                       |   |              |        |   |             |   |       |                                   |   |   |              |   |   |                             |       |   |           |   |       |              |   |   |        |   |   |   |   |   |   |   |   |   |
| Collectively evaluated for impairment |   |              | 100,302,895 |   |             |   | 30,997,736 |                                   |   |   | 3,990,265         |   |   |                             | 47,927,571 |   |           |   | 15,661,681 |              |   |   | 4,518,971   |   |   |   | - |   |   |   | 203,399,119 |   |
|                                  |   |              |        |   |             |   |       |                                   |   |   |              |   |   |                             |       |   |           |   |       |              |   |   |        |   |   |   |   |   |   |   |   |   |
| Total loans                           |   |              |        |   |             |   |       |                                   |   |   |              |   |   |                             |       |   |           |   |       |              |   |   |        |   |   |   |   |   |   |   |   |   |
| ending balance                        |   | $                 | 100,686,989 |   |             | $      | 31,324,142 |                                   |   | $      | 4,991,008         |   |   | $                                | 47,935,373 |   |           | $      | 15,661,681 |              |   | $      | 4,518,971   |   |   | $ | - |   |   | $ | 205,118,164 |   |

----

|            |   | Real Estate       |        |   |             |   |       |                                  |   |   |              |   |
|-----------------|--------|-------------------|-------------|--------|------------------|--------|------------|---------------------------------------|--------|--------|-------------------|--------|
|            |   |  Residential |        |   |  Commercial |   |       |  Constructionand LandDevelopment |   |   |  Home Equity |   |   |  Commericaland Industrial |   |   |  Consumer |   |   |   Total |   |
| Grade:          |   |              |        |   |             |   |       |                                  |   |   |              |   |   |   |   |   |   |   |   |   |   |
| Pass            |   | $                 | 99,658,355  |   |             | $      | 28,802,453 |                                  |   | $      | 3,650,310         |   |   | $ | 47,515,158 |   |   | $ | 14,392,933 |   |   | $ | 4,510,408 |   |   | $ | 198,529,617 |   |
| Special Mention |   |              | 259,610     |   |             |   | 1,797,703  |                                  |   |   | 339,955           |   |   |   | - |   |   |   | 162,364 |   |   |   | - |   |   |   | 2,559,632 |   |
| Substandard     |   |              | 769,024     |   |             |   | 723,986    |                                  |   |   | 1,000,743         |   |   |   | 420,215 |   |   |   | 1,106,384 |   |   |   | 8,563 |   |   |   | 4,028,915 |   |
| Total           |   | $                 | 100,686,989 |   |             | $      | 31,324,142 |                                  |   | $      | 4,991,008         |   |   | $ | 47,935,373 |   |   | $ | 15,661,681 |   |   | $ | 4,518,971 |   |   | $ | 205,118,164 |   |

----

|                              |   | 30-59 Days |    |   | 60-89 Days |   |    | Greaterthan 90 Days |   |   |  TotalPast Due |   |   | RecordedInvestment >90 Days and Accruing |      |
|-----------------------------------|--------|------------|---------|--------|------------|--------|---------|---------------------|--------|--------|---------------------|--------|--------|---------------------------------------------|-----------|
| Real estate:                      |   |       |    |   |       |   |    |                |   |   |                |   |   |                                        |      |
| Residential                       |   | $          | 529,324 |   |       | $      | -       |                |   | $      | 324,455             |   |   | $                                           | 853,779   |   |   | $ | - |   |
| Commercial                        |   |       | -       |   |       |   | 254,548 |                |   |   | 71,858              |   |   |                                        | 326,406   |   |   |   | - |   |
| Construction and land development |   |       | -       |   |       |   | -       |                |   |   | 1,000,743           |   |   |                                        | 1,000,743 |   |   |   | - |   |
| Commercial and industrial         |   |       | -       |   |       |   | -       |                |   |   | 203,117             |   |   |                                        | 203,117   |   |   |   | - |   |
| Consumer                          |   |       | 72,503  |   |       |   | 526     |                |   |   | 8,620               |   |   |                                        | 81,649    |   |   |   | - |   |
| Total                             |   | $          | 601,827 |   |       | $      | 255,074 |                |   | $      | 1,608,793           |   |   | $                                           | 2,465,694 |   |   | $ | - |   |

| Real Estate:                      |   |   |      |
|-----------------------------------|--------|--------|-----------|
| Residential                       |   | $      | 541,969   |   |
| Commercial                        |   |   | 326,406   |   |
| Construction and land development |   |   | 1,000,743 |   |
| Home equity                       |   |   | 420,215   |   |
| Consumer                          |   |   | 17,183    |   |
| Total nonaccrual loans            |   | $      | 2,306,516 |   |

| Total nonaccrual loans                           |   | $      | 3,153,187 |   |
|--------------------------------------------------|--------|--------|-----------|--------|
|                                             |   |   |      |   |
| Accruing loans which are 90 days or more overdue |   | $      | 202,024   |   |

