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<p style="margin: 0pt"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b>NOTE TWO: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The accounting and reporting policies of Highlands
Bankshares, Inc. and its subsidiaries conform to accounting principles generally accepted in the United States of America and to
accepted practice within the banking industry.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<table cellspacing="0" cellpadding="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif; border-collapse: collapse">
<tr style="vertical-align: top">
<td style="width: 5%; text-align: left">(a)</td>
<td style="width: 95%">Principles of Consolidation</td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The consolidated financial statements include
the accounts of The Grant County Bank, Capon Valley Bank and HBI Life Insurance Company, Inc. All significant inter-company accounts
and transactions have been eliminated.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif; border-collapse: collapse">
<tr style="vertical-align: top">
<td style="text-align: left; width: 5%">(b)</td>
<td style="text-align: justify; width: 95%">Use of Estimates in the Preparation of Financial Statements</td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">In preparing the consolidated financial statements
in conformity with accounting principles generally accepted in the United States, management is required to make estimates and
assumptions that affect the reported amounts of assets and liabilities as of the date of the balance sheet and reported amounts
of revenues and expenses during the reporting period. Actual results could differ significantly from those estimates. A material
estimate that is particularly susceptible to significant changes in the near term is the determination of the allowance for loan
losses, which is sensitive to changes in local economic conditions, deferred tax and the fair value of financial instruments.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif; border-collapse: collapse">
<tr style="vertical-align: top">
<td style="text-align: justify; width: 5%">(c)</td>
<td style="text-align: justify; width: 95%">Cash and Cash Equivalents</td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">For purposes of the consolidated statements
of cash flows, cash and cash equivalents include cash on hand and non-interest bearing funds at correspondent institutions.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif; border-collapse: collapse">
<tr style="vertical-align: top">
<td style="text-align: justify; width: 5%">(d)</td>
<td style="text-align: justify; width: 95%">Foreclosed Real Estate</td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Assets acquired through, or in lieu of, loan
foreclosure are held for sale and are initially recorded at the lower of the loan balance or fair value, less cost to sell, at
the date of foreclosure, establishing a new cost basis. Capitalized costs include accrued interest, and any costs that significantly
improve the value of the properties. Subsequent to foreclosure, valuations are periodically performed by management and the assets
are carried at the loser of carrying amount or the fair value less cost to sell. Gains and losses resulting from the sale or write-down
of foreclosed real estate are recorded in other expenses. Revenue and expenses from operations and changes in the valuation allowance
are also included in other operating expenses.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif; border-collapse: collapse">
<tr style="vertical-align: top">
<td style="text-align: justify; width: 5%">(e)</td>
<td style="text-align: justify; width: 95%">Loans</td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font-weight: normal; color: black">Loans</font><b>
</b>that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are stated at unpaid
principal balances net of unearned interest and the allowance for loan losses. Interest income is computed using the effective
interest method based on the daily amount of principal outstanding and is credited to income as earned.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">Loans are considered past due when they
are not paid in accordance with contractual terms. Past due loans are monitored by portfolio segment and by severity of delinquency
– 30-59 days past due; 60-89 days past due; and 90 days and greater past due.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">The accrual of interest on loans in
all loan segments (nonaccrual loans) is discontinued when the contractual payment of principal or interest has become 90 days past
due or management has serious doubts about further collectability of principal or interest, even though the loan is currently performing.
A loan may remain on accrual status if it is well secured and in the process of collection. When a loan is placed on nonaccrual
status, all unpaid interest credited to income in the current calendar year is reversed and all unpaid interest accrued in prior
calendar years is charged against the allowance for loan losses. Interest payments received on nonaccrual loans are either applied
against principal or reported as interest income according to management’s judgment as to the collectability of principal.
Generally, loans are restored to accrual status when the obligation is brought current, has performed in accordance with the contractual
terms for a reasonable period of time and the ultimate collectability of the total contractual principal and interest is no longer
in doubt.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif; border-collapse: collapse">
<tr style="vertical-align: top">
<td style="width: 5%">
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">f)</p></td>
<td style="width: 95%">
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Securities</p></td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Securities that the Company has both the positive
intent and ability to hold to maturity (at time of purchase) are classified as held to maturity securities. All other securities
are classified as available for sale. Securities held to maturity are carried at historical cost and adjusted for amortization
of premiums and accretion of discounts, using the effective interest method. Securities available for sale are carried at fair
value with any valuation adjustments reported, net of deferred taxes, as other accumulated comprehensive income.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Restricted investments consist of investments
in the Federal Home Loan Bank of Pittsburgh, the Federal Reserve Bank of Richmond and West Virginia Bankers’ Title Insurance
Company. Such investments are required as members of these institutions and these investments cannot be sold without a change in
the members' borrowing or service levels. Because there is no readily determinable market value for these investments, restricted
investments are carried at cost on the Company’s balance sheet.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Interest and dividends on securities and amortization
of premiums and discounts on securities are reported as interest income using the effective interest method. Gains (losses) realized
on sales and calls of securities are determined using the specific identification method.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Investment securities are impaired when fair
value is less than cost. An impairment is considered “other than temporary” if any of the following conditions are
met: the Company intends to sell the security, it is more likely than not that the entity will be required to sell the security
before the recovery of its amortized cost basis, or the Company does not expect to recover the security’s entire amortized
cost basis (even if the entity does not intend to sell). The Company does not have any securities impairment that is considered
“other than temporary” at December 31, 2011 and 2010.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif; border-collapse: collapse">
<tr style="vertical-align: top">
<td style="text-align: justify; width: 5%">(g)</td>
<td style="text-align: justify; width: 95%">Allowance For Loan Losses</td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">The allowance for loan losses is established
as losses are estimated to have occurred through a provision for loan losses charged to earnings. Loan losses are charged against
the allowance when management believes the uncollectability of a loan balance is confirmed. Subsequent recoveries, if any, are
credited to the allowance.</p>
<p style="font: 11pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">The allowance for loan losses is evaluated
on a regular basis by management and is based upon management’s periodic review of the collectability of the loans in light
of historical experience, the nature and volume of the loan portfolio, adverse situations that may affect the borrower’s
ability to repay, estimated value of any underlying collateral and prevailing economic conditions. This evaluation is inherently
subjective as it requires estimates that are susceptible to significant revision as more information becomes available.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">The allowance consists of specific,
general and unallocated components. The specific component relates to loans that are determined to be impaired. For such loans,
an allowance is established when the discounted cash flows (or collateral value or observable market price) of the impaired loan
is lower than the carrying value of that loan.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">The general component covers non-impaired
loans and is based on management’s internal risk ratings as well as historical loss experience adjusted for qualitative factors.
The following risk factors relevant to each portfolio segment are reviewed and evaluated:</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif; border-collapse: collapse">
<tr style="vertical-align: top">
<td style="width: 11%; text-align: center; line-height: 11pt; font-size: 11pt"><font style="font: 10pt Symbol">·</font></td>
<td style="width: 89%; text-align: justify; line-height: 11pt; vertical-align: top">Changes in lending policies and procedures, including changes in underwriting standards or collection, charge-off and recovery practices.</td></tr>
<tr style="vertical-align: top">
<td style="text-align: center; line-height: 11pt; font-size: 11pt"><font style="font: 10pt Symbol">·</font></td>
<td style="text-align: justify; line-height: 11pt; vertical-align: top">Changes in national, regional, and local economic and business conditions and developments that affect the collectability of the portfolio, including unemployment trends and GDP and other leading economic indicators.</td></tr>
<tr style="vertical-align: top">
<td style="text-align: center; line-height: 11pt; font-size: 11pt"><font style="font: 10pt Symbol">· </font></td>
<td style="text-align: justify; line-height: 11pt; vertical-align: top">Changes in the nature and volume of the portfolio.</td></tr>
<tr style="vertical-align: top">
<td style="text-align: center; line-height: 11pt; font-size: 11pt"><font style="font: 10pt Symbol">·</font></td>
<td style="text-align: justify; line-height: 11pt; vertical-align: top">Changes in the experience, ability and depth of lending management and staff.</td></tr>
<tr style="vertical-align: top">
<td style="text-align: center; line-height: 11pt; font-size: 11pt"><font style="font: 10pt Symbol">·</font></td>
<td style="text-align: justify; line-height: 11pt; vertical-align: top">Changes in the volume and severity of past due and classified loans, the volume of nonaccrual loans, troubled debt restructurings and other loan modifications.</td></tr>
<tr style="vertical-align: top">
<td style="text-align: center; line-height: 11pt; font-size: 11pt"><font style="font: 10pt Symbol">·</font></td>
<td style="text-align: justify; line-height: 11pt; vertical-align: top">Changes in the quality of the Banks’ loan review systems.</td></tr>
<tr style="vertical-align: top">
<td style="text-align: center; line-height: 11pt; font-size: 11pt"><font style="font: 10pt Symbol">·</font></td>
<td style="text-align: justify; line-height: 11pt; vertical-align: top">The existence and effect of any concentrations of credit, and the changes in the level of such concentrations.</td></tr>
<tr style="vertical-align: top">
<td style="text-align: center; line-height: 11pt; font-size: 11pt"><font style="font: 10pt Symbol">·</font></td>
<td style="text-align: justify; line-height: 11pt; vertical-align: top">Changes in the value of underlying collateral.</td></tr>
<tr style="vertical-align: top">
<td style="text-align: center; line-height: 11pt; font-size: 11pt"><font style="font: 10pt Symbol">·</font></td>
<td style="text-align: justify; line-height: 11pt; vertical-align: top">The effect of other external factors such as competition and legal and regulatory requirements on the level of estimated credit losses in the existing portfolio.</td></tr>
</table>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">An unallocated component is maintained
to cover uncertainties that could affect management’s estimate of probable losses. The unallocated component of the allowance
reflects the margin of imprecision inherent in the underlying assumptions used in the methodologies for estimating specific and
general losses in the portfolio.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">A loan is considered impaired when,
based on current information and events, it is probable that the Company will be unable to collect the scheduled payment of principal
or interest when due according to the contractual terms of the loan agreement. Factors considered by management in determining
impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest payments
when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. Management
determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of
the circumstances surrounding the loan and the borrower, including the length of the delay, the borrower’s prior payment
record, and the amount of the shortfall in relation to the principal and interest owed.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">Impairment is measured on a loan by
loan basis for commercial loans by either the present value of expected future cash flows discounted at the loan’s effective
interest rate, the loan’s obtainable market price, or the fair value of the collateral if the loan is collateral dependent.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">Large groups of smaller balance homogeneous
loans are collectively evaluated for impairment. Accordingly, the Banks do not separately identify individual consumer and residential
loans for impairment disclosures, unless the loans are the subject of a restructuring agreement.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">Authoritative accounting guidance does
not specify how an institution should identify loans that are to be evaluated for collectability, nor does it specify how an institution
should determine that a loan is impaired. Each subsidiary of the Company uses its standard loan review procedures in making those
judgments so that allowance estimates are based on a comprehensive analysis of the loan portfolio. For loans that are individually
evaluated and found to be impaired, the associated allowance is based upon the estimated fair value, less costs to sell, of any
collateral securing the loan as compared to the existing balance of the loan as of the date of analysis.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">All other loans, including individually
evaluated loans determined not to be impaired, are included in a group of loans that are measured under the general component of
the allowance for loan losses to provide for estimated credit losses that have been incurred on groups of loans with similar risk
characteristics. The methodology for measuring estimated credit losses on groups of loans with similar risk characteristics is
based on each group’s historical net charge-off rate, adjusted for the effects of the qualitative or environmental factors
that are likely to cause estimated credit losses as of the evaluation date to differ from the group’s historical loss experience.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif; border-collapse: collapse">
<tr style="vertical-align: top">
<td style="text-align: justify; width: 5%">(h)</td>
<td style="text-align: justify; width: 95%">Per Share Calculations</td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Earnings per share are based on the weighted
average number of shares outstanding.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif; border-collapse: collapse">
<tr>
<td style="width: 5%">(i) </td>
<td style="width: 94%">Bank Premises and Equipment </td>
<td style="width: 1%"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Land is carried at cost. Bank premises and
equipment are stated at cost less accumulated depreciation. Depreciation is charged to income over the estimated useful lives of
the assets using a combination of the straight line and accelerated methods. The costs of maintenance, repairs, renewals, and improvements
to buildings, equipment and furniture and fixtures are charged to operations as incurred. Gains and losses on routine dispositions
are reflected in other income or expense.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif; border-collapse: collapse">
<tr style="vertical-align: top">
<td style="text-align: justify; width: 5%">(j)</td>
<td style="text-align: justify; width: 95%">Comprehensive Income</td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Accounting principles generally require that
recognized revenue, expenses, gains and losses be included in net income. Certain changes in assets and liabilities, such as unrealized
gains and losses on available-for-sale securities and accrued pension liabilities, are reported along with net income as the components
of comprehensive income.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif; border-collapse: collapse">
<tr style="vertical-align: top">
<td style="text-align: justify; width: 5%">(k)</td>
<td style="text-align: justify; width: 95%">Bank Owned Life Insurance Contracts</td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company has invested in and owns life insurance
policies on certain officers. The policies are designed so that the Company recovers the interest expenses associated with carrying
the policies and the officer will, at the time of retirement, receive any earnings in excess of the amounts earned by the Company.
The Company recognizes as an asset the net amount that could be realized under the insurance contract as of the balance sheet date.
This amount represents the cash surrender value of the policies less applicable surrender charges. The portion of the benefits
which will be received by the executives at the time of their retirement is considered, when taken collectively, to constitute
a retirement plan. Authoritative accounting guidance requires that an employers' obligation under a deferred compensation agreement
be accrued over the expected service life of the employee through their normal retirement date. <font style="letter-spacing: 0pt">Assumptions
are used in estimating the present value of amounts due officers after their normal retirement date. These assumptions include
the estimated income to be derived from the investments and an estimate of the Company’s cost of funds in these future periods.
In addition, the discount rate used in the present value calculation will change in future years based on market conditions.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="letter-spacing: 0pt"> </font></p>
<table cellspacing="0" cellpadding="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif; border-collapse: collapse">
<tr style="vertical-align: top">
<td style="width: 5%; text-align: justify">(l)</td>
<td style="width: 95%; text-align: justify">Advertising</td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Advertising costs are expensed as they are
incurred. Advertising expense for the years ended December 31, 2011 and 2010 was $150,000 and $ 158,000, respectively.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif; border-collapse: collapse">
<tr style="vertical-align: top">
<td style="text-align: justify; width: 5%">(m)</td>
<td style="text-align: justify; width: 95%">Goodwill and Other Intangible Assets</td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">In accordance with authoritative accounting
guidance, goodwill resulting from the purchase of a bank is not amortized over an estimated useful life, but is tested at least
annually for impairment. Core deposit and other intangible assets include premiums paid for acquisitions of core deposits (core
deposit intangibles) and other identifiable intangible assets. Intangible assets other than goodwill, which are determined to have
finite lives, are amortized based upon the estimated economic benefits received, which is ten years for the core deposit intangibles.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Core deposit and other intangible assets include
premiums paid for acquisitions of core deposits (core deposit intangibles) and other identifiable intangible assets related to
business acquisitions. I<font style="letter-spacing: 0pt">n addition to the intangible</font> <font style="letter-spacing: 0pt">assets
associated with the purchase of banking organizations, the Company also carries intangible assets related to the purchase of certain
naming rights to a performing arts center in Petersburg, WV. This intangible asset is being amortized over four years. </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif; border-collapse: collapse">
<tr style="vertical-align: top">
<td style="text-align: justify; width: 5%">(n)</td>
<td style="text-align: justify; width: 95%">Income Taxes</td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Amounts provided for income tax expense are
based on income reported for financial statement purposes rather than amounts currently payable under federal and state tax laws.
Deferred taxes, which arise principally from differences between the period in which certain income and expenses are recognized
for financial accounting purposes and the period in which they affect taxable income, are included in the amounts provided for
income taxes.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">When tax returns are filed, it is highly certain
that some positions taken would be sustained upon examination by the taxing authorities, while others are subject to uncertainty
about the merits of the position taken or the amount of the position that would be ultimately sustained. The benefit of a tax position
is recognized in the financial statements in the period during which, based on all available evidence, management believes it is
more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes,
if any. Tax positions taken are not offset or aggregated with other positions. Tax positions that meet the more-likely-than-not
recognition threshold are measured as the largest amount of tax benefit that is more than 50 percent likely to be realized upon
settlement with the applicable taxing authority. The portion of the benefits associated with tax positions taken that exceeds the
amount measured as described above would be reflected as a liability for unrecognized tax benefits in the accompanying balance
sheet along with any associated interest and penalties that would be payable to the taxing authorities upon examination.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Interest and penalties associated with unrecognized
tax benefits would be classified as additional income taxes in the statement of income.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">At December 31, 2011 there were no unrecognized
tax benefits.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif; border-collapse: collapse">
<tr style="vertical-align: top">
<td style="text-align: justify; width: 5%">(o)</td>
<td style="text-align: justify; width: 95%">Reclassifications</td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Certain reclassifications have been made to
prior period balances to conform with the current year’s presentation format.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif; border-collapse: collapse">
<tr style="vertical-align: top">
<td style="text-align: justify; width: 5%">(p)</td>
<td style="text-align: justify; width: 95%">Recent Accounting Standards</td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Adoption of New Accounting Standards</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">In January 2010, the Financial Accounting
Standards Board (FASB) issued Accounting Standards Update (ASU) 2010-06, “Fair Value Measurements and Disclosures (Topic
820): Improving Disclosures about Fair Value Measurements.” ASU 2010-06 amends Subtopic 820-10 to clarify existing disclosures,
require new disclosures, and includes conforming amendments to guidance on employers’ disclosures about postretirement benefit
plan assets. ASU 2010-06 is effective for interim and annual periods beginning after December 15, 2009, except for disclosures
about purchases, sales, issuances, and settlements in the roll forward of activity in Level 3 fair value measurements. Those disclosures
are effective for fiscal years beginning after December 15, 2010 and for interim periods within those fiscal years. The adoption
of the new guidance did not have a material impact on the Company’s consolidated financial statements.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">In July 2010, the FASB issued ASU 2010-20,
“Receivables (Topic 310) – Disclosures about the Credit Quality of Financing Receivables and the Allowance for Credit
Losses.”  The new disclosure guidance significantly expands the existing requirements and will lead to greater transparency
into an entity’s exposure to credit losses from lending arrangements.  The extensive new disclosures of information
as of the end of a reporting period became effective for both interim and annual reporting periods ending on or after December
15, 2010.  Specific disclosures regarding activity that occurred before the issuance of the ASU, such as the allowance roll
forward and modification disclosures, will be required for periods beginning on or after December 15, 2010.  The Company has
included the required disclosures in its consolidated financial statements.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><i> </i></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">In December 2010, the FASB issued ASU
2010-28, “Intangible – Goodwill and Other (Topic 350) – When to Perform Step 2 of the Goodwill Impairment Test
for Reporting Units with Zero or Negative Carrying Amounts.” The amendments in this ASU modify Step 1 of the goodwill impairment
test for reporting units with zero or negative carrying amounts. For those reporting units, an entity is required to perform Step
2 of the goodwill impairment test if it is more likely than not that a goodwill impairment exists. The amendments in this ASU are
effective for fiscal years, and interim periods within those years, beginning after December 15, 2010. Early adoption is not permitted.
The adoption of the new guidance did not have a material impact on the Company’s consolidated financial statements.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><i> </i></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">In December 2010, the FASB issued ASU
2010-29, “Business Combinations (Topic 805) – Disclosure of Supplementary Pro Forma Information for Business Combinations.”
The guidance requires pro forma disclosure for business combinations that occurred in the current reporting period as though the
acquisition date for all business combinations that occurred during the year had been as of the beginning of the annual reporting
period. If comparative financial statements are presented, the pro forma information should be reported as though the acquisition
date for all business combinations that occurred during the current year had been as of the beginning of the comparable prior annual
reporting period. ASU 2010-29 is effective for business combinations for which the acquisition date is on or after the beginning
of the first annual reporting period beginning on or after December 15, 2010. Early adoption is permitted. The adoption of the
new guidance did not have a material impact on the Company’s consolidated financial statements.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="color: black">The Securities
Exchange Commission (SEC) issued Final Rule No. 33-9002, “Interactive Data to Improve Financial Reporting.” The rule
requires companies to submit financial statements in extensible business reporting language (XBRL)<b> </b>format with their SEC
filings on a phased-in schedule. L</font>arge accelerated filers and foreign large accelerated filers using U.S. generally accepted
accounting principles (GAAP) were required to provide interactive data reports starting with their first quarterly report for fiscal
periods ending on or after June 15, 2010. <font style="color: black">All remaining filers were required to provide interactive
data reports starting with their first quarterly report for fiscal periods ending on or after June 15, 2011. The Company has submitted
financial statements in extensible business reporting language (XBRL)<b> </b>format with their SEC filings in accordance with the
phased-in schedule.</font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="color: black">In March
2011, the SEC issued Staff Accounting Bulletin (SAB) 114. This SAB revises or rescinds portions of the interpretive guidance included
in the codification of the Staff Accounting Bulletin Series. This update is intended to make the relevant interpretive guidance
consistent with current authoritative accounting guidance issued as a part of the FASB’s Codification. The principal changes
involve revision or removal of accounting guidance references and other conforming changes to ensure consistency of referencing
through the SAB Series. The effective date for SAB 114 is March 28, 2011. </font>The adoption of the new guidance did not have
a material impact on the Company’s consolidated financial statements.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="color: black">In January
2011, the FASB issued ASU 2011-01, “Receivables (Topic 310) – Deferral of the Effective Date of Disclosures about Troubled
Debt Restructurings.” The amendments in this ASU temporarily delayed the effective date of the disclosures about troubled
debt restructurings in Update 2010-20 for public entities. The delay was intended to allow the Board time to complete its deliberations
on what constitutes a troubled debt restructuring. The effective date of the new disclosures about troubled debt restructurings
for public entities and the guidance for determining what constitutes a troubled debt restructuring was effective for interim and
annual periods ending after June 15, 2011. </font>The Company has adopted ASU 2011-01 and included the required disclosures in
its consolidated financial statements. <font style="color: black"><i> </i> </font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="color: black">In April
2011, the FASB issued ASU 2011-02, “Receivables (Topic 310) – A Creditor’s Determination of Whether a Restructuring
Is a Troubled Debt Restructuring.” The amendments in this ASU clarify the guidance on a creditor’s evaluation of whether
it has granted a concession to a debtor. They also clarify the guidance on a creditor’s evaluation of whether a debtor is
experiencing financial difficulty. The amendments in this ASU are effective for the first interim or annual period beginning on
or after June 15, 2011. Early adoption is permitted. Retrospective application to the beginning of the annual period of adoption
for modifications occurring on or after the beginning of the annual adoption period is required. As a result of applying these
amendments, an entity may identify receivables that are newly considered to be impaired. For purposes of measuring impairment of
those receivables, an entity should apply the amendments prospectively for the first interim or annual period beginning on or after
June 15, 2011. </font>The Company has adopted ASU 2011-02 and included the required disclosures in its consolidated financial statements.
