----

----

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----

----

| §   | We will add to our residential mortgage product offerings and extend our market reach.  As the housing market stabilizes, we want to be in a position to help as many households as possible to achieve their home ownership goals.  By expanding the products we offer, including FHA mortgages, and extending our geographic reach, we will leverage our historic expertise to build our customer base, balance sheet and earnings. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| §   | We will make it easier for small businesses to borrow from us.  Currently, our commercial loan underwriting, approval and management processes are the same regardless of loan size.  There are many companies in our market area that would prefer to select us for their borrowing and deposit needs, however find our loan process cumbersome.  We think there is a great opportunity to bring our personal service to many more businesses by significantly streamlining our credit process for smaller business loans. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| §   | We want to offer our full service customers more rewards for consolidating their banking and investment business with us.  To that end, we will launch a relationship program that provides a variety of pricing and service enhancements to customers who select us for most of their financial needs. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| §   | Finally, we will continue to embrace the efficiency and convenience that our 2009 investment in an upgraded technology platform provides to our customers and us.  We will use technology to make it easier for customers to access us and our services and to streamline our work processes to improve controls and productivity and make it easier for us to serve our customers. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| /s/ Martin J. Geitz                     |   | /s/ Lincoln S. Young               |   |
|-----------------------------------------|--------|------------------------------------|--------|
| Martin J. Geitz                         |   | Lincoln S. Young                   |   |
| President & Chief Executive Officer |   | Chairman of the Board of Directors |   |

----

|                                                                                                      |   | At 12/31/09                |             |   | At 12/31/08                |   |             | At 12/31/07                |   |
|-----------------------------------------------------------------------------------------------------------|--------|----------------------------|------------------|--------|----------------------------|--------|------------------|----------------------------|--------|
| Balance Sheet Data:                                                                                       |   |                       |             |   |                       |   |             |                       |   |
| Total assets                                                                                              |   | $                          | 273,738,573      |   |                       | $      | 240,756,468      |                       |   | $ | 210,390,282 |   |
| Loans, net                                                                                                |   |                       | 191,303,519      |   |                       |   | 178,073,758      |                       |   |   | 163,765,440 |   |
| Investment securities                                                                                     |   |                       | 50,642,016       |   |                       |   | 33,628,012       |                       |   |   | 25,501,248 |   |
| Federal funds sold, money market mutual funds, and other    interest-earning deposits |   |                       |   8,876,984 |   |                       |   |   7,550,417 |                       |   |   |   2,330,187 |   |
| Deposits                                                                                                  |   |                       | 250,445,682      |   |                       |   | 220,879,117      |                       |   |   | 186,805,866 |   |
| Stockholders’ equity                                                                                |   |                       | 21,411,578       |   |                       |   | 16,846,649       |                       |   |   | 17,318,059 |   |
|                                                                                                      |   |                       |             |   |                       |   |             |                       |   |   |   |   |
|                                                                                                      |   | For the YearEnded 12/31/09 |             |   | For the YearEnded 12/31/08 |   |             | For the YearEnded 12/31/07 |   |
| Statement of Income Data:                                                                                 |   |                       |             |   |                       |   |             |                       |   |   |   |   |
| Total interest and dividend income                                                                        |   | $                          | 11,791,863       |   |                       | $      | 11,064,810       |                       |   | $ | 11,349,114 |   |
| Total interest expense                                                                                    |   |                       | 2,823,394        |   |                       |   | 3,042,570        |                       |   |   | 3,477,333 |   |
| Net interest and dividend income                                                                          |   |                       | 8,968,469        |   |                       |   | 8,022,240        |                       |   |   | 7,871,781 |   |
| Provision for loan losses                                                                                 |   |                       | 547,000          |   |                       |   | 450,000          |                       |   |   | 250,000 |   |
| Net interest and dividend income after provision for loan losses                                          |   |                       | 8,421,469        |   |                       |   | 7,572,240        |                       |   |   | 7,621,781 |   |
| Gain (loss) on loans sold, net                                                                            |   |                       | 58,928           |   |                       |   | -                |                       |   |   | (414 | ) |
| Writedown of available-for-sale securities                                                                |   |                       | -                |   |                       |   | (1,755,600       | )                          |   |   | (227,900 | ) |
| Other noninterest income                                                                                  |   |                       | 1,522,020        |   |                       |   | 1,601,042        |                       |   |   | 1,821,379 |   |
| Noninterest expense                                                                                       |   |                       | 8,997,485        |   |                       |   | 8,830,965        |                       |   |   | 7,901,091 |   |
| Income tax expense (benefit)                                                                              |   |                       | 227,713          |   |                       |   | (768,459         | )                          |   |   | 174,458 |   |
| Net income (loss)                                                                                         |   |                       | 718,291          |   |                       |   | (644,824         | )                          |   |   | 1,139,711 |   |
|                                                                                                      |   |                       |             |   |                       |   |             |                       |   |   |   |   |
| Earnings (loss) per common share                                                                          |   | $                          | 0.60             |   |                       | $      | (0.75            | )                          |   | $ | 1.34 |   |
| Earnings (loss) per common share, assuming dilution                                                       |   | $                          | 0.60             |   |                       | $      | (0.75            | )                          |   | $ | 1.33 |   |
| Other Data:                                                                                               |   |                       |             |   |                       |   |             |                       |   |   |   |   |
| Net interest spread                                                                                       |   |                       | 3.32             | %      |                       |   | 3.56             | %                          |   |   | 3.64 | % |
| Net interest margin                                                                                       |   |                       | 3.56             | %      |                       |   | 3.95             | %                          |   |   | 4.11 | % |
| Return on average assets                                                                                  |   |                       | 0.27             | %      |                       |   | (0.30            | )%                         |   |   | 0.55 | % |
| Return on average stockholders’ equity                                                              |   |                       | 3.49             | %      |                       |   | (3.71            | )%                         |   |   | 6.80 | % |
| Dividend payout ratio                                                                                     |   |                       | 59.6             | %      |                       |   | n/a              |                       |   |   | 32.8 | % |
| Average stockholders’ equity to average assets                                                      |   |                       | 7.63             | %      |                       |   | 8.02             | %                          |   |   | 8.11 | % |

----

----

----

----

| NET INTEREST INCOME                            |   |
|------------------------------------------------|--------|
| (Dollars in thousands)                         |   |
|                                           |   |
|                                           |   | For the Year Ended 12/31/09 |   |
|                                           |   | AverageBalance |   |   | (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 | % |
|                                           |   |   |   |
|                                           |   |   |   |
|                                           |   | For the Year Ended 12/31/08 |   |
|                                           |   | AverageBalance |   |   | (1)Interest |   |   | Yield |   |
|                                           |   |   |   |   |   |   |   |   |   |   |   |   |
| Federal funds sold and overnight deposits      |   | $ | 9,717 |   |   | $ | 145 |   |   |   | 1.49 | % |
|                                           |   |   |   |   |   |   |   |   |   |   |   |   |
| Investments (1)                           |   |   | 23,577 |   |   |   | 1,251 |   |   |   | 5.31 |   |
|                                           |   |   |   |   |   |   |   |   |   |   |   |   |
| Mortgage loans                                 |   |   | 91,702 |   |   |   | 5,109 |   |   |   | 5.57 |   |
| Commercial loans                               |   |   | 44,671 |   |   |   | 2,747 |   |   |   | 6.15 |   |
| Consumer loans                                 |   |   | 36,796 |   |   |   | 1,946 |   |   |   | 5.29 |   |
| Term federal funds sold                        |   |   | 475 |   |   |   | 10 |   |   |   | 2.11 |   |
| Total loans                                    |   |   | 173,644 |   |   |   | 9,812 |   |   |   | 5.65 |   |
|                                           |   |   |   |   |   |   |   |   |   |   |   |   |
| Total interest-earning assets                  |   | $ | 206,938 |   |   |   | 11,208 |   |   |   | 5.42 | % |
|                                           |   |   |   |   |   |   |   |   |   |   |   |   |
| NOW deposits                                   |   | $ | 29,990 |   |   |   | 45 |   |   |   | 0.15 | % |
| Savings deposits                               |   |   | 65,706 |   |   |   | 717 |   |   |   | 1.09 |   |
| Time deposits                                  |   |   | 65,755 |   |   |   | 2,214 |   |   |   | 3.37 |   |
| Total interest-bearing deposits                |   |   | 161,451 |   |   |   | 2,976 |   |   |   | 1.84 |   |
|                                           |   |   |   |   |   |   |   |   |   |   |   |   |
| Securities sold under agreements to repurchase |   |   | 1,952 |   |   |   | 48 |   |   |   | 2.46 |   |
| Federal Home Loan Bank advances                |   |   | 611 |   |   |   | 18 |   |   |   | 2.95 |   |
|                                           |   |   |   |   |   |   |   |   |   |   |   |   |
| Total interest-bearing liabilities             |   | $ | 164,014 |   |   |   | 3,042 |   |   |   | 1.85 | % |
|                                           |   |   |   |   |   |   |   |   |   |   |   |   |
| Net interest income                            |   |   |   |   |   | $ | 8,166 |   |   |   |   |   |
| Net interest spread                            |   |   |   |   |   |   |   |   |   |   | 3.56 | % |
| Net interest margin                            |   |   |   |   |   |   |   |   |   |   | 3.95 | % |

----

| NET INTEREST INCOME                            |   |
|------------------------------------------------|--------|
| (Dollars in thousands)                         |   |
|                                           |   |   |   |
|                                           |   | For the Year Ended 12/31/07 |   |
|                                           |   | AverageBalance |   |   | (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 $161,000 in 2009, $143,000 in 2008, and $106,000 in 2007. |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                                                               |   | Year Ended December 31, 2009Compared toYear Ended December 31, 2008 |   |   | Year Ended December 31, 2008Compared toYear Ended December 31, 2007 |   |
|------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------|--------|--------|---------------------------------------------------------------------|--------|
|                                                                               |   | 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                                     |   | $                                                                   | 175    |   |                                                                | $      | (294 | ) |   | $ | (119 | ) |   | $ | 47 |   |   | $ | (102 | ) |   | $ | (55 | ) |
| Investments                                                                        |   |                                                                | 1,090  |   |                                                                |   | (235 | ) |   |   | 855 |   |   |   | 182 |   |   |   | (529 | ) |   |   | (347 | ) |
| Loans                                                                              |   |                                                                | 396    |   |                                                                |   | (387 | ) |   |   | 9 |   |   |   | (380 | ) |   |   | 535 |   |   |   | 155 |   |
| Total interest-earning assets                                                      |   |                                                                | 1,661  |   |                                                                |   | (916 | ) |   |   | 745 |   |   |   | (151 | ) |   |   | (96 | ) |   |   | (247 | ) |
|                                                                               |   |                                                                |   |   |                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest expense:                                                                  |   |                                                                |   |   |                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| NOW deposits                                                                       |   |                                                                | 5      |   |                                                                |   | (13 | ) |   |   | (8 | ) |   |   | (11 | ) |   |   | 5 |   |   |   | (6 | ) |
| Savings deposits                                                                   |   |                                                                | (1,765 | )      |                                                                |   | 1,704 |   |   |   | (61 | ) |   |   | 90 |   |   |   | 81 |   |   |   | 171 |   |
| Time deposits                                                                      |   |                                                                | (536   | )      |                                                                |   | 437 |   |   |   | (99 | ) |   |   | (576 | ) |   |   | 32 |   |   |   | (544 | ) |
| Total interest-bearing deposits                                                    |   |                                                                | (2,296 | )      |                                                                |   | 2,128 |   |   |   | (168 | ) |   |   | (497 | ) |   |   | 118 |   |   |   | (379 | ) |
|                                                                               |   |                                                                |   |   |                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                     |   |                                                                |   |   |                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Securities sold under agreements to       repurchase |   |                                                                | (17    | )      |                                                                |   | (23 | ) |   |   | (40 | ) |   |   | 1 |   |   |   | 10 |   |   |   | 11 |   |
| FHLB advances                                                                      |   |                                                                | (11    | )      |                                                                |   | 1 |   |   |   | (10 | ) |   |   | (27 | ) |   |   | (40 | ) |   |   | (67 | ) |
| Total interest-bearing liabilities                                                 |   |                                                                | (2,324 | )      |                                                                |   | 2,106 |   |   |   | (218 | ) |   |   | (523 | ) |   |   | 88 |   |   |   | (435 | ) |
| Net change in interest income                                                      |   | $                                                                   | 3,985  |   |                                                                | $      | (3,022 | ) |   | $ | 963 |   |   | $ | 372 |   |   | $ | (184 | ) |   | $ | 188 |   |