|                                      |   | RecordedInvestment |      |   |  UnpaidPrincipalBalance |   |      |  RelatedAllowance |   |
|-------------------------------------------|--------|--------------------|-----------|--------|------------------------------|--------|-----------|------------------------|--------|
| December 31, 2010:                        |   |               |      |   |                         |   |      |                   |   |
| With no related allowance recorded:       |   |               |      |   |                         |   |      |                   |   |
| Real Estate:                              |   |               |      |   |                         |   |      |                   |   |
| Commercial                                |   | $                  | 326,406   |   |                         | $      | 325,340   |                   |   | $ | - |   |
| Construction and land development         |   |               | 1,000,743 |   |                         |   | 1,000,838 |                   |   |   | - |   |
| Total impaired with no related allowance  |   |               | 1,327,149 |   |                         |   | 1,326,178 |                   |   |   | - |   |
|                                      |   |               |      |   |                         |   |      |                   |   |   |   |   |
| With an allowance recorded:               |   |               |      |   |                         |   |      |                   |   |   |   |   |
| Real Estate:                              |   |               |      |   |                         |   |      |                   |   |   |   |   |
| Residential                               |   |               | 384,094   |   |                         |   | 400,747   |                   |   |   | 79,000 |   |
| Home equity                               |   |               | 7,802     |   |                         |   | 7,703     |                   |   |   | 600 |   |
| Total impaired with an allowance recorded |   |               | 391,896   |   |                         |   | 408,450   |                   |   |   | 79,600 |   |
| Total:                                    |   |               |      |   |                         |   |      |                   |   |   |   |   |
| Real Estate:                              |   |               |      |   |                         |   |      |                   |   |   |   |   |
| Residential                               |   |               | 384,094   |   |                         |   | 400,747   |                   |   |   | 79,000 |   |
| Commercial                                |   |               | 326,406   |   |                         |   | 325,340   |                   |   |   | - |   |
| Construction and land development         |   |               | 1,000,743 |   |                         |   | 1,000,838 |                   |   |   | - |   |
| Home equity                               |   |               | 7,802     |   |                         |   | 7,703     |                   |   |   | 600 |   |
|                                      |   | $                  | 1,719,045 |   |                         | $      | 1,734,628 |                   |   | $ | 79,600 |   |

----

|                                                                              |   | Recorded   |      |
|-----------------------------------------------------------------------------------|--------|------------|-----------|
|                                                                              |   | Investment |      |
| Average recorded investment in impaired loans                                     |   |       |      |
|      during the year ended December 31, 2010                  |   | $          | 2,027,326 |   |
|                                                                              |   |       |      |   |
| Related amount of interest income recognized during the                           |   |       |      |   |
|      time, in the year ended December 31, 2010 that the loans |   |       |      |   |
|      were impaired                                            |   |       |      |   |
|                                                                              |   |       |      |   |
| Total recognized                                                                  |   | $          | 35,260    |   |
|                                                                              |   |       |      |   |
| Amount recognized using a cost-basis method of accounting                         |   | $          | 34,380    |   |

|                                                                                                                           |   | 2009                               |            |
|--------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------|-----------------|
|                                                                                                                           |   | RecordedInvestmentin ImpairedLoans |            |   | RelatedAllowancefor CreditLosses |   |
| Loans for which there is a related allowance for credit losses                                                                 |   | $                                  | 353,613         |   |   | $ | 160,000 |   |
|                                                                                                                           |   |                               |            |   |   |   |   |   |
| Loans for which there is no related allowance for credit losses                                                                |   |                               | 1,911,995       |   |   |   | - |   |
|                                                                                                                           |   |                               |            |   |   |   |   |   |
| Totals                                                                                                                         |   | $                                  | 2,265,608       |   |   | $ | 160,000 |   |
|                                                                                                                           |   |                               |            |   |   |   |   |   |
| Average recorded investment in impaired loans during the year ended December 31, 2009                                          |   | $                                  | 1,215,532  |   |   |   |   |   |
|                                                                                                                           |   |                               |            |   |   |   |   |   |
| Related amount of interest income recognized during the time, in the year ended December 31, 2009 that the loans were impaired |   |                               |            |   |   |   |   |   |
| Total recognized                                                                                                               |   | $                                  | 560             |   |   |   |   |   |
| Amount recognized using a cash-basis method of accounting                                                                      |   | $                                  | -               |   |   |   |   |   |

|                                      |   | 2010   |       |   | 2009   |   |
|-------------------------------------------|--------|--------|------------|--------|--------|--------|
| Leasehold improvements                    |   | $      | 1,178,612  |   |   | $      | 1,155,367 |   |
| Furniture and equipment                   |   |   | 2,369,883  |   |   |   | 2,302,763 |   |
|                                      |   |   | 3,548,495  |   |   |   | 3,458,130 |   |
| Accumulated depreciation and amortization |   |   | (2,986,782 | )      |   |   | (2,773,836 | ) |
|                                      |   | $      | 561,713    |   |   | $      | 684,294 |   |