<font style="color: black"> </font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="color: black">In April
2011, the FASB issued ASU 2011-03, “Transfers and Servicing (Topic 860) – Reconsideration of Effective Control for
Repurchase Agreements.” The amendments in this ASU remove from the assessment of effective control (1) the criterion requiring
the transferor to have the ability to repurchase or redeem the financial assets on substantially the agreed terms, even in the
event of default by the transferee and (2) the collateral maintenance implementation guidance related to that criterion. The amendments
in this ASU are effective for the</font> first interim or annual period beginning on or after December 15, 2011. The guidance should
be applied prospectively to transactions or modifications of existing transactions that occur on or after the effective date. Early
adoption is not permitted. <font style="color: black">The Company is currently assessing the impact that ASU 2011-03 will have
on its consolidated financial statements.<i> </i> </font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">In May 2011, the FASB issued ASU 2011-04,
“Fair Value Measurement (Topic 820) – Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements
in U.S. GAAP and IFRSs.” This ASU is the result of joint efforts by the FASB and International Accounting Standards Board
(IASB) to develop a single, converged fair value framework on how (not when) to measure fair value and what disclosures to provide
about fair value measurements. The ASU is largely consistent with existing fair value measurement principles in U.S. GAAP (Topic
820), with many of the amendments made to eliminate unnecessary wording differences between U.S. GAAP and International Financial
Reporting Standards (IFRS). The amendments are effective for interim and annual periods beginning after December 15, 2011 with
prospective application. Early application is not permitted. The Company is currently assessing the impact that ASU 2011-04 will
have on its consolidated financial statements.<i></i></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><i> </i></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">In June 2011, the FASB issued ASU 2011-05,
“Comprehensive Income (Topic 220) – Presentation of Comprehensive Income.” The objective of this ASU is to improve
the comparability, consistency and transparency of financial reporting and to increase the prominence of items reported in other
comprehensive income by eliminating the option to present components of other comprehensive income as part of the statement of
changes in stockholders’ equity. The amendments require that all non-owner changes in stockholders’ equity be presented
either in a single continuous statement of comprehensive income or in two separate but consecutive statements. The single statement
of comprehensive income should include the components of net income, a total for net income, the components of other comprehensive
income, a total for other comprehensive income, and a total for comprehensive income. In the two-statement approach, the first
statement should present total net income and its components followed consecutively by a second statement that should present all
the components of other comprehensive income, a total for other comprehensive income, and a total for comprehensive income. The
amendments do not change the items that must be reported in other comprehensive income, the option for an entity to present components
of other comprehensive income either net of related tax effects or before related tax effects, or the calculation or reporting
of earnings per share. The amendments in this ASU should be applied retrospectively. The amendments are effective for fiscal years
and interim periods within those years beginning after December 15, 2011. Early adoption is permitted because compliance with the
amendments is already permitted. The amendments do not require transition disclosures. The Company is currently assessing the impact
that ASU 2011-05 will have on its consolidated financial statements.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">In August 2011, the SEC issued Final
Rule No. 33-9250, “Technical Amendments to Commission Rules and Forms related to the FASB’s Accounting Standards Codification.”  The
SEC has adopted technical amendments to various rules and forms under the Securities Act of 1933, the Securities Exchange Act of
1934, and the Investment Company Act of 1940.  These revisions were necessary to conform those rules and forms to the
FASB Accounting Standards Codification.  The technical amendments include revision of certain rules in Regulation S-X,
certain items in Regulation S-K, and various rules and forms prescribed under the Securities Act, Exchange Act and Investment Company
Act.  The Release was effective as of August 12, 2011.  The adoption of the new guidance did not have a material
impact on the Company’s consolidated financial statements.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">In September 2011, the FASB issued ASU
2011-08, “Intangible – Goodwill and Other (Topic 350) – Testing Goodwill for Impairment.”  The
amendments in this ASU permit an entity to first assess qualitative factors related to goodwill to determine whether it is more
likely than not that the fair value of the reporting unit is less than its carrying amount as a basis for determining whether it
is necessary to perform the two-step goodwill test described in Topic 350.  The more-likely-than-not threshold is defined
as having a likelihood of more than 50 percent.  Under the amendments in this ASU, an entity is not required to calculate
the fair value of a reporting unit unless the entity determines that it is more likely than not that its fair value is less than
its carrying amount.  The amendments in this ASU are effective for annual and interim goodwill impairment tests performed
for fiscal years beginning after December 15, 2011. Early adoption is permitted, including for annual and interim goodwill impairment
tests performed as of a date before September 15, 2011, if an entity’s financial statements for the most recent annual or
interim period have not yet been issued.  <font style="color: black">The Company is currently assessing the impact that
ASU 2011-08 will have on its consolidated financial statements.<i> </i> </font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">In December 2011, the FASB issued ASU
2011-11, “Balance Sheet (Topic 210) – Disclosures about Offsetting Assets and Liabilities.” This ASU requires
entities to disclose both gross information and net information about both instruments and transactions eligible for offset in
the balance sheet and instruments and transactions subject to an agreement similar to a master netting arrangement. An entity is
required to apply the amendments for annual reporting periods beginning on or after January 1, 2013, and interim periods within
those annual periods. An entity should provide the disclosures required by those amendments retrospectively for all comparative
periods presented. The Company is currently assessing the impact that ASU 2011-11 will have on its consolidated financial statements.<i></i></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><i> </i></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="color: black">In December
2011, the FASB issued ASU 2011-12, “Comprehensive Income (Topic 220) – Deferral of the Effective Date for Amendments
to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in Accounting Standards Update
No. 2011-05.” </font>The amendments are being made to allow the Board time to redeliberate whether to present on the face
of the financial statements the effects of reclassifications out of accumulated other comprehensive income on the components of
net income and other comprehensive income for all periods presented. While the Board is considering the operational concerns about
the presentation requirements for reclassification adjustments and the needs of financial statement users for additional information
about reclassification adjustments, entities should continue to report reclassifications out of accumulated other comprehensive
income consistent with the presentation requirements in effect before ASU 2011-05. All other requirements in ASU 2011-05 are not
affected by ASU 2011-12, including the requirement to report comprehensive income either in a single continuous financial statement
or in two separate but consecutive financial statements. Public entities should apply these requirements for fiscal years, and
interim periods within those years, beginning after December 15, 2011. Nonpublic entities should begin applying these requirements
for fiscal years ending after December 15, 2012, and interim and annual periods thereafter. <font style="color: black">The Company
is currently assessing the impact that ASU 2011-12 will have on its consolidated financial statements.<i> </i> </font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="background-color: yellow"></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="letter-spacing: 0pt">No other
recent accounting pronouncements had a material impact on the Company’s consolidated financial statements, and it is believed
that none will have a material impact on the Company’s operations in future years.</font></p>
<p style="margin: 0pt"> </p>
<p style="margin: 0pt"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b>NOTE FOUR: RESTRICTED INVESTMENTS</b></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="letter-spacing: 0pt">Restricted
investments consist of investments in the Federal Home Loan Bank, the Federal Reserve Bank and West Virginia Bankers’ Title
Insurance Company. Investments are carried at face value and the level of investment is dictated by the level of participation
with each institution. Amounts are restricted as to transferability. Investments in the Federal Home Loan Bank act as collateral
against the outstanding borrowings from that institution.</font></p>
<p style="margin: 0pt"></p>
<p style="margin: 0pt"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b>NOTE SEVEN: ALLOWANCE FOR LOAN LOSSES</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">A summary of the changes in the allowance for
loan losses for the years ended December 31, 2011 and 2010 is shown below (in thousands of dollars):</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="text-align: center; padding-left: 10pt"> </td><td style="padding-bottom: 1pt; text-align: center"> </td>
<td style="border-bottom: Black 1pt solid; text-align: center"> </td><td style="border-bottom: Black 1pt solid; text-align: center">2011</td><td style="padding-bottom: 1pt; text-align: center"> </td><td style="padding-bottom: 1pt; text-align: center"> </td>
<td style="border-bottom: Black 1pt solid; text-align: center"> </td><td style="border-bottom: Black 1pt solid; text-align: center">2010</td><td style="padding-bottom: 1pt; text-align: center"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 72%; text-align: left; padding-left: 10pt; text-indent: -10pt">Balance at beginning of year</td><td style="width: 3%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">5,407</td><td style="width: 1%; text-align: left"> </td><td style="width: 3%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">4,021</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-left: 10pt; text-indent: -10pt">Provision charged to operating expenses</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">3,624</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">3,487</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-left: 10pt; text-indent: -10pt">Loan recoveries</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">502</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">646</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; text-indent: -10pt; padding-left: 10pt">Loans charged off</td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">(3,422</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">(2,747</td><td style="padding-bottom: 1pt; text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; text-indent: -10pt; padding-left: 10pt">Balance at end of year</td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">6,111</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">5,407</td><td style="padding-bottom: 2.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="padding-left: 10pt; text-indent: -10pt"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-left: 10pt; text-indent: -10pt">Allowance for Loan Losses as percentage of outstanding loans at year end</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">1.95</td><td style="text-align: left">%</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">1.64</td><td style="text-align: left">%</td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Allowance for Credit Losses and Recorded
Investment in Financing Receivables</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>For the Year Ended December 31, 2011</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid; padding-left: 10pt; text-indent: -10pt"> </td><td style="font-weight: bold; padding-bottom: 1pt; border-bottom: Black 1pt solid"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Commercial<br />
Mortgage</td><td style="padding-bottom: 1pt; font-weight: bold; border-bottom: Black 1pt solid"> </td><td style="font-weight: bold; padding-bottom: 1pt; border-bottom: Black 1pt solid"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Commercial<br />
Other</td><td style="padding-bottom: 1pt; font-weight: bold; border-bottom: Black 1pt solid"> </td><td style="font-weight: bold; padding-bottom: 1pt; border-bottom: Black 1pt solid"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Consumer<br />
Mortgage</td><td style="padding-bottom: 1pt; font-weight: bold; border-bottom: Black 1pt solid"> </td><td style="font-weight: bold; padding-bottom: 1pt; border-bottom: Black 1pt solid"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Consumer<br />
Other</td><td style="padding-bottom: 1pt; font-weight: bold; border-bottom: Black 1pt solid"> </td><td style="font-weight: bold; padding-bottom: 1pt; border-bottom: Black 1pt solid"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Unallocated</td><td style="padding-bottom: 1pt; font-weight: bold; border-bottom: Black 1pt solid"> </td><td style="font-weight: bold; padding-bottom: 1pt; border-bottom: Black 1pt solid"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Total</td><td style="padding-bottom: 1pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-left: 10pt; text-indent: -10pt"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom">
<td style="font-weight: bold; text-align: left; padding-left: 10pt; text-indent: -10pt">Allowance for Credit Losses:</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 32%; text-align: left; padding-left: 10pt; text-indent: -10pt">Beginning Balance 12/31/2010</td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 7%; text-align: right">1,345</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 7%; text-align: right">887</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 7%; text-align: right">1,662</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">968</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 7%; text-align: right">545</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 7%; text-align: right">5,407</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: right; padding-left: 10pt; text-indent: -10pt">Charge-offs</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">2,322</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">163</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">565</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">372</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">0</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">3,422</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: right; padding-left: 10pt; text-indent: -10pt">Recoveries</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">129</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">137</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">15</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">221</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">0</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">502</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: right; text-indent: -10pt; padding-left: 10pt">Provision</td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">3,746</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">(396</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">847</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">(389</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">(184</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">3,624</td><td style="padding-bottom: 1pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-left: 10pt; text-indent: -10pt">Ending Balance 12/31/2011</td><td> </td>
<td style="text-align: left">$</td><td style="text-align: right">2,898</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left">$</td><td style="text-align: right">465</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left">$</td><td style="text-align: right">1,959</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left">$</td><td style="text-align: right">428</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left">$</td><td style="text-align: right">361</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left">$</td><td style="text-align: right">6,111</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-left: 10pt; text-indent: -10pt">Ending Balance: individually evaluated for impairment</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">1,018</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">167</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">328</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">0</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">0</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">1,513</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-left: 10pt; text-indent: -10pt">Ending Balance: collectively evaluated for impairment</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">1,880</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">298</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">1,631</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">428</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">361</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">4,598</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="padding-left: 10pt; text-indent: -10pt"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="font-weight: bold; text-align: left; padding-left: 10pt; text-indent: -10pt">Financing Receivables:</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="padding-left: 10pt; text-indent: -10pt">Ending Balance</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">139,374</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">13,709</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">136,472</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">23,501</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">0</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">313,056</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-left: 10pt; text-indent: -10pt">Ending Balance: individually evaluated for impairment</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">26,543</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">691</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">1,966</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">0</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">0</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">29,200</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-left: 10pt; text-indent: -10pt">Ending Balance: collectively evaluated for impairment</td><td> </td>
<td style="text-align: left">$</td><td style="text-align: right">112,831</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left">$</td><td style="text-align: right">13,018</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left">$</td><td style="text-align: right">134,506</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left">$</td><td style="text-align: right">23,501</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left">$</td><td style="text-align: right">0</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left">$</td><td style="text-align: right">283,856</td><td style="text-align: left"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Allowance for Credit Losses and Recorded
Investment in Financing Receivables</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>For the Year Ended December 31, 2010</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="font-weight: bold; text-align: center; padding-left: 10pt; border-bottom: Black 1pt solid"> </td><td style="font-weight: bold; padding-bottom: 1pt; border-bottom: Black 1pt solid; text-align: center"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Commercial<br />
Mortgage</td><td style="padding-bottom: 1pt; font-weight: bold; border-bottom: Black 1pt solid; text-align: center"> </td><td style="font-weight: bold; padding-bottom: 1pt; border-bottom: Black 1pt solid; text-align: center"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Commercial<br />
Other</td><td style="padding-bottom: 1pt; font-weight: bold; border-bottom: Black 1pt solid; text-align: center"> </td><td style="font-weight: bold; padding-bottom: 1pt; border-bottom: Black 1pt solid; text-align: center"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Consumer<br />
Mortgage</td><td style="padding-bottom: 1pt; font-weight: bold; border-bottom: Black 1pt solid; text-align: center"> </td><td style="font-weight: bold; padding-bottom: 1pt; border-bottom: Black 1pt solid; text-align: center"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Consumer<br />
Other</td><td style="padding-bottom: 1pt; font-weight: bold; border-bottom: Black 1pt solid; text-align: center"> </td><td style="font-weight: bold; padding-bottom: 1pt; border-bottom: Black 1pt solid; text-align: center"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Unallocated</td><td style="padding-bottom: 1pt; font-weight: bold; border-bottom: Black 1pt solid; text-align: center"> </td><td style="font-weight: bold; padding-bottom: 1pt; border-bottom: Black 1pt solid; text-align: center"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Total</td><td style="padding-bottom: 1pt; font-weight: bold; text-align: center"> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-left: 10pt; text-indent: -10pt"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom">
<td style="font-weight: bold; text-align: left; padding-left: 10pt; text-indent: -10pt">Allowance for Credit Losses:</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 34%; padding-left: 10pt; text-indent: -10pt">Ending Balance 12/31/2010</td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 7%; text-align: right">1,345</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 7%; text-align: right">887</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 7%; text-align: right">1,662</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 7%; text-align: right">968</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 7%; text-align: right">545</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 7%; text-align: right">5,407</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-left: 10pt; text-indent: -10pt">Ending Balance: individually evaluated for impairment</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">904</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">21</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">0</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">0</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">0</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">925</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-left: 10pt; text-indent: -10pt">Ending Balance: collectively evaluated for impairment</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">441</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">866</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">1,662</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">968</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">545</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">4,482</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="padding-left: 10pt; text-indent: -10pt"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="font-weight: bold; text-align: left; padding-left: 10pt; text-indent: -10pt">Financing Receivables:</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="padding-left: 10pt; text-indent: -10pt">Ending Balance</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">142,896</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">15,037</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">142,505</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">28,898</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">0</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">329,336</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-left: 10pt; text-indent: -10pt">Ending Balance: individually evaluated for impairment</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">24,147</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">988</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">253</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">0</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">0</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">25,388</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-left: 10pt; text-indent: -10pt">Ending Balance: collectively evaluated for impairment</td><td> </td>
<td style="text-align: left">$</td><td style="text-align: right">118,749</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left">$</td><td style="text-align: right">14,049</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left">$</td><td style="text-align: right">142,252</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left">$</td><td style="text-align: right">28,898</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left">$</td><td style="text-align: right">0</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left">$</td><td style="text-align: right">303,948</td><td style="text-align: left"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">The following table presents the Company’s loans by internally
assigned grades and by loan type for the years ended December 31, 2011 and 2010 (in thousands of dollars).</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Credit Quality Indicators</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>As of December 31, 2011</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b>Credit Risk Profile by Internally Assigned Grade</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="padding-left: 5.4pt; text-align: center"> </td><td style="font-weight: bold; text-align: center"> </td>
<td style="font-weight: bold; text-align: center"> </td><td style="font-weight: bold; text-align: center">Commercial</td><td style="font-weight: bold; text-align: center"> </td><td style="font-weight: bold; text-align: center"> </td>
<td style="font-weight: bold; text-align: center"> </td><td style="font-weight: bold; text-align: center">Commercial</td><td style="font-weight: bold; text-align: center"> </td><td style="font-weight: bold; text-align: center"> </td>
<td style="font-weight: bold; text-align: center"> </td><td style="font-weight: bold; text-align: center">Consumer</td><td style="font-weight: bold; text-align: center"> </td><td style="font-weight: bold; text-align: center"> </td>
<td style="font-weight: bold; text-align: center"> </td><td style="font-weight: bold; text-align: center">Consumer</td><td style="font-weight: bold; text-align: center"> </td><td style="font-weight: bold; text-align: center"> </td>
<td style="font-weight: bold; text-align: center"> </td><td style="font-weight: bold; text-align: center">Total</td><td style="font-weight: bold; text-align: center"> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-left: 5.4pt; text-align: center"> </td><td style="font-weight: bold; text-align: center"> </td>
<td style="font-weight: bold; text-align: center"> </td><td style="font-weight: bold; text-align: center">Mortgage</td><td style="font-weight: bold; text-align: center"> </td><td style="font-weight: bold; text-align: center"> </td>
<td style="font-weight: bold; text-align: center"> </td><td style="font-weight: bold; text-align: center">Other</td><td style="font-weight: bold; text-align: center"> </td><td style="font-weight: bold; text-align: center"> </td>
<td style="font-weight: bold; text-align: center"> </td><td style="font-weight: bold; text-align: center">Mortgage</td><td style="font-weight: bold; text-align: center"> </td><td style="font-weight: bold; text-align: center"> </td>
<td style="font-weight: bold; text-align: center"> </td><td style="font-weight: bold; text-align: center">Other</td><td style="font-weight: bold; text-align: center"> </td><td style="font-weight: bold; text-align: center"> </td>
<td style="font-weight: bold; text-align: center"> </td><td style="font-weight: bold; text-align: center"> </td><td style="font-weight: bold; text-align: center"> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-left: 5.4pt">Grade:</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 42%; text-align: right; padding-left: 5.4pt"> Excellent</td><td style="width: 5%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 7%; text-align: right">732</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 7%; text-align: right">1,400</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 7%; text-align: right">2,437</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 7%; text-align: right">2,740</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 7%; text-align: right">7,309</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: right; padding-left: 5.4pt">Very Good</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">14,049</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">607</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">28,026</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">4,128</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">46,810</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: right; padding-left: 5.4pt">Pass</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">70,462</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">9,693</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">88,752</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">14,942</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">183,849</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: right; padding-left: 5.4pt">Pass-Watch</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">12,050</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">117</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">1,106</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">104</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">13,377</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: right; padding-left: 5.4pt">Special Mention</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">13,887</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">1,107</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">5,449</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">1,016</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">21,459</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: right; padding-left: 5.4pt">Substandard</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">28,161</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">785</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">9,849</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">571</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">39,366</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: right; padding-left: 5.4pt">Doubtful</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">33</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">0</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">853</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">0</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">886</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: right; padding-bottom: 1pt; padding-left: 5.4pt">Loss</td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">0</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">0</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">0</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">0</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">0</td><td style="padding-bottom: 1pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-bottom: 2.5pt; padding-left: 5.4pt">Total</td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">139,374</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">13,709</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">136,472</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">23,501</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">313,056</td><td style="padding-bottom: 2.5pt; text-align: left"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b> </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Credit Quality Indicators</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>As of December 31, 2010</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b>Credit Risk Profile by Internally Assigned Grade</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="padding-left: 5.4pt; text-align: center"> </td><td style="font-weight: bold; text-align: center"> </td>
<td style="font-weight: bold; text-align: center"> </td><td style="font-weight: bold; text-align: center">Commercial</td><td style="font-weight: bold; text-align: center"> </td><td style="font-weight: bold; text-align: center"> </td>
<td style="font-weight: bold; text-align: center"> </td><td style="font-weight: bold; text-align: center">Commercial</td><td style="font-weight: bold; text-align: center"> </td><td style="font-weight: bold; text-align: center"> </td>
<td style="font-weight: bold; text-align: center"> </td><td style="font-weight: bold; text-align: center">Consumer</td><td style="font-weight: bold; text-align: center"> </td><td style="font-weight: bold; text-align: center"> </td>
<td style="font-weight: bold; text-align: center"> </td><td style="font-weight: bold; text-align: center">Consumer</td><td style="font-weight: bold; text-align: center"> </td><td style="font-weight: bold; text-align: center"> </td>
<td style="font-weight: bold; text-align: center"> </td><td style="font-weight: bold; text-align: center">Total</td><td style="font-weight: bold; text-align: center"> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-left: 5.4pt; text-align: center"> </td><td style="font-weight: bold; text-align: center"> </td>
<td style="font-weight: bold; text-align: center"> </td><td style="font-weight: bold; text-align: center">Mortgage</td><td style="font-weight: bold; text-align: center"> </td><td style="font-weight: bold; text-align: center"> </td>
<td style="font-weight: bold; text-align: center"> </td><td style="font-weight: bold; text-align: center">Other</td><td style="font-weight: bold; text-align: center"> </td><td style="font-weight: bold; text-align: center"> </td>
<td style="font-weight: bold; text-align: center"> </td><td style="font-weight: bold; text-align: center">Mortgage</td><td style="font-weight: bold; text-align: center"> </td><td style="font-weight: bold; text-align: center"> </td>
<td style="font-weight: bold; text-align: center"> </td><td style="font-weight: bold; text-align: center">Other</td><td style="font-weight: bold; text-align: center"> </td><td style="font-weight: bold; text-align: center"> </td>
<td style="font-weight: bold; text-align: center"> </td><td style="font-weight: bold; text-align: center"> </td><td style="font-weight: bold; text-align: center"> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-left: 5.4pt">Grade:</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 42%; text-align: right; padding-left: 5.4pt"> Excellent</td><td style="width: 5%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 7%; text-align: right">1,573</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 7%; text-align: right">968</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 7%; text-align: right">2,964</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 7%; text-align: right">2,793</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 7%; text-align: right">8,298</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: right; padding-left: 5.4pt">Very Good</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">16,509</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">1,648</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">28,611</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">5,765</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">52,533</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: right; padding-left: 5.4pt">Pass</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">90,198</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">8,901</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">96,776</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">18,244</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">214,119</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: right; padding-left: 5.4pt">Pass-Watch</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">3,160</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">619</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">1,228</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">120</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">5,127</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: right; padding-left: 5.4pt">Special Mention</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">7,262</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">1,876</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">6,050</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">1,526</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">16,714</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: right; padding-left: 5.4pt">Substandard</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">24,194</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">1,025</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">6,747</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">450</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">32,416</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: right; padding-left: 5.4pt">Doubtful</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">0</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">0</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">0</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">0</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">0</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: right; padding-bottom: 1pt; padding-left: 5.4pt">Loss</td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">0</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">0</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">129</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">0</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">129</td><td style="padding-bottom: 1pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-bottom: 2.5pt; padding-left: 5.4pt">Total</td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">142,896</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">15,037</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">142,505</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">28,898</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">329,336</td><td style="padding-bottom: 2.5pt; text-align: left"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">Loans classified as, “special
mention” have potential weaknesses that deserve management’s close attention. Loans classified as “substandard”
have been determined to be inadequately protected by the current collateral pledged, if any, the cash flow and or the net worth
of the borrower. “Doubtful” loans have all the weaknesses inherent in substandard loans, with the added characteristic
that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions and values, highly
questionable and improbable. Loans classified as “loss” are loans with expected loss of the entire principal balance. 