----

| NONINTEREST INCOME (CHARGES)                 |   |
|----------------------------------------------|--------|
|                                         |   |
|                                         |   | For YearEnded12/31/09 |   |   | % of IncomeExcluding Writedown |   |   | For YearEnded12/31/08 |   |   | % of IncomeExcluding Writedown |   |   | For YearEnded12/31/07 |   |   | % of IncomeExcluding Writedown |   |
|                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Service charges on deposit accounts          |   | $ | 544,054 |   |   |   | 35.7 | % |   | $ | 479,210 |   |   |   | 29.9 | % |   | $ | 413,758 |   |   |   | 22.7 | % |
| Safe deposit fees                            |   |   | 80,968 |   |   |   | 5.3 |   |   |   | 74,039 |   |   |   | 4.6 |   |   |   | 79,764 |   |   |   | 4.3 |   |
| Business manager income                      |   |   | 109,425 |   |   |   | 7.2 |   |   |   | 129,232 |   |   |   | 8.1 |   |   |   | 132,339 |   |   |   | 7.3 |   |
| Gain (loss) on loans sold, net               |   |   | 58,928 |   |   |   | 3.9 |   |   |   | - |   |   |   | - |   |   |   | (414 | ) |   |   | - |   |
| SBT Investment Services, Inc                 |   |   | 100,910 |   |   |   | 6.6 |   |   |   | 82,295 |   |   |   | 5.2 |   |   |   | 210,630 |   |   |   | 11.6 |   |
| Other income                                 |   |   | 627,735 |   |   |   | 41.3 |   |   |   | 836,266 |   |   |   | 52.2 |   |   |   | 985,302 |   |   |   | 54.1 |   |
| Noninterest income excludes write-down       |   |   | 1,522,020 |   |   |   | 100.0 | % |   |   | 1,601,042 |   |   |   | 100.0 | % |   |   | 1,821,379 |   |   |   | 100.0 | % |
| Write-down of securities available- for-sale |   |   |    - |   |   |   |   |   |   |   | (1,755,600 | ) |   |   |   |   |   |   | (227,900 | ) |   |   |   |   |
| Total noninterest income (charges)           |   | $ | 1,522,020 |   |   |   |   |   |   | $ | (154,558 | ) |   |   |   |   |   | $ | 1,593,479 |   |   |   |   |   |

| NONINTEREST EXPENSE            |   |
|--------------------------------|--------|
|                           |   |
|                           |   | For YearEnded12/31/09 |   |   | % ofTotal |   |   | For Year Ended12/31/08 |   |   | % ofTotal |   |   | For YearEnded12/31/07 |   |   | % ofTotal |   |
|                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Salaries and employee benefits |   | $ | 4,165,247 |   |   |   | 46.3 | % |   | $ | 4,284,603 |   |   |   | 48.5 | % |   | $ | 4,166,414 |   |   |   | 52.7 | % |
| Occupancy expense              |   |   | 1,128,436 |   |   |   | 12.5 |   |   |   | 1,287,076 |   |   |   | 14.5 |   |   |   | 1,115,588 |   |   |   | 14.1 |   |
| Equipment expense              |   |   | 349,935 |   |   |   | 3.7 |   |   |   | 411,703 |   |   |   | 4.7 |   |   |   | 391,122 |   |   |   | 5.0 |   |
| Impairment of operating lease  |   |   | - |   |   |   | - |   |   |   | 298,657 |   |   |   | 3.4 |   |   |   |   |   |   |   |   |   |
| Professional fees              |   |   | 513,000 |   |   |   | 5.7 |   |   |   | 407,597 |   |   |   | 4.6 |   |   |   | 417,476 |   |   |   | 5.3 |   |
| Advertising and promotions     |   |   | 398,365 |   |   |   | 4.4 |   |   |   | 384,404 |   |   |   | 4.4 |   |   |   | 335,999 |   |   |   | 4.3 |   |
| Forms and supplies             |   |   | 185,882 |   |   |   | 2.1 |   |   |   | 152,212 |   |   |   | 1.7 |   |   |   | 126,826 |   |   |   | 1.6 |   |
| Insurance                      |   |   | 575,120 |   |   |   | 6.4 |   |   |   | 200,750 |   |   |   | 2.3 |   |   |   | 110,172 |   |   |   | 1.4 |   |
| Loan expenses                  |   |   | 94,742 |   |   |   | 1.1 |   |   |   | 68,393 |   |   |   | 0.8 |   |   |   | 77,603 |   |   |   | 1.0 |   |
| Postage                        |   |   | 103,912 |   |   |   | 1.2 |   |   |   | 151,522 |   |   |   | 1.7 |   |   |   | 130,700 |   |   |   | 1.6 |   |
| Other expenses                 |   |   | 1,482,846 |   |   |   | 16.6 |   |   |   | 1,184,048 |   |   |   | 13.4 |   |   |   | 1,029,191 |   |   |   | 13.0 |   |
|                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                          |   | $ | 8,997,485 |   |   |   | 100.0 | % |   | $ | 8,830,965 |   |   |   | 100.0 | % |   | $ | 7,901,091 |   |   |   | 100.0 | % |

----

| Distribution of Assets, Liabilities and Stockholders’ Equity |   |
|--------------------------------------------------------------------|--------|
| (Dollars in thousands)                                             |   |
|                                                               |   |
|                                                               |   | For the Year Ended12/31/09 |   |   | For the Year Ended12/31/08 |   |   | For the Year Ended12/31/07 |   |
|                                                               |   | AverageBalance |   |   | Percent ofTotalAssets |   |   | AverageBalance |   |   | Percent ofTotalAssets |   |   | AverageBalance |   |   | Percent ofTotalAssets |   |
| Assets                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash and due from banks                                            |   | $ | 7,280 |   |   |   | 2.7 | % |   | $ | 7,682 |   |   |   | 3.6 | % |   | $ | 7,604 |   |   |   | 3.7 | % |
| Investment securities                                              |   |   | 57,881 |   |   |   | 21.4 |   |   |   | 22,873 |   |   |   | 10.5 |   |   |   | 33,092 |   |   |   | 16.0 |   |
| Federal funds sold and overnight deposits                          |   |   | 14,829 |   |   |   | 5.5 |   |   |   | 9,717 |   |   |   | 4.5 |   |   |   | 3,812 |   |   |   | 1.9 |   |
| Loans, net                                                         |   |   | 181,929 |   |   |   | 67.5 |   |   |   | 171,723 |   |   |   | 79.1 |   |   |   | 155,616 |   |   |   | 75.4 |   |
| Premises and equipment                                             |   |   | 787 |   |   |   | 0.3 |   |   |   | 1,072 |   |   |   | 0.5 |   |   |   | 1,410 |   |   |   | 0.7 |   |
| Accrued interest and other assets                                  |   |   | 6,909 |   |   |   | 2.6 |   |   |   | 3,960 |   |   |   | 1.8 |   |   |   | 4,942 |   |   |   | 2.3 |   |
|                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total assets                                                       |   | $ | 269,615 |   |   |   | 100.0 | % |   | $ | 217,027 |   |   |   | 100.0 | % |   | $ | 206,476 |   |   |   | 100.0 | % |
|                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Liabilities and Stockholders' Equity                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Deposits                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Demand and NOW deposits                                            |   | $ | 70,154 |   |   |   | 26.0 | % |   | $ | 64,953 |   |   |   | 29.9 | % |   | $ | 62,955 |   |   |   | 30.5 | % |
| Savings deposits                                                   |   |   | 86,423 |   |   |   | 32.1 |   |   |   | 65,706 |   |   |   | 30.3 |   |   |   | 57,754 |   |   |   | 28.0 |   |
| Time deposits                                                      |   |   | 90,322 |   |   |   | 33.5 |   |   |   | 65,755 |   |   |   | 30.3 |   |   |   | 65,016 |   |   |   | 31.5 |   |
| Total deposits                                                     |   |   | 246,899 |   |   |   | 91.6 |   |   |   | 196,414 |   |   |   | 90.5 |   |   |   | 185,725 |   |   |   | 90.0 |   |
| Accrued interest and other liabilities                             |   |   | 2,146 |   |   |   | 0.8 |   |   |   | 3,210 |   |   |   | 1.5 |   |   |   | 3,995 |   |   |   | 1.9 |   |
|                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total liabilities                                                  |   |   | 249,045 |   |   |   | 92.4 |   |   |   | 199,624 |   |   |   | 92.0 |   |   |   | 189,720 |   |   |   | 91.9 |   |
|                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Stockholders’ equity:                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Preferred stock                                                    |   |   | 3,079 |   |   |   | 1.1 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Common stock                                                       |   |   | 9,353 |   |   |   | 3.5 |   |   |   | 9,177 |   |   |   | 4.2 |   |   |   | 8,576 |   |   |   | 4.2 |   |
| Retained earnings and other   comprehensive income       |   |   |  8,138 |   |   |   |  3.0 |   |   |   |  8,226 |   |   |   |  3.8 |   |   |   |  8,180 |   |   |   |  3.9 |   |
| Total stockholders’ equity                                   |   |   | 20,570 |   |   |   | 7.6 |   |   |   | 17,403 |   |   |   | 8.0 |   |   |   | 16,756 |   |   |   | 8.1 |   |
|                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total liabilities and   stockholders’ equity       |   | $ | 269,615 |   |   |   | 100.0 | % |   | $ | 217,027 |   |   |   | 100.0 | % |   | $ | 206,476 |   |   |   | 100.0 | % |

----

| INVESTMENT PORTFOLIO                        |   |
|---------------------------------------------|--------|
| (Dollars in thousands)                      |   |
|                                        |   | December 31, 2009 |   |
|                                        |   | AmortizedCost |   |   | 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 |   |   |   | 3.41 |   |
| 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 |   |   |   | 0.00 |   |
| Total available-for-sale securities         |   | $ | 49,638 |   |   | $ | 50,011 |   |   |   | 3.58 | % |

----

| INVESTMENT PORTFOLIO                        |   |
|---------------------------------------------|--------|
| (Dollars in thousands)                      |   |
|                                        |   |
|                                        |   | December 31, 2008 |   |
|                                        |   | AmortizedCost |   |   | Fair Value |   |   |   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 |   |   |   | 3.4 |   |
| 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 |   |
| Due after one to five years                 |   |   | 512 |   |   |   | 514 |   |   |   | 5 |   |
| 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 |   |   |   | 8.8 |   |
| Due after one to five years                 |   |   | 230 |   |   |   | 231 |   |   |   | 4.63 |   |
| Due after five to ten years                 |   |   | 0 |   |   |   | 0 |   |   |   | 0 |   |
| 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 |   |   |   | 0 |   |
| Total available-for-sale securities         |   | $ | 33,037 |   |   | $ | 32,997 |   |   |   | 4.64 | % |

|                                        |   | December 31, 2007 |   |
|---------------------------------------------|--------|-------------------|--------|
|                                        |   | AmortizedCost     |   |   | FairValue |   |   | Yield |   |
| AVAILABLE-FOR-SALE SECURITIES               |   |              |   |   |   |   |   |   |   |
| U.S. Government and Agency securities       |   |              |   |   |   |   |   |   |   |
| Due within one year                         |   | $                 | 3,000  |   |   | $ | 2,999 |   |   |   | 4.85 | % |
| Due after one to five years                 |   |              | 1,500  |   |   |   | 1,503 |   |   |   | 5.53 |   |
| Total U.S. Government and Agency securities |   |              | 4,500  |   |   |   | 4,502 |   |   |   | 5.08 |   |
| State and municipal securities              |   |              |   |   |   |   |   |   |   |   |   |   |
| Due after one to five years                 |   |              | 2,325  |   |   |   | 2,393 |   |   |   | 5.30 |   |
| Due after five to ten years                 |   |              | 4,588  |   |   |   | 4,624 |   |   |   | 4.46 |   |
| Total state and municipal securities        |   |              | 6,913  |   |   |   | 7,017 |   |   |   | 4.79 |   |
| Corporate debt securities                   |   |              |   |   |   |   |   |   |   |   |   |   |
| Due after one to fuve years                 |   |              | 475    |   |   |   | 474 |   |   |   | 3.3 |   |
| Total corporate debt securities             |   |              | 475    |   |   |   | 474 |   |   |   | 3.3 |   |
| Mortgage-backed securities                  |   |              |   |   |   |   |   |   |   |   |   |   |
| WARM* after one to five years               |   |              | 11,636 |   |   |   | 11,625 |   |   |   | 5.02 |   |
| Total mortgage-backed securities            |   |              | 11,636 |   |   |   | 11,625 |   |   |   | 5.02 |   |
| Preferred stocks                            |   |              | 1,772  |   |   |   | 1,253 |   |   |   | 5.09 |   |
| Total available-for-sale securities         |   | $                 | 25,296 |   |   | $ | 24,871 |   |   |   | 4.79 | % |