----

| 2011  |   | $      | 55,664,340 |   |
|-------|--------|--------|------------|--------|
| 2012  |   |   | 13,405,673 |   |
| 2013  |   |   | 2,653,084  |   |
| 2014  |   |   | 2,954,258  |   |
| 2015  |   |   | 3,054,984  |   |
| Total |   | $      | 77,732,339 |   |

|                     |   | 2010   |    |   | 2009   |   |
|--------------------------|--------|--------|---------|--------|--------|--------|
| Current:                 |   |   |    |   |   |   |
| Federal                  |   | $      | 262,551 |   |   | $      | 184,014 |   |
| State                    |   |   | 99,543  |   |   |   | 61,452 |   |
|                     |   |   | 362,094 |   |   |   | 245,466 |   |
| Deferred:                |   |   |    |   |   |   |   |   |
| Federal                  |   |   | (1,469  | )      |   |   | (30,352 | ) |
| State                    |   |   | 1,469   |   |   |   | 12,599 |   |
|                     |   |   | -       |   |   |   | (17,753 | ) |
| Total income tax expense |   | $      | 362,094 |   |   | $      | 227,713 |   |

----

|                                       |   | 2010   |   |   | 2009   |   |
|--------------------------------------------|--------|--------|--------|--------|--------|--------|
|                                       |   | % of   |   |   | % of   |   |
|                                       |   | Income |   |   | Income |   |
| Federal income tax at statutory rate       |   |   | 34.0   | %      |   |   | 34.0 | % |
| Increase (decrease) in tax resulting from: |   |   |   |   |   |   |   |   |
| Tax-exempt income                          |   |   | (15.5  | )      |   |   | (20.0 | ) |
| Other                                      |   |   | 1      |   |   |   | 3.3 |   |
| Stock-based compensation                   |   |   | 0.2    |   |   |   | 1.6 |   |
| State tax expense, net of federal benefit  |   |   | 4.3    |   |   |   | 5.2 |   |
| Effective tax rates                        |   |   | 24.0   | %      |   |   | 24.1 | % |

|                                                          |   | 2010   |      |   | 2009   |   |
|---------------------------------------------------------------|--------|--------|-----------|--------|--------|--------|
| Deferred tax assets:                                          |   |   |      |   |   |   |
| Allowance for loan losses                                     |   | $      | 798,326   |   |   | $      | 803,109 |   |
| Deferred compensation                                         |   |   | 88,146    |   |   |   | 61,350 |   |
| Other                                                         |   |   | -         |   |   |   | 24,456 |   |
| Impairment of operating lease                                 |   |   | 78,988    |   |   |   | 96,221 |   |
| Write-down of equity securities                               |   |   | 772,573   |   |   |   | 772,573 |   |
| Alternative minimum tax carryforward                          |   |   | 115,662   |   |   |   | 83,375 |   |
| Gross deferred tax assets                                     |   |   | 1,853,695 |   |   |   | 1,841,084 |   |
|                                                          |   |   |      |   |   |   |   |   |
| Deferred tax liabilities:                                     |   |   |      |   |   |   |   |   |
| Depreciation                                                  |   |   | (15,181   | )      |   |   | (34,475 | ) |
| Deferred loan costs/fees                                      |   |   | (127,313  | )      |   |   | (97,351 | ) |
| Other                                                         |   |   | (1,943    | )      |   |   | - |   |
| Net unrealized holdings gain on available-for-sale securities |   |   | (166,269  | )      |   |   | (145,345 | ) |
| Gross deferred tax liabilities                                |   |   | (310,706  | )      |   |   | (277,171 | ) |
| Net deferred tax asset                                        |   | $      | 1,542,989 |   |   | $      | 1,563,913 |   |

| 2011                          |   | $      | 501,903   |   |
|-------------------------------|--------|--------|-----------|--------|
| 2012                          |   |   | 458,524   |   |
| 2013                          |   |   | 446,966   |   |
| 2014                          |   |   | 385,082   |   |
| 2015                          |   |   | 282,491   |   |
| Thereafter                    |   |   | 47,839    |   |
|     Total |   | $      | 2,122,805 |   |