The loan may be carried in this classified status if circumstances indicate a remote possibility that the amount will be repaid,
however, the principal balance is included in the impairment calculation and carried in the allowance for loan losses. Loans not
categorized as special mention, substandard, or doubtful are classified as “pass”, “very good” or “excellent”
loans and are considered to exhibit acceptable risk. Additionally the company classifies certain loans as “pass-watch”
loans. This category includes satisfactory borrowing relationships that require close monitoring because of complexity, information
deficiencies, or emerging signs of weakness.</p>
<p style="margin: 0pt"> </p>
<p style="margin: 0pt"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b>NOTE EIGHT: BANK PREMISES AND EQUIPMENT</b> </p>
<table cellspacing="0" cellpadding="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif; border-collapse: collapse">
<tr style="vertical-align: top">
<td style="padding-right: 5.4pt; padding-left: 5.4pt; font-weight: bold"></td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">Bank premises and equipment as of December 31, 2011 and 2010 are
summarized as follows (in thousands of dollars):</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="text-align: center; padding-left: 10pt"> </td><td style="padding-bottom: 1pt; text-align: center"> </td>
<td style="border-bottom: Black 1pt solid; text-align: center"> </td><td style="border-bottom: Black 1pt solid; text-align: center">2011</td><td style="padding-bottom: 1pt; text-align: center"> </td><td style="padding-bottom: 1pt; text-align: center"> </td>
<td style="border-bottom: Black 1pt solid; text-align: center"> </td><td style="border-bottom: Black 1pt solid; text-align: center">2010</td><td style="padding-bottom: 1pt; text-align: center"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 72%; padding-left: 10pt; text-indent: -10pt">Land</td><td style="width: 3%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">2,368</td><td style="width: 1%; text-align: left"> </td><td style="width: 3%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">2,237</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-left: 10pt; text-indent: -10pt">Buildings and improvements</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">9,308</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">9,445</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; text-indent: -10pt; padding-left: 10pt">Furniture and equipment</td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">5,942</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">5,805</td><td style="padding-bottom: 1pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="padding-left: 10pt; text-indent: -10pt"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-left: 10pt; text-indent: -10pt">Total Cost</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">17,618</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">17,487</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; text-indent: -10pt; padding-left: 10pt">Less accumulated depreciation</td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">(8,207</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">(7,586</td><td style="padding-bottom: 1pt; text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-left: 10pt; text-indent: -10pt"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-indent: -10pt; padding-left: 10pt">Net Book Value</td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">9,411</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">9,901</td><td style="padding-bottom: 2.5pt; text-align: left"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Provisions for depreciation charged to operations
during 2011 and 2010 were as follows (in thousands of dollars):</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="text-decoration: underline"><u>Year</u></td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: center">Provision
for Depreciation</td><td style="padding-bottom: 1pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 83%; text-align: left">2011</td><td style="width: 3%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 12%; text-align: right">783</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">2010</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">787</td><td style="text-align: left"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="margin: 0pt"> </p>
<p style="margin: 0pt"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b>NOTE NINE: RESTRICTIONS ON DIVIDENDS OF SUBSIDIARY BANKS</b> </p>
<table cellspacing="0" cellpadding="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif; border-collapse: collapse">
<tr style="vertical-align: top">
<td style="padding-right: 5.4pt; padding-left: 5.4pt; font-weight: bold"></td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="letter-spacing: 0pt">The principal
source of funds of the Company is dividends paid by its subsidiary Banks. The various regulatory authorities impose restrictions
on dividends paid by a state bank. A state bank cannot pay dividends (without the consent of state banking authorities) in excess
of the total net profits (net income less dividends paid) of the current year to date and the combined retained profits of the
previous two years. As of December 31, 2011, the Banks could pay dividends to the Company of approximately $3,307,000 without permission
of the regulatory authorities.</font></p>
<p style="margin: 0pt"> </p>
<p style="margin: 0pt"></p>
<table cellspacing="0" cellpadding="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif; border-collapse: collapse"><tr style="vertical-align: top"><td style="font-weight: bold">NOTE TEN: DEPOSITS</td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">At December 31, 2011, the scheduled maturities of time deposits
were as follows (in thousands of dollars):</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="text-decoration: underline">Year</td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: center">Amount Maturing</td><td style="padding-bottom: 1pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 86%; text-align: left">2012</td><td style="width: 3%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">119,283</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">2013</td><td style="text-align: left"> </td>
<td style="text-align: left"> </td><td style="text-align: right">34,409</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">2014</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">11,569</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">2015</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">9,979</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">2016</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">24,187</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">2017</td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">20</td><td style="padding-bottom: 1pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td>Total</td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">199,447</td><td style="padding-bottom: 2.5pt; text-align: left"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Included in the table above are CDARS
deposits totaling $3,393,000 at December 31, 2011.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Interest expense on time deposits of $100,000
and over aggregated $1,515,000 and $2,020,000 for 2011 and 2010, respectively.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The aggregate amount of demand deposit overdrafts
reclassified as loan balances were $180,000 and $214,000 at December 31, 2011 and 2010, respectively.</p>
<p style="margin: 0pt"> </p>
<p style="margin: 0pt"> </p>
<table cellspacing="0" cellpadding="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif; border-collapse: collapse"><tr style="vertical-align: top"><td style="font-weight: bold">NOTE ELEVEN: CONCENTRATIONS</td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="letter-spacing: 0pt">The Banks
grant commercial, residential real estate and consumer loans to customers located primarily in the eastern portion of the State
of West Virginia. Although the Banks have a diversified loan portfolio, a substantial portion of the debtors' ability to honor
their contracts is dependent upon the agribusiness, mining, trucking and logging sectors. Collateral required by the Banks is determined
on an individual basis depending on the purpose of the loan and the financial condition of the borrower. The ultimate collectability
of the loan portfolios is susceptible to changes in local economic conditions. Of the $313,056,000 and $329,336,000 loans held
by the Company at December 31, 2011 and 2010, respectively, $273,785,000 and $282,882,000 are secured by real estate. </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="letter-spacing: 0pt; background-color: yellow"></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="letter-spacing: 0pt">The Company’s
subsidiaries had cash deposited in and federal funds sold to other commercial banks totaling $13,582,000 and $9,368,000 at December
31, 2011 and 2010, respectively. Deposits with other correspondent banks are generally unsecured and have limited insurance under
current banking insurance regulations, which management considers to be a normal business risk. </font></p>
<p style="margin: 0pt"></p>
<p style="margin: 0pt"></p>
<table cellspacing="0" cellpadding="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif; border-collapse: collapse"><tr style="vertical-align: top"><td style="font-weight: bold">NOTE TWELVE: TRANSACTIONS WITH RELATED PARTIES</td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">During the year, officers and directors
(and companies controlled by them) of the Company and subsidiary Banks were customers of and had transactions with the subsidiary
Banks in the normal course of business. These transactions were made on substantially the same terms as those prevailing for other
customers and did not involve any abnormal risk. The table below summarizes changes to balances of loans and to unused commitments
to related parties during the years ended December 31, 2011 and 2010 (in thousands of dollars):</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="padding-bottom: 1pt; padding-left: 5.4pt"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: center">2011</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: center">2010</td><td style="padding-bottom: 1pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 72%; text-align: left; padding-left: 10pt; text-indent: -10pt">Loans to related parties, beginning of year</td><td style="width: 3%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">8,677</td><td style="width: 1%; text-align: left"> </td><td style="width: 3%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">8,402</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-left: 10pt; text-indent: -10pt">New loans</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">9</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">798</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-left: 10pt; text-indent: -10pt">Additions for new executives</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">0</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">257</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-left: 10pt; text-indent: -10pt">Deletions for former executives</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(1,509</td><td style="text-align: left">)</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">0</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-left: 10pt; text-indent: -10pt">Repayments</td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">(538</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">(780</td><td style="padding-bottom: 1pt; text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-left: 10pt; text-indent: -10pt">Loans to related parties, end of year</td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">6,639</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">8,677</td><td style="padding-bottom: 2.5pt; text-align: left"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">At December 31, 2011, deposits of related parties
including directors, executive officers, and their related interests of the Company and subsidiaries approximated $7,163,000, and
at December 31, 2010, deposits of related parties including directors, executive officers, and their related interests of the Company
and subsidiaries approximated $8,349,000.</p>
<p style="margin: 0pt"> </p>
<p style="margin: 0pt"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b>NOTE FOURTEEN: INCOME TAX EXPENSE</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company files an income tax return in the
U.S. federal jurisdiction and an income tax return in the State of West Virginia. With few exceptions, the Company is no longer
subject to U.S. federal, state or local income tax examinations by tax authorities for years before 2008.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Included in the balance sheet at December 31,
2011 are tax positions related to loan charge offs for which the ultimate deductibility is highly certain but for which there is
uncertainty about the timing of such deductibility. Because of the impact of deferred tax accounting, other than interest and penalties,
the disallowance of the shorter deductibility period would not affect the annual effective tax rate but would accelerate the payment
of cash to the taxing authority to an earlier period.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The components of income tax expense for the
years ended December 31, 2011 and 2010 are summarized in the table on the following page (in thousands of dollars):</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="padding-left: 10pt; text-indent: -10pt"> </td><td style="padding-bottom: 1pt"> </td>
<td colspan="2" style="text-align: center; border-bottom: Black 1pt solid">2011</td><td style="padding-bottom: 1pt"> </td><td style="padding-bottom: 1pt"> </td>
<td colspan="2" style="text-align: center; border-bottom: Black 1pt solid">2010</td><td style="padding-bottom: 1pt"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: left; padding-left: 10pt; text-indent: -10pt">Current Expense</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 72%; padding-left: 20pt; text-indent: -10pt">Federal</td><td style="width: 3%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">988</td><td style="width: 1%; text-align: left"> </td><td style="width: 3%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">984</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-indent: -10pt; padding-left: 20pt">State</td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">126</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">139</td><td style="padding-bottom: 1pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-left: 20pt; text-indent: -10pt">Total Current Expense</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">1,114</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">1,123</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="padding-left: 10pt; text-indent: -10pt"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-left: 10pt; text-indent: -10pt">Deferred Expense (Benefit)</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="padding-left: 20pt; text-indent: -10pt">Federal</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(526</td><td style="text-align: left">)</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(444</td><td style="text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-indent: -10pt; padding-left: 20pt">State</td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">(50</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">(39</td><td style="padding-bottom: 1pt; text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; text-indent: -10pt; padding-left: 20pt">Total Deferred Expense (Benefit)</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(576</td><td style="text-align: left">)</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(483</td><td style="text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; text-indent: -10pt; padding-left: 20pt; padding-bottom: 1pt"> </td><td style="padding-bottom: 1pt"> </td>
<td style="text-align: left; border-bottom: Black 1pt solid"> </td><td style="text-align: right; border-bottom: Black 1pt solid"> </td><td style="text-align: left; padding-bottom: 1pt"> </td><td style="padding-bottom: 1pt"> </td>
<td style="text-align: left; border-bottom: Black 1pt solid"> </td><td style="text-align: right; border-bottom: Black 1pt solid"> </td><td style="text-align: left; padding-bottom: 1pt"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; text-indent: -10pt; padding-left: 10pt">Income Tax Expense</td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">538</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">640</td><td style="padding-bottom: 2.5pt; text-align: left"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">The deferred tax effects of temporary differences for the years
ended December 31, 2011 and 2010 are as follows (in thousands of dollars):</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="text-indent: -10pt; padding-left: 10pt"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: center">2011</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: center">2010</td><td style="padding-bottom: 1pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 72%; text-align: left; padding-left: 10pt; text-indent: -10pt">Provision for loan losses</td><td style="width: 3%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">(122</td><td style="width: 1%; text-align: left">)</td><td style="width: 3%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">(519</td><td style="width: 1%; text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-left: 10pt; text-indent: -10pt">OREO deferred costs</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(403</td><td style="text-align: left">)</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">0</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-left: 10pt; text-indent: -10pt">Pension Expense</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(35</td><td style="text-align: left">)</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(91</td><td style="text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="padding-left: 10pt; text-indent: -10pt">Depreciation</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(33</td><td style="text-align: left">)</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">183</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-left: 10pt; text-indent: -10pt">Deferred compensation</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">27</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(62</td><td style="text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-indent: -10pt; padding-left: 10pt">Miscellaneous</td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">(10</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">6</td><td style="padding-bottom: 1pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; text-indent: -10pt; padding-left: 10pt">Net increase in deferred income tax benefit</td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">(576</td><td style="padding-bottom: 2.5pt; text-align: left">)</td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">(483</td><td style="padding-bottom: 2.5pt; text-align: left">)</td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">The net deferred tax assets arising from temporary differences as
of December 31, 2011 and 2010 are shown in the table on the following page (in thousands of dollars):</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="padding-left: 10pt; text-indent: -10pt"> </td><td style="padding-bottom: 1pt"> </td>
<td colspan="2" style="text-align: center; border-bottom: Black 1pt solid">2011</td><td style="padding-bottom: 1pt"> </td><td style="padding-bottom: 1pt"> </td>
<td colspan="2" style="text-align: center; border-bottom: Black 1pt solid">2010</td><td style="padding-bottom: 1pt"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: left; padding-left: 10pt; text-indent: -10pt">Deferred Tax Assets</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 72%; text-align: left; padding-left: 20pt; text-indent: -10pt">Provision for loan losses</td><td style="width: 3%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">1,846</td><td style="width: 1%; text-align: left"> </td><td style="width: 3%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">1,725</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-left: 20pt; text-indent: -10pt">OREO deferred expenses</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">401</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">0</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-left: 20pt; text-indent: -10pt">Insurance commissions</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">15</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">19</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-left: 20pt; text-indent: -10pt">Deferred compensation</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">957</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">983</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-left: 20pt; text-indent: -10pt">Pension obligation</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">994</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">641</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-indent: -10pt; padding-left: 20pt">Other</td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">10</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">2</td><td style="padding-bottom: 1pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; text-indent: -10pt; padding-left: 20pt">Total Assets</td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">4,223</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">3,370</td><td style="padding-bottom: 1pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="padding-left: 10pt; text-indent: -10pt"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-left: 10pt; text-indent: -10pt">Deferred Tax Liabilities</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="padding-left: 10pt; text-indent: -10pt"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-left: 20pt; text-indent: -10pt">Unrealized gains on securities available for sale</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">159</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">125</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="padding-left: 20pt; text-indent: -10pt">Depreciation</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">595</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">638</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-indent: -10pt; padding-left: 20pt">Other</td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">1</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">2</td><td style="padding-bottom: 1pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; text-indent: -10pt; padding-left: 20pt">Total Liabilities</td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">755</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">765</td><td style="padding-bottom: 1pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-left: 10pt; text-indent: -10pt"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; text-indent: -10pt; padding-left: 10pt">Net Deferred Tax Asset</td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">3,468</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">2,605</td><td style="padding-bottom: 2.5pt; text-align: left"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">The Company has not recorded a valuation allowance for the deferred
tax assets as management believes it is more likely than not that they will be ultimately realized.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">The following table summarizes the differences between income tax
expense and the amount computed by applying the federal statutory rate for the two years ended December 31, 2011 and 2010 (in thousands
of dollars):</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="padding-left: 10pt; text-indent: -10pt"> </td><td style="padding-bottom: 1pt"> </td>
<td colspan="2" style="text-align: center; border-bottom: Black 1pt solid">2011</td><td style="padding-bottom: 1pt"> </td><td style="padding-bottom: 1pt"> </td>
<td colspan="2" style="text-align: center; border-bottom: Black 1pt solid">2010</td><td style="padding-bottom: 1pt"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 72%; text-align: left; padding-left: 10pt; text-indent: -10pt">Amounts at federal statutory rate</td><td style="width: 3%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">656</td><td style="width: 1%; text-align: left"> </td><td style="width: 3%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">759</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-left: 10pt; text-indent: -10pt">Additions (reductions) resulting from:</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-left: 20pt; text-indent: -10pt">Tax exempt income</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(38</td><td style="text-align: left">)</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(59</td><td style="text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-left: 20pt; text-indent: -10pt">Partially exempt income</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(19</td><td style="text-align: left">)</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(26</td><td style="text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-left: 20pt; text-indent: -10pt">State income taxes, net</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">60</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">28</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-left: 20pt; text-indent: -10pt">Income from life insurance contracts</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(128</td><td style="text-align: left">)</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(43</td><td style="text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-left: 20pt; text-indent: -10pt">Non deductible expenses related to branch acquisitions</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">54</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">53</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-left: 20pt; text-indent: -10pt">Income tax credits</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(37</td><td style="text-align: left">)</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">0</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-indent: -10pt; padding-left: 20pt">Other</td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">(10</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">(72</td><td style="padding-bottom: 1pt; text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="padding-left: 10pt; text-indent: -10pt"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; text-indent: -10pt; padding-left: 10pt">Income tax expense</td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">538</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">640</td><td style="padding-bottom: 2.5pt; text-align: left"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="margin: 0pt"> </p>
<p style="margin: 0pt"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b>NOTE FIFTEEN: EMPLOYEE BENEFITS</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">In addition to an Employee Stock Ownership
Plan (ESOP), which provides stock ownership to all employees of the Company, the Company’s two subsidiary Banks, The Grant
County Bank (Grant) and Capon Valley Bank (Capon) have separate retirement and profit sharing plans which cover substantially all
full time employees at each Bank. A summary of the employee benefits provided by each Bank is provided below. <font style="letter-spacing: 0pt">The
Company’s ESOP plan provides stock ownership to all employees of the Company. The Plan provides total vesting upon the attainment
of seven years of service. Contributions to the plan are made at the discretion of the board of directors and are allocated based
on the compensation of each employee relative to total compensation paid by the Company. All shares held by the Plan are considered
outstanding in the computation of earnings per share. Shares of Company stock, when distributed, will have restrictions on transferability.