----

| LOAN PORTFOLIO                                                                                                   |   |
|------------------------------------------------------------------------------------------------------------------|--------|
| (Dollars in thousands)                                                                                           |   |
|                                                                                                             |   |
|                                                                                                             |   | December 31, 2009 |   |   | December 31, 2008 |   |   | December 31, 2007 |   |
|                                                                                                             |   | Balance |   |   | % TotalLoans |   |   | Balance |   |   | % TotalLoans |   |   | Balance |   |   | % TotalLoans |   |
|                                                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commercial, financial and agricultural *                                                                         |   | $ | 12,901 |   |   |   | 6.7 | % |   | $ | 15,742 |   |   |   | 8.7 | % |   | $ | 16,585 |   |   |   | 10.0 | % |
| Real estate – construction and land development                                                            |   |   | 6,745 |   |   |   | 3.5 |   |   |   | 8,871 |   |   |   | 4.9 |   |   |   | 10,756 |   |   |   | 6.5 |   |
| Real estate – residential                                                                                  |   |   | 138,409 |   |   |   | 71.6 |   |   |   | 126,042 |   |   |   | 70.1 |   |   |   | 113,629 |   |   |   | 68.7 |   |
| Real estate – commercial                                                                                   |   |   | 28,721 |   |   |   | 14.9 |   |   |   | 22,962 |   |   |   | 12.8 |   |   |   | 15,135 |   |   |   | 9.1 |   |
| Municipal                                                                                                        |   |   | 2,015 |   |   |   | 1.0 |   |   |   | 2,082 |   |   |   | 1.2 |   |   |   | 1,916 |   |   |   | 1.2 |   |
| Consumer                                                                                                         |   |   | 4,474 |   |   |   | 2.3 |   |   |   | 4,125 |   |   |   | 2.3 |   |   |   | 7,427 |   |   |   | 4.5 |   |
|                                                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total loans                                                                                                      |   |   | 193,265 |   |   |   | 100.0 | % |   |   | 179,824 |   |   |   | 100.0 | % |   |   | 165,448 |   |   |   | 100.0 | % |
|                                                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Allowance for loan losses                                                                                        |   |   | (2,211 | ) |   |   |   |   |   |   | (2,017 | ) |   |   |   |   |   |   | (1,925 | ) |   |   |   |   |
| Deferred costs, net                                                                                              |   |   | 250 |   |   |   |   |   |   |   | 267 |   |   |   |   |   |   |   | 242 |   |   |   |   |   |
|                                                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net loans                                                                                                        |   | $ | 191,304 |   |   |   |   |   |   | $ | 178,074 |   |   |   |   |   |   | $ | 163,765 |   |   |   |   |   |
|                                                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| * - Includes term federal funds sold of $0 at 12/31/2009, $2,000,000 at 12/31/2008 and $3,000,000 at 12/31/2007. |   |
|                                                                                                             |   |
|                                                                                                             |   | December 31, 2006 |   |   | December 31, 2005 |   |   |   |   |   |   |   |   |   |
|                                                                                                             |   | Balance |   |   | % TotalLoans |   |   | Balance |   |   | % TotalLoans |   |   |   |   |   |   |   |   |   |
|                                                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commercial, financial and agricultural *                                                                         |   | $ | 10,947 |   |   |   | 7.0 | % |   | $ | 11,386 |   |   |   | 7.7 | % |   |   |   |   |   |   |   |   |
| Real estate – construction and land development                                                            |   |   | 11,113 |   |   |   | 7.1 |   |   |   | 9,037 |   |   |   | 6.1 |   |   |   |   |   |   |   |   |   |
| Real estate – residential                                                                                  |   |   | 106,375 |   |   |   | 67.7 |   |   |   | 96,459 |   |   |   | 65.5 |   |   |   |   |   |   |   |   |   |
| Real estate – commercial                                                                                   |   |   | 15,974 |   |   |   | 10.2 |   |   |   | 16,101 |   |   |   | 10.9 |   |   |   |   |   |   |   |   |   |
| Municipal                                                                                                        |   |   | 987 |   |   |   | 0.6 |   |   |   | 987 |   |   |   | 0.7 |   |   |   |   |   |   |   |   |   |
| Consumer                                                                                                         |   |   | 11,582 |   |   |   | 7.4 |   |   |   | 13,381 |   |   |   | 9.1 |   |   |   |   |   |   |   |   |   |
|                                                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total loans                                                                                                      |   |   | 156,978 |   |   |   | 100.0 | % |   |   | 147,351 |   |   |   | 100.0 | % |   |   |   |   |   |   |   |   |
|                                                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Allowance for loan losses                                                                                        |   |   | (1,698 | ) |   |   |   |   |   |   | (1,720 | ) |   |   |   |   |   |   |   |   |   |   |   |   |
| Deferred costs, net                                                                                              |   |   | 233 |   |   |   |   |   |   |   | 175 |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net loans                                                                                                        |   | $ | 155,513 |   |   |   |   |   |   | $ | 145,806 |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| * - Includes term federal funds sold of $0 at 12/31/2006 and $2,000,000 at 12/31/2005.                           |   |

----

| MATURITIES AND RATE SENSITIVITY OF LOANS        |   |
|-------------------------------------------------|--------|
| As of December 31, 2009                         |   |
| (In thousands)                                  |   |
|                                            |   |
|                                            |   | One Yearor Less |   |   | Over One toFive Years |   |   | Over Five Years |   |   |  Total |   |
|                                            |   |   |   |   |   |   |   |   |   |   |   |   |
| Commercial, financial and agricultural          |   | $ | 8,358 |   |   | $ | 4,544 |   |   | $ | - |   |   | $ | 12,902 |   |
| Real estate - construction and land development |   |   | 6,745 |   |   |   | - |   |   |   | - |   |   |   | 6,745 |   |
| Real estate – residential                 |   |   | 40,498 |   |   |   | 57,171 |   |   |   | 40,740 |   |   |   | 138,409 |   |
| Real estate – commercial                  |   |   | 22,802 |   |   |   | 3,946 |   |   |   | 1,972 |   |   |   | 28,720 |   |
| Municipal                                       |   |   | 2,015 |   |   |   | - |   |   |   | - |   |   |   | 2,015 |   |
| Consumer                                        |   |   | 2,109 |   |   |   | 2,365 |   |   |   | - |   |   |   | 4,474 |   |
| Total loans                                     |   | $ | 85,527 |   |   | $ | 68,026 |   |   | $ | 42,712 |   |   | $ | 193,265 |   |
|                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loans with fixed interest rates                 |   | $ | 20,464 |   |   | $ | 59,130 |   |   | $ | 41,539 |   |   | $ | 121,133 |   |
|                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loans with variable interest rates              |   |   | 62,063 |   |   |   | 8,896 |   |   |   | 1,173 |   |   |   | 72,132 |   |
| Total loans                                     |   | $ | 82,527 |   |   | $ | 68,026 |   |   | $ | 42,712 |   |   | $ | 193,265 |   |

----

| LOAN COMMITMENTS AND STANDBY LETTERS OF CREDIT |   |
|------------------------------------------------|--------|
| (In thousands)                                 |   |
|                                           |   |
|                                           |   | 12/31/09 |   |   | 12/31/08 |   |   | 12/31/07 |   |
|                                           |   |   |   |   |   |   |   |   |   |
| Commitments to originate loans                 |   | $ | 1,498 |   |   | $ | 1,273 |   |   | $ | 2,222 |   |
| Standby letters of credit                      |   |   | 337 |   |   |   | 337 |   |   |   | 557 |   |
| Unadvanced portion of loans:                   |   |   |   |   |   |   |   |   |   |   |   |   |
| Construction                                   |   |   | 3,474 |   |   |   | 5,987 |   |   |   | 8,480 |   |
| Commercial lines of credit                     |   |   | 7,744 |   |   |   | 9,479 |   |   |   | 6,801 |   |
| Consumer                                       |   |   | 701 |   |   |   | 715 |   |   |   | 730 |   |
| Home equity lines of credit               |   |   | 24,232 |   |   |   | 22,894 |   |   |   | 22,721 |   |
|                                           |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                                          |   | $ | 37,986 |   |   | $ | 40,685 |   |   | $ | 41,511 |   |

----

| ALLOWANCE FOR LOAN LOSSES                           |   |
|-----------------------------------------------------|--------|
| (Dollars in thousands)                              |   |
|                                                |   |
|                                                |   | At or Forthe Year Ended12/31/09 |   |   | At or Forthe Year Ended12/31/08 |   |   | At or Forthe Year Ended12/31/07 |   |
|                                                |   |   |   |   |   |   |   |   |   |
| ALLOWANCE FOR LOAN LOSSES                           |   |   |   |   |   |   |   |   |   |
| Balance at beginning of period                      |   | $ | 2,017 |   |   | $ | 1,924 |   |   | $ | 1,698 |   |
| Charge-offs:                                        |   |   |   |   |   |   |   |   |   |   |   |   |
| Commercial, financial and agricultural              |   |   | (226 | ) |   |   | (130 | ) |   |   | (3 | ) |
| Installment loans to individuals                    |   |   | (132 | ) |   |   | (229 | ) |   |   | (21 | ) |
| Total charge-offs                                   |   |   | (358 | ) |   |   | (359 | ) |   |   | (24 | ) |
| Recoveries:                                         |   |   |   |   |   |   |   |   |   |   |   |   |
| Commercial, financial and agricultural              |   |   | 3 |   |   |   | 2 |   |   |   | - |   |
| Installment loans to individuals                    |   |   | 2 |   |   |   | - |   |   |   | - |   |
| Total recoveries                                    |   |   | 5 |   |   |   | 2 |   |   |   | - |   |
|                                                |   |   |   |   |   |   |   |   |   |   |   |   |
| Net loans (charged-off) recovered                   |   |   | (353 | ) |   |   | (357 | ) |   |   | (24 | ) |
| Provision for loan losses                           |   |   | 547 |   |   |   | 450 |   |   |   | 250 |   |
| Balance at end of period                            |   | $ | 2,211 |   |   | $ | 2,017 |   |   | $ | 1,924 |   |
|                                                |   |   |   |   |   |   |   |   |   |   |   |   |
| BALANCES                                            |   |   |   |   |   |   |   |   |   |   |   |   |
| Average total loans                                 |   | $ | 184,089 |   |   | $ | 173,168 |   |   | $ | 157,326 |   |
| Total loans at end of period                        |   |   | 193,265 |   |   |   | 179,824 |   |   |   | 165,448 |   |
|                                                |   |   |   |   |   |   |   |   |   |   |   |   |
| RATIOS                                              |   |   |   |   |   |   |   |   |   |   |   |   |
| Allowance for loan losses to average loans          |   |   | 1.20 | % |   |   | 1.17 | % |   |   | 1.22 | % |
| Allowance for loan losses to loans at end of period |   |   | 1.14 |   |   |   | 1.12 |   |   |   | 1.16 |   |

|                                                 |   | At or Forthe Year Ended12/31/06 |    |   | At or Forthe Year Ended12/31/05 |   |    |   |   |
|------------------------------------------------------|--------|--------------------------------------|---------|--------|--------------------------------------|--------|---------|--------|--------|
|                                                 |   |                                 |    |   |                                 |   |    |   |   |
| ALLOWANCE FOR LOAN LOSSES                            |   |                                 |    |   |                                 |   |    |   |   |
| Balance at beginning of period                       |   | $                                    | 1,720   |   |                                 | $      | 1,702   |   |   |   |   |   |
| Total charge-offs (installment loans to individuals) |   |                                 | (22     | )      |                                 |   | (12     | )      |   |   |   |   |
| Total recoveries (installment loans to individuals)  |   |                                 | -       |   |                                 |   | -       |   |   |   |   |   |
| Net loans (charged-off) recovered                    |   |                                 | (22     | )      |                                 |   | (12     | )      |   |   |   |   |
| Provision for loan losses                            |   |                                 | -       |   |                                 |   | 30      |   |   |   |   |   |
| Balance at end of period                             |   | $                                    | 1,698   |   |                                 | $      | 1,720   |   |   |   |   |   |
|                                                 |   |                                 |    |   |                                 |   |    |   |   |   |   |   |
| BALANCES                                             |   |                                 |    |   |                                 |   |    |   |   |   |   |   |
| Average total loans                                  |   | $                                    | 151,822 |   |                                 | $      | 144,749 |   |   |   |   |   |
| Total loans at end of period                         |   |                                 | 156,978 |   |                                 |   | 147,351 |   |   |   |   |   |
|                                                 |   |                                 |    |   |                                 |   |    |   |   |   |   |   |
| RATIOS                                               |   |                                 |    |   |                                 |   |    |   |   |   |   |   |
| Allowance for loan losses to average loans           |   |                                 | 1.12    | %      |                                 |   | 1.19    | %      |   |   |   |   |
| Allowance for loan losses to loans at end of period  |   |                                 | 1.08    |   |                                 |   | 1.17    |   |   |   |   |   |