----

----

|                                                                                                                      |   | Fair Value Measurements at Reporting Date Using: |       |
|---------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------|------------|
|                                                                                                                      |   |                                             |       |   | Quoted Prices in |   |   | Significant |   |   | Significant |   |
|                                                                                                                      |   |                                             |       |   | Active Markets for |   |   | Other Observable |   |   | Unobservable |   |
|                                                                                                                      |   |                                             |       |   | Identical Assets |   |   | Inputs |   |   | Inputs |   |
|                                                                                                                      |   | Total                                            |       |   | Level 1 |   |   | Level 2 |   |   | Level 3 |   |
| December 31, 2010:                                                                                                        |   |                                             |       |   |   |   |   |   |   |   |   |   |
|     Securities available-for-sale                                                                          |   | $                                                | 46,289,197 |   |   | $ | 34,498 |   |   | $ | 46,254,699 |   |   | $ | - |   |
|                     Totals |   | $                                                | 46,289,197 |   |   | $ | 34,498 |   |   | $ | 46,254,699 |   |   | $ | - |   |
|                                                                                                                      |   |                                             |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| December 31, 2009:                                                                                                        |   |                                             |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     Securities available-for-sale                                                                          |   | $                                                | 50,011,316 |   |   | $ | 57,195 |   |   | $ | 49,954,121 |   |   | $ | - |   |
|                     Totals |   | $                                                | 50,011,316 |   |   | $ | 57,195 |   |   | $ | 49,954,121 |   |   | $ | - |   |

|                              |   | Fair Value Measurements at Reporting Date Using: |    |
|-----------------------------------|--------|--------------------------------------------------|---------|
|                              |   |                                             |    |   | Quoted Prices in |   |   | Significant |   |   | Significant |   |
|                              |   |                                             |    |   | Active Markets for |   |   | Other Observable |   |   | Unobservable |   |
|                              |   |                                             |    |   | Identical Assets |   |   | Inputs |   |   | Inputs |   |
|                              |   | Total                                            |    |   | Level 1 |   |   | Level 2 |   |   | Level 3 |   |
| December 31, 2010:                |   |                                             |    |   |   |   |   |   |   |   |   |   |
|     Impaired loans |   | $                                                | 312,296 |   |   | $ | - |   |   | $ | - |   |   | $ | 312,296 |   |
| Totals                            |   | $                                                | 312,296 |   |   | $ | - |   |   | $ | - |   |   | $ | 312,296 |   |
|                              |   |                                             |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| December 31, 2009:                |   |                                             |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     Impaired loans |   | $                                                | 193,613 |   |   | $ | - |   |   | $ | 193,613 |   |   | $ | - |   |
| Totals                            |   | $                                                | 193,613 |   |   | $ | - |   |   | $ | 193,613 |   |   | $ | - |   |

|                                 |   | Fair Value Measurements               |    |
|--------------------------------------|--------|---------------------------------------|---------|
|                                 |   | Using Significant Unobservable Inputs |    |
|                                 |   | Level 3                               |    |
|                                 |   | Impaired Loans                        |    |
| Beginning balance, December 31, 2009 |   | $                                     | -       |   |
| Transfers in and/or out of Level 3   |   |                                  | 312,296 |   |
| Ending balance, December 31, 2010    |   | $                                     | 312,296 |   |

----

|                                            |   | 2010     |        |   | 2009   |   |
|-------------------------------------------------|--------|----------|-------------|--------|--------|--------|
|                                            |   | Carrying |        |   | Fair   |   |   | Carrying |   |   | Fair |   |
|                                            |   | Amount   |        |   | Value  |   |   | Amount |   |   | Value |   |
| Financial assets:                               |   |     |        |   |   |   |   |   |   |   |   |   |
| Cash and cash equivalents                       |   | $        | 30,871,344  |   |   | $      | 30,871,344 |   |   | $ | 17,089,409 |   |   | $ | 17,089,409 |   |
| Interest-bearing time deposits with other banks |   |     | 5,963,426   |   |   |   | 6,257,000 |   |   |   | 5,488,037 |   |   |   | 5,690,000 |   |
| Available-for-sale securities                   |   |     | 46,289,197  |   |   |   | 46,289,197 |   |   |   | 50,011,316 |   |   |   | 50,011,316 |   |
| Federal Home Loan Bank stock                    |   |     | 659,600     |   |   |   | 659,600 |   |   |   | 630,700 |   |   |   | 630,700 |   |
| Loans, net                                      |   |     | 202,792,477 |   |   |   | 204,841,000 |   |   |   | 191,303,519 |   |   |   | 193,185,000 |   |
| Accrued interest receivable                     |   |     | 904,896     |   |   |   | 904,896 |   |   |   | 977,350 |   |   |   | 977,350 |   |
| Financial liabilities:                          |   |     |        |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Deposits                                        |   |     | 269,279,026 |   |   |   | 270,082,000 |   |   |   | 250,445,682 |   |   |   | 251,268,000 |   |
| Securities sold under agreements to repurchase  |   |     | 3,235,083   |   |   |   | 3,235,083 |   |   |   | 912,849 |   |   |   | 912,849 |   |