</font>Certain executives of both Grant and Capon have post retirement benefits related to the Banks’ investment in life
insurance policies (see Note Nineteen). <font style="letter-spacing: 0pt">Expenses related to all retirement benefit plans charged
to operations totaled $649,000 in 2011 and $976,000 in 2010. </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="letter-spacing: 0pt"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><u>Capon Valley Bank</u></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Capon has a defined contribution pension plan
with 401(k) features that is funded with discretionary contributions. Capon matches on a limited basis the contributions of the
employees. Investment of employee balances is done through the direction of each employee. Employer contributions are vested over
a six-year period.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="letter-spacing: 0pt"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><u>The Grant County Bank</u></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Grant is a member of the West Virginia Bankers’
Association Retirement Plan (the “Plan”). This Plan is a defined benefit plan with benefits under the Plan based on
compensation and years of service with full vesting after seven years of service. Prior to 2002, the Plan’s assets were in
excess of the projected benefit obligations and thus Grant was not required to make contributions to the Plan during 2001, 2002,
or 2003. Beginning 2004, Grant has been required to make contributions. The contribution expected during 2012 is $1,451,000. At
December 31, 2011, Grant has recognized liabilities of $2,715,000 relating to unfunded pension liabilities. As a result of the
Plan’s inability to meet expected returns in recent years, a portion of this liability is reflected as a decrease in other
comprehensive income of $2,025,000 (net of $1,190,000 tax benefit).</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The following table provides a reconciliation
of the changes in the Plan’s obligations and fair value of assets as of December 31, 2011 and 2010 using a measurement date
of December 31, 2011 and December 31, 2010 respectively (in thousands of dollars):</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="padding-left: 10pt; text-indent: -10pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td><td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="text-align: center; border-bottom: Black 1pt solid"><font style="font: 10pt Times New Roman, Times, Serif">2011</font></td><td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td><td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="text-align: center; border-bottom: Black 1pt solid"><font style="font: 10pt Times New Roman, Times, Serif">2010</font></td><td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom">
<td style="text-decoration: underline; text-align: left; padding-left: 10pt; text-indent: -10pt"><font style="font: 10pt Times New Roman, Times, Serif">Change
in Benefit Obligation</font></td><td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td><td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td><td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td><td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td><td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td><td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 72%; text-align: left; padding-left: 10pt; text-indent: -10pt"><font style="font: 10pt Times New Roman, Times, Serif">Benefit
obligation, beginning</font></td><td style="width: 3%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td><td style="width: 9%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">6,011</font></td><td style="width: 1%; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td><td style="width: 3%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td><td style="width: 9%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">5,136</font></td><td style="width: 1%; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-left: 20pt; text-indent: -10pt"><font style="font: 10pt Times New Roman, Times, Serif">Service
Cost</font></td><td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td><td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">204</font></td><td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td><td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td><td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">188</font></td><td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-left: 20pt; text-indent: -10pt"><font style="font: 10pt Times New Roman, Times, Serif">Interest
Cost</font></td><td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td><td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">325</font></td><td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td><td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td><td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">303</font></td><td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-left: 20pt; text-indent: -10pt"><font style="font: 10pt Times New Roman, Times, Serif">Actuarial
Loss (Gain)</font></td><td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td><td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">472</font></td><td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td><td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td><td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">464</font></td><td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; text-indent: -10pt; padding-left: 20pt"><font style="font: 10pt Times New Roman, Times, Serif">Benefits
Paid</font></td><td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: Black 1pt solid; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td><td style="border-bottom: Black 1pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">(160</font></td><td style="padding-bottom: 1pt; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">)</font></td><td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: Black 1pt solid; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td><td style="border-bottom: Black 1pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">(80</font></td><td style="padding-bottom: 1pt; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">)</font></td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-indent: -10pt; padding-left: 10pt"><font style="font: 10pt Times New Roman, Times, Serif">Benefit obligation,
ending</font></td><td style="padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: Black 2.5pt double; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td><td style="border-bottom: Black 2.5pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">6,852</font></td><td style="padding-bottom: 2.5pt; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td><td style="padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: Black 2.5pt double; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td><td style="border-bottom: Black 2.5pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">6,011</font></td><td style="padding-bottom: 2.5pt; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-left: 10pt; text-indent: -10pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td><td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td><td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td><td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td><td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td><td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td><td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; text-indent: -10pt; padding-left: 10pt"><font style="font: 10pt Times New Roman, Times, Serif">Accumulated
Benefit Obligation</font></td><td style="padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: Black 2.5pt double; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td><td style="border-bottom: Black 2.5pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">5,830</font></td><td style="padding-bottom: 2.5pt; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td><td style="padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: Black 2.5pt double; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td><td style="border-bottom: Black 2.5pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">5,037</font></td><td style="padding-bottom: 2.5pt; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-left: 10pt; text-indent: -10pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td><td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td><td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td><td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td><td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td><td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td><td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-decoration: underline; text-align: left; padding-left: 10pt; text-indent: -10pt"><font style="font: 10pt Times New Roman, Times, Serif">Change
in Plan Assets</font></td><td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td><td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td><td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td><td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td><td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td><td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-left: 20pt; text-indent: -10pt"><font style="font: 10pt Times New Roman, Times, Serif">Fair value of assets,
beginning</font></td><td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td><td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">4,249</font></td><td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td><td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td><td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">3,858</font></td><td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-left: 20pt; text-indent: -10pt"><font style="font: 10pt Times New Roman, Times, Serif">Actual
return on assets, net of administrative expenses</font></td><td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td><td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">(187</font></td><td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">)</font></td><td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td><td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">471</font></td><td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-left: 20pt; text-indent: -10pt"><font style="font: 10pt Times New Roman, Times, Serif">Employer
contributions</font></td><td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td><td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">235</font></td><td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td><td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td><td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">0</font></td><td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; text-indent: -10pt; padding-left: 20pt"><font style="font: 10pt Times New Roman, Times, Serif">Benefits
paid</font></td><td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: Black 1pt solid; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td><td style="border-bottom: Black 1pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">(160</font></td><td style="padding-bottom: 1pt; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">)</font></td><td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: Black 1pt solid; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td><td style="border-bottom: Black 1pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">(80</font></td><td style="padding-bottom: 1pt; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">)</font></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-indent: -10pt; padding-left: 20pt"><font style="font: 10pt Times New Roman, Times, Serif">Fair value of assets,
ending</font></td><td style="padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: Black 2.5pt double; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td><td style="border-bottom: Black 2.5pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">4,137</font></td><td style="padding-bottom: 2.5pt; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td><td style="padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: Black 2.5pt double; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td><td style="border-bottom: Black 2.5pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">4,249</font></td><td style="padding-bottom: 2.5pt; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="padding-left: 20pt; text-indent: -10pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td><td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td><td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td><td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td><td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td><td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td><td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-decoration: underline; text-align: left; padding-left: 10pt; text-indent: -10pt"><font style="font: 10pt Times New Roman, Times, Serif">Funded
Status</font></td><td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td><td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td><td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td><td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td><td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td><td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="padding-left: 20pt; text-indent: -10pt"><font style="font: 10pt Times New Roman, Times, Serif">Fair value of plan
assets</font></td><td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td><td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">4,137</font></td><td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td><td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td><td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">4,249</font></td><td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; text-indent: -10pt; padding-left: 20pt"><font style="font: 10pt Times New Roman, Times, Serif">Projected
benefit obligation</font></td><td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: Black 1pt solid; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td><td style="border-bottom: Black 1pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">6,852</font></td><td style="padding-bottom: 1pt; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td><td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: Black 1pt solid; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td><td style="border-bottom: Black 1pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">6,011</font></td><td style="padding-bottom: 1pt; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-left: 20pt; text-indent: -10pt"><font style="font: 10pt Times New Roman, Times, Serif">Funded
status</font></td><td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td><td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">(2,715</font></td><td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">)</font></td><td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td><td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">(1,762</font></td><td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">)</font></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-left: 10pt; text-indent: -10pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td><td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td><td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td><td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td><td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td><td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td><td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; text-indent: -10pt; padding-left: 10pt; text-decoration: underline">Amounts Recognized in the Statements of Financial Position</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-left: 20pt; text-indent: -10pt; padding-bottom: 1pt"> Accumulated other comprehensive loss</td><td style="padding-bottom: 1pt"> </td>
<td style="text-align: left; border-bottom: Black 1pt none">$</td><td style="text-align: right; border-bottom: Black 1pt none">3,215</td><td style="text-align: left; padding-bottom: 1pt"> </td><td style="padding-bottom: 1pt"> </td>
<td style="text-align: left; border-bottom: Black 1pt none">$</td><td style="text-align: right; border-bottom: Black 1pt none">2,356</td><td style="text-align: left; padding-bottom: 1pt"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="padding-left: 20pt; text-indent: -10pt">(Prepaid) pension expense</td><td> </td>
<td style="text-align: left; border-bottom: Black 1pt solid"></td><td style="text-align: right; border-bottom: Black 1pt solid">(500</td><td style="text-align: left">)</td><td> </td>
<td style="text-align: left; border-bottom: Black 1pt solid"></td><td style="text-align: right; border-bottom: Black 1pt solid">(594</td><td style="text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-left: 20pt; text-indent: -10pt"><font style="font: 10pt Times New Roman, Times, Serif">Net
liability recognized</font></td><td style="padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: Black 2.5pt double; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td><td style="border-bottom: Black 2.5pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">2,715</font></td><td style="padding-bottom: 2.5pt; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"></font></td><td style="padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: Black 2.5pt double; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td><td style="border-bottom: Black 2.5pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">1,762</font></td><td style="padding-bottom: 2.5pt; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"></font></td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="padding-left: 10pt; text-indent: -10pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td><td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td><td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td><td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td><td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td><td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td><td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; text-indent: -10pt; padding-left: 10pt; text-decoration: underline"><font style="font: 10pt Times New Roman, Times, Serif">Amounts
Recognized in Accumulated Other Comprehensive Income</font></td><td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td><td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td><td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td><td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td><td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td><td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="padding-left: 20pt; text-indent: -10pt"><font style="font: 10pt Times New Roman, Times, Serif">Unrecognized
actuarial loss</font></td><td style="padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: Black 2.5pt double; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td><td style="border-bottom: Black 2.5pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">3,215</font></td><td style="padding-bottom: 2.5pt; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td><td style="padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: Black 2.5pt double; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td><td style="border-bottom: Black 2.5pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">2,356</font></td><td style="padding-bottom: 2.5pt; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">The following table provides the components of the net periodic
pension expense for the Plan for the years ended December 31, 2011 and 2010 (in thousands of dollars):</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="padding-left: 10pt; text-indent: -10pt"> </td><td style="padding-bottom: 1pt"> </td>
<td colspan="2" style="text-align: center; border-bottom: Black 1pt solid">2011</td><td style="padding-bottom: 1pt"> </td><td style="padding-bottom: 1pt"> </td>
<td colspan="2" style="text-align: center; border-bottom: Black 1pt solid">2010</td><td style="padding-bottom: 1pt"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 72%; text-align: left; padding-left: 10pt; text-indent: -10pt">Service cost</td><td style="width: 3%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">204</td><td style="width: 1%; text-align: left"> </td><td style="width: 3%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">188</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-left: 10pt; text-indent: -10pt">Interest cost</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">325</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">303</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-left: 10pt; text-indent: -10pt">Expected return on plan assets</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(353</td><td style="text-align: left">)</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(337</td><td style="text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; text-indent: -10pt; padding-left: 10pt">Recognized net actuarial loss</td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">154</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">98</td><td style="padding-bottom: 1pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; text-indent: -10pt; padding-left: 10pt">Net Periodic Pension Expense</td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">330</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">252</td><td style="padding-bottom: 2.5pt; text-align: left"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The expected pension expense for 2012 is $282,000.
The amount of estimated loss accumulated in other comprehensive income expected to be recognized in net periodic benefit cost in
2012 is $207,000.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The table below summarizes the benefits expected
to be paid to participants in the plan (in thousands of dollars):</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="text-decoration: underline; text-align: left; padding-left: 50pt"> <u>Year</u></td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: center">Expected
Benefit Payments</td><td style="padding-bottom: 1pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 82%; text-align: left; padding-left: 50pt"> 2012</td><td style="width: 3%; padding-bottom: 1pt"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 13%; text-align: right; padding-bottom: 1pt">272</td><td style="width: 1%; text-align: left; padding-bottom: 1pt"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-left: 50pt"> 2013</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">306</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-left: 50pt"> 2014</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">356</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-left: 50pt"> 2015</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">370</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-left: 50pt"> 2016</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">386</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">Years 2017 – 2021</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">2,077</td><td style="text-align: left"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The weighted average assumption used in the
measurement of Grant’s benefit obligation and net periodic pension expense is as follows:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="padding-bottom: 1pt; text-indent: -10pt; padding-left: 10pt"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: center">2011</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: center"> </td><td style="border-bottom: Black 1pt solid; text-align: center">2010</td><td style="padding-bottom: 1pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 72%; text-align: left; text-indent: -10pt; padding-left: 10pt">Discount rate</td><td style="width: 3%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 9%; text-align: right">5.50</td><td style="width: 1%; text-align: left">%</td><td style="width: 3%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 9%; text-align: right">6.00</td><td style="width: 1%; text-align: left">%</td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; text-indent: -10pt; padding-left: 10pt">Expected return on plan assets</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">8.00</td><td style="text-align: left">%</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">8.00</td><td style="text-align: left">%</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; text-indent: -10pt; padding-left: 10pt">Rate of compensation increase</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">3.00</td><td style="text-align: left">%</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">3.00</td><td style="text-align: left">%</td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="letter-spacing: 0pt"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="letter-spacing: 0pt"></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="letter-spacing: 0pt">The plan
sponsor estimates the expected long-term rate of return on assets in consultation with their advisors and the plan actuary. This
rate is intended to reflect the average rate of earnings expected to be earned on the funds invested or to be invested to provide
plan benefits. Historical performance is reviewed, especially with respect to real rate of return (net of inflation) for the major
asset classes held or anticipated to be held by the trust. Undue weight is not given to recent experience, which may not continue
over the measurement period, with higher significance placed on current forecasts of future long-term economic conditions.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="letter-spacing: 0pt"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">The following table provides the pension plan’s asset allocation
as of December 31, 2011 and 2010:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: center">2011</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: center"> </td><td style="border-bottom: Black 1pt solid; text-align: center">2010</td><td style="padding-bottom: 1pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 72%; text-align: left">Equity Securities</td><td style="width: 3%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 9%; text-align: right">60</td><td style="width: 1%; text-align: left">%</td><td style="width: 3%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 9%; text-align: right">59</td><td style="width: 1%; text-align: left">%</td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">Debt Securities</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">35</td><td style="text-align: left">%</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">31</td><td style="text-align: left">%</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td>Other</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">5</td><td style="text-align: left">%</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">10</td><td style="text-align: left">%</td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The trust fund is sufficiently diversified
to maintain a reasonable level of risk without imprudently sacrificing return. The targeted asset allocation and allowable range
of allocation is set forth in the table below:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td> </td><td style="padding-bottom: 1pt"> </td>
<td colspan="3" style="text-align: center; border-bottom: Black 1pt solid">Target Allocation</td><td style="padding-bottom: 1pt"> </td>
<td style="text-align: center; border-bottom: Black 1pt solid">Allowable Allocation Range</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 59%; text-align: left">Equity Securities</td><td style="width: 3%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 8%; text-align: right">70</td><td style="width: 8%; text-align: left">%</td><td style="width: 6%"> </td>
<td style="text-align: center; width: 15%">40%-80%</td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">Debt Securities</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">25</td><td style="text-align: left">%</td><td> </td>
<td style="text-align: center">20%-40%</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td>Other</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">5</td><td style="text-align: left">%</td><td> </td>
<td style="text-align: center">3%-10%</td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; text-align: center; margin-bottom: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="letter-spacing: 0pt">The Investment
Manager selects investment fund managers with demonstrated experience and expertise, and funds with demonstrated historical performance,
for the implementation of the Plan’s investment strategy. The Investment Manager will consider both actively and passively
managed investment strategies and will allocate funds across the asset classes to develop an efficient investment structure.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><u>Fair Value</u></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">The fair value of the Company’s pension plan assets at December
31, 2011 and 2010, by asset category is as follows:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="padding-bottom: 1pt"> </td><td style="padding-bottom: 1pt"> </td>
<td style="text-align: left"> </td><td colspan="9" style="text-align: center">Fair Value Measurements Using</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-bottom: 1pt"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td colspan="9" style="border-bottom: Black 1pt solid; text-align: center">Quoted Prices</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: center"></td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: center">In Active</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"></td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom">
<td></td><td> </td>
<td style="text-align: left"> </td><td style="text-align: center">Balance </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: center">Markets<br />
for</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: center">Significant <br />
Other</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: center">Significant</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: center">as of</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: center">Identical</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: center">Observable</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: center">Unobservable</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: center">December 31, </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: center">Assets</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: center">Inputs</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: center">Inputs</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: left; padding-bottom: 1pt; border-bottom: Black 1pt solid">Asset Category</td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: center"> 2011</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: center">(Level 1)</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: center">(Level 2)</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: center">(Level 3)</td><td style="padding-bottom: 1pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 36%; text-align: left">Cash and cash equivalents</td><td style="width: 3%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 11%; text-align: right">17</td><td style="width: 1%; text-align: left"> </td><td style="width: 3%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 11%; text-align: right">17</td><td style="width: 1%; text-align: left"> </td><td style="width: 3%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 11%; text-align: right">0</td><td style="width: 1%; text-align: left"> </td><td style="width: 3%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 11%; text-align: right">0</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">Equity securities:</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-left: 20pt; text-indent: -10pt"> U.S. Companies</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">1,930</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">1,930</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-left: 10pt"> International Companies</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">556</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">556</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">Debt Securities</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">1,451</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"></td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">1,451</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-bottom: 1pt">Short Term</td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">183</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">183</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: right"> <u></u></td><td style="border-bottom: Black 1pt solid; text-align: right"> </td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> <u></u></td>
<td style="border-bottom: Black 1pt solid; text-align: right"> <u></u></td><td style="border-bottom: Black 1pt solid; text-align: right"> </td><td style="padding-bottom: 1pt; text-align: left"> <u></u></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td>Totals</td><td> </td>
<td style="text-align: left">$</td><td style="text-align: right">4,137</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left">$</td><td style="text-align: right">2,686</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left">$</td><td style="text-align: right">1,451</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left">$</td><td style="text-align: right">0</td><td style="text-align: left"> </td></tr>
</table>
<p style="margin: 0"> </p>
<table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="padding-bottom: 1pt"> </td><td style="padding-bottom: 1pt"> </td>
<td style="text-align: left; padding-bottom: 1pt"> </td><td colspan="9" style="text-align: center">Fair Value Measurements Using</td><td style="text-align: left; padding-bottom: 1pt"> </td><td style="padding-bottom: 1pt"> </td>
<td style="text-align: left; padding-bottom: 1pt"> </td><td style="text-align: right; padding-bottom: 1pt"> </td><td style="text-align: left; padding-bottom: 1pt"> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-bottom: 1pt"> </td><td style="padding-bottom: 1pt"> </td>
<td style="text-align: left; padding-bottom: 1pt"> </td><td colspan="9" style="text-align: center; border-bottom: Black 1pt solid">Quoted Prices</td><td style="text-align: left; padding-bottom: 1pt"> </td><td style="padding-bottom: 1pt"> </td>
<td style="text-align: left; padding-bottom: 1pt"> </td><td style="text-align: right; padding-bottom: 1pt"> </td><td style="text-align: left; padding-bottom: 1pt"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"></td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: center">In Active</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: center"></td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom">
<td></td><td> </td>
<td style="text-align: left"> </td><td style="text-align: center"><br />
Balance </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: center">Markets<br />
for</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: center">Significant<br />
Other </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: center">Significant</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: center">as of</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: center">Identical</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: center">Observable</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: center">Unobservable</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: center">December 31, </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: center">Assets</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: center">Inputs</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: center">Inputs</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: left; padding-bottom: 1pt; border-bottom: Black 1pt solid">Asset Category</td><td style="padding-bottom: 1pt"> </td>
<td style="text-align: left; border-bottom: Black 1pt solid"> </td><td style="text-align: center; border-bottom: Black 1pt solid"> 2010</td><td style="text-align: left; padding-bottom: 1pt"> </td><td style="padding-bottom: 1pt"> </td>