----

| ALLOCATION OF ALLOWANCE FOR LOAN LOSSES                           |   |
|-------------------------------------------------------------------|--------|
| (Dollars in thousands)                                            |   |
|                                                              |   |
|                                                              |   | December 31, 2009 |   |   | December 31, 2008 |   |   | December 31, 2007 |   |
|                                                              |   | Allocation of Allowance |   |   | % ofLoans byCategory |   |   | Allocation of Allowance |   |   | % ofLoans byCategory |   |   | Allocation of Allowance |   |   | % ofLoans byCategory |   |
|                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Real estate - residential                                         |   | $ | 1,229 |   |   |   | 71.6 | % |   | $ | 639 |   |   |   | 70.1 | % |   | $ | 563 |   |   |   | 68.7 | % |
| Real estate -  commercial                               |   |   | 450 |   |   |   | 14.9 |   |   |   | 823 |   |   |   | 12.8 |   |   |   | 316 |   |   |   | 9.1 |   |
| Real estate – construction and land   development |   |   | 106 |   |   |   | 3.5 |   |   |   | 77 |   |   |   | 4.9 |   |   |   | 464 |   |   |   | 6.5 |   |
| Commercial, financial and agricultural                            |   |   | 341 |   |   |   | 6.7 |   |   |   | 345 |   |   |   | 8.8 |   |   |   | 363 |   |   |   | 10.0 |   |
| Municipal                                                         |   |   | 38 |   |   |   | 1.0 |   |   |   | 33 |   |   |   | 1.2 |   |   |   | 31 |   |   |   | 1.2 |   |
| Consumer                                                          |   |   | 47 |   |   |   | 2.3 |   |   |   | 100 |   |   |   | 2.2 |   |   |   | 188 |   |   |   | 4.5 |   |
|                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                                                             |   | $ | 2,211 |   |   |   | 100.0 | % |   | $ | 2,017 |   |   |   | 100.0 | % |   | $ | 1,925 |   |   |   | 100.0 | % |

|                                                              |   | December 31, 2006      |   |   | December 31, 2005    |   |   |                   |   |   |                 |   |
|-------------------------------------------------------------------|--------|------------------------|--------|--------|----------------------|--------|--------|------------------------|--------|--------|----------------------|--------|
|                                                              |   | Allocation ofAllowance |   |   | % ofLoans byCategory |   |   | Allocation ofAllowance |   |   | % ofLoans byCategory |   |   |   |   |   |   |   |
|                                                              |   |                   |   |   |                 |   |   |                   |   |   |                 |   |   |   |   |   |   |   |
| Real estate - residential                                         |   | $                      | 464    |   |                 |   | 67.7   | %                      |   | $      | 418                  |   |   |   | 65.5 | % |   |   |   |   |   |   |   |   |
| Real estate -  commercial                               |   |                   | 465    |   |                 |   | 10.2   |                   |   |   | 455                  |   |   |   | 10.9 |   |   |   |   |   |   |   |   |   |
| Real estate – construction and land   development |   |                   | 212    |   |                 |   | 7.1    |                   |   |   | 208                  |   |   |   | 6.1 |   |   |   |   |   |   |   |   |   |
| Commercial, financial and agricultural                            |   |                   | 331    |   |                 |   | 7.0    |                   |   |   | 370                  |   |   |   | 7.7 |   |   |   |   |   |   |   |   |   |
| Municipal                                                         |   |                   | 9      |   |                 |   | 0.6    |                   |   |   | 9                    |   |   |   | 0.7 |   |   |   |   |   |   |   |   |   |
| Consumer                                                          |   |                   | 217    |   |                 |   | 7.4    |                   |   |   | 260                  |   |   |   | 9.1 |   |   |   |   |   |   |   |   |   |
|                                                              |   |                   |   |   |                 |   |   |                   |   |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                                                             |   | $                      | 1,698  |   |                 |   | 100.0  | %                      |   | $      | 1,720                |   |   |   | 100.0 | % |   |   |   |   |   |   |   |   |

----

| AVERAGE DEPOSITS       |   |
|------------------------|--------|
| (Dollars in thousands) |   |
|                   |   |
|                   |   | For the Year EndedDecember 31, 2009 |   |   | For the Year EndedDecember 31, 2008 |   |   | For the Year EndedDecember 31, 2007 |   |
|                   |   | AverageBalance |   |   | AverageRate |   |   | AverageBalance |   |   | AverageRate |   |   | AverageBalance |   |   | AverageRate |   |
|                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Demand deposits        |   | $ | 37,484 |   |   |   | 0.00 | % |   | $ | 34,963 |   |   |   | 0.00 | % |   | $ | 35,189 |   |   |   | 0.00 | % |
| NOW deposits           |   |   | 32,670 |   |   |   | 0.11 |   |   |   | 29,990 |   |   |   | 0.15 |   |   |   | 27,764 |   |   |   | 0.18 |   |
| Savings deposits       |   |   | 86,423 |   |   |   | 0.76 |   |   |   | 65,706 |   |   |   | 1.09 |   |   |   | 57,754 |   |   |   | 0.94 |   |
| Time deposits          |   |   | 90,323 |   |   |   | 2.34 |   |   |   | 65,755 |   |   |   | 3.37 |   |   |   | 64,999 |   |   |   | 4.24 |   |
|                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total average deposits |   | $ | 246,900 |   |   |   | 1.14 | % |   | $ | 196,414 |   |   |   | 1.51 | % |   | $ | 185,706 |   |   |   | 1.81 | % |

| SCHEDULED MATURITY OF TIME DEPOSITS OF $100,000 OR MORE |   |
|---------------------------------------------------------|--------|
| (Dollars in thousands)                                  |   |
|                                                    |   |
|                                                    |   | December 31, 2009 |   |   | December 31, 2008 |   |   | December 31, 2007 |   |
|                                                    |   | Balance |   |   | % of Total |   |   | Balance |   |   | % of Total |   |   | Balance |   |   | % ofTotal |   |
|                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Three months or less                                    |   | $ | 14,342 |   |   |   | 41.4 | % |   | $ | 21,148 |   |   |   | 62.6 | % |   | $ | 9,723 |   |   |   | 47.4 | % |
| Over three through six months                           |   |   | 6,984 |   |   |   | 20.1 |   |   |   | 5,180 |   |   |   | 15.4 |   |   |   | 6,474 |   |   |   | 31.5 |   |
| Over six through twelve months                          |   |   | 5,983 |   |   |   | 17.2 |   |   |   | 3,923 |   |   |   | 11.6 |   |   |   | 2,938 |   |   |   | 14.3 |   |
| Over twelve months                                      |   |   | 7,369 |   |   |   | 21.3 |   |   |   | 3,503 |   |   |   | 10.4 |   |   |   | 1,388 |   |   |   | 6.8 |   |
|                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total Time Deposits                                     |   | $ | 34,678 |   |   |   | 100.0 | % |   | $ | 33,754 |   |   |   | 100.0 | % |   | $ | 20,523 |   |   |   | 100.0 | % |

----

| INTEREST RATE SENSITIVITY                      |   |
|------------------------------------------------|--------|
| (Dollars in thousands)                         |   |
|                                           |   |
|                                           |   | December 31, 2009 |   |
|                                           |   | Due withinThreeMonths |   |   | Due in Three 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 | % |   |   |   |   |

|                                           |   | December 31, 2008           |      |
|------------------------------------------------|--------|-----------------------------|-----------|
|                                           |   | Due withinThree 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 | % |   |   |   |   |

----

| INTEREST RATE SENSITIVITY                 |   |
|-------------------------------------------|--------|
| (Dollars in thousands)                    |   |
|                                      |   |
|                                      |   | December 31, 2007 |   |
|                                      |   | Due withinThreeMonths |   |   | Due inThree to TwelveMonths |   |   | Due after OneYear to FiveYears |   |   | Due afterFiveYears |   |   |  Total |   |
| Rate sensitive assets                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Federal funds sold and overnight deposits |   | $ | 5,300 |   |   | $ | - |   |   | $ | - |   |   | $ | - |   |   | $ | 5,300 |   |
| Available-for-sale securities             |   |   | 3,728 |   |   |   | 524 |   |   |   | 15,995 |   |   |   | 4,624 |   |   |   | 24,871 |   |
| Total loans                               |   |   | 56,231 |   |   |   | 4,263 |   |   |   | 39,608 |   |   |   | 65,346 |   |   |   | 165,448 |   |
| Total                                     |   | $ | 65,259 |   |   | $ | 4,787 |   |   | $ | 55,603 |   |   | $ | 69,970 |   |   | $ | 195,619 |   |
|                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Rate sensitive liabilities                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| NOW deposits                              |   | $ | 1,311 |   |   | $ | - |   |   | $ | - |   |   | $ | 24,905 |   |   | $ | 26,216 |   |
| Savings deposits                          |   |   | 29,988 |   |   |   | - |   |   |   | - |   |   |   | 24,241 |   |   |   | 54,229 |   |
| Time deposits                             |   |   | 25,118 |   |   |   | 32,840 |   |   |   | 5,201 |   |   |   | 7 |   |   |   | 63,166 |   |
| Borrowings                                |   |   | 2,000 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 2,000 |   |
| Total                                     |   | $ | 58,417 |   |   | $ | 32,840 |   |   | $ | 5,201 |   |   | $ | 49,153 |   |   | $ | 145,611 |   |
|                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest rate sensitivity gap             |   | $ | 6,842 |   |   | $ | (28,053 | ) |   | $ | 50,402 |   |   | $ | 20,817 |   |   | $ | 50,008 |   |
| Cumulative gap                            |   | $ | 6,842 |   |   | $ | (21,211 | ) |   | $ | 29,191 |   |   | $ | 50,008 |   |   |   |   |   |
|                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cumulative gap ratio to total assets      |   |   | 3 | % |   |   | (10 | )% |   |   | 13 | % |   |   | 24 | % |   |   |   |   |

----

| CAPITAL RATIOS                           |
|------------------------------------------|
|                                     |
|                                     |   | Actual12/31/09 |   |   | Actual12/31/08 |   |   | Actual12/31/07 |   |   | MinimumRegulatoryRequirements |   |   | Well-Capitalized |
| Bank:                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total capital (to risk weighted assets)  |   |   | 13.97 | % |   |   | 12.13 | % |   |   | 13.48 | % |   |   | 8.00 | % |   |   | 10.00 | % |
| Tier 1 capital (to risk weighted assets) |   |   | 12.71 | % |   |   | 10.88 | % |   |   | 12.23 | % |   |   | 4.00 | % |   |   | 6.00 | % |
| Tier 1 capital (to average assets)       |   |   | 7.35 | % |   |   | 7.00 | % |   |   | 8.21 | % |   |   | 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    |   |                                                                              |   51,189 |   |                                                                            | $      | 30.33    |                                                                                                                                   |   |   |   0 |   |
| Equity compensation plans not      approved by security       holders |   |                                                                              |   0      |   |                                                                            |   |   0 |                                                                                                                                   |   |   |    0 |   |
|                  Total                       |   |                                                                              | 51,189        |   |                                                                            | $      | 30.33    |                                                                                                                                   |   |   | 0 |   |

----

----

| ASSETS                                                                          |   | 2009   |        |   | 2008   |   |
|---------------------------------------------------------------------------------|--------|--------|-------------|--------|--------|--------|
| Cash and due from banks                                                         |   | $      | 8,212,425   |   |   | $      | 8,784,995 |   |
| Interest-bearing deposits with the Federal Home Loan Bank and                   |   |   |        |   |   |   |   |   |
|    Federal Reserve Bank                                               |   |   | 5,108,273   |   |   |   | 2,722,738 |   |
| Money market mutual funds                                                       |   |   | 1,352,711   |   |   |   | 3,027,679 |   |
| Federal funds sold                                                              |   |   | 2,416,000   |   |   |   | 1,800,000 |   |
| Cash and cash equivalents                                                       |   |   | 17,089,409  |   |   |   | 16,335,412 |   |
| Interest-bearing time deposits with other banks                                 |   |   | 5,488,037   |   |   |   | 7,320,434 |   |
| Investments in available-for-sale securities (at fair value)                    |   |   | 50,011,316  |   |   |   | 32,997,312 |   |
| Federal Home Loan Bank stock, at cost                                           |   |   | 630,700     |   |   |   | 630,700 |   |
|                                                                            |   |   |        |   |   |   |   |   |
| Loans                                                                           |   |   | 193,514,820 |   |   |   | 180,090,903 |   |
| Less allowance for loan losses                                                  |   |   | 2,211,301   |   |   |   | 2,017,145 |   |
| Loans, net                                                                      |   |   | 191,303,519 |   |   |   | 178,073,758 |   |
|                                                                            |   |   |        |   |   |   |   |   |
| Premises and equipment                                                          |   |   | 684,294     |   |   |   | 845,836 |   |
| Accrued interest receivable                                                     |   |   | 977,350     |   |   |   | 835,559 |   |
| Bank owned life insurance                                                       |   |   | 3,846,083   |   |   |   | 1,203,693 |   |
| Other assets                                                                    |   |   | 3,707,865   |   |   |   | 2,513,764 |   |
| Total assets                                                                    |   | $      | 273,738,573 |   |   | $      | 240,756,468 |   |
|                                                                            |   |   |        |   |   |   |   |   |
|                                                                            |   |   |        |   |   |   |   |   |
| LIABILITIES AND STOCKHOLDERS' EQUITY                                            |   |   |        |   |   |   |   |   |
| Deposits:                                                                       |   |   |        |   |   |   |   |   |
| Demand deposits                                                                 |   | $      | 43,886,928  |   |   | $      | 38,288,288 |   |
| Savings and NOW deposits                                                        |   |   | 124,482,134 |   |   |   | 98,263,788 |   |
| Time deposits                                                                   |   |   | 82,076,620  |   |   |   | 84,327,041 |   |
| Total deposits                                                                  |   |   | 250,445,682 |   |   |   | 220,879,117 |   |
| Federal Home Loan Bank advances                                                 |   |   | -           |   |   |   | 1,000,000 |   |
| Securities sold under agreements to repurchase                                  |   |   | 912,849     |   |   |   | 576,933 |   |
| Other liabilities                                                               |   |   | 968,464     |   |   |   | 1,453,769 |   |
| Total liabilities                                                               |   |   | 252,326,995 |   |   |   | 223,909,819 |   |
| 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 |   |   | 3,804,500   |   |   |   | - |   |
| Preferred stock, fixed rate cumulative perpetual, Series B, no par;             |   |   |        |   |   |   |   |   |
|    200 shares issued in 2009; liquidation value of $1,000 per share   |   |   | 225,500     |   |   |   | - |   |
| Common stock, no par value; authorized 2,000,000 shares; issued and             |   |   |        |   |   |   |   |   |
|    outstanding 864,976 shares in 2009 and 2008                        |   |   | 9,372,068   |   |   |   | 9,328,313 |   |
| Retained earnings                                                               |   |   | 7,781,696   |   |   |   | 7,542,863 |   |
| Accumulated other comprehensive income (loss)                                   |   |   | 227,814     |   |   |   | (24,527 | ) |
| Total stockholders' equity                                                      |   |   | 21,411,578  |   |   |   | 16,846,649 |   |
| Total liabilities and stockholders' equity                                      |   | $      | 273,738,573 |   |   | $      | 240,756,468 |   |