----

|                                          |   | 2010   |       |   | 2009   |   |
|-----------------------------------------------|--------|--------|------------|--------|--------|--------|
| Commitments to originate loans                |   | $      | 2,701,250  |   |   | $      | 1,498,580 |   |
| Standby letters of credit                     |   |   | 233,400    |   |   |   | 337,000 |   |
| Unadvanced portions of loans:                 |   |   |       |   |   |   |   |   |
|     Construction               |   |   | 4,321,442  |   |   |   | 3,473,939 |   |
|     Commercial lines of credit |   |   | 7,857,538  |   |   |   | 7,743,686 |   |
|     Consumer                   |   |   | 735,355    |   |   |   | 701,361 |   |
|     Home equity                |   |   | 24,119,575 |   |   |   | 24,231,520 |   |
|                                          |   | $      | 39,968,560 |   |   | $      | 37,986,086 |   |

----

|                                                                               |   |                                       |   |   |              |   |              |       |   |              |   | To Be Well        |
|------------------------------------------------------------------------------------|--------|--------------------------------------------|--------|--------|-------------------|--------|-------------------|------------|--------|-------------------|--------|-------------------|
|                                                                               |   |                                       |   |   |              |   |              |       |   |              |   | Capitalized Under |
|                                                                               |   |                                       |   |   |              |   |              | For Capita |   | Prompt Corrective |
|                                                                               |   | Actual                                     |   |   | Adequacy Purposes |   | Action Provisions |
|                                                                               |   | Amount                                     |   |   | Ratio             |   |              | Amount     |   | Ratio             |   | Amount            |   | Ratio |
|                                                                               |   |    (Dollar amounts in thousands) |
| As of December 31, 2010:                                                           |
|     Total Capital (to Risk Weighted Assets):                        |   |                                       |   |   |              |   |              |       |   |              |   |              |   |   |
|         Simsbury Bank & Trust Company, Inc. |   | $                                          | 23,150 |   |              |   | 12.66             | %          |   | $                 | 14,624 |              | > 8.0% |   | $ | 18,280 |   | > 10.0% |
|     Tier 1 Capital (to Risk Weighted Assets):                       |   |                                       |   |   |              |   |              |       |   |              |   |              |   |   |   |   |   |   |
|         Simsbury Bank & Trust Company, Inc. |   |                                       | 20,864 |   |              |   | 11.41             |       |   |              | 7,312  |              | > 4.0 |   |   | 10,968 |   | > 6.0 |
|     Tier 1 Capital (to Average Assets):                             |   |                                       |   |   |              |   |              |       |   |              |   |              |   |   |   |   |   |   |
|         Simsbury Bank & Trust Company, Inc. |   |                                       | 20,864 |   |              |   | 7.00              |       |   |              | 11,921 |              | > 4.0 |   |   | 14,901 |   | > 5.0 |
|                                                                               |   |                                       |   |   |              |   |              |       |   |              |   |              |   |   |   |   |   |   |
| As of December 31, 2009:                                                           |
|     Total Capital (to Risk Weighted Assets):                        |   |                                       |   |   |              |   |              |       |   |              |   |              |   |   |   |   |   |   |
|         Simsbury Bank & Trust Company, Inc. |   |                                       | 22,512 |   |              |   | 13.97             |       |   |              | 12,896 |              | >8.0 |   |   | 16,119 |   | >10.0 |
|     Tier 1 Capital (to Risk Weighted Assets):                       |   |                                       |   |   |              |   |              |       |   |              |   |              |   |   |   |   |   |   |
|         Simsbury Bank & Trust Company, Inc. |   |                                       | 20,495 |   |              |   | 12.71             |       |   |              | 6,448  |              | >4.0 |   |   | 9,672 |   | >6.0 |
|     Tier 1 Capital (to Average Assets):                             |   |                                       |   |   |              |   |              |       |   |              |   |              |   |   |   |   |   |   |
|         Simsbury Bank & Trust Company, Inc. |   |                                       | 20,495 |   |              |   | 7.35              |       |   |              | 11,156 |              | >4.0 |   |   | 13,945 |   | >5.0 |

----

|                                                     |   | 2010   |    |   | 2009             |   |
|----------------------------------------------------------|--------|--------|---------|--------|------------------|--------|
|                                                     |   |   |    |   | Weighted-Average |   |   |   |   |   | Weighted-Average |   |
| Fixed Options                                            |   | Shares |    |   | Exercise Price   |   |   | Shares |   |   | Exercise Price |   |
| Outstanding at beginning of year                         |   |   | 51,189  |   |             | $      | 30.33 |   |   |   | 51,189 |   |   | $ | 30.33 |   |
| Granted                                                  |   |   | -       |   |             |   | - |   |   |   | - |   |   |   | - |   |
| Exercised                                                |   |   | -       |   |             |   | - |   |   |   | - |   |   |   | - |   |
| Forfeited                                                |   |   | ( 1,314 | )      |             |   | 34.90 |   |   |   | - |   |   |   | - |   |
| Outstanding at end of year                               |   |   | 49,875  |   |             |   | 30.21 |   |   |   | 51,189 |   |   |   | 30.33 |   |
|                                                     |   |   |    |   |             |   |   |   |   |   |   |   |   |   |   |   |
| Options exercisable at year-end                          |   |   | 49,875  |   |             |   | 30.21 |   |   |   | 47,689 |   |   |   | 30.35 |   |
| Weighted-average fair value of                           |   |   |    |   |             |   |   |   |   |   |   |   |   |   |   |   |
|      options granted during the year |   |   | N/A     |   |             |   |   |   |   |   | N/A |   |   |   |   |   |