<td style="text-align: left; border-bottom: Black 1pt solid"> </td><td style="text-align: center; border-bottom: Black 1pt solid">(Level 1)</td><td style="text-align: left; padding-bottom: 1pt"> </td><td style="padding-bottom: 1pt"> </td>
<td style="text-align: left; border-bottom: Black 1pt solid"> </td><td style="text-align: center; border-bottom: Black 1pt solid">(Level 2)</td><td style="text-align: left; padding-bottom: 1pt"> </td><td style="padding-bottom: 1pt"> </td>
<td style="text-align: left; border-bottom: Black 1pt solid"> </td><td style="text-align: center; border-bottom: Black 1pt solid">(Level 3)</td><td style="text-align: left; padding-bottom: 1pt"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 36%; text-align: left">Cash and cash equivalents</td><td style="width: 3%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 11%; text-align: right">404</td><td style="width: 1%; text-align: left"> </td><td style="width: 3%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 11%; text-align: right">404</td><td style="width: 1%; text-align: left"> </td><td style="width: 3%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 11%; text-align: right">0</td><td style="width: 1%; text-align: left"> </td><td style="width: 3%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 11%; text-align: right">0</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">Equity securities:</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-left: 20pt; text-indent: -10pt"> U.S. Companies</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">1,870</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">1,870</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-left: 10pt"> International Companies</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">442</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">442</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">Debt Securities</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">1,313</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"></td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">1,313</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-bottom: 1pt">Short Term</td><td style="padding-bottom: 1pt"> </td>
<td style="text-align: left; border-bottom: Black 1pt solid"> </td><td style="text-align: right; border-bottom: Black 1pt solid">220</td><td style="text-align: left; padding-bottom: 1pt"> </td><td style="padding-bottom: 1pt"> </td>
<td style="text-align: left; border-bottom: Black 1pt solid"> </td><td style="text-align: right; border-bottom: Black 1pt solid">220</td><td style="text-align: left; padding-bottom: 1pt"> </td><td style="padding-bottom: 1pt"> </td>
<td style="text-align: left; border-bottom: Black 1pt solid"> </td><td style="text-align: right; border-bottom: Black 1pt solid"> </td><td style="text-align: left; padding-bottom: 1pt"> </td><td style="padding-bottom: 1pt"> </td>
<td style="text-align: left; border-bottom: Black 1pt solid"> </td><td style="text-align: right; border-bottom: Black 1pt solid"> </td><td style="text-align: left; padding-bottom: 1pt"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td>Totals</td><td> </td>
<td style="text-align: left">$</td><td style="text-align: right">4,249</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left">$</td><td style="text-align: right">2,936</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left">$</td><td style="text-align: right">1,313</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left">$</td><td style="text-align: right">0</td><td style="text-align: left"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="letter-spacing: 0pt"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="letter-spacing: 0pt">The Grant County Bank also
maintains a profit sharing plan covering substantially all employees to which contributions are made at the discretion of the board
of directors. Portions of employer contributions to this plan are, at individual employees’ discretion, available to employees
as immediate cash payment while portions are allocated for deferred payment to the employee. The portions of the plan contribution
by the employer which are allocated for deferred payment to the employee are vested over a five year period.</font></p>
<p style="margin: 0pt"> </p>
<p style="margin: 0pt"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b>NOTE SIXTEEN: COMMITMENTS AND GUARANTEES</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="letter-spacing: 0pt">The Banks
make commitments to extend credit in the normal course of business and issue standby letters of credit to meet the financing needs
of their customers. The amount of the commitments represents the Banks' exposure to credit loss that is not included in the balance
sheet. </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="letter-spacing: 0pt"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Banks use the same credit policies in making
commitments and issuing letters of credit as used for the loans reflected in the balance sheet. Commitments to extend credit are
agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally
have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments are expected
to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The Banks
evaluate each customer's creditworthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by the
Banks upon the extension of credit, is based on management's credit evaluation of the borrower. Collateral held varies but may
include accounts receivable, inventory, property, plant and equipment.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="letter-spacing: 0pt">As of
December 31, 2011 and 2010, the Banks had outstanding the following commitments (in thousands of dollars):</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="letter-spacing: 0pt"> </font></p>
<table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="padding-bottom: 1pt; padding-left: 5.4pt"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: center">2011</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: center">2010</td><td style="padding-bottom: 1pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 72%; text-align: left">Commitments to extend credit</td><td style="width: 3%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">10,036</td><td style="width: 1%; text-align: left"> </td><td style="width: 3%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">11,138</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">Standby letter of credit</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">352</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">342</td><td style="text-align: left"> </td></tr></table>
<p style="margin: 0pt"> </p>
<p style="margin: 0pt"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b>NOTE SEVENTEEN: CHANGES IN OTHER COMPREHENSIVE INCOME</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">The components of changes in other comprehensive
income, net of deferred tax, for the years ended December 31, 2011 and 2010 are as follows (in thousands of dollars):</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="padding-left: 10pt; text-indent: -10pt"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: center">Unrealized Gains(losses) on Securities</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: center">Defined Benefit Plan Obligation</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: center">Total</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 58%; padding-left: 10pt; text-indent: -10pt">Balance, December 31, 2009</td><td style="width: 3%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">323</td><td style="width: 1%; text-align: left"> </td><td style="width: 3%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">(1,338</td><td style="width: 1%; text-align: left">)</td><td style="width: 3%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">(1,015</td><td style="width: 1%; text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-indent: -10pt; padding-left: 10pt">2010 change</td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">(110</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">(146</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">(256</td><td style="padding-bottom: 1pt; text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-left: 10pt; text-indent: -10pt">Balance, December 31, 2010</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">213</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(1,484</td><td style="text-align: left">)</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(1,271</td><td style="text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-indent: -10pt; padding-left: 10pt">2011 change</td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">56</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">(540</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">(484</td><td style="padding-bottom: 1pt; text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-left: 10pt; text-indent: -10pt">Balance, December 31, 2011</td><td style="padding-bottom: 2.5pt"> </td>
<td style="text-align: left; border-bottom: Black 2.5pt double">$</td><td style="text-align: right; border-bottom: Black 2.5pt double">269</td><td style="text-align: left; padding-bottom: 2.5pt"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="text-align: left; border-bottom: Black 2.5pt double">$</td><td style="text-align: right; border-bottom: Black 2.5pt double">(2,024</td><td style="text-align: left; padding-bottom: 2.5pt">)</td><td style="padding-bottom: 2.5pt"> </td>
<td style="text-align: left; border-bottom: Black 2.5pt double">$</td><td style="text-align: right; border-bottom: Black 2.5pt double">(1,755</td><td style="text-align: left; padding-bottom: 2.5pt">)</td></tr></table>
<p style="margin: 0pt"> </p>
<p style="margin: 0pt"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b>NOTE TWENTY: REGULATORY MATTERS</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="letter-spacing: 0pt"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="letter-spacing: 0pt">The Company
is subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital
requirements can initiate certain mandatory - and possibly additional discretionary - actions by regulators that, if undertaken,
could have a direct material effect on the Company's financial statements. Under capital adequacy guidelines and the regulatory
framework for prompt corrective action, the Company must meet specific capital guidelines that involve quantitative measures of
the Company's assets, liabilities, and certain off-balance-sheet items as calculated under regulatory accounting practices. The
Company's capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk
weightings and other factors.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="letter-spacing: 0pt"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="letter-spacing: 0pt">Quantitative
measures established by regulation to ensure capital adequacy require the Company to maintain minimum amounts and ratios (set forth
in the table below) of total and Tier I capital (as defined in the regulations) to risk-weighted assets (as defined), and of Tier
I capital (as defined) to average assets (as defined). The Company meets all capital adequacy requirements to which it is subject
and as of the most recent examination, the Company was classified as well capitalized. </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="letter-spacing: 0pt"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">To be categorized as well capitalized the Company
must maintain minimum total risk-based, Tier I risk-based, and Tier I leverage ratios as set forth in the table. There are no conditions
or events that management believes have changed the Company's category from a well-capitalized status.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="letter-spacing: 0pt">Capital
ratios and amounts are applicable both at the individual Bank level and on a consolidated basis. At December 31, 2011 both subsidiary
Banks had capital levels in excess of minimum requirements. </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="letter-spacing: 0pt"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="letter-spacing: 0pt">In addition,
HBI Life Insurance Company is subject to certain capital requirements and dividend restrictions. At present, HBI Life is well within
any capital limitations and no conditions or events have occurred to change this capital status, nor does management expect any
such occurrence in the foreseeable future.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">The actual and required capital amounts and ratios of the Company
and its subsidiary banks at December 31, 2011 are presented in the following table (in thousands of dollars):</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">  </p>
<table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td colspan="25" style="text-align: center">December 31, 2011</td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: center; padding-left: 10pt"> </td><td style="text-align: center"> </td>
<td colspan="2" style="text-align: center"> </td><td style="text-align: center"> </td><td style="text-align: center"> </td>
<td colspan="2" style="text-align: center"> </td><td style="text-align: center"> </td><td style="text-align: center"> </td>
<td colspan="14" style="text-align: center">Regulatory Requirements</td><td style="text-align: center"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: center; padding-left: 10pt"> </td><td style="text-align: center"> </td>
<td colspan="6" style="text-align: center">Actual</td><td style="text-align: center"> </td>
<td style="text-align: center"> </td>
<td colspan="6" style="text-align: center">Adequately Capitalized</td><td style="text-align: center"> </td><td style="text-align: center"> </td>
<td colspan="6" style="text-align: center">Well Capitalized</td><td style="text-align: center"> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-left: 10pt; text-align: center"> </td><td style="padding-bottom: 1pt; text-align: center"> </td>
<td style="border-bottom: Black 1pt solid; text-align: center"> </td><td style="border-bottom: Black 1pt solid; text-align: center">Amount</td><td style="padding-bottom: 1pt; text-align: center"> </td><td style="padding-bottom: 1pt; text-align: center"> </td>
<td style="border-bottom: Black 1pt solid; text-align: center"> </td><td style="border-bottom: Black 1pt solid; text-align: center">Percentage</td><td style="padding-bottom: 1pt; text-align: center"> </td><td style="padding-bottom: 1pt; text-align: center"> </td>
<td style="border-bottom: Black 1pt solid; text-align: center"> </td><td style="border-bottom: Black 1pt solid; text-align: center">Amount</td><td style="padding-bottom: 1pt; text-align: center"> </td><td style="padding-bottom: 1pt; text-align: center"> </td>
<td style="border-bottom: Black 1pt solid; text-align: center"> </td><td style="border-bottom: Black 1pt solid; text-align: center">Percentage</td><td style="padding-bottom: 1pt; text-align: center"> </td><td style="padding-bottom: 1pt; text-align: center"> </td>
<td style="border-bottom: Black 1pt solid; text-align: center"> </td><td style="border-bottom: Black 1pt solid; text-align: center">Amount</td><td style="padding-bottom: 1pt; text-align: center"> </td><td style="padding-bottom: 1pt; text-align: center"> </td>
<td style="border-bottom: Black 1pt solid; text-align: center"> </td><td style="border-bottom: Black 1pt solid; text-align: center">Percentage</td><td style="padding-bottom: 1pt; text-align: center"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: center; padding-left: 10pt; text-indent: -10pt"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-decoration: underline; text-align: left; padding-left: 10pt; text-indent: -10pt">Total Risk Based Capital Ratio</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 34%; text-align: left; padding-left: 10pt; text-indent: -10pt">Highlands Bankshares</td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 7%; text-align: right">44,970</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 7%; text-align: right">15.17</td><td style="width: 1%; text-align: left">%</td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 7%; text-align: right">23,715</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 7%; text-align: right">8.00</td><td style="width: 1%; text-align: left">%</td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 7%; text-align: right"> </td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 7%; text-align: right"> </td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-left: 10pt; text-indent: -10pt">Capon Valley Bank</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">14,619</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">13.16</td><td style="text-align: left">%</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">8,887</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">8.00</td><td style="text-align: left">%</td><td> </td>
<td style="text-align: left">$</td><td style="text-align: right">11,109</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">10.00</td><td style="text-align: left">%</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-left: 10pt; text-indent: -10pt">The Grant County Bank</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">28,172</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">15.31</td><td style="text-align: left">%</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">14,721</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">8.00</td><td style="text-align: left">%</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">18,401</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">10.00</td><td style="text-align: left">%</td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="padding-left: 10pt; text-indent: -10pt"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-decoration: underline; text-align: left; padding-left: 10pt; text-indent: -10pt">Tier 1 Leverage Ratio</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-left: 10pt; text-indent: -10pt">Highlands Bankshares</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">41,235</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">10.22</td><td style="text-align: left">%</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">16,139</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">4.00</td><td style="text-align: left">%</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-left: 10pt; text-indent: -10pt">Capon Valley Bank</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">13,219</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">8.50</td><td style="text-align: left">%</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">6,221</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">4.00</td><td style="text-align: left">%</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">7,776</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">5.00</td><td style="text-align: left">%</td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-left: 10pt; text-indent: -10pt">The Grant County Bank</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">25,874</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">10.55</td><td style="text-align: left">%</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">9,810</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">4.00</td><td style="text-align: left">%</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">12,262</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">5.00</td><td style="text-align: left">%</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-left: 10pt; text-indent: -10pt"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-decoration: underline; text-align: left; padding-left: 10pt; text-indent: -10pt">Tier 1 Risk Based Capital Ratio</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-left: 10pt; text-indent: -10pt">Highlands Bankshares</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">41,235</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">13.91</td><td style="text-align: left">%</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">11,858</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">4.00</td><td style="text-align: left">%</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-left: 10pt; text-indent: -10pt">Capon Valley Bank</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">13,219</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">11.90</td><td style="text-align: left">%</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">4,443</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">4.00</td><td style="text-align: left">%</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">6,665</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">6.00</td><td style="text-align: left">%</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-left: 10pt; text-indent: -10pt">The Grant County Bank</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">25,874</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">14.06</td><td style="text-align: left">%</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">7,361</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">4.00</td><td style="text-align: left">%</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">11,042</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">6.00</td><td style="text-align: left">%</td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">The actual and required capital amounts and ratios of the Company
and its subsidiary banks at December 31, 2010 are presented in the following table (in thousands of dollars):</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td colspan="25" style="text-align: center">December 31, 2010</td></tr>
<tr style="vertical-align: bottom">
<td style="padding-left: 10pt; text-indent: -10pt"> </td><td> </td>
<td colspan="2"> </td><td> </td><td> </td>
<td colspan="2"> </td><td> </td><td> </td>
<td colspan="14" style="text-align: center">Regulatory Requirements</td><td> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-left: 10pt; text-indent: -10pt"> </td><td> </td>
<td colspan="6" style="text-align: center">Actual</td><td> </td><td> </td>
<td colspan="6" style="text-align: center">Adequately Capitalized</td><td> </td><td> </td>
<td colspan="6" style="text-align: center">Well Capitalized</td><td> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-left: 10pt; text-indent: -10pt"> </td><td style="padding-bottom: 1pt"> </td>
<td colspan="2" style="text-align: center; border-bottom: Black 1pt solid">Amount</td><td style="padding-bottom: 1pt"> </td><td style="padding-bottom: 1pt"> </td>
<td colspan="2" style="text-align: center; border-bottom: Black 1pt solid">Percentage</td><td style="padding-bottom: 1pt"> </td><td style="padding-bottom: 1pt"> </td>
<td colspan="2" style="text-align: center; border-bottom: Black 1pt solid">Amount</td><td style="padding-bottom: 1pt"> </td><td style="padding-bottom: 1pt"> </td>
<td colspan="2" style="text-align: center; border-bottom: Black 1pt solid">Percentage</td><td style="padding-bottom: 1pt"> </td><td style="padding-bottom: 1pt"> </td>
<td colspan="2" style="text-align: center; border-bottom: Black 1pt solid">Amount</td><td style="padding-bottom: 1pt"> </td><td style="padding-bottom: 1pt"> </td>
<td colspan="2" style="text-align: center; border-bottom: Black 1pt solid">Percentage</td><td style="padding-bottom: 1pt"> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-left: 10pt; text-indent: -10pt"> </td><td> </td>
<td colspan="2"> </td><td> </td><td> </td>
<td colspan="2"> </td><td> </td><td> </td>
<td colspan="2"> </td><td> </td><td> </td>
<td colspan="2"> </td><td> </td><td> </td>
<td colspan="2"> </td><td> </td><td> </td>
<td colspan="2"> </td><td> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-decoration: underline; text-align: left; padding-left: 10pt; text-indent: -10pt">Total Risk Based Capital Ratio</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 34%; text-align: left; padding-left: 10pt; text-indent: -10pt">Highlands Bankshares</td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 7%; text-align: right">44,086</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 7%; text-align: right">14.49</td><td style="width: 1%; text-align: left">%</td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 7%; text-align: right">24,340</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 7%; text-align: right">8.00</td><td style="width: 1%; text-align: left">%</td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 7%; text-align: right"> </td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 7%; text-align: right"> </td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-left: 10pt; text-indent: -10pt">Capon Valley Bank</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">14,496</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">12.50</td><td style="text-align: left">%</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">9,277</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">8.00</td><td style="text-align: left">%</td><td> </td>
<td style="text-align: left">$</td><td style="text-align: right">11,597</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">10.00</td><td style="text-align: left">%</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-left: 10pt; text-indent: -10pt">The Grant County Bank</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">27,306</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">14.58</td><td style="text-align: left">%</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">14,983</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">8.00</td><td style="text-align: left">%</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">18,728</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">10.00</td><td style="text-align: left">%</td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="padding-left: 10pt; text-indent: -10pt"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-decoration: underline; text-align: left; padding-left: 10pt; text-indent: -10pt">Tier 1 Leverage Ratio</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td style="text-align: left"> </td><td style="text-align: left"> </td><td style="text-align: left"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-left: 10pt; text-indent: -10pt">Highlands Bankshares</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">40,275</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">9.91</td><td style="text-align: left">%</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">16,256</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">4.00</td><td style="text-align: left">%</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-left: 10pt; text-indent: -10pt">Capon Valley Bank</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">13,029</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">8.33</td><td style="text-align: left">%</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">6,256</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">4.00</td><td style="text-align: left">%</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">7,821</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">5.00</td><td style="text-align: left">%</td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-left: 10pt; text-indent: -10pt">The Grant County Bank</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">24,953</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">10.26</td><td style="text-align: left">%</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">9,728</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">4.00</td><td style="text-align: left">%</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">12,160</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">5.00</td><td style="text-align: left">%</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-left: 10pt; text-indent: -10pt"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-decoration: underline; text-align: left; padding-left: 10pt; text-indent: -10pt">Tier 1 Risk Based Capital Ratio</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-left: 10pt; text-indent: -10pt">Highlands Bankshares</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">40,275</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">13.24</td><td style="text-align: left">%</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">12,168</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">4.00</td><td style="text-align: left">%</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-left: 10pt; text-indent: -10pt">Capon Valley Bank</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">13,029</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">11.24</td><td style="text-align: left">%</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">4,637</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">4.00</td><td style="text-align: left">%</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">6,955</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">6.00</td><td style="text-align: left">%</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-left: 10pt; text-indent: -10pt">The Grant County Bank</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">24,953</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">13.32</td><td style="text-align: left">%</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">7,493</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">4.00</td><td style="text-align: left">%</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">11,240</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">6.00</td><td style="text-align: left">%</td></tr></table>
<p style="margin: 0pt"> </p>
<p style="margin: 0pt"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b>NOTE TWENTY THREE: PARENT COMPANY FINANCIAL STATEMENTS</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; text-align: center; margin-bottom: 0"> <b>Balance Sheets</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; text-align: center; margin-bottom: 0"><b>(in thousands of dollars) </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; text-align: center; margin-bottom: 0"><b> </b></p>
<table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="text-align: left"> </td><td> </td>
<td colspan="6" style="text-align: center">December 31,</td><td> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td colspan="2" style="text-align: center; border-bottom: Black 1pt solid">2011</td><td style="padding-bottom: 1pt"> </td><td style="padding-bottom: 1pt"> </td>
<td colspan="2" style="text-align: center; border-bottom: Black 1pt solid">2010</td><td style="padding-bottom: 1pt"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; text-indent: -10pt; padding-left: 10pt">Assets</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="width: 72%; text-align: left; text-indent: -10pt; padding-left: 10pt">Cash</td><td style="width: 3%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">13</td><td style="width: 1%; text-align: left"> </td><td style="width: 3%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">70</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; text-indent: -10pt; padding-left: 10pt">Investment in subsidiaries</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">41,443</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">41,105</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; text-indent: -10pt; padding-left: 10pt">Receivable from subsidiaries</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">397</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">267</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; text-indent: -10pt; padding-left: 10pt">Fixed assets, net of accumulated depreciation </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: right">35</p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center"></p></td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: right">47</p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center"></p></td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-bottom: 1pt; text-indent: -10pt; padding-left: 10pt">Other assets</td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">1</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right"> 18</td><td style="padding-bottom: 1pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-bottom: 2.5pt; text-indent: -10pt; padding-left: 10pt">Total Assets</td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">41,889</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">41,507</td><td style="padding-bottom: 2.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; text-indent: -10pt; padding-left: 10pt"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; text-indent: -10pt; padding-left: 10pt">Liabilities</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; text-indent: -10pt; padding-left: 10pt">Accrued expenses</td><td> </td>
<td style="text-align: left">$</td><td style="text-align: right">29</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left">$</td><td style="text-align: right">53</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-bottom: 1pt; text-indent: -10pt; padding-left: 10pt">Income taxes payable</td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">186</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">86</td><td style="padding-bottom: 1pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-bottom: 1pt; text-indent: -10pt; padding-left: 10pt">Total Liabilities</td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">215</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">139</td><td style="padding-bottom: 1pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; text-indent: -10pt; padding-left: 10pt"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; text-indent: -10pt; padding-left: 10pt">Stockholders’ Equity</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; text-indent: -10pt; padding-left: 10pt">Common stock, par value $5 per share, 3,000,000 shares authorized, 1,436,874 issued</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">7,184</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">7,184</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; text-indent: -10pt; padding-left: 10pt">Surplus</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">1,662</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">1,662</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; text-indent: -10pt; padding-left: 10pt">Treasury stock, at cost, 100,001 shares</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(3,372</td><td style="text-align: left">)</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(3,372</td><td style="text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; text-indent: -10pt; padding-left: 10pt">Retained earnings</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">37,955</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">37,165</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-bottom: 1pt; text-indent: -10pt; padding-left: 10pt">Other accumulated comprehensive income (loss)</td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">(1,755</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">(1,271</td><td style="padding-bottom: 1pt; text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-bottom: 1pt; text-indent: -10pt; padding-left: 10pt">Total Stockholders’ Equity</td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">41,674</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">41,368</td><td style="padding-bottom: 1pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; text-indent: -10pt; padding-left: 10pt"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-bottom: 2.5pt; text-indent: -10pt; padding-left: 10pt">Total Liabilities and Stockholders’ Equity</td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">41,889</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">41,507</td><td style="padding-bottom: 2.5pt; text-align: left"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; text-align: center; margin-bottom: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; text-align: center; margin-bottom: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; text-align: center; margin-bottom: 0"><b> Statements of
Income and Retained Earnings</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; text-align: center; margin-bottom: 0"><b>(in thousands of dollars)</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; text-align: center; margin-bottom: 0"><b> </b></p>
<table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="text-align: left; padding-left: 10pt; text-indent: -10pt"> </td><td style="padding-bottom: 1pt"> </td>