----

|                                                              |   | 2009   |       |   | 2008   |   |
|-------------------------------------------------------------------|--------|--------|------------|--------|--------|--------|
| Interest and dividend income:                                     |   |   |       |   |   |   |
| Interest and fees on loans                                        |   | $      | 9,821,472  |   |   | $      | 9,814,080 |   |
| Interest on debt securities:                                      |   |   |       |   |   |   |   |   |
| Taxable                                                           |   |   | 1,596,380  |   |   |   | 792,641 |   |
| Tax-exempt                                                        |   |   | 348,612    |   |   |   | 281,339 |   |
| Dividends                                                         |   |   | -          |   |   |   | 31,407 |   |
| Other interest                                                    |   |   | 25,399     |   |   |   | 145,343 |   |
| Total interest and dividend income                                |   |   | 11,791,863 |   |   |   | 11,064,810 |   |
| Interest expense:                                                 |   |   |       |   |   |   |   |   |
| Interest on deposits                                              |   |   | 2,807,793  |   |   |   | 2,975,985 |   |
| Interest on Federal Home Loan Bank advances                       |   |   | 7,309      |   |   |   | 18,420 |   |
| Interest on securities sold under agreements to repurchase        |   |   | 8,292      |   |   |   | 48,165 |   |
| Total interest expense                                            |   |   | 2,823,394  |   |   |   | 3,042,570 |   |
| Net interest and dividend income                                  |   |   | 8,968,469  |   |   |   | 8,022,240 |   |
| Provision for loan losses                                         |   |   | 547,000    |   |   |   | 450,000 |   |
| Net interest and dividend income after provision for loan losses  |   |   | 8,421,469  |   |   |   | 7,572,240 |   |
| Noninterest income (charges):                                     |   |   |       |   |   |   |   |   |
| Service charges on deposit accounts                               |   |   | 544,054    |   |   |   | 479,210 |   |
| Gain on sales and calls of available-for-sale securities          |   |   | 39,491     |   |   |   | 10,000 |   |
| Writedown of securities                                           |   |   | -          |   |   |   | (1,755,600 | ) |
| Gain on sale of mortgages                                         |   |   | 58,928     |   |   |   | - |   |
| Investment services fees and commissions                          |   |   | 100,910    |   |   |   | 82,295 |   |
| Other service charges and fees                                    |   |   | 562,036    |   |   |   | 576,218 |   |
| Increase in cash surrender value of life insurance policies       |   |   | 142,390    |   |   |   | 61,152 |   |
| BOLI death benefit income                                         |   |   | -          |   |   |   | 328,358 |   |
| Other income                                                      |   |   | 74,211     |   |   |   | 63,809 |   |
| Total noninterest income (charges)                                |   |   | 1,522,020  |   |   |   | (154,558 | ) |
| Noninterest expense:                                              |   |   |       |   |   |   |   |   |
| Salaries and employee benefits                                    |   |   | 4,165,247  |   |   |   | 4,284,603 |   |
| Occupancy expense                                                 |   |   | 1,128,436  |   |   |   | 1,287,076 |   |
| Impairment of operating lease                                     |   |   | -          |   |   |   | 298,657 |   |
| Equipment expense                                                 |   |   | 349,935    |   |   |   | 411,703 |   |
| Professional fees                                                 |   |   | 513,000    |   |   |   | 407,597 |   |
| Advertising and promotions                                        |   |   | 398,365    |   |   |   | 384,404 |   |
| Forms and supplies                                                |   |   | 185,882    |   |   |   | 152,212 |   |
| Correspondent charges                                             |   |   | 272,475    |   |   |   | 241,461 |   |
| FDIC assessment                                                   |   |   | 516,200    |   |   |   | 140,271 |   |
| Postage                                                           |   |   | 103,912    |   |   |   | 106,038 |   |
| Directors’ fees                                             |   |   | 132,000    |   |   |   | 145,829 |   |
| Data processing                                                   |   |   | 364,921    |   |   |   | 121,511 |   |
| Other expense                                                     |   |   | 867,112    |   |   |   | 849,603 |   |
| Total noninterest expense                                         |   |   | 8,997,485  |   |   |   | 8,830,965 |   |
| Income (loss) before income tax expense (benefit)                 |   |   | 946,004    |   |   |   | (1,413,283 | ) |
| Income tax expense (benefit)                                      |   |   | 227,713    |   |   |   | (768,459 | ) |
| Net income (loss)                                                 |   | $      | 718,291    |   |   | $      | (644,824 | ) |
| Net income (loss) available (attributable) to common stockholders |   | $      | 522,369    |   |   | $      | (644,824 | ) |
|                                                              |   |   |       |   |   |   |   |   |
| Earnings (loss) per common share                                  |   | $      | 0.60       |   |   | $      | (0.75 | ) |
| Earnings (loss) per common share, assuming dilution               |   | $      | 0.60       |   |   | $      | (0.75 | ) |

----

|                                                          |   |            |      |   |     |   |    |     |   |   |          |   |   | Accumulated   |      |    |   |   |
|---------------------------------------------------------------|--------|-----------------|-----------|--------|----------|--------|---------|----------|--------|--------|---------------|--------|--------|---------------|-----------|---------|--------|--------|
|                                                          |   |            |      |   |     |   |    |     |   |   |          |   |   | Other         |      |    |   |   |
|                                                          |   | Preferred Stock |      |   | Common   |   |    | Retained |   |   | Comprehensive |   |   |          |      |
|                                                          |   | Series A        |      |   | Series B |   |    | Stock    |   |   | Earnings      |   |   | Income (Loss) |      |    | Total  |   |
| Balance, December 31, 2007                                    |   | $               | -         |   |     | $      | -       |     |   | $      | 8,975,051     |   |   | $             | 8,602,875 |    |   | $      | (259,867 | ) |   | $ | 17,318,059 |   |
| Comprehensive loss:                                           |   |            |      |   |     |   |    |     |   |   |          |   |   |          |      |    |   |   |   |   |   |   |   |   |
| Net loss                                                      |   |            | -         |   |     |   | -       |     |   |   | -             |   |   |          | (644,824  | )  |   |   | - |   |   |   | - |   |
| Net change in unrealized holding loss on                      |   |            |      |   |     |   |    |     |   |   |          |   |   |          |      |    |   |   |   |   |   |   |   |   |
|    available-for-sale securities, net of tax effect |   |            | -         |   |     |   | -       |     |   |   | -             |   |   |          | -         |    |   |   | 235,340 |   |   |   | - |   |
| Comprehensive loss                                            |   |            | -         |   |     |   | -       |     |   |   | -             |   |   |          | -         |    |   |   | - |   |   |   | (409,484 | ) |
| 14,080 shares issued on stock options exercised               |   |            | -         |   |     |   | -       |     |   |   | 195,289       |   |   |          | -         |    |   |   | - |   |   |   | 195,289 |   |
| Tax benefit on stock options exercised                        |   |            | -         |   |     |   | -       |     |   |   | 43,699        |   |   |          | -         |    |   |   | - |   |   |   | 43,699 |   |
| Stock based compensation                                      |   |            | -         |   |     |   | -       |     |   |   | 114,274       |   |   |          | -         |    |   |   | - |   |   |   | 114,274 |   |
| Dividends declared ($.48 per share)                           |   |            | -         |   |     |   | -       |     |   |   | -             |   |   |          | (415,188  | )       |   |   | - |   |   |   | (415,188 | ) |
| 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 |   |
|                                                          |   |            |      |   |     |   |    |     |   |   |          |   |   |          |      |    |   |   |   |   |   |   |   |   |
| Reclassification disclosure for the years ended December 31:  |   |            |      |   |     |   |    |     |   |   |          |   |   |          |      |    |   |   |   |   |   |
|                                                          |   |            |      |   |     |   |    |     |   |   |          |   |   |          | 2009      |    |   |   | 2008 |   |   |   |   |   |
| Net unrealized holding gains (losses) on                      |   |            |      |   |     |   |    |     |   |   |          |   |   |          |      |    |   |   |   |   |   |   |   |   |
|    available-for-sale securities                    |   |            |      |   |     |   |    |     |   |   |          |   |   | $             | 452,826   |    |   | $      | (1,360,114 | ) |   |   |   |   |
| Reclassification adjustment for realized (gains) losses       |   |            |      |   |     |   |    |     |   |   |          |   |   |          |      |    |   |   |   |   |   |   |   |   |
|    in net income (loss)                             |   |            |      |   |     |   |    |     |   |   |          |   |   |          | (39,491   | )       |   |   | 1,745,600 |   |   |   |   |   |
| Other comprehensive income before income tax effect           |   |            |      |   |     |   |    |     |   |   |          |   |   |          | 413,335   |    |   |   | 385,486 |   |   |   |   |   |
| Income tax expense                                            |   |            |      |   |     |   |    |     |   |   |          |   |   |          | (160,994  | )       |   |   | (150,146 | ) |   |   |   |   |
| Other comprehensive income, net of tax                        |   |            |      |   |     |   |    |     |   |   |          |   |   | $             | 252,341   |    |   | $      | 235,340 |   |   |   |   |   |

----

|                                                                         |   | 2009   |        |   | 2008   |   |
|------------------------------------------------------------------------------|--------|--------|-------------|--------|--------|--------|
| Cash flows from operating activities:                                        |   |   |        |   |   |   |
| Net income (loss)                                                            |   | $      | 718,291     |   |   | $      | (644,824 | ) |
| Adjustments to reconcile net income (loss) to net cash (used in) provided by |   |   |        |   |   |   |   |   |
|    operating activities:                                           |   |   |        |   |   |   |   |   |
| Interest capitalized on interest-bearing time deposits with other banks      |   |   | (167,603    | )      |   |   | (20,434 | ) |
| Amortization of securities, net                                              |   |   | 141,845     |   |   |   | 4,126 |   |
| Gain on sales and calls of available-for-sale securities, net                |   |   | (39,491     | )      |   |   | (10,000 | ) |
| Writedown of securities                                                      |   |   | -           |   |   |   | 1,755,600 |   |
| Change in deferred loan costs, net                                           |   |   | 16,589      |   |   |   | (24,734 | ) |
| Provision for loan losses                                                    |   |   | 547,000     |   |   |   | 450,000 |   |
| Depreciation and amortization                                                |   |   | 265,282     |   |   |   | 486,310 |   |
| Impairment of operating lease                                                |   |   | -           |   |   |   | 298,657 |   |
| Accretion on impairment of operating lease                                   |   |   | (44,246     | )      |   |   | (7,374 | ) |
| (Increase) decrease in other assets                                          |   |   | (1,443,200  | )      |   |   | 85,413 |   |
| Increase in interest receivable                                              |   |   | (141,791    | )      |   |   | (27,129 | ) |
| Decrease (increase) in taxes receivable                                      |   |   | 120,466     |   |   |   | (180,622 | ) |
| Increase in cash surrender value of bank owned life insurance                |   |   | (142,390    | )      |   |   | (61,152 | ) |
| BOLI death benefit income                                                    |   |   | -           |   |   |   | (328,358 | ) |
| Stock based compensation                                                     |   |   | 43,755      |   |   |   | 114,274 |   |
| Decrease in other liabilities                                                |   |   | (437,389    | )      |   |   | (87,351 | ) |
| Decrease in interest payable                                                 |   |   | (3,670      | )      |   |   | (220,264 | ) |
| Deferred tax benefit                                                         |   |   | (17,753     | )      |   |   | (1,002,837 | ) |
|                                                                         |   |   |        |   |   |   |   |   |
| Net cash (used in) provided by operating activities                          |   |   | (584,305    | )      |   |   | 579,301 |   |
|                                                                         |   |   |        |   |   |   |   |   |
| Cash flows from investing activities:                                        |   |   |        |   |   |   |   |   |
| Purchases of interest-bearing time deposits with other banks                 |   |   | (3,000,000  | )      |   |   | (7,300,000 | ) |
| Proceeds from maturities of interest-bearing time deposits with other banks  |   |   | 5,000,000   |   |   |   | - |   |
| Purchases of available-for-sale securities                                   |   |   | (31,867,586 | )      |   |   | (17,860,336 | ) |
| Proceeds from sales of available-for-sale securities                         |   |   | 1,170,316   |   |   |   | - |   |
| Proceeds from maturities of available-for-sale securities                    |   |   | 13,994,247  |   |   |   | 6,936,109 |   |
| Loan originations and principal collections, net                             |   |   | (1,565,172  | )      |   |   | (14,735,039 | ) |
| Loans purchased                                                              |   |   | (12,233,431 | )      |   |   | - |   |
| Recoveries of loans previously charged off                                   |   |   | 5,253       |   |   |   | 1,455 |   |
| Capital expenditures                                                         |   |   | (118,348    | )      |   |   | (111,041 | ) |
| Purchase of life insurance policies                                          |   |   | (2,500,000  | )      |   |   | - |   |
| Redemption of life insurance policies                                        |   |   | -           |   |   |   | 1,010,330 |   |
| Premiums paid on life insurance policy                                       |   |   | -           |   |   |   | (6,432 | ) |
|                                                                         |   |   |        |   |   |   |   |   |
| Net cash used in investing activities                                        |   |   | (31,114,721 | )      |   |   | (32,064,954 | ) |