| Options Outstanding and Exercisable |   |
|-------------------------------------|--------|
|                                |   |   |   |   |   | Weighted-Average |   |   |   |   |   |   |   |
|                                |   |   | Number |   |   | Remaining |   |   | Number |   |   |   |   |
| Exercise Price                      |   |   | Outstanding |   |   | Contractual Life |   |   | Exercisable |   |   | Exercise Price |   |
|                                |   |   |   |   |   |   |   |   |   |   |   |   |   |
| $                                   | 15.65  |   |   |   | 1,311 |   |   |   | 1.2 |   |   |   | 1,311 |   |   | $ | 15.65 |   |
|                                | 16.25  |   |   |   | 1,314 |   |   |   | 0.9 |   |   |   | 1,314 |   |   |   | 16.25 |   |
|                                | 35.00  |   |   |   | 5,250 |   |   |   | 3.8 |   |   |   | 5,250 |   |   |   | 35.00 |   |
|                                | 31.50  |   |   |   | 21,000 |   |   |   | 5.0 |   |   |   | 21,000 |   |   |   | 31.50 |   |
|                                | 29.00  |   |   |   | 10,500 |   |   |   | 5.5 |   |   |   | 10,500 |   |   |   | 29.00 |   |
|                                | 30.00  |   |   |   | 10,500 |   |   |   | 6.6 |   |   |   | 10,500 |   |   |   | 30.00 |   |
|                                | 30.21  |   |   |   | 49,875 |   |   |   | 5.1 |   |   |   | 49,875 |   |   |   | 30.21 |   |

----

|                                                                |   | 2010   |      |   | 2009   |   |
|---------------------------------------------------------------------|--------|--------|-----------|--------|--------|--------|
| Basic earnings per share computation:                               |   |   |      |   |   |   |
|    Net income                                             |   | $      | 1,146,709 |   |   | $      | 718,291 |   |
|    Preferred stock net accretion                          |   |   | (40,000   | )      |   |   | (30,000 | ) |
|    Cumulative preferred stock dividends                   |   |   | (218,000  | )      |   |   | (165,922 | ) |
|    Net income available to common shareholders            |   | $      | 888,709   |   |   | $      | 522,369 |   |
|    Weighted average shares outstanding, basic             |   |   | 864,976   |   |   |   | 864,976 |   |
|    Basic earnings per share                               |   | $      | 1.03      |   |   | $      | 0.60 |   |
|                                                                |   |   |      |   |   |   |   |   |
| Diluted earnings per share computation:                             |   |   |      |   |   |   |   |   |
|    Net income                                             |   | $      | 1,146,709 |   |   | $      | 718,291 |   |
|    Preferred stock net accretion                          |   |   | (40,000   | )      |   |   | (30,000 | ) |
|    Cumulative preferred stock dividends                   |   |   | (218,000  | )      |   |   | (165,922 | ) |
|    Net income available to common shareholders            |   | $      | 888,709   |   |   | $      | 522,369 |   |
|    Weighted average shares outstanding, before dilution   |   |   | 864,976   |   |   |   | 864,976 |   |
|    Dilutive potential shares                              |   |   | 367       |   |   |   | - |   |
|    Weighted average shares outstanding, assuming dilution |   |   | 865,343   |   |   |   | 864,976 |   |
|    Diluted earnings per share                             |   | $      | 1.03      |   |   | $      | 0.60 |   |

----

| Series A Preferred Stock                       |   | $      | 3,770,000 |   |
|------------------------------------------------|--------|--------|-----------|--------|
| Series B Preferred Stock                       |   |   | 230,000   |   |
| Proceeds received from the Treasury Department |   | $      | 4,000,000 |   |

| 2011   |   | $      | 46,000  |   |
|--------|--------|--------|---------|--------|
| 2012   |   |   | 46,000  |   |
| 2013   |   |   | 46,000  |   |
| 2014   |   |   | 11,500  |   |
|   |   | $      | 149,500 |   |

| 2011   |   | $      | 6,000  |   |
|--------|--------|--------|--------|--------|
| 2012   |   |   | 6,000  |   |
| 2013   |   |   | 6,000  |   |
| 2014   |   |   | 1,500  |   |
|   |   | $      | 19,500 |   |
|   |   |   |   |   |