<td colspan="6" style="text-align: center; border-bottom: Black 1pt solid">Years ended December 31,</td><td style="padding-bottom: 1pt"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: left; padding-left: 10pt; text-indent: -10pt"> </td><td style="padding-bottom: 1pt"> </td>
<td colspan="2" style="text-align: center; border-bottom: Black 1pt solid">2011</td><td style="padding-bottom: 1pt"> </td><td style="padding-bottom: 1pt"> </td>
<td colspan="2" style="text-align: center; border-bottom: Black 1pt solid">2010</td><td style="padding-bottom: 1pt"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: left; padding-left: 10pt; text-indent: -10pt">Income</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 72%; text-align: left; padding-left: 20pt; text-indent: -10pt">Dividends from subsidiaries</td><td style="width: 3%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">756</td><td style="width: 1%; text-align: left"> </td><td style="width: 3%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">1,740</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; text-indent: -10pt; padding-left: 20pt">Management fees from subsidiaries</td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">427</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">225</td><td style="padding-bottom: 1pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; text-indent: -10pt; padding-left: 10pt">Total Income</td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">1,183</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">1,965</td><td style="padding-bottom: 1pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-left: 10pt; text-indent: -10pt"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-left: 10pt; text-indent: -10pt">Expenses</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-left: 20pt; text-indent: -10pt">Salary and benefits expense</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">465</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">482</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-left: 20pt; text-indent: -10pt">Professional fees</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">108</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">190</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-left: 20pt; text-indent: -10pt">Directors fees</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">72</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">85</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; text-indent: -10pt; padding-left: 20pt">Other expenses</td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">113</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">113</td><td style="padding-bottom: 1pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; text-indent: -10pt; padding-left: 10pt">Total Expenses</td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">758</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">870</td><td style="padding-bottom: 1pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-left: 10pt; text-indent: -10pt"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-left: 10pt; text-indent: -10pt">Net income before income tax benefit and undistributed subsidiary net income</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">425</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">1,095</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-left: 10pt; text-indent: -10pt"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; text-indent: -10pt; padding-left: 10pt">Income tax (benefit)</td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">(145</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">(367</td><td style="padding-bottom: 1pt; text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-left: 10pt; text-indent: -10pt"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-left: 10pt; text-indent: -10pt">Income before undistributed subsidiary net income</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">570</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">1,462</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-left: 10pt; text-indent: -10pt"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; text-indent: -10pt; padding-left: 10pt">Undistributed subsidiary net income</td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">822</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">130</td><td style="padding-bottom: 1pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-left: 10pt; text-indent: -10pt"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; text-indent: -10pt; padding-left: 10pt">Net Income</td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">1,392</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">1,592</td><td style="padding-bottom: 2.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-left: 10pt; text-indent: -10pt"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-left: 10pt; text-indent: -10pt">Retained earnings, beginning of period</td><td> </td>
<td style="text-align: left">$</td><td style="text-align: right">37,165</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left">$</td><td style="text-align: right">36,963</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-left: 20pt; text-indent: -10pt">Dividends paid in cash</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(602</td><td style="text-align: left">)</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(1,390</td><td style="text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; text-indent: -10pt; padding-left: 20pt">Net income</td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">1,392</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">1,592</td><td style="padding-bottom: 1pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; text-indent: -10pt; padding-left: 10pt">Retained earnings, end of period</td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">37,955</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">37,165</td><td style="padding-bottom: 2.5pt; text-align: left"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; text-align: center; margin-bottom: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; text-align: center; margin-bottom: 0"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; text-align: center; margin-bottom: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center"><b>Statements of Cash Flows</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center"><b>(in thousands of dollars)</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; text-align: center; margin-bottom: 0"> </p>
<table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="text-align: center; padding-left: 10pt; text-indent: -10pt"> </td><td> </td>
<td colspan="6" style="text-align: center">Years Ended December 31,</td><td> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: center; padding-left: 10pt; text-indent: -10pt"> </td><td style="padding-bottom: 1pt"> </td>
<td colspan="2" style="text-align: center; border-bottom: Black 1pt solid">2011</td><td style="padding-bottom: 1pt"> </td><td style="padding-bottom: 1pt"> </td>
<td colspan="2" style="text-align: center; border-bottom: Black 1pt solid">2010</td><td style="padding-bottom: 1pt"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: left; padding-left: 10pt; text-indent: -10pt">Cash Flows From Operating Activities</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: center; padding-left: 10pt; text-indent: -10pt"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 72%; text-align: left; padding-left: 10pt; text-indent: -10pt">Net Income</td><td style="width: 3%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">1,392</td><td style="width: 1%; text-align: left"> </td><td style="width: 3%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">1,592</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: center; padding-left: 10pt; text-indent: -10pt"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-left: 10pt; text-indent: -10pt">Adjustments to net income</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; text-indent: -10pt; padding-left: 20pt">Depreciation</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">12</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">13</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; text-indent: -10pt; padding-left: 20pt">Undistributed subsidiary income</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(822</td><td style="text-align: left">)</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(130</td><td style="text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; text-indent: -10pt; padding-left: 20pt">Increase (decrease) in payables</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(24</td><td style="text-align: left">)</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">46</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; text-indent: -10pt; padding-left: 20pt">(Increase) decrease in receivables from subsidiaries</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(130</td><td style="text-align: left">)</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(267</td><td style="text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; text-indent: -10pt; padding-left: 20pt">(Increase) decrease in receivables</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">815</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">545</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; text-indent: -10pt; padding-left: 20pt">(Increase) decrease in other assets</td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">17</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">(12</td><td style="padding-bottom: 1pt; text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: center; padding-left: 10pt; text-indent: -10pt"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; text-indent: -10pt; padding-left: 10pt">Net Cash Provided by Operating Activities</td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">1,260</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">1,787</td><td style="padding-bottom: 1pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: center; padding-left: 10pt; text-indent: -10pt"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-left: 10pt; text-indent: -10pt">Cash Flows From Investing Activities</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; text-indent: -10pt; padding-left: 20pt">Net (payments to) subsidiaries</td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">(715</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">(641</td><td style="padding-bottom: 1pt; text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: center; padding-left: 10pt; text-indent: -10pt"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; text-indent: -10pt; padding-left: 20pt">Net Cash Used in Investing Activities</td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">(715</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">(641</td><td style="padding-bottom: 1pt; text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: center; padding-left: 10pt; text-indent: -10pt"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-left: 10pt; text-indent: -10pt">Cash Flows From Financing Activities</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; text-indent: -10pt; padding-left: 20pt">Dividends paid in cash</td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">(602</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">(1,390</td><td style="padding-bottom: 1pt; text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: center; padding-left: 10pt; text-indent: -10pt"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; text-indent: -10pt; padding-left: 20pt">Net Cash Used in Financing Activities</td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">(602</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">(1,390</td><td style="padding-bottom: 1pt; text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: center; padding-left: 10pt; text-indent: -10pt"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; text-indent: -10pt; padding-left: 20pt">Net Decrease in Cash</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(57</td><td style="text-align: left">)</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(244</td><td style="text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: center; padding-left: 10pt; text-indent: -10pt"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; text-indent: -10pt; padding-left: 20pt">Cash, beginning of year</td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">70</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">314</td><td style="padding-bottom: 1pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: center; padding-left: 10pt; text-indent: -10pt"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; text-indent: -10pt; padding-left: 20pt">Cash, end of year</td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">13</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">70</td><td style="padding-bottom: 2.5pt; text-align: left"> </td></tr></table>
<p style="margin: 0pt"> </p>
<p style="margin: 0pt"></p>
<table cellspacing="0" cellpadding="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif; border-collapse: collapse"><tr style="vertical-align: top"><td><p style="font: 9pt Arial; margin: 0; color: Red"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b>NOTE NINETEEN: INVESTMENTS IN LIFE INSURANCE CONTRACTS</b></p></td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Investments in insurance contracts consist
of single premium insurance contracts, which have the purpose of providing a rate of return to the Company and providing a source
of funding for retirement benefits to certain executives.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">A summary of the changes to the balance of
investments in insurance contracts for the twelve month periods ended December 31, 2011 and December 31, 2010 are shown in the
table below (in thousands of dollars):</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<table cellpadding="0" cellspacing="0" align="center" style="width: 60%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="padding-bottom: 1pt; padding-left: 5.4pt"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">2011</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">2010</td><td style="padding-bottom: 1pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 65%; text-align: right; padding-left: 5.4pt">Balance, beginning of period</td><td style="width: 10%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">7,031</td><td style="width: 1%; text-align: left"> </td><td style="width: 3%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">6,755</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: right; padding-bottom: 1pt; padding-left: 5.4pt">Increases in value of policies</td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">269</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">276</td><td style="padding-bottom: 1pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: right; padding-bottom: 2.5pt; padding-left: 5.4pt">Balance, end of period</td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">7,300</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">7,031</td><td style="padding-bottom: 2.5pt; text-align: left"> </td></tr></table>
<p style="margin: 0pt"> </p>
404194000
399900000
5560000
5123000
660000
830000
1534000
1534000
7070000
4700000
7300000
7031000
1513000
1791000
9411000
9901000
6111000
5407000
313056000
329336000
1741000
2087000
39557000
25324000
11253000
5836000
2329000
3532000
9321000
8282000
7062000
362520000
358532000
7203000
6327000
11245000
9393000
344072000
342812000
125335000
135724000
74112000
75003000
82915000
77392000
61710000
54693000
404194000
399900000
-1755000
-1271000
37955000
37165000
3372000
3372000
1662000
1662000
7184000
7184000
12923000
13196000
3624000
3487000
16547000
16683000
4583000
6214000
438000
474000
4145000
5740000
21130000
22897000
658000
731000
6000
8000
18000
14000
20448000
22144000
2152000
2145000
371000
414000
15000
52000
325000
120000
1441000
1559000
1336873
1336873
0.45
1.04
1.04
1.19
1392000
1592000
538000
640000
1930000
2232000
13145000
13109000
934000
956000
912000
88000
-22000
-54000
505000
426000
520000
662000
346000
407000
509000
604000
332000
388000
1157000
1101000
1483000
1487000
6425000
6936000
7022000
7253000
44000
526000
440000
857000
278000
117000
187000
190000
-576000
-483000
912000
159000
256000
141000
-325000
-120000
783000
787000
22000
52000
-15000
-52000
-8493000
3895000
293000
1362000
-8926000
-1524000
-5417000
3100000
1203000
-1652000
-346000
-98000
26390000
18297000
9087000
0
2915000
19650000
1130000
834000
2510000
-9928000
-602000
-1390000
1648000
1473000
3500000
0
12540000
6654000
-11280000
-13719000
1039000
1220000
4434000
2522000
4712000
6382000
1132000
743000
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b>NOTE ONE: SUMMARY OF OPERATIONS</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b> </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Highlands Bankshares, Inc. (the "Company")
is a bank holding company and operates under a charter issued by the State of West Virginia. The Company owns all of the outstanding
stock of The Grant County Bank ("Grant") and Capon Valley Bank ("Capon"), which operate under charters issued
by the State of West Virginia. The Company also owns all of the outstanding stock of HBI Life Insurance Company, Inc. ("HBI
Life"), which operates under a charter issued by the State of Arizona. State chartered banks are subject to regulation by
the West Virginia Division of Banking, The Federal Reserve Bank and the Federal Deposit Insurance Corporation, while the insurance
company is regulated by the Arizona Department of Insurance. The Banks provide services to customers located mainly in Grant, Hardy,
Hampshire, Mineral, Pendleton, Randolph and Tucker counties of West Virginia, including the towns of Petersburg, Keyser, Moorefield,
Davis and Wardensville through ten locations and in the county of Frederick in Virginia through two locations. The insurance company
sells life and accident coverage exclusively through the Company's subsidiary Banks.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b>NOTE THREE: SECURITIES</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">The income derived from taxable and non-taxable securities for the
years ended December 31, 2011 and 2010 is shown below (in thousands of dollars):</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="padding-left: 10pt; text-indent: -10pt"> </td><td> </td>
<td colspan="6" style="text-align: center">Year Ended December 31,</td><td style="text-align: center"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: center; padding-left: 10pt; text-indent: -10pt"> </td><td style="padding-bottom: 1pt; text-align: center"> </td>
<td colspan="2" style="text-align: center; border-bottom: Black 1pt solid">2011</td><td style="padding-bottom: 1pt; text-align: center"> </td><td style="padding-bottom: 1pt; text-align: center"> </td>
<td colspan="2" style="text-align: center; border-bottom: Black 1pt solid">2010</td><td style="padding-bottom: 1pt"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 72%; text-align: left; padding-left: 10pt; text-indent: -10pt">Investment securities, taxable</td><td style="width: 3%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">608</td><td style="width: 1%; text-align: left"> </td><td style="width: 3%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">625</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-left: 10pt; text-indent: -10pt">Investment securities, non-taxable</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">50</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">106</td><td style="text-align: left"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The carrying amount and estimated fair value
of securities available for sale at December 31, 2011 and 2010 are as follows (in thousands of dollars):</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; text-align: center; margin-bottom: 0"> Available for Sale Securities</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="text-indent: -10pt; padding-left: 10pt; text-align: center"> </td><td style="padding-bottom: 1pt; text-align: center"> </td>
<td style="border-bottom: Black 1pt solid; text-align: center"> </td><td style="border-bottom: Black 1pt solid; text-align: center">Amortized
Cost</td><td style="padding-bottom: 1pt; text-align: center"> </td><td style="padding-bottom: 1pt; text-align: center"> </td>
<td style="border-bottom: Black 1pt solid; text-align: center"> </td><td style="border-bottom: Black 1pt solid; text-align: center">Unrealized
Gains</td><td style="padding-bottom: 1pt; text-align: center"> </td><td style="padding-bottom: 1pt; text-align: center"> </td>
<td style="border-bottom: Black 1pt solid; text-align: center"> </td><td style="border-bottom: Black 1pt solid; text-align: center">Unrealized
Losses</td><td style="padding-bottom: 1pt; text-align: center"> </td><td style="padding-bottom: 1pt; text-align: center"> </td>
<td style="border-bottom: Black 1pt solid; text-align: center"> </td><td style="border-bottom: Black 1pt solid; text-align: center"><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center"> </p><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center">Fair
Value</p></td><td style="padding-bottom: 1pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-left: 10pt; text-indent: -10pt">December 31, 2011</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-left: 10pt; text-indent: -10pt"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 44%; text-align: left; padding-left: 10pt; text-indent: -10pt">U.S. Treasuries and Agencies</td><td style="width: 3%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">21,741</td><td style="width: 1%; text-align: left"> </td><td style="width: 3%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">195</td><td style="width: 1%; text-align: left"> </td><td style="width: 3%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">4</td><td style="width: 1%; text-align: left"> </td><td style="width: 3%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">21,932</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-left: 10pt; text-indent: -10pt">Mortgage backed securities</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">5,456</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">151</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">3</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">5,604</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-left: 10pt; text-indent: -10pt">Collateralized mortgage obligations</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">3,387</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">37</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">11</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">3,413</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-left: 10pt; text-indent: -10pt">State and municipals</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">2,642</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">56</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">0</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">2,698</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-indent: -10pt; padding-left: 10pt">Certificates of deposit</td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">5,901</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">15</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">6</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">5,910</td><td style="padding-bottom: 1pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; text-indent: -10pt; padding-left: 10pt">Total Securities Available for Sale</td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">39,127</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">454</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">24</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">39,557</td><td style="padding-bottom: 2.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-left: 10pt; text-indent: -10pt"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="padding-left: 10pt; text-indent: -10pt">December 31, 2010</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-left: 10pt; text-indent: -10pt"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-left: 10pt; text-indent: -10pt">U.S. Treasuries and Agencies</td><td> </td>
<td style="text-align: left">$</td><td style="text-align: right">9,132</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left">$</td><td style="text-align: right">133</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left">$</td><td style="text-align: right">7</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left">$</td><td style="text-align: right">9,258</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-left: 10pt; text-indent: -10pt">Mortgage backed securities</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">5,505</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">153</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">7</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">5,651</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-left: 10pt; text-indent: -10pt">Collateralized mortgage obligations</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">1,764</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">0</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">0</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">1,764</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-left: 10pt; text-indent: -10pt">State and municipals</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">2,123</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">34</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">0</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">2,157</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="padding-left: 10pt; text-indent: -10pt">Certificates of deposit</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">6,442</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">25</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">2</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">6,465</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; text-indent: -10pt; padding-left: 10pt">Marketable equities</td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">15</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">14</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">0</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">29</td><td style="padding-bottom: 1pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; text-indent: -10pt; padding-left: 10pt">Total Securities Available for Sale</td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">24,981</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">359</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">16</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">25,324</td><td style="padding-bottom: 2.5pt; text-align: left"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">  </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The carrying amount and fair value of securities
at December 31, 2011, by contractual maturity are shown below (in thousands of dollars). Expected maturities will differ from contractual
maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="padding-left: 20pt; text-indent: -10pt"> </td><td style="font-weight: bold; padding-bottom: 1pt"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Amortized Cost</td><td style="padding-bottom: 1pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1pt"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Fair Value</td><td style="padding-bottom: 1pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-left: 20pt; text-indent: -10pt"> </td><td> </td>
<td colspan="2" style="text-align: right"> </td><td> </td><td> </td>
<td colspan="2" style="text-align: right"> </td><td> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: left; padding-left: 10pt; text-indent: -10pt">Securities Available for Sale</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 72%; text-align: left; padding-left: 20pt; text-indent: -10pt">Due in next twelve months</td><td style="width: 3%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">9,495</td><td style="width: 1%; text-align: left"> </td><td style="width: 3%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">9,572</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-left: 20pt; text-indent: -10pt">Due after one year through five</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">20,788</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">20,968</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-left: 20pt; text-indent: -10pt">Due beyond five years</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">3,388</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">3,413</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; text-indent: -10pt; padding-left: 20pt">Mortgage backed securities</td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">5,456</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">5,604</td><td style="padding-bottom: 1pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; text-indent: -10pt; padding-left: 20pt">Total Available For Sale</td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">39,127</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">39,557</td><td style="padding-bottom: 2.5pt; text-align: left"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Securities having a carrying value of $9,449,000
at December 31, 2011 and $7,195,000 at December 31, 2010 were pledged to secure public deposits and for other purposes required
by law.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Information pertaining to securities with gross
unrealized losses at December 31, 2011 and 2010, aggregated by investment category and length of time that individual securities
have been in a continuous loss position is shown in the table below (in thousands of dollars):</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="padding-left: 10pt; text-indent: -10pt"> </td><td> </td>
<td colspan="6" style="text-align: center">Total</td><td> </td><td> </td>
<td colspan="6" style="text-align: center">Less than 12 Months</td><td> </td><td> </td>
<td colspan="6" style="text-align: center">12 Months or Greater</td><td> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-left: 10pt; text-indent: -10pt"> </td><td style="padding-bottom: 1pt"> </td>
<td colspan="2" style="border-bottom: Black 1pt solid"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"> </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">Fair Value</p></td><td style="padding-bottom: 1pt"> </td><td style="padding-bottom: 1pt"> </td>
<td colspan="2" style="text-align: center; border-bottom: Black 1pt solid">Gross Unrealized<br />
Losses</td><td style="padding-bottom: 1pt"> </td><td style="padding-bottom: 1pt"> </td>
<td colspan="2" style="border-bottom: Black 1pt solid"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"> </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">Fair Value</p></td><td style="padding-bottom: 1pt"> </td><td style="padding-bottom: 1pt"> </td>
<td colspan="2" style="text-align: center; border-bottom: Black 1pt solid">Gross Unrealized Losses</td><td style="padding-bottom: 1pt; text-align: center"><br />
 <br />
</td><td style="padding-bottom: 1pt"> </td>
<td colspan="2" style="border-bottom: Black 1pt solid"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"> </p><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center">Fair Value</p></td><td style="padding-bottom: 1pt"> </td><td style="padding-bottom: 1pt"> </td>
<td colspan="2" style="text-align: center; border-bottom: Black 1pt solid">Gross Unrealized<br />
Losses</td><td style="padding-bottom: 1pt"> </td></tr>
<tr style="vertical-align: bottom">
<td colspan="5" style="padding-bottom: 1pt">December 31, 2011</td><td style="padding-bottom: 1pt"> </td>
<td colspan="2" style="padding-bottom: 1pt"> </td><td style="padding-bottom: 1pt"> </td><td style="padding-bottom: 1pt"> </td>
<td colspan="2" style="padding-bottom: 1pt"> </td><td style="padding-bottom: 1pt"> </td><td style="padding-bottom: 1pt"> </td>
<td colspan="2" style="padding-bottom: 1pt"> </td><td style="padding-bottom: 1pt"> </td><td style="padding-bottom: 1pt"> </td>
<td colspan="2" style="padding-bottom: 1pt"> </td><td style="padding-bottom: 1pt"> </td><td style="padding-bottom: 1pt"> </td>
<td colspan="2" style="padding-bottom: 1pt"> </td><td style="padding-bottom: 1pt"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: left; padding-left: 10pt; text-indent: -10pt">Investment Category</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 34%; text-align: left; padding-left: 10pt; text-indent: -10pt">U.S. Treasuries and Agencies</td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 7%; text-align: right">2,494</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 7%; text-align: right">(4</td><td style="width: 1%; text-align: left">)</td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 7%; text-align: right">2,494</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 7%; text-align: right">(4</td><td style="width: 1%; text-align: left">)</td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 7%; text-align: right">0</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 7%; text-align: right">0</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-left: 10pt; text-indent: -10pt">Mortgage backed securities</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">1,007</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(3</td><td style="text-align: left">)</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">1,007</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(3</td><td style="text-align: left">)</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">0</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">0</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-left: 10pt; text-indent: -10pt">Collateralized mortgage obligations</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">904</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(11</td><td style="text-align: left">)</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">904</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(11</td><td style="text-align: left">)</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">0</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">0</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-indent: -10pt; padding-left: 10pt">Certificates of deposit</td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">943</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">(6</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">943</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">(6</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">0</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">0</td><td style="padding-bottom: 1pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-indent: -10pt; padding-left: 10pt">Total</td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">5,348</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">(24</td><td style="padding-bottom: 2.5pt; text-align: left">)</td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">5,348</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">(24</td><td style="padding-bottom: 2.5pt; text-align: left">)</td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">0</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">0</td><td style="padding-bottom: 2.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="padding-left: 10pt; text-indent: -10pt"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-left: 10pt; text-indent: -10pt">December 31, 2010</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-left: 10pt; text-indent: -10pt">Investment Category</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-left: 10pt; text-indent: -10pt">U.S. Treasuries and Agencies</td><td> </td>
<td style="text-align: left">$</td><td style="text-align: right">993</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left">$</td><td style="text-align: right">(7</td><td style="text-align: left">)</td><td> </td>
<td style="text-align: left">$</td><td style="text-align: right">993</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left">$</td><td style="text-align: right">(7</td><td style="text-align: left">)</td><td> </td>