----

|                                                                      |   | 2009   |       |   | 2008   |   |
|---------------------------------------------------------------------------|--------|--------|------------|--------|--------|--------|
| Cash flows from financing activities:                                     |   |   |       |   |   |   |
| Net increase in demand deposits, NOW and savings accounts                 |   |   | 31,816,986 |   |   |   | 12,912,031 |   |
| Net (decrease) increase in time deposits                                  |   |   | (2,250,421 | )      |   |   | 21,161,220 |   |
| Long-term advances received from Federal Home Loan Bank                   |   |   | -          |   |   |   | 1,000,000 |   |
| Payment of long-term advances from Federal Home Loan Bank                 |   |   | (1,000,000 | )      |   |   | - |   |
| Net change in short term advances from the Federal Home Loan Bank         |   |   | -          |   |   |   | (2,000,000 | ) |
| Net increase (decrease) in securities sold under agreements to repurchase |   |   | 335,916    |   |   |   | (786,100 | ) |
| Proceeds from exercise of stock options                                   |   |   | -          |   |   |   | 195,289 |   |
| Proceeds from issuance of preferred stock                                 |   |   | 4,000,000  |   |   |   | - |   |
| Dividends paid - preferred stock                                          |   |   | (138,067   | )      |   |   | - |   |
| Dividends paid - common stock                                             |   |   | (311,391   | )      |   |   | (415,188 | ) |
|                                                                      |   |   |       |   |   |   |   |   |
| Net cash provided by financing activities                                 |   |   | 32,453,023 |   |   |   | 32,067,252 |   |
|                                                                      |   |   |       |   |   |   |   |   |
| Net increase in cash and cash equivalents                                 |   |   | 753,997    |   |   |   | 581,599 |   |
| Cash and cash equivalents at beginning of year                            |   |   | 16,335,412 |   |   |   | 15,753,813 |   |
| Cash and cash equivalents at end of year                                  |   | $      | 17,089,409 |   |   | $      | 16,335,412 |   |
|                                                                      |   |   |       |   |   |   |   |   |
| Supplemental disclosures:                                                 |   |   |       |   |   |   |   |   |
| Interest paid                                                             |   | $      | 2,827,064  |   |   | $      | 3,262,834 |   |
| Income taxes paid                                                         |   |   | 125,000    |   |   |   | 415,000 |   |

----

----

|   | -- | 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. |
|--------|----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

----

----

----

|                                                |   | Amortized |       |   | Gross      |   |    | Gross      |   |   |    |   |
|-----------------------------------------------------|--------|-----------|------------|--------|------------|--------|---------|------------|--------|--------|---------|--------|
|                                                |   | Cost      |       |   | Unrealized |   |    | Unrealized |   |   | Fair    |   |
|                                                |   | Basis     |       |   | Gains      |   |    | Losses     |   |   | Value   |   |
| 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 |   |

----

|                                                |   | Amortized |       |   | Gross      |   |    | Gross      |   |   |    |   |
|-----------------------------------------------------|--------|-----------|------------|--------|------------|--------|---------|------------|--------|--------|---------|--------|
|                                                |   | Cost      |       |   | Unrealized |   |    | Unrealized |   |   | Fair    |   |
|                                                |   | Basis     |       |   | Gains      |   |    | Losses     |   |   | Value   |   |
| December 31, 2008:                                  |   |      |       |   |       |   |    |       |   |   |    |   |
| Debt securities issued by the U.S. Treasury         |   |      |       |   |       |   |    |       |   |   |    |   |
|    and other U.S. government corporations |   |      |       |   |       |   |    |       |   |   |    |   |
|    and agencies                           |   | $         | 5,772,147  |   |       | $      | 83,213  |       |   | $      | 1,273   |   |   | $ | 5,854,087 |   |
| Obligations of states and municipalities            |   |      | 5,948,405  |   |       |   | 60,480  |       |   |   | 154,755 |   |   |   | 5,854,130 |   |
| Corporate debt securities                           |   |      | 2,670,815  |   |       |   | 19,063  |       |   |   | 13      |   |   |   | 2,689,865 |   |
| Mortgage-backed securities                          |   |      | 16,799,358 |   |       |   | 143,417 |       |   |   | 239,440 |   |   |   | 16,703,335 |   |
| SBA loan pools                                      |   |      | 1,830,262  |   |       |   | 49,132  |       |   |   | -       |   |   |   | 1,879,394 |   |
| U.S. government sponsored enterprises               |   |      |       |   |       |   |    |       |   |   |    |   |   |   |   |   |
|    perpetual/callable preferred stocks    |   |      | 16,501     |   |       |   | -       |       |   |   | -       |   |   |   | 16,501 |   |
| Marketable equity securities                        |   |      | 3,027,679  |   |       |   | -       |       |   |   | -       |   |   |   | 3,027,679 |   |
|                                                |   |      | 36,065,167 |   |       |   | 355,305 |       |   |   | 395,481 |   |   |   | 36,024,991 |   |
| Money market mutual funds included in cash          |   |      |       |   |       |   |    |       |   |   |    |   |   |   |   |   |
|    and cash equivalents                   |   |      | (3,027,679 | )      |       |   | -       |       |   |   | -       |   |   |   | (3,027,679 | ) |
| Total available-for-sale securities                 |   | $         | 33,037,488 |   |       | $      | 355,305 |       |   | $      | 395,481 |   |   | $ | 32,997,312 |   |

|                                   |   | Fair   |       |
|----------------------------------------|--------|--------|------------|
|                                   |   | Value  |       |
| Due within one year                    |   | $      | 516,900    |   |
| Due after one year through five years  |   |   | 17,322,546 |   |
| Due after five years through ten years |   |   | 1,102,150  |   |
| Due after ten years                    |   |   | 7,520,754  |   |
| SBA loan pools                         |   |   | 1,707,165  |   |
| Mortgage-backed securities             |   |   | 21,841,801 |   |
|                                   |   | $      | 50,011,316 |   |

|                                     |   |   Less than 12 Months |      |   | 12 Months or Longer |   |   |  Total |   |
|------------------------------------------|--------|----------------------------|-----------|--------|---------------------|--------|--------|-------------|--------|
|                                     |   | Fair                       |      |   | Unrealized          |   |   | Fair        |   |   | Unrealized |   |   | Fair |   |   | Unrealized |   |
|                                     |   | Value                      |      |   | Losses              |   |   | Value       |   |   | Losses |   |   | Value |   |   | Losses |   |
| 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 |   |

----

|                                     |   | Less than 12 Months |      |   | 12 Months or Longer |   |    | Total  |   |
|------------------------------------------|--------|---------------------|-----------|--------|---------------------|--------|---------|--------|--------|
|                                     |   | Fair                |      |   | Unrealized          |   |    | Fair   |   |   | Unrealized |   |   | Fair |   |   | Unrealized |   |
|                                     |   | Value               |      |   | Losses              |   |    | Value  |   |   | Losses |   |   | Value |   |   | Losses |   |
| December 31, 2008:                       |   |                |      |   |                |   |    |   |   |   |   |   |   |   |   |   |   |   |
| Debt securities issued by the U.S.       |   |                |      |   |                |   |    |   |   |   |   |   |   |   |   |   |   |   |
| Treasury and other U.S. government       |   |                |      |   |                |   |    |   |   |   |   |   |   |   |   |   |   |   |
| corporations and agencies                |   | $                   | 498,726   |   |                | $      | 1,273   |   |   | $ | - |   |   | $ | - |   |   | $ | 498,726 |   |   | $ | 1,273 |   |
| Obligations of states and municipalities |   |                | 3,434,449 |   |                |   | 146,544 |   |   |   | 252,915 |   |   |   | 8,211 |   |   |   | 3,687,364 |   |   |   | 154,755 |   |
| Corporate debt securities                |   |                | 498,595   |   |                |   | 13      |   |   |   | - |   |   |   | - |   |   |   | 498,595 |   |   |   | 13 |   |
| Mortgage-backed securities               |   |                | 4,191,930 |   |                |   | 71,072  |   |   |   | 4,472,386 |   |   |   | 168,368 |   |   |   | 8,664,316 |   |   |   | 239,440 |   |
| Total temporarily impaired securities    |   | $                   | 8,623,700 |   |                | $      | 218,902 |   |   | $ | 4,725,301 |   |   | $ | 176,579 |   |   | $ | 13,349,001 |   |   | $ | 395,481 |   |

|                                            |   | 2009   |        |   | 2008   |   |
|-------------------------------------------------|--------|--------|-------------|--------|--------|--------|
| Commercial, financial and agricultural          |   | $      | 12,900,649  |   |   | $      | 15,741,584 |   |
| Real estate - construction and land development |   |   | 6,744,569   |   |   |   | 8,870,572 |   |
| Real estate - residential                       |   |   | 138,408,956 |   |   |   | 126,042,062 |   |
| Real estate - commercial                        |   |   | 28,721,564  |   |   |   | 22,962,191 |   |
| Municipal                                       |   |   | 2,015,318   |   |   |   | 2,081,996 |   |
| Consumer                                        |   |   | 4,473,822   |   |   |   | 4,125,967 |   |
|                                            |   |   | 193,264,878 |   |   |   | 179,824,372 |   |
| Allowance for loan losses                       |   |   | (2,211,301  | )      |   |   | (2,017,145 | ) |
| Deferred costs, net                             |   |   | 249,942     |   |   |   | 266,531 |   |
| Net loans                                       |   | $      | 191,303,519 |   |   | $      | 178,073,758 |   |

|                                       |   | 2009   |      |   | 2008   |   |
|--------------------------------------------|--------|--------|-----------|--------|--------|--------|
| Balance at beginning of year               |   | $      | 2,017,145 |   |   | $      | 1,924,552 |   |
| Provision for loan losses                  |   |   | 547,000   |   |   |   | 450,000 |   |
| Charge offs                                |   |   | (358,097  | )      |   |   | (358,862 | ) |
| Recoveries of loans previously charged off |   |   | 5,253     |   |   |   | 1,455 |   |
| Balance at end of year                     |   | $      | 2,211,301 |   |   | $      | 2,017,145 |   |

|                                             |   | 2009   |      |   | 2008   |   |
|--------------------------------------------------|--------|--------|-----------|--------|--------|--------|
| Total nonaccrual loans                           |   | $      | 3,153,187 |   |   | $      | 560,917 |   |
|                                             |   |   |      |   |   |   |   |   |
| Accruing loans which are 90 days or more overdue |   | $      | 202,024   |   |   | $      | 89,823 |   |