----

----

|                      |   | Year Ended        |   |   | Year Ended        |   |
|---------------------------|--------|-------------------|--------|--------|-------------------|--------|
|                      |   | December 31, 2010 |   |   | December 31, 2009 |   |
|                      |   |              |   |   |              |   |   |   |   |   |   |   |
|                      |   | High              |   |   | Low               |   |   | High |   |   | Low |   |
| Fourth Quarter            |   | $                 | 21.00  |   |              | $      | 18.60 |   |   | $ | 16.25 |   |   | $ | 15.50 |   |
| Third Quarter             |   | $                 | 19.00  |   |              | $      | 18.40 |   |   | $ | 16.05 |   |   | $ | 15.00 |   |
| Second Quarter            |   | $                 | 21.50  |   |              | $      | 18.20 |   |   | $ | 17.00 |   |   | $ | 12.75 |   |
|   First Quarter |   | $                 | 19.50  |   |              | $      | 15.65 |   |   | $ | 16.15 |   |   | $ | 13.00 |   |

----

----

| Board of Directors                          |                                  | Officers                              |
|---------------------------------------------|---------------------------------------|---------------------------------------|
| *Chairman of Committee                      |                                  |                                  |
|                                        |                                  |                                  |
| Robert J. Bogino                            |                                  |                                  |
| Chairman of the Board                       | Gary R. Kevorkian                     | Martin J. Geitz                       |
| Retired President and Co-Owner              | Attorney at Law                       | President and Chief Executive Officer |
| Bogino & DeMaria, Inc.                  | Executive Committee                   |                                  |
| Compensation & Human Resources          | Loan Committee                        | Anthony F. Bisceglio, Ph.D.           |
| Committee                                   | Compensation & Human Resources    | Treasurer and Chief Financial Officer |
| Corporate Governance Committee*             | Committee*                            |                                  |
| Executive Committee                         |                                  | Gary R. Kevorkian                     |
| Loan Committee                              | Jerry W. Long                         | Secretary                             |
|                                        | President and CEO                     |                                  |
| James T. Fleming                            | PCC Technology Group                  | Susan D. Presutti                     |
| President                                   | Compensation & Human Resources    | Assistant Secretary                   |
| Connecticut Automotive Retailers            | Committee                             |                                  |
| Association                                 | Loan Committee                        |                                  |
| Audit & Compliance Committee            |                                  |                                  |
| Corporate Governance Committee              | Nicholas B. Mason                     |                                  |
|                                        | Retired Chief Financial Officer       |                                  |
| Martin J. Geitz                             | Savings Bank of Manchester            |                                  |
| President and Chief Executive Officer       | Audit & Compliance Committee      |                                  |
| The Simsbury Bank & Trust Company, Inc. | Corporate Governance Committee        |                                  |
| Executive Committee                         |                                  |                                  |
| Loan Committee                              | George B. Odlum, Jr., DMD             |                                  |
|                                        | Retired General Dentistry             |                                  |
| Edward J. Guarco                            | Audit & Compliance Committee*     |                                  |
| Vice President                              | Executive Committee                   |                                  |
| State Line Oil                              |                                  |                                  |
| Audit & Compliance Committee            | Rodney R. Reynolds                    |                                  |
| Compensation & Human Resources          | Retired Founding Director             |                                  |
| Committee                                   | Trust Company of Connecticut          |                                  |
|                                        | Compensation & Human Resources    |                                  |
|                                        | Committee                             |                                  |
|                                        | Corporate Governance Committee        |                                  |
|                                        |                                  |                                  |
|                                        | David W. Sessions                     |                                  |
|                                        | Vice Chairman                         |                                  |
|                                        | President and Treasurer               |                                  |
|                                        | Casle Corporation                     |                                  |
|                                        | Compensation & Human Resources    |                                  |
|                                        | Committee                             |                                  |
|                                        | Executive Committee*                  |                                  |
|                                        | Loan Committee*                       |                                  |
|                                        |                                  |                                  |
|                                        | Penny R. Woodford                     |                                  |
|                                        | Real Estate Agent                     |                                  |
|                                        | Coldwell Banker Residential Brokerage |                                  |
|                                        | Audit & Compliance Committee      |                                  |
|                                        | Corporate Governance Committee        |                                  |