<td style="text-align: left">$</td><td style="text-align: right">0</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left">$</td><td style="text-align: right">0</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-left: 10pt; text-indent: -10pt">Mortgage backed securities</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">2,283</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(7</td><td style="text-align: left">)</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">2,283</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(7</td><td style="text-align: left">)</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">0</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">0</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-left: 10pt; text-indent: -10pt">Collateralized mortgage obligations</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">827</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">0</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">827</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">0</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-indent: -10pt; padding-left: 10pt">Certificates of deposit</td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">494</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">(2</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">494</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">(2</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">0</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">0</td><td style="padding-bottom: 1pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-indent: -10pt; padding-left: 10pt">Total</td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">4,597</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">(16</td><td style="padding-bottom: 2.5pt; text-align: left">)</td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">4,597</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">(16</td><td style="padding-bottom: 2.5pt; text-align: left">)</td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">0</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">0</td><td style="padding-bottom: 2.5pt; text-align: left"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The number of securities available for sale
that were in an unrealized loss position at December 31, 2011 is summarized in the table below:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="padding-left: 10pt; text-indent: -10pt"> </td><td style="padding-bottom: 1pt"> </td>
<td colspan="2" style="text-align: right; border-bottom: Black 1pt solid"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: right"> </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: right"> </p><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center">Total</p></td><td style="padding-bottom: 1pt"> </td><td style="padding-bottom: 1pt"> </td>
<td colspan="2" style="text-align: center; border-bottom: Black 1pt solid">Loss Position less than 12 Months</td><td style="padding-bottom: 1pt"> </td><td style="padding-bottom: 1pt"> </td>
<td colspan="2" style="text-align: center; border-bottom: Black 1pt solid">Loss Position greater than 12 Months</td><td style="padding-bottom: 1pt"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 58%; text-align: left; padding-left: 10pt; text-indent: -10pt">U.S. Treasuries and Agencies</td><td style="width: 3%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 9%; text-align: right">2</td><td style="width: 1%; text-align: left"> </td><td style="width: 3%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 9%; text-align: right">2</td><td style="width: 1%; text-align: left"> </td><td style="width: 3%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 9%; text-align: right">0</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-left: 10pt; text-indent: -10pt">Mortgage backed securities</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">1</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">1</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">0</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-left: 10pt; text-indent: -10pt">Collateralized mortgage obligations</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">1</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">1</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">0</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="padding-left: 10pt; text-indent: -10pt">Certificates of deposit</td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">4</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">4</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">0</td><td style="padding-bottom: 1pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-left: 10pt; text-indent: -10pt">Total</td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left"> </td><td style="border-bottom: Black 2.5pt double; text-align: right">8</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left"> </td><td style="border-bottom: Black 2.5pt double; text-align: right">8</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left"> </td><td style="border-bottom: Black 2.5pt double; text-align: right">0</td><td style="padding-bottom: 2.5pt; text-align: left"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">It is management’s determination
that all securities held at December 31, 2011, which have fair values less than the amortized cost, have gross unrealized losses
related to increases in the current interest rates for similar issues of securities, and that no material impairment for any securities
in the portfolio exists because of downgrades of the securities or as a result of a change in the financial condition of any of
the issuers.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b>NOTE FIVE: LOANS</b></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">Loans outstanding as of December 31,
2011 and 2010 are summarized as follows (in thousands of dollars):</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="text-align: center; padding-left: 10pt"> </td><td style="padding-bottom: 1pt; text-align: center"> </td>
<td style="border-bottom: Black 1pt solid; text-align: center"> </td><td style="border-bottom: Black 1pt solid; text-align: center">2011</td><td style="padding-bottom: 1pt; text-align: center"> </td><td style="padding-bottom: 1pt; text-align: center"> </td>
<td style="border-bottom: Black 1pt solid; text-align: center"> </td><td style="border-bottom: Black 1pt solid; text-align: center">2010</td><td style="padding-bottom: 1pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 72%; padding-left: 10pt; text-indent: -10pt">Commercial</td><td style="width: 3%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">101,517</td><td style="width: 1%; text-align: left"> </td><td style="width: 3%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">97,089</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-left: 10pt; text-indent: -10pt">Real Estate Construction</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">23,711</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">33,746</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-left: 10pt; text-indent: -10pt">Real Estate Mortgage</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">162,214</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">168,226</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; text-indent: -10pt; padding-left: 10pt">Consumer Installment</td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">25,614</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">30,275</td><td style="padding-bottom: 1pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; text-indent: -10pt; padding-left: 10pt">Total Loans</td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">313,056</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">329,336</td><td style="padding-bottom: 2.5pt; text-align: left"> </td></tr>
</table>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">The following is a summary of information
pertaining to impaired loans by portfolio segment at December 31, 2011 and 2010 (in thousands of dollars):</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Impaired Loans</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>As of December 31, 2011</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="text-align: center"> </td><td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: center">Recorded Investment</td><td style="font-weight: bold"> </td><td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: center">Unpaid Principal Balance</td><td style="font-weight: bold"> </td><td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: center">Related Allowance</td><td style="font-weight: bold"> </td><td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: center">Average Recorded Investment</td><td style="font-weight: bold"> </td><td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: center">Interest Income Recognized</td><td style="font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td style="font-weight: bold; text-align: center"> </td><td> </td>
<td colspan="2"> </td><td> </td><td> </td>
<td colspan="2"> </td><td> </td><td> </td>
<td colspan="2"> </td><td> </td><td> </td>
<td colspan="2"> </td><td> </td><td> </td>
<td colspan="2"> </td><td> </td></tr>
<tr style="vertical-align: bottom">
<td style="font-weight: bold; text-align: left; padding-left: 10pt; text-indent: -10pt">With no related allowance recorded:</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td style="text-align: left"> </td><td style="text-align: left"> </td><td style="text-align: left"> </td><td style="text-align: left"> </td><td style="text-align: left"> </td><td style="text-align: left"> </td><td style="text-align: left"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 45%; text-align: left; padding-left: 10pt">Commercial Mortgage</td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 7%; text-align: right">21,160</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 7%; text-align: right">21,160</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 7%; text-align: right">0</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 7%; text-align: right">23,065</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 7%; text-align: right">1,287</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-left: 10pt">Commercial Other</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">261</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">261</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">0</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">300</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">23</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-bottom: 1pt; padding-left: 10pt">Consumer Mortgage</td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">930</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">930</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">0</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">940</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">49</td><td style="padding-bottom: 1pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="font-weight: bold; text-align: right; padding-bottom: 1pt; padding-left: 10pt">Sub-total</td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left">$</td><td style="border-bottom: Black 1pt solid; text-align: right">22,351</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left">$</td><td style="border-bottom: Black 1pt solid; text-align: right">22,351</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left">$</td><td style="border-bottom: Black 1pt solid; text-align: right">0</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left">$</td><td style="border-bottom: Black 1pt solid; text-align: right">24,305</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left">$</td><td style="border-bottom: Black 1pt solid; text-align: right">1,359</td><td style="padding-bottom: 1pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="font-weight: bold; text-align: left; padding-left: 10pt; text-indent: -10pt">With an allowance recorded:</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td style="text-align: left"> </td><td style="text-align: left"> </td><td style="text-align: left"> </td><td style="text-align: left"> </td><td style="text-align: left"> </td><td style="text-align: left"> </td><td style="text-align: left"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-left: 10pt">Commercial Mortgage</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">5,383</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">5,383</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">1,018</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">5,468</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">125</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-left: 10pt">Commercial Other</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">430</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">430</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">167</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">475</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">23</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-bottom: 1pt; padding-left: 10pt">Consumer Mortgage</td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">1,036</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">1,036</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">328</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">1,036</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">42</td><td style="padding-bottom: 1pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="font-weight: bold; text-align: right; padding-bottom: 1pt; padding-left: 10pt">Sub-total</td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left">$</td><td style="border-bottom: Black 1pt solid; text-align: right">6,849</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left">$</td><td style="border-bottom: Black 1pt solid; text-align: right">6,849</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left">$</td><td style="border-bottom: Black 1pt solid; text-align: right">1,513</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left">$</td><td style="border-bottom: Black 1pt solid; text-align: right">6,979</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left">$</td><td style="border-bottom: Black 1pt solid; text-align: right">190</td><td style="padding-bottom: 1pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="font-weight: bold; text-align: left; padding-left: 10pt; text-indent: -10pt">Total</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td style="text-align: left"> </td><td style="text-align: left"> </td><td style="text-align: left"> </td><td style="text-align: left"> </td><td style="text-align: left"> </td><td style="text-align: left"> </td><td style="text-align: left"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-left: 10pt">Commercial Mortgage</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">26,543</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">26,543</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">1,018</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">28,534</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">1,412</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-left: 10pt">Commercial Other</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">691</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">691</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">167</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">775</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">46</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-bottom: 1pt; padding-left: 10pt">Consumer Mortgage</td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">1,966</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">1,966</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">328</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">1,976</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">91</td><td style="padding-bottom: 1pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="font-weight: bold; text-align: right; padding-bottom: 2.5pt; padding-left: 10pt">Total</td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">29,200</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">29,200</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">1,513</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">31,285</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">1,549</td><td style="padding-bottom: 2.5pt; text-align: left"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Impaired Loans</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>As of December 31, 2010</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="text-align: center"> </td><td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: center">Recorded Investment</td><td style="font-weight: bold"> </td><td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: center">Unpaid Principal Balance</td><td style="font-weight: bold"> </td><td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: center">Related Allowance</td><td style="font-weight: bold"> </td><td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: center">Average Recorded Investment</td><td style="font-weight: bold"> </td><td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: center">Interest Income Recognized</td><td style="font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td style="font-weight: bold; text-align: center"> </td><td> </td>
<td colspan="2"> </td><td> </td><td> </td>
<td colspan="2"> </td><td> </td><td> </td>
<td colspan="2"> </td><td> </td><td> </td>
<td colspan="2"> </td><td> </td><td> </td>
<td colspan="2"> </td><td> </td></tr>
<tr style="vertical-align: bottom">
<td style="font-weight: bold; text-align: left; padding-left: 10pt; text-indent: -10pt">With no related allowance recorded:</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td style="text-align: left"> </td><td style="text-align: left"> </td><td style="text-align: left"> </td><td style="text-align: left"> </td><td style="text-align: left"> </td><td style="text-align: left"> </td><td style="text-align: left"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 45%; text-align: left; padding-left: 10pt">Commercial Mortgage</td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 7%; text-align: right">18,455</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 7%; text-align: right">18,455</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 7%; text-align: right">0</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 7%; text-align: right">26,557</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 7%; text-align: right">137</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-left: 10pt">Commercial Other</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">840</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">840</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">0</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">1,159</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">13</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-bottom: 1pt; padding-left: 10pt">Consumer Mortgage</td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">253</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">253</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">0</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">256</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">2</td><td style="padding-bottom: 1pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="font-weight: bold; text-align: right; padding-bottom: 1pt; padding-left: 10pt">Sub-total</td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left">$</td><td style="border-bottom: Black 1pt solid; text-align: right">19,548</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left">$</td><td style="border-bottom: Black 1pt solid; text-align: right">19,548</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left">$</td><td style="border-bottom: Black 1pt solid; text-align: right">0</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left">$</td><td style="border-bottom: Black 1pt solid; text-align: right">27,972</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left">$</td><td style="border-bottom: Black 1pt solid; text-align: right">152</td><td style="padding-bottom: 1pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="font-weight: bold; text-align: left; padding-left: 10pt; text-indent: -10pt">With an allowance recorded:</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td style="text-align: left"> </td><td style="text-align: left"> </td><td style="text-align: left"> </td><td style="text-align: left"> </td><td style="text-align: left"> </td><td style="text-align: left"> </td><td style="text-align: left"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-left: 10pt">Commercial Mortgage</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">5,692</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">5,692</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">904</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">6,871</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">272</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-bottom: 1pt; padding-left: 10pt">Commercial Other</td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">148</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">148</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">21</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">203</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">19</td><td style="padding-bottom: 1pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="font-weight: bold; text-align: right; padding-bottom: 1pt; padding-left: 10pt">Sub-total</td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left">$</td><td style="border-bottom: Black 1pt solid; text-align: right">5,840</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left">$</td><td style="border-bottom: Black 1pt solid; text-align: right">5,840</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left">$</td><td style="border-bottom: Black 1pt solid; text-align: right">925</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left">$</td><td style="border-bottom: Black 1pt solid; text-align: right">7,074</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left">$</td><td style="border-bottom: Black 1pt solid; text-align: right">291</td><td style="padding-bottom: 1pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="font-weight: bold; text-align: left; padding-left: 10pt; text-indent: -10pt">Total</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td style="text-align: left"> </td><td style="text-align: left"> </td><td style="text-align: left"> </td><td style="text-align: left"> </td><td style="text-align: left"> </td><td style="text-align: left"> </td><td style="text-align: left"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-left: 10pt">Commercial Mortgage</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">24,147</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">24,147</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">904</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">33,428</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">409</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-left: 10pt">Commercial Other</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">988</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">988</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">21</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">1,362</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">32</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-bottom: 1pt; padding-left: 10pt">Consumer Mortgage</td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">253</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">253</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">0</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">256</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">2</td><td style="padding-bottom: 1pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="font-weight: bold; text-align: right; padding-bottom: 2.5pt; padding-left: 10pt">Total</td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">25,388</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">25,388</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">925</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">35,046</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">443</td><td style="padding-bottom: 2.5pt; text-align: left"> </td></tr>
</table>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">No loans were identified as impaired
with potential loss as of December 31, 2011 or December 31, 2010 for which an allowance was not provided. The table above includes
troubled debt restructurings (TDR) of $14,152,000 and $5,607,000 as of December 31, 2011 and December 31, 2010, respectively. Loans
are identified as TDR if concessions are made related to the terms of the loan beyond regular lending practices in response to
a borrower’s financial condition. Restructured loans performing in accordance with modified terms consist of twenty commercial
mortgages and fifteen consumer mortgages. Restructured loans not performing in accordance with modified terms consist of six commercial
mortgages and seven consumer mortgages. These loans were balloon renewals or restructurings of borrowers experiencing financial
difficulties at either current market rates for borrowers not experiencing financial difficulties, were modified to reduce interest
rates, or provide for interest-only payment periods. These loans did not have any additional commitments to extend credit at December
31, 2011.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">Balances of non-accrual loans at December
31, 2011 and December 31, 2010 are shown below (in thousands of dollars):</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="text-align: justify"> </td><td> </td>
<td colspan="2" style="text-align: center">December 31, 2011</td><td> </td><td> </td>
<td colspan="2" style="text-align: center">December 31, 2010</td><td> </td></tr>
<tr style="vertical-align: bottom">
<td style="font-weight: bold; text-align: justify; padding-left: 10pt; text-indent: -10pt">Loans on non-accrual status</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 66%; text-align: justify; padding-left: 10pt">Commercial Mortgage</td><td style="width: 3%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 12%; text-align: right">4,152</td><td style="width: 1%; text-align: left"> </td><td style="width: 3%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 12%; text-align: right">2,215</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: justify; padding-left: 10pt">Commercial Other</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">295</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">139</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: justify; padding-left: 10pt">Consumer Mortgage</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">3,526</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">4,240</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: justify; padding-bottom: 1pt; padding-left: 10pt">Consumer Other</td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">48</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">385</td><td style="padding-bottom: 1pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: justify; padding-left: 10pt">Total non-accrual loans</td><td> </td>
<td style="text-align: left">$</td><td style="text-align: right">8,021</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left">$</td><td style="text-align: right">6,979</td><td style="text-align: left"> </td></tr>
</table>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Certain loans identified as impaired are placed
into non-accrual status, based upon the loan’s performance compared with contractual terms. Not all loans identified as impaired
are placed into non-accrual status. The interest on loans identified as impaired and placed into non-accrual status that was not
recognized as income throughout the year (foregone interest) was $396,000 and $427,000 in 2011 and 2010, respectively.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The following table presents the contractual
aging of the recorded investment in past due loans by class as of December 31, 2011 and December 31, 2010 (in thousands of dollars):</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Age Analysis of Past Due Financing Receivables</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>As of December 31, 2011</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="text-align: center; padding-left: 10pt"> </td><td style="font-weight: bold; text-align: center"> </td>
<td style="font-weight: bold; text-align: center"> </td><td style="font-weight: bold; text-align: center">30-59 Days Past Due</td><td style="font-weight: bold; text-align: center"> </td><td style="font-weight: bold; text-align: center"> </td>
<td style="font-weight: bold; text-align: center"> </td><td style="font-weight: bold; text-align: center">60-89 Days Past Due</td><td style="font-weight: bold; text-align: center"> </td><td style="font-weight: bold; text-align: center"> </td>
<td style="font-weight: bold; text-align: center"> </td><td style="font-weight: bold; text-align: center">Greater Than 90 Days</td><td style="font-weight: bold; text-align: center"> </td><td style="font-weight: bold; text-align: center"> </td>
<td style="font-weight: bold; text-align: center"> </td><td style="font-weight: bold; text-align: center">Total Past Due</td><td style="font-weight: bold; text-align: center"> </td><td style="font-weight: bold; text-align: center"> </td>
<td style="font-weight: bold; text-align: center"> </td><td style="font-weight: bold; text-align: center">Current</td><td style="font-weight: bold; text-align: center"> </td><td style="font-weight: bold; text-align: center"> </td>
<td style="font-weight: bold; text-align: center"> </td><td style="font-weight: bold; text-align: center">Total Financing Receivables</td><td style="font-weight: bold; text-align: center"> </td><td style="font-weight: bold; text-align: center"> </td>
<td style="font-weight: bold; text-align: center"> </td><td style="font-weight: bold; text-align: center">Recorded Investment<br /> > 90 Days and Accruing</td><td style="font-weight: bold; text-align: center"> </td></tr>
<tr style="vertical-align: bottom">
<td style="font-weight: bold; text-align: center; text-indent: -10pt; padding-left: 10pt"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 26%; font-weight: bold; text-align: left; text-indent: -10pt; padding-left: 10pt">Commercial - Mortgage</td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 6%; text-align: right">3,541</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 6%; text-align: right">1,490</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 6%; text-align: right">3,599</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 6%; text-align: right">8,630</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 6%; text-align: right">130,744</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 6%; text-align: right">139,374</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 10%; text-align: right">212</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="font-weight: bold; text-indent: -10pt; padding-left: 10pt">Commercial -Other</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">313</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">27</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">297</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">637</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">13,072</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">13,709</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">11</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="font-weight: bold; text-align: left; text-indent: -10pt; padding-left: 10pt">Consumer - Mortgage</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">4,317</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">2,770</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">3,120</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">10,207</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">126,265</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">136,472</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">269</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="font-weight: bold; text-align: left; padding-bottom: 1pt; text-indent: -10pt; padding-left: 10pt">Consumer - Other</td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">738</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">300</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">65</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">1,103</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">22,398</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">23,501</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">44</td><td style="padding-bottom: 1pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="font-weight: bold; padding-bottom: 2.5pt; text-indent: -10pt; padding-left: 10pt">Total</td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">8,909</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">4,587</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">7,081</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">20,577</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">292,479</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">313,056</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">536</td><td style="padding-bottom: 2.5pt; text-align: left"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Age Analysis of Past Due Financing Receivables</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>As of December 31, 2010</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="text-align: center; padding-left: 10pt"> </td><td style="font-weight: bold; text-align: center"> </td>
<td style="font-weight: bold; text-align: center"> </td><td style="font-weight: bold; text-align: center">30-59 Days Past Due</td><td style="font-weight: bold; text-align: center"> </td><td style="font-weight: bold; text-align: center"> </td>
<td style="font-weight: bold; text-align: center"> </td><td style="font-weight: bold; text-align: center">60-89 Days Past Due</td><td style="font-weight: bold; text-align: center"> </td><td style="font-weight: bold; text-align: center"> </td>
<td style="font-weight: bold; text-align: center"> </td><td style="font-weight: bold; text-align: center">Greater Than 90 Days</td><td style="font-weight: bold; text-align: center"> </td><td style="font-weight: bold; text-align: center"> </td>
<td style="font-weight: bold; text-align: center"> </td><td style="font-weight: bold; text-align: center">Total Past Due</td><td style="font-weight: bold; text-align: center"> </td><td style="font-weight: bold; text-align: center"> </td>
<td style="font-weight: bold; text-align: center"> </td><td style="font-weight: bold; text-align: center">Current</td><td style="font-weight: bold; text-align: center"> </td><td style="font-weight: bold; text-align: center"> </td>
<td style="font-weight: bold; text-align: center"> </td><td style="font-weight: bold; text-align: center">Total Financing Receivables</td><td style="font-weight: bold; text-align: center"> </td><td style="font-weight: bold; text-align: center"> </td>
<td style="font-weight: bold; text-align: center"> </td><td style="font-weight: bold; text-align: center">Recorded Investment<br />
> 90 Days and Accruing</td><td style="font-weight: bold; text-align: center"> </td></tr>
<tr style="vertical-align: bottom">