----

|                                                            |   | 2009        |      |   | 2008       |   |
|-----------------------------------------------------------------|--------|-------------|-----------|--------|------------|--------|
|                                                            |   | Recorded    |      |   | Related    |   |   | Recorded |   |   | Related |   |
|                                                            |   | Investment  |      |   | Allowance  |   |   | Investment |   |   | Allowance |   |
|                                                            |   | In Impaired |      |   | For Credit |   |   | In Impaired |   |   | For Credit |   |
|                                                            |   | Loans       |      |   | Losses     |   |   | Loans |   |   | Losses |   |
| Loans for which there is a related allowance for credit losses  |   | $           | 353,613   |   |       | $      | 160,000 |   |   | $ | 45,341 |   |   | $ | 6,946 |   |
|                                                            |   |        |      |   |       |   |   |   |   |   |   |   |   |   |   |   |
| Loans for which there is no related allowance for credit losses |   |        | 1,911,995 |   |       |   | - |   |   |   | - |   |   |   | - |   |
|                                                            |   |        |      |   |       |   |   |   |   |   |   |   |   |   |   |   |
| Totals                                                          |   | $           | 2,265,608 |   |       | $      | 160,000 |   |   | $ | 45,341 |   |   | $ | 6,946 |   |
|                                                            |   |        |      |   |       |   |   |   |   |   |   |   |   |   |   |   |
| Average recorded investment in impaired loans during the        |   |        |      |   |       |   |   |   |   |   |   |   |   |   |   |   |
| year ended December 31                                          |   | $           | 1,215,532 |   |       |   |   |   |   | $ | 9,068 |   |   |   |   |   |
|                                                            |   |        |      |   |       |   |   |   |   |   |   |   |   |   |   |   |
| Related amount of interest income recognized during the time,   |   |        |      |   |       |   |   |   |   |   |   |   |   |   |   |   |
| in the year ended December 31, that the loans were impaired     |   |        |      |   |       |   |   |   |   |   |   |   |   |   |   |   |
|                                                            |   |        |      |   |       |   |   |   |   |   |   |   |   |   |   |   |
| Total recognized                                                |   | $           | 560       |   |       |   |   |   |   | $ | - |   |   |   |   |   |
|                                                            |   |        |      |   |       |   |   |   |   |   |   |   |   |   |   |   |
| Amount recognized using a cash-basis method of accounting       |   | $           | -         |   |       |   |   |   |   | $ | - |   |   |   |   |   |

|                                      |   | 2009   |       |   | 2008   |   |
|-------------------------------------------|--------|--------|------------|--------|--------|--------|
| Leasehold improvements                    |   | $      | 1,155,367  |   |   | $      | 1,144,004 |   |
| Furniture and equipment                   |   |   | 2,302,763  |   |   |   | 2,225,318 |   |
|                                      |   |   | 3,458,130  |   |   |   | 3,369,322 |   |
| Accumulated depreciation and amortization |   |   | (2,773,836 | )      |   |   | (2,523,486 | ) |
|                                      |   | $      | 684,294    |   |   | $      | 845,836 |   |

| 2010  |   | $      | 65,244,834 |   |
|-------|--------|--------|------------|--------|
| 2011  |   |   | 6,224,389  |   |
| 2012  |   |   | 6,631,981  |   |
| 2013  |   |   | 1,764,798  |   |
| 2014  |   |   | 2,210,618  |   |
| Total |   | $      | 82,076,620 |   |

----

|                               |   | 2009   |    |   | 2008   |   |
|------------------------------------|--------|--------|---------|--------|--------|--------|
| Current:                           |   |   |    |   |   |   |
| Federal                            |   | $      | 184,014 |   |   | $      | 172,166 |   |
| State                              |   |   | 61,452  |   |   |   | 62,212 |   |
|                               |   |   | 245,466 |   |   |   | 234,378 |   |
| Deferred:                          |   |   |    |   |   |   |   |   |
| Federal                            |   |   | (30,352 | )      |   |   | (809,873 | ) |
| State                              |   |   | 12,599  |   |   |   | (192,964 | ) |
|                               |   |   | (17,753 | )      |   |   | (1,002,837 | ) |
| Total income tax expense (benefit) |   | $      | 227,713 |   |   | $      | (768,459 | ) |

|                                                          |   | 2009   |   |   | 2008   |   |
|---------------------------------------------------------------|--------|--------|--------|--------|--------|--------|
|                                                          |   | % of   |   |   | % of   |   |
|                                                          |   | Income |   |   | Income |   |
| Federal income tax at statutory rate                          |   |   | 34.0   | %      |   |   | (34.0 | )% |
| Increase (decrease) in tax resulting from:                    |   |   |   |   |   |   |   |   |
| Tax-exempt income                                             |   |   | (20.0  | )      |   |   | (10.9 | ) |
| Other                                                         |   |   | 3.3    |   |   |   | (6.2 | ) |
| Stock based compensation                                      |   |   | 1.6    |   |   |   | 2.8 |   |
| State tax expense (benefit), net of federal (benefit) expense |   |   | 5.2    |   |   |   | (6.1 | ) |
| Effective tax rates                                           |   |   | 24.1   | %      |   |   | (54.4 | )% |

----

|                                                         |   | 2009   |      |   | 2008   |   |
|--------------------------------------------------------------|--------|--------|-----------|--------|--------|--------|
|                                                         |   |   |      |   |   |   |
| Deferred tax assets:                                         |   |   |      |   |   |   |
| Allowance for loan losses                                    |   | $      | 803,109   |   |   | $      | 755,082 |   |
| Deferred compensation                                        |   |   | 61,350    |   |   |   | 198,688 |   |
| Other                                                        |   |   | 24,456    |   |   |   | 3,680 |   |
| Impairment of operating lease                                |   |   | 96,221    |   |   |   | 113,455 |   |
| Write-down of equity securities                              |   |   | 772,573   |   |   |   | 772,573 |   |
| Alternative minimum tax carryforward                         |   |   | 83,375    |   |   |   | - |   |
| Net unrealized holding loss on available-for-sale securities |   |   | -         |   |   |   | 15,649 |   |
| Gross deferred tax assets                                    |   |   | 1,841,084 |   |   |   | 1,859,127 |   |
|                                                         |   |   |      |   |   |   |   |   |
| Deferred tax liabilities:                                    |   |   |      |   |   |   |   |   |
| Depreciation                                                 |   |   | (34,475   | )      |   |   | (48,444 | ) |
| Deferred loan costs/fees                                     |   |   | (97,351   | )      |   |   | (103,529 | ) |
| Net unrealized holding gain on available-for-sale securities |   |   | (145,345  | )      |   |   | - |   |
| Gross deferred tax liabilities                               |   |   | (277,171  | )      |   |   | (151,973 | ) |
| Net deferred tax asset                                       |   | $      | 1,563,913 |   |   | $      | 1,707,154 |   |

| 2010       |   | $      | 640,042   |
|------------|--------|--------|-----------|
| 2011       |   |   | 372,477   |
| 2012       |   |   | 315,721   |
| 2013       |   |   | 304,163   |
| 2014       |   |   | 218,451   |
| Thereafter |   |   | 188,315   |
| Total      |   | $      | 2,039,169 |

----

----

|                          |   | Fair Value Measurements at Reporting Date Using: |       |
|-------------------------------|--------|--------------------------------------------------|------------|
|                          |   | Total                                            |       |   | Quoted Prices inActive Markets forIdentical AssetsLevel 1 |   |   | SignificantOther ObservableInputsLevel 2 |   |   | SignificantUnobservableInputsLevel 3 |   |
| December 31, 2009:            |   |                                             |       |   |   |   |   |   |   |   |   |   |
| Securities available-for-sale |   | $                                                | 50,011,316 |   |   | $ | 57,195 |   |   | $ | 49,954,121 |   |   | $ | - |   |
| Totals                        |   | $                                                | 50,011,316 |   |   | $ | 57,195 |   |   | $ | 49,954,121 |   |   | $ | - |   |
|                          |   |                                             |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| December 31, 2008:            |   |                                             |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Securities available-for-sale |   | $                                                | 32,997,312 |   |   | $ | 16,501 |   |   | $ | 32,980,811 |   |   | $ | - |   |
| Totals                        |   | $                                                | 32,997,312 |   |   | $ | 16,501 |   |   | $ | 32,980,811 |   |   | $ | - |   |

|               |   | Fair Value Measurements at Reporting Date Using: |    |
|--------------------|--------|--------------------------------------------------|---------|
|               |   | Total                                            |    |   | Quoted Prices inActive Markets forIdentical AssetsLevel 1 |   |   | SignificantOther ObservableInputsLevel 2 |   |   | SignificantUnobservableInputsLevel 3 |   |
| December 31, 2009: |   |                                             |    |   |   |   |   |   |   |   |   |   |
| Impaired loans     |   | $                                                | 193,613 |   |   | $ | - |   |   | $ | 193,613 |   |   | $ | - |   |
| Totals             |   | $                                                | 193,613 |   |   | $ | - |   |   | $ | 193,613 |   |   | $ | - |   |
|               |   |                                             |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| December 31, 2008: |   |                                             |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Impaired loans     |   | $                                                | 38,395  |   |   | $ | - |   |   | $ | 38,395 |   |   | $ | - |   |
| Totals             |   | $                                                | 38,395  |   |   | $ | - |   |   | $ | 38,395 |   |   | $ | - |   |

----

|                                            |   | 2009           |        |   | 2008      |   |
|-------------------------------------------------|--------|----------------|-------------|--------|-----------|--------|
|                                            |   | CarryingAmount |        |   | FairValue |   |   | CarryingAmount |   |   | FairValue |   |
| Financial assets:                               |   |           |        |   |      |   |   |   |   |   |   |   |
| Cash and cash equivalents                       |   | $              | 17,089,409  |   |      | $      | 17,089,409 |   |   | $ | 16,335,412 |   |   | $ | 16,335,412 |   |
| Interest-bearing time deposits with other banks |   |           | 5,488,037   |   |      |   | 5,690,000 |   |   |   | 7,320,434 |   |   |   | 7,414,000 |   |
| Available-for-sale securities                   |   |           | 50,011,316  |   |      |   | 50,011,316 |   |   |   | 32,997,312 |   |   |   | 32,997,312 |   |
| Federal Home Loan Bank stock                    |   |           | 630,700     |   |      |   | 630,700 |   |   |   | 630,700 |   |   |   | 630,700 |   |
| Loans, net                                      |   |           | 191,303,519 |   |      |   | 193,185,000 |   |   |   | 178,073,758 |   |   |   | 179,899,358 |   |
| Accrued interest receivable                     |   |           | 977,350     |   |      |   | 977,350 |   |   |   | 835,559 |   |   |   | 835,559 |   |
|                                            |   |           |        |   |      |   |   |   |   |   |   |   |   |   |   |   |
| Financial liabilities:                          |   |           |        |   |      |   |   |   |   |   |   |   |   |   |   |   |
| Deposits                                        |   |           | 250,445,682 |   |      |   | 251,268,000 |   |   |   | 220,879,117 |   |   |   | 220,595,000 |   |
| Federal Home Loan Bank advances                 |   |           | -           |   |      |   | - |   |   |   | 1,000,000 |   |   |   | 1,000,000 |   |
| Securities sold under agreements to repurchase  |   |           | 912,849     |   |      |   | 912,849 |   |   |   | 576,933 |   |   |   | 576,933 |   |

----

|                           |   |   |  2009 |   |   |   |  2008 |   |
|--------------------------------|--------|--------|------------|--------|--------|--------|------------|--------|
|                           |   |   |       |   |   |   |       |   |
| Commitments to originate loans |   | $      | 1,498,580  |   |   | $      | 1,273,063  |   |
| Standby letters of credit      |   |   | 337,000    |   |   |   | 337,000    |   |
| Unadvanced portions of loans:  |   |   |       |   |   |   |       |   |
| Construction                   |   |   | 3,473,939  |   |   |   | 5,986,683  |   |
| Commercial lines of credit     |   |   | 7,743,686  |   |   |   | 9,479,394  |   |
| Consumer                       |   |   | 701,361    |   |   |   | 714,962    |   |
| Home equity                    |   |   | 24,231,520 |   |   |   | 22,893,758 |   |
|                           |   | $      | 37,986,086 |   |   | $      | 40,684,860 |   |

----

|                                        |   |                          |   |   |              |   |              |        |   |              |   | To Be Well        |
|---------------------------------------------|--------|-------------------------------|--------|--------|-------------------|--------|-------------------|-------------|--------|-------------------|--------|-------------------|
|                                        |   |                          |   |   |              |   |              |        |   |              |   | Capitalized Under |
|                                        |   |                          |   |   |              |   |              | For Capital |   | Prompt Corrective |
|                                        |   | Actual                        |   |   | Adequacy Purposes |   | Action Provisions |
|                                        |   | Amount                        |   |   | Ratio             |   |              | Amount      |   | Ratio             |   | Amount            |   | Ratio |
|                                        |   | (Dollar amounts in thousands) |
| As of December 31, 2009:                    |   |                          |   |   |              |   |              |        |   |              |   |              |   |   |
| Total Capital (to Risk Weighted Assets):    |   |                          |   |   |              |   |              |        |   |              |   |              |   |   |
| The Simsbury Bank & Trust Company, Inc. |   | $                             | 22,512 |   |              |   | 13.97             | %           |   | $                 | 12,896 |              | ≥8.0% |   | $ | 16,119 |   | ≥10.0% |
|                                        |   |                          |   |   |              |   |              |        |   |              |   |              |   |   |   |   |   |   |
| Tier 1 Capital (to Risk Weighted Assets):   |   |                          |   |   |              |   |              |        |   |              |   |              |   |   |   |   |   |   |
| The Simsbury Bank & Trust Company, Inc. |   |                          | 20,495 |   |              |   | 12.71             |        |   |              | 6,448  |              | ≥4.0 |   |   | 9,672 |   | ≥6.0 |
|                                        |   |                          |   |   |              |   |              |        |   |              |   |              |   |   |   |   |   |   |
| Tier 1 Capital (to Average Assets):         |   |                          |   |   |              |   |              |        |   |              |   |              |   |   |   |   |   |   |
| The Simsbury Bank & Trust Company, Inc. |   |                          | 20,495 |   |              |   | 7.35              |        |   |              | 11,156 |              | ≥4.0 |   |   | 13,945 |   | ≥5.0 |
|                                        |   |                          |   |   |              |   |              |        |   |              |   |              |   |   |   |   |   |   |
| As of December 31, 2008:                    |   |                          |   |   |              |   |              |        |   |              |   |              |   |   |   |   |   |   |
| Total Capital (to Risk Weighted Assets):    |   |                          |   |   |              |   |              |        |   |              |   |              |   |   |   |   |   |   |
| The Simsbury Bank & Trust Company, Inc. |   | $                             | 18,048 |   |              |   | 12.13             | %           |   | $                 | 11,908 |              | ≥8.0% |   | $ | 14,884 |   | ≥10.0% |
|                                        |   |                          |   |   |              |   |              |        |   |              |   |              |   |   |   |   |   |   |
| Tier 1 Capital (to Risk Weighted Assets):   |   |                          |   |   |              |   |              |        |   |              |   |              |   |   |   |   |   |   |
| The Simsbury Bank & Trust Company, Inc. |   |                          | 16,190 |   |              |   | 10.88             |        |   |              | 5,954  |              | ≥4.0 |   |   | 8,931 |   | ≥6.0 |
|                                        |   |                          |   |   |              |   |              |        |   |              |   |              |   |   |   |   |   |   |
| Tier 1 Capital (to Average Assets):         |   |                          |   |   |              |   |              |        |   |              |   |              |   |   |   |   |   |   |
| The Simsbury Bank & Trust Company, Inc. |   |                          | 16,190 |   |              |   | 7.00              |        |   |              | 9,255  |              | ≥4.0 |   |   | 11,569 |   | ≥5.0 |