----

----

| Board of Directors                     | Officers                                    | Employees             |
|----------------------------------------|---------------------------------------------|-----------------------|
|                                   |                                        |                  |
| All SBT Bancorp, Inc. Directors        | Executive Officers                          | Mami Barall           |
|                                   |                                        | Deborah L. Barber     |
|                                   | Martin J. Geitz                             | Theresa D. Bendell    |
| Directors Emeriti                      | President and Chief Executive Officer       | Mary Lou Bidwell      |
|                                   |                                        | Celeste M. Brouillard |
| Richard C. Anthony                     | Anthony F. Bisceglio, Ph.D.                 | Katherine P. Cain     |
| Consultant                             | Executive Vice President, Treasurer and     | Bente Christensen     |
|                                   | Chief Financial Officer                     | Meagan Chrusciel      |
| Jackson F. Eno                         |                                        | Sophia P. Clarke      |
| Vice President                         | Michael L. Alberts                          | Carol D. Clifford     |
| Morgan Stanley                         | Senior Vice President and Chief             | Megan L. Clifford     |
|                                   | Commercial Banking Officer                  | Catherine A. Cook     |
| Jane F. von Holzhausen                 |                                        | Jacek Danillowicz     |
| Retired Vice President of Operations   | Michael T. Sheahan                          | Cheryl B. DiLisio     |
| Southwest Region                       | Senior Vice President and  Chief  | S. Thomas Edge        |
| Prudential Connecticut Realty          | Mortgage & Consumer Lending Officer     | Deborah A. Fochesato  |
|                                   |                                        | Shirley T. Gentry     |
| Evan W. Woollacott                     | Howard R. Zern                              | Paula M. Giorgio      |
| Retired Vice Chairman and Commissioner | Senior Vice President and Chief             | Lynn G. Godin         |
| Connecticut Department of Public       | Retail Banking, IT & Deposit Operations | Kelly M. Hammick      |
| Utility Control                        | Officer                                     | Lucyna Jennison       |
|                                   |                                        | Leslie S. Kane        |
| Lincoln S. Young                       | Gary R. Kevorkian                           | Sherrie S. Krawczyk   |
| Retired Chief Executive Officer        | Secretary                                   | Susan LeBel           |
| Turbine Engine Services Corp.          |                                        | Jaclyn Levesque       |
|                                   | Senior Vice President                       | Cindy Matthews        |
|                                   | Terry L. Boulton                            | Christine L. Miller   |
|                                   |                                        | Jordan Moore          |
|                                   | Vice Presidents                             | Susan S. Pohlod       |
|                                   | Richard A. Bahre                            | Patricia A. Pschirer  |
|                                   | Brian D. Belyea                             | Michelle Raymond      |
|                                   | Joan Beresford                              | Petrina C. Reid       |
|                                   | Charlene Faselle                            | Margaret E. Rose      |
|                                   | Aurelia P. Pruzin                           | Lamar J. Ross         |
|                                   | Barbara J. Wallace                          | Megan B. Shufelt      |
|                                   |                                        | Joyce E. Slate        |
|                                   | Assistant Vice Presidents                   | Irene M. Smith        |
|                                   | Brenda J. Abbott                            | Jean M. Spalla        |
|                                   | Robin J. DiNicola                           | Maria Theodoratos     |
|                                   | Jocelyn A. Mitchell                         | Annette M. Troutman   |
|                                   | Craig S. Porter                             | Margaret Washer       |
|                                   | Susan D. Presutti, Assistant Secretary      | Michelle G. Wiggins   |
|                                   | Peter G. Sepelak, Jr.                       |                  |
|                                   | Kenneth S. Sklodosky                        |                  |
|                                   | Sophie S. Stevens                           |                  |
|                                   |                                        |                  |
|                                   | Assistant Treasurers                        |                  |
|                                   | Margot M. Byrne                             |                  |
|                                   | Lori L. Ethier                              |                  |
|                                   | Barbara J. Hanifin                          |                  |
|                                   | Ella Marker                                 |                  |
|                                   | Lisa A. Morgan                              |                  |
|                                   | Romualdo A. Polce                           |                  |

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| Notice of Shareholders' Meeting                                                                                                                                                                                                              |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  The Annual Meeting of Shareholders of SBT Bancorp, Inc., the holding company for The Simsbury Bank & Trust Company, Inc., will be held at 5:00 p.m. on Tuesday, May 10, 2011 at 981 Hopmeadow Street, Simsbury, Connecticut.  |
|                                                                                                                                                                                                                                         |
| Independent Auditors                                                                                                                                                                                                                         | Legal Counsel |
|                                                                                                                                                                                                                                         |   |
| Shatswell, MacLeod & Company, P.C.83 Pine StreetWest Peabody, MA  01960-3635                                                                                                                                                   | Day Pitney LLPCounselors at Law242 Trumbull StreetHartford, CT  06103-1212 |
|                                                                                                                                                                                                                                         |   |
| Transfer Agent                                                                                                                                                                                                                               | Shareholder Contact |
|                                                                                                                                                                                                                                         |   |
| American Stock Transfer & Trust Company59 Maiden LanePlaza LevelNew York, NY 10005Shareholder Relations:  (800) 937-5449 Trading Symbol:     SBTB                                                | Susan D. Presutti, Assistant SecretarySBT Bancorp, Inc.760 Hopmeadow Street, P.O. Box 248Simsbury, CT  06070-0248(860) 408-5493 |