----

|                                                           |   | 2009   |   |   | 2008             |   |
|----------------------------------------------------------------|--------|--------|--------|--------|------------------|--------|
|                                                           |   |   |   |   | Weighted-Average |   |   |   |   |   | Weighted-Average |   |
| Fixed Options                                                  |   | Shares |   |   | Exercise Price   |   |   | Shares |   |   | Exercise Price |   |
| Outstanding at beginning of year                               |   |   | 51,189 |   |             | $      | 30.33 |   |   |   | 69,208 |   |   | $ | 27.21 |   |
| Granted                                                        |   |   | -      |   |             |   | - |   |   |   | - |   |   |   | - |   |
| Exercised                                                      |   |   | -      |   |             |   | - |   |   |   | (14,080 | ) |   |   | 13.87 |   |
| Forfeited                                                      |   |   | -      |   |             |   | - |   |   |   | (3,939 | ) |   |   | 34.35 |   |
| Outstanding at end of year                                     |   |   | 51,189 |   |             |   | 30.33 |   |   |   | 51,189 |   |   |   | 30.33 |   |
|                                                           |   |   |   |   |             |   |   |   |   |   |   |   |   |   |   |   |
| Options exercisable at year-end                                |   |   | 47,689 |   |             |   | 30.35 |   |   |   | 40,689 |   |   |   | 30.50 |   |
| 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 |   | 2.2 years |   | 1,311 |   | $15.65 |
| 16.25                               |   | 1,314 |   | 1.9 years |   | 1,314 |   | 16.25 |
| 34.90                               |   | 1,314 |   | 4.3 years |   | 1,314 |   | 34.90 |
| 35.00                               |   | 5,250 |   | 4.8 years |   | 5,250 |   | 35.00 |
| 31.50                               |   | 21,000 |   | 6.0 years |   | 21,000 |   | 31.50 |
| 29.00                               |   | 10,500 |   | 6.5 years |   | 10,500 |   | 29.00 |
| 30.00                               |   | 10,500 |   | 7.6 years |   | 7,000 |   | 30.00 |
| 30.33                               |   | 51,189 |   | 6.1 years |   | 47,689 |   | 30.35 |

----

|                                                   |   | 2009   |     |   | 2008   |   |
|--------------------------------------------------------|--------|--------|----------|--------|--------|--------|
|                                                   |   |   |     |   |   |   |
| Basic earnings (loss) per share computation:           |   |   |     |   |   |   |
| Net income (loss)                                      |   | $      | 718,291  |   |   | $      | (644,824 | ) |
| Preferred stock net accretion                          |   |   | (30,000  | )      |   |   | - |   |
| Cumulative preferred stock dividends                   |   |   | (165,922 | )      |   |   | - |   |
| Net income (loss) available to common shareholders     |   | $      | 522,369  |   |   | $      | (644,824 | ) |
|                                                   |   |   |     |   |   |   |   |   |
| Weighted average shares outstanding, basic             |   |   | 864,976  |   |   |   | 860,030 |   |
| Basic earnings (loss) per share                        |   | $      | 0.60     |   |   | $      | (0.75 | ) |
|                                                   |   |   |     |   |   |   |   |   |
| Diluted earnings (loss) per share computation:         |   |   |     |   |   |   |   |   |
| Net income (loss)                                      |   | $      | 718,291  |   |   | $      | (644,824 | ) |
| Preferred stock net accretion                          |   |   | (30,000  | )      |   |   | - |   |
| Cumulative preferred stock dividends                   |   |   | (165,922 | )      |   |   | - |   |
| Net income (loss) available to common shareholders     |   | $      | 522,369  |   |   | $      | (644,824 | ) |
|                                                   |   |   |     |   |   |   |   |   |
| Weighted average shares outstanding, assuming dilution |   |   | 864,976  |   |   |   | 860,030 |   |
| Dilutive potential shares                              |   |   | -        |   |   |   | - |   |
|                                                   |   |   | 864,976  |   |   |   | 860,030 |   |
| Diluted earnings (loss) per share                      |   | $      | 0.60     |   |   | $      | (0.75 | ) |

----

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

| 2010   |   | $      | 46,000  |   |
|--------|--------|--------|---------|--------|
| 2011   |   |   | 46,000  |   |
| 2012   |   |   | 46,000  |   |
| 2013   |   |   | 46,000  |   |
| 2014   |   |   | 11,500  |   |
|   |   | $      | 195,500 |   |

| 2010   |   | $      | 6,000  |   |
|--------|--------|--------|--------|--------|
| 2011   |   |   | 6,000  |   |
| 2012   |   |   | 6,000  |   |
| 2013   |   |   | 6,000  |   |
| 2014   |   |   | 1,500  |   |
|   |   | $      | 25,500 |   |

----

----

|           | Year Ended        | Year Ended        |
|----------------|-------------------|-------------------|
|           | December 31, 2009 | December 31, 2008 |
|           |              |              |   |   |
|           | High              | Low               | High | Low |
| First Quarter  | $16.15            | $13.00            | $32.00 | $25.50 |
| Second Quarter | $17.00            | $12.75            | $26.75 | $23.25 |
| Third Quarter  | $16.05            | $15.00            | $25.55 | $21.50 |
| Fourth Quarter | $16.25            | $15.50            | $21.50 | $16.00 |

----

| SBT Bancorp, Inc.                     |
|---------------------------------------|
|                                  |
|                                  |
| Board of Directors                    |   | Officers |
| *Chairman of Committee                |   |   |
|                                  |
| Lincoln S. Young                      | Gary R. Kevorkian | Martin J. Geitz |
| Chairman of the Board                 | Attorney at Law | President and Chief Executive Officer |
| Retired Chief Executive Officer       | Investment Services Committee |   |
| Turbine Engine Services Corp.         | Loan Committee | Anthony F. Bisceglio, Ph.D. |
| Corporate Governance Committee*       | Personnel Committee | Treasurer and Chief Financial Officer |
| Executive Committee                   |   |   |
| Investment Services Committee*        | George B. Odlum, Jr., DMD | Gary R. Kevorkian |
| Loan Committee                        | Retired General Dentistry | Secretary |
| Personnel Committee                   | Audit & Compliance Committee* |   |
|                                  | Executive Committee | Susan D. Presutti |
| Robert J. Bogino                      |   | Assistant Secretary |
| Vice Chairman                         | Rodney R. Reynolds |   |
| Retired President and Co-Owner        | Retired Founding Director |   |
| Bogino & DeMaria, Inc.            | Trust Company of Connecticut |   |
| Audit & Compliance Committee      | Investment Services Committee |   |
| Corporate Governance Committee        | Personnel Committee |   |
| Executive Committee*                  |   |   |
| Investment Services Committee         | David W. Sessions |   |
| Loan Committee*                       | President and Treasurer |   |
|                                  | Casle Corporation |   |
| James T. Fleming                      | Executive Committee |   |
| President                             | Loan Committee |   |
| Connecticut Automotive Retailers      | Personnel Committee* |   |
| Association                           |   |   |
| Audit & Compliance Committee      | Penny R. Woodford |   |
| Corporate Governance Committee        | Real Estate Agent |   |
|                                  | Coldwell Banker Residential Brokerage |   |
| Martin J. Geitz                       | Audit & Compliance Committee |   |
| President and Chief Executive Officer | Corporate Governance Committee |   |
| The Simsbury Bank & Trust Company |   |   |
| Executive Committee                   |   |   |
| Investment Services Committee         |   |   |
| Loan Committee                        |   |   |
|                                  |
| Edward J. Guarco                      |   |   |
| Vice President                        |   |   |
| State Line Oil                        |   |   |
| Audit & Compliance Committee      |   |   |
| Personnel Committee                   |   |   |

----

| The Simsbury Bank & Trust Company, Inc. |
|---------------------------------------------|
|                                        |
|                                        |
| Board of Directors                          | Officers | Employees |
|                                        |
| All SBT Bancorp, Inc. Directors and         | Executive Officers | Dianna S. Anderson |
|                                        | Martin J. Geitz | Mami Barall |
| Jerry W. Long                               | President and Chief Executive Officer | Theresa D. Bendell |
| President and CEO                           |   | Mary Lou Bidwell |
| PCC Technology Group                        | Anthony F. Bisceglio, Ph.D. | Katherine P. Cain |
| Personnel Committee                         | Executive Vice President, Treasurer and | Bente Christensen |
|                                        | Chief Financial Officer | Sophia P. Clarke |
|                                        |   | Carol D. Clifford |
|                                        | Paul R. Little | Megan L. Clifford |
| Directors Emeriti                           | Senior Vice President and | Catherine A. Cook |
|                                        | Chief Lending Officer | Jacek Danillowicz |
| Richard C. Anthony                          |   | S. Thomas Edge |
| Consultant                                  | Michael T. Sheahan | Deborah A. Fochesato |
|                                        | Vice President, Head of Consumer Lending | Shirley T. Gentry |
| Jackson F. Eno                              |   | Paula M. Giorgio |
| Vice President                              | Howard R. Zern | Lynn G. Godin |
| Morgan Stanley                              | Senior Vice President and | Kelly M. Hammick |
|                                        | Chief Retail, Bank Operations & | Jo-Ann Horton |
| Jane F. von Holzhausen                      | Technology Officer | Lucyna Jennison |
| Retired Vice President of Operations        |   | Leslie S. Kane |
| Southwest Region                            | Gary R. Kevorkian | Sherrie S. Krawczyk |
| Prudential Connecticut Realty               | Secretary | Elizabeth C. Lenhart |
|                                        |   | Cindy Matthews |
| Evan W. Woollacott                          | Senior Vice President | Beverly Mlinek |
| Retired Vice Chairman and Commissioner      | Terry L. Boulton | Jordan Moore |
| Connecticut Department of Public            |   | Julia E. Pattison |
| Utility Control                             |   | Patricia A. Pschirer |
|                                        | Vice Presidents | Michelle Raymond |
|                                        | Michael L. Alberts | Petrina C. Reid |
|                                        | Richard A. Bahre | Margaret E. Rose |
|                                        | Brian D. Belyea | Joyce E. Slate |
|                                        | Charlene Faselle | Irene M. Smith |
|                                        | H. Holbrook Hyde, Jr. | Karen E. Storms |
|                                        | Barbara J. Wallace | Maria Theodoratos |
|                                        |   | Annette M. Troutman |
|                                        | Assistant Vice Presidents | Michelle G. Wiggins |
|                                        | Brenda J. Abbott |   |
|                                        | Robin J. DiNicola |   |
|                                        | Jocelyn A. Mitchell |   |
|                                        | Craig S. Porter |   |
|                                        | Susan D. Presutti, Assistant Secretary |   |
|                                        | Peter G. Sepelak, Jr. |   |
|                                        | Kenneth S. Sklodosky |   |
|                                        | Sophie S. Stevens |   |
|                                        |
|                                        | Assistant Treasurers |   |
|                                        | Margot M. Byrne |   |
|                                        | Lori L. Ethier |   |
|                                        | Barbara J. Hanifin |   |
|                                        | Karen G. Jepeal |   |
|                                        | Lisa A. Morgan |   |
|                                        | Romualdo A. Polce |   |

----

----

| 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 11, 2010 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 LawCityPlace IHartford, CT 06103-3499 |
|                                                                                                                                                                                                                             |   |
|                                                                                                                                                                                                                             |   |
| 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 |