<td style="font-weight: bold; text-align: center; padding-left: 10pt; text-indent: -10pt"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 26%; font-weight: bold; text-align: left; padding-left: 10pt; text-indent: -10pt">Commercial - Mortgage</td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 6%; text-align: right">3,691</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 6%; text-align: right">663</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 6%; text-align: right">2,188</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 6%; text-align: right">6,542</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 6%; text-align: right">136,354</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 6%; text-align: right">142,896</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 10%; text-align: right">301</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="font-weight: bold; padding-left: 10pt; text-indent: -10pt">Commercial -Other</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">234</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">396</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">46</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">676</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">14,361</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">15,037</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">46</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="font-weight: bold; text-align: left; padding-left: 10pt; text-indent: -10pt">Consumer - Mortgage</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">5,391</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">2,952</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">4,089</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">12,432</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">130,073</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">142,505</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">397</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="font-weight: bold; text-align: left; text-indent: -10pt; padding-left: 10pt">Consumer - Other</td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">917</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">580</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">171</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">1,668</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">27,230</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">28,898</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">122</td><td style="padding-bottom: 1pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="font-weight: bold; text-indent: -10pt; padding-left: 10pt">Total</td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">10,233</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">4,591</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">6,494</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">21,318</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">308,018</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">329,336</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">866</td><td style="padding-bottom: 2.5pt; text-align: left"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Troubled Debt Restructurings: </b></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">The following tables present the Company’s
loans restructured during the twelve month reporting period ending December 31, 2011 considered troubled debt restructuring by
loan type (in thousands of dollars except number of contracts):</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td><td style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td colspan="10" style="font-weight: bold; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">Troubled
Debt Restructurings</font></td><td style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom">
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td><td style="font-weight: bold; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td colspan="10" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><font style="font: 10pt Times New Roman, Times, Serif">For
the twelve month period ended December 31, 2011</font></td><td style="padding-bottom: 1pt; font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td><td style="font-weight: bold; padding-bottom: 1pt; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><font style="font: 10pt Times New Roman, Times, Serif">Number
of Contacts</font></td><td style="padding-bottom: 1pt; font-weight: bold; border-bottom: Black 1pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td><td style="font-weight: bold; padding-bottom: 1pt; border-bottom: Black 1pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><font style="font: 10pt Times New Roman, Times, Serif">Pre-Modification
Outstanding Recorded Investment</font></td><td style="padding-bottom: 1pt; font-weight: bold; border-bottom: Black 1pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td><td style="font-weight: bold; padding-bottom: 1pt; border-bottom: Black 1pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><font style="font: 10pt Times New Roman, Times, Serif">Post-Modification
Outstanding Recorded Investment</font></td><td style="padding-bottom: 1pt; font-weight: bold; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: left; padding-left: 10pt; text-indent: -10pt"><font style="font: 10pt Times New Roman, Times, Serif">Troubled
Debt Restructurings</font></td><td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td><td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td><td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td><td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td><td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td><td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td><td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td><td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td><td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 49%; text-align: left; padding-left: 10pt"><font style="font: 10pt Times New Roman, Times, Serif">Commercial
Mortgage</font></td><td style="width: 3%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td><td style="width: 12%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">20</font></td><td style="width: 1%; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td><td style="width: 3%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td><td style="width: 12%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">12,039</font></td><td style="width: 1%; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td><td style="width: 3%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td><td style="width: 12%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">11,874</font></td><td style="width: 1%; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-left: 10pt"><font style="font: 10pt Times New Roman, Times, Serif">Commercial Other</font></td><td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td><td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">3</font></td><td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td><td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td><td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">469</font></td><td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td><td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td><td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">466</font></td><td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-left: 10pt; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif">Consumer Mortgage</font></td><td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left; padding-bottom: 1pt; border-bottom: Black 1pt solid"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td><td style="text-align: right; border-bottom: Black 1pt solid"><font style="font: 10pt Times New Roman, Times, Serif">9</font></td><td style="text-align: left; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td><td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left; border-bottom: Black 1pt solid"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td><td style="text-align: right; border-bottom: Black 1pt solid"><font style="font: 10pt Times New Roman, Times, Serif">1,569</font></td><td style="text-align: left; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td><td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left; border-bottom: Black 1pt solid"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td><td style="text-align: right; border-bottom: Black 1pt solid"><font style="font: 10pt Times New Roman, Times, Serif">1,595</font></td><td style="text-align: left; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: right; padding-bottom: 2.5pt; padding-left: 10pt"><font style="font: 10pt Times New Roman, Times, Serif">Total</font></td><td style="padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: Black 2.5pt double; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td><td style="border-bottom: Black 2.5pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">32</font></td><td style="padding-bottom: 2.5pt; text-align: left; border-bottom: Black 2.5pt double"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td><td style="padding-bottom: 2.5pt; border-bottom: Black 2.5pt double"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: Black 2.5pt double; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td><td style="border-bottom: Black 2.5pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">14,077</font></td><td style="padding-bottom: 2.5pt; text-align: left; border-bottom: Black 2.5pt double"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td><td style="padding-bottom: 2.5pt; border-bottom: Black 2.5pt double"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: Black 2.5pt double; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td><td style="border-bottom: Black 2.5pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">13,935</font></td><td style="padding-bottom: 2.5pt; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The following table presents the Company’s restructured loans
for which there was a payment default during the twelve month reporting period ended December 31, 2011:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td><td style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td colspan="10" style="font-weight: bold; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">Defaulted
Troubled Debt Restructurings</font></td><td style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom">
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td><td style="font-weight: bold; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td colspan="10" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><font style="font: 10pt Times New Roman, Times, Serif">For
the twelve month period ended December 31, 2011</font></td><td style="padding-bottom: 1pt; font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td><td style="font-weight: bold; padding-bottom: 1pt; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><font style="font: 10pt Times New Roman, Times, Serif">Number
of Contacts</font></td><td style="padding-bottom: 1pt; font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td><td style="font-weight: bold; padding-bottom: 1pt; text-align: center; border-bottom: Black 1pt solid"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><font style="font: 10pt Times New Roman, Times, Serif">Recorded
Investment</font></td><td style="padding-bottom: 1pt; font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td><td style="font-weight: bold; padding-bottom: 1pt; text-align: center; border-bottom: Black 1pt solid"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><font style="font: 10pt Times New Roman, Times, Serif">Allowance
associated with Defaulted TDR’s</font></td><td style="padding-bottom: 1pt; font-weight: bold; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: left; padding-left: 10pt; text-indent: -10pt"><font style="font: 10pt Times New Roman, Times, Serif">Troubled
debt restructurings:</font></td><td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td><td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td><td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td><td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td><td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td><td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td><td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td><td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td><td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 49%; text-align: left; padding-left: 10pt"><font style="font: 10pt Times New Roman, Times, Serif">Commercial
Mortgage</font></td><td style="width: 3%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td><td style="width: 12%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">5</font></td><td style="width: 1%; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td><td style="width: 3%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td><td style="width: 12%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">1,826</font></td><td style="width: 1%; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td><td style="width: 3%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td><td style="width: 12%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">405</font></td><td style="width: 1%; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-left: 10pt"><font style="font: 10pt Times New Roman, Times, Serif">Commercial Other</font></td><td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td><td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">4</font></td><td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td><td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td><td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">431</font></td><td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td><td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td><td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">85</font></td><td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-left: 10pt; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif">Consumer Mortgage</font></td><td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left; padding-bottom: 1pt; border-bottom: Black 1pt solid"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td><td style="text-align: right; border-bottom: Black 1pt solid"><font style="font: 10pt Times New Roman, Times, Serif">7</font></td><td style="text-align: left; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td><td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left; border-bottom: Black 1pt solid"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td><td style="text-align: right; border-bottom: Black 1pt solid"><font style="font: 10pt Times New Roman, Times, Serif">641</font></td><td style="text-align: left; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td><td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: left; border-bottom: Black 1pt solid"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td><td style="text-align: right; border-bottom: Black 1pt solid"><font style="font: 10pt Times New Roman, Times, Serif">62</font></td><td style="text-align: left; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: right; padding-bottom: 2.5pt; padding-left: 10pt"><font style="font: 10pt Times New Roman, Times, Serif">Total</font></td><td style="padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: Black 2.5pt double; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td><td style="border-bottom: Black 2.5pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">16</font></td><td style="padding-bottom: 2.5pt; text-align: left; border-bottom: Black 2.5pt double"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td><td style="padding-bottom: 2.5pt; border-bottom: Black 2.5pt double"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: Black 2.5pt double; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td><td style="border-bottom: Black 2.5pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">2,898</font></td><td style="padding-bottom: 2.5pt; text-align: left; border-bottom: Black 2.5pt double"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td><td style="padding-bottom: 2.5pt; border-bottom: Black 2.5pt double"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: Black 2.5pt double; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td><td style="border-bottom: Black 2.5pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">552</font></td><td style="padding-bottom: 2.5pt; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b>NOTE SIX: EARNINGS PER SHARE</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="letter-spacing: 0pt">Earnings per share represents
income available to common stockholders divided by the weighted average number of common shares outstanding during the period.
During 2011 and 2010, there were no changes to the outstanding shares of common stock. </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b>NOTE THIRTEEN: DEBT INSTRUMENTS</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company has borrowed money from the Federal
Home Loan Bank of Pittsburgh (FHLB). This debt consists of both borrowings with terms of maturities of six months or greater and
also certain debts with maturities of thirty days or less.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The borrowings with long term maturities may
have either single payment maturities or amortize. The various borrowings mature from 2012 to 2020. The interest rates on the various
borrowings at December 31, 2011 range from 1.68% to 5.96%. The weighted average interest rate on the borrowings at December 31,
2011 was 3.76%. Repayments of long-term debt are due monthly, quarterly or in a single payment at maturity. The maturities of long-term
debt as of December 31, 2011 are as follows (in thousands of dollars):</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="text-decoration: underline">Year</td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: center">Balance</td><td style="padding-bottom: 1pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 86%; text-align: left">2012</td><td style="width: 3%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">5,597</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">2013</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">351</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">2014</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">603</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">2015</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">0</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">2016</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">4,544</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td>Thereafter</td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">150</td><td style="padding-bottom: 1pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td>Total</td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">11,245</td><td style="padding-bottom: 2.5pt; text-align: left"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">In addition to utilization of the FHLB for
borrowings of long term debt, the Company also can utilize the FHLB for overnight and other short term borrowings; however, at
December 31, 2011, the Company had no balances in overnight and other short term borrowings. The Company has total borrowing capacity
from the FHLB of $73,394,000. The Banks have pledged mortgage loans and securities as collateral on the FHLB borrowings in the
approximate amount of $73,394,000 at December 31, 2011.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The subsidiary Banks also have short term borrowing
capacity from each of their respective correspondent banks. As of December 31, 2011 the Company has total borrowing capacity from
its correspondent banks of $13,500,000. The interest rates on these lines are variable and are subject to change daily based on
current market conditions. There were no borrowings outstanding on these lines as of December 31, 2011 or 2010.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b>NOTE EIGHTEEN: FAIR VALUE MEASUREMENTS</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="letter-spacing: 0pt">The Company
uses fair value measurements to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures.
In accordance with the authoritative accounting guidance regarding fair value measurements and disclosures, the fair value of a
financial instrument is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date. Fair value is best determined based on quoted market prices. However, in the
event there are no quoted market prices available, fair values are based on estimates using present value or other valuation techniques.
Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows.
Accordingly, the fair value estimates may not be realized in an immediate settlement of the instrument. </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="letter-spacing: 0pt"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="letter-spacing: 0pt">The recent
fair value guidance provides a consistent definition of fair value, which focuses on exit price in an orderly transaction (that
is, not a forced liquidation or distressed sale) between market participants as the measurement date under current market conditions.
If there has been a significant decrease in the volume and level of activity for the asset or liability, a change in valuation
technique or the use of multiple valuation </font>techniques may be appropriate. In such instances, determining the price at which
willing market participants would transact at the measurement date under current market conditions depends on the facts and circumstances
and requires the use of significant judgment. The fair value is a reasonable amount within the range that is most representative
of fair value under current market conditions.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">ASC 820, <i>Fair Value Measurements and Disclosures</i>,
defines fair value, establishes a framework for measuring fair value, establishes a three-level valuation hierarchy for disclosure
of fair value measurement and enhances disclosure requirements for fair value measurements. The valuation hierarchy is based upon
the transparency of inputs to the valuation of an asset or liability as of the measurement date. The three levels are defined as
follows:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif; border-collapse: collapse">
<tr style="vertical-align: top">
<td style="width: 11%; font-size: 12pt; text-align: center"><font style="font: 10pt Symbol; letter-spacing: 0pt">·</font><font style="font: 7pt Times New Roman, Times, Serif"> </font><font style="font-size: 10pt"></font></td>
<td style="width: 89%; text-underline-style: double; text-align: justify"><font style="letter-spacing: 0pt"><u>Level One:</u> </font>Inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.</td></tr>
<tr style="vertical-align: top">
<td style="font-size: 12pt; text-align: center"><font style="font: 10pt Symbol; letter-spacing: 0pt">·</font></td>
<td style="text-align: justify"><font style="letter-spacing: 0pt"><u>Level Two</u>: I</font>nputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.</td></tr>
<tr style="vertical-align: top">
<td style="font-size: 12pt; text-align: center"><font style="font: 10pt Symbol">·</font></td>
<td style="text-align: justify"><u>Level Three</u>: Inputs to the valuation methodology are unobservable and significant to the fair value measurement.</td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Following is a description of the valuation
methodologies used for instruments measured at fair value on the Company’s balance sheet, as well as the general classification
of such instruments pursuant to the valuation hierarchy:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><u>Securities</u></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Where quoted prices are available in an active
market, securities are classified within level 1 of the valuation hierarchy. Level 1 securities would include highly liquid government
bonds, mortgage products and exchange traded equities. If quoted market prices are not available, then fair values are estimated
by using pricing models, quoted prices of securities with similar characteristics, or discounted cash flow. Level 2 securities
would include U.S. agency securities, mortgage-backed agency securities, obligations of states and political subdivisions and certain
corporate, asset backed and other securities. In certain cases where there is limited activity or less transparency around inputs
to the valuation, securities are classified within level 3 of the valuation hierarchy. Currently, all of the Company’s securities
are considered to be Level 2 securities.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><u>Impaired Loans</u></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The fair value measurement guidance applies
to loans measured for impairment using the practical expedients permitted by authoritative accounting guidance, including impaired
loans measured at an observable market price (if available), or at the fair value of the loan’s collateral (if the loan is
collateral dependent). Fair value of the loan’s collateral, when the loan is dependent on collateral, is determined by appraisals
or independent valuation which is then adjusted for the estimated cost related to liquidation of the collateral. Fair value of
collateral dependent loans are considered level two if the most recent appraisal or independent valuation is complete within the
preceding twelve months. Fair value of collateral dependent loans are considered level three if the most recent appraisal or independent
valuation is over twelve months old. At December 31, 2011, the Company had impaired loans of $29,200,000 of which $6,849,000 required
an allowance of $1,513,000. (see Note Five).</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><u>Other Real Estate Owned</u></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Certain assets such as other real estate owned
(OREO) are measured at fair value. Real estate acquired through foreclosure is recorded at an estimated fair value less cost to
sell. At or near the time of foreclosure, a real estate appraisal is obtained on the properties. The real estate is then valued
at the lesser of the appraised value or the loan balance, including interest receivable, at the time of foreclosure less an estimate
of costs to sell the property. Appraised values are typically determined utilizing an income or market valuation approach based
on an appraisal conducted by an independent, licensed appraiser (Level 2). If the acquired property is a house or building in the
process of construction or if an appraisal of the real estate property is over twelve months old, the fair value is considered
Level 3. The estimate of costs to sell the property is based on historical transactions of similar holdings.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">The Company, at December 31, 2011, had no liabilities subject to
fair value reporting requirements. The tables below summarize assets at December 31, 2011 and 2010 measured at fair value on a
recurring basis (in thousands of dollars):</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="font-weight: bold; text-decoration: underline; text-align: center; padding-bottom: 1pt; padding-left: 5.4pt">December 31, 2011</td><td style="font-weight: bold; padding-bottom: 1pt; text-align: center"> </td>
<td style="border-bottom: Black 1pt solid; font-weight: bold; text-align: center"> </td><td style="border-bottom: Black 1pt solid; font-weight: bold; text-align: center">Level 1</td><td style="padding-bottom: 1pt; font-weight: bold; text-align: center"> </td><td style="font-weight: bold; padding-bottom: 1pt; text-align: center"> </td>
<td style="border-bottom: Black 1pt solid; font-weight: bold; text-align: center"> </td><td style="border-bottom: Black 1pt solid; font-weight: bold; text-align: center">Level 2</td><td style="padding-bottom: 1pt; font-weight: bold; text-align: center"> </td><td style="font-weight: bold; padding-bottom: 1pt; text-align: center"> </td>
<td style="border-bottom: Black 1pt solid; font-weight: bold; text-align: center"> </td><td style="border-bottom: Black 1pt solid; font-weight: bold; text-align: center">Level 3</td><td style="padding-bottom: 1pt; font-weight: bold; text-align: center"> </td><td style="font-weight: bold; padding-bottom: 1pt; text-align: center"> </td>
<td style="border-bottom: Black 1pt solid; font-weight: bold; text-align: center"> </td><td style="border-bottom: Black 1pt solid; font-weight: bold; text-align: center"><b>Total
Fair Value Measurements</b></td><td style="padding-bottom: 1pt; font-weight: bold; text-align: center"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 44%; text-align: left; padding-left: 10pt; text-indent: -10pt">U.S. Treasuries and Agencies</td><td style="width: 3%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">0</td><td style="width: 1%; text-align: left"> </td><td style="width: 3%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">21,932</td><td style="width: 1%; text-align: left"> </td><td style="width: 3%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">0</td><td style="width: 1%; text-align: left"> </td><td style="width: 3%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">21,932</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-left: 10pt; text-indent: -10pt">Mortgage backed securities</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">0</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">5,604</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">0</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">5,604</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-left: 10pt; text-indent: -10pt">Collateralized mortgage obligations</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">0</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">3,413</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">0</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">3,413</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-left: 10pt; text-indent: -10pt">States and municipalities</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">0</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">2,698</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">0</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">2,698</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-left: 10pt; text-indent: -10pt; padding-bottom: 1pt">Certificates of deposit</td><td style="padding-bottom: 1pt"> </td>
<td style="text-align: left; border-bottom: Black 1pt solid"> </td><td style="text-align: right; border-bottom: Black 1pt solid">0</td><td style="text-align: left; padding-bottom: 1pt"> </td><td style="padding-bottom: 1pt"> </td>
<td style="text-align: left; border-bottom: Black 1pt solid"> </td><td style="text-align: right; border-bottom: Black 1pt solid">5,910</td><td style="text-align: left; padding-bottom: 1pt"> </td><td style="padding-bottom: 1pt"> </td>
<td style="text-align: left; border-bottom: Black 1pt solid"> </td><td style="text-align: right; border-bottom: Black 1pt solid">0</td><td style="text-align: left; padding-bottom: 1pt"> </td><td style="padding-bottom: 1pt"> </td>
<td style="text-align: left; border-bottom: Black 1pt solid"> </td><td style="text-align: right; border-bottom: Black 1pt solid">5,910</td><td style="text-align: left; padding-bottom: 1pt"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-left: 10pt; text-indent: -10pt; padding-bottom: 2.5pt">Total Available For Sale Securities</td><td style="padding-bottom: 2.5pt"> </td>
<td style="text-align: left; border-bottom: Black 2.5pt double">$</td><td style="text-align: right; border-bottom: Black 2.5pt double">0</td><td style="text-align: left; padding-bottom: 2.5pt"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="text-align: left; border-bottom: Black 2.5pt double">$</td><td style="text-align: right; border-bottom: Black 2.5pt double">39,557</td><td style="text-align: left; padding-bottom: 2.5pt"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="text-align: left; border-bottom: Black 2.5pt double">$</td><td style="text-align: right; border-bottom: Black 2.5pt double">0</td><td style="text-align: left; padding-bottom: 2.5pt"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="text-align: left; border-bottom: Black 2.5pt double">$</td><td style="text-align: right; border-bottom: Black 2.5pt double">39,557</td><td style="text-align: left; padding-bottom: 2.5pt"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="font-weight: bold; text-decoration: underline; text-align: center; padding-left: 10pt">December 31, 2010</td><td style="font-weight: bold; padding-bottom: 1pt; text-align: center"> </td>
<td style="border-bottom: Black 1pt solid; font-weight: bold; text-align: center"> </td><td style="border-bottom: Black 1pt solid; font-weight: bold; text-align: center">Level 1</td><td style="padding-bottom: 1pt; font-weight: bold; text-align: center"> </td><td style="font-weight: bold; padding-bottom: 1pt; text-align: center"> </td>
<td style="border-bottom: Black 1pt solid; font-weight: bold; text-align: center"> </td><td style="border-bottom: Black 1pt solid; font-weight: bold; text-align: center">Level 2</td><td style="padding-bottom: 1pt; font-weight: bold; text-align: center"> </td><td style="font-weight: bold; padding-bottom: 1pt; text-align: center"> </td>
<td style="border-bottom: Black 1pt solid; font-weight: bold; text-align: center"> </td><td style="border-bottom: Black 1pt solid; font-weight: bold; text-align: center">Level 3</td><td style="padding-bottom: 1pt; font-weight: bold; text-align: center"> </td><td style="font-weight: bold; padding-bottom: 1pt; text-align: center"> </td>
<td style="border-bottom: Black 1pt solid; font-weight: bold; text-align: center"> </td><td style="border-bottom: Black 1pt solid; font-weight: bold; text-align: center"><b>Total
Fair Value Measurements</b></td><td style="padding-bottom: 1pt; font-weight: bold; text-align: center"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 44%; text-align: left; padding-left: 10pt; text-indent: -10pt">U.S. Treasuries and Agencies</td><td style="width: 3%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">0</td><td style="width: 1%; text-align: left"> </td><td style="width: 3%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">9,258</td><td style="width: 1%; text-align: left"> </td><td style="width: 3%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">0</td><td style="width: 1%; text-align: left"> </td><td style="width: 3%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">9,258</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-left: 10pt; text-indent: -10pt">Mortgage backed securities</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">0</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">5,651</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">0</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">5,651</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-left: 10pt; text-indent: -10pt">Collateralized mortgage obligations</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">0</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">1,764</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">0</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">1,764</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-left: 10pt; text-indent: -10pt">States and municipalities</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">0</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">2,157</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">0</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">2,157</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-left: 10pt; text-indent: -10pt">Certificates of deposit</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">0</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">6,465</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">0</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">6,465</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-left: 10pt; text-indent: -10pt; padding-bottom: 1pt">Marketable equities</td><td style="padding-bottom: 1pt"> </td>
<td style="text-align: left; border-bottom: Black 1pt solid"> </td><td style="text-align: right; border-bottom: Black 1pt solid">0</td><td style="text-align: left; padding-bottom: 1pt"> </td><td style="padding-bottom: 1pt"> </td>
<td style="text-align: left; border-bottom: Black 1pt solid"> </td><td style="text-align: right; border-bottom: Black 1pt solid">29</td><td style="text-align: left; padding-bottom: 1pt"> </td><td style="padding-bottom: 1pt"> </td>
<td style="text-align: left; border-bottom: Black 1pt solid"> </td><td style="text-align: right; border-bottom: Black 1pt solid">0</td><td style="text-align: left; padding-bottom: 1pt"> </td><td style="padding-bottom: 1pt"> </td>
<td style="text-align: left; border-bottom: Black 1pt solid"> </td><td style="text-align: right; border-bottom: Black 1pt solid">29</td><td style="text-align: left; padding-bottom: 1pt"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-left: 10pt; text-indent: -10pt; padding-bottom: 2.5pt">Total Available For Sale Securities</td><td style="padding-bottom: 2.5pt"> </td>
<td style="text-align: left; border-bottom: Black 2.5pt double">$</td><td style="text-align: right; border-bottom: Black 2.5pt double">0</td><td style="text-align: left; padding-bottom: 2.5pt"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="text-align: left; border-bottom: Black 2.5pt double">$</td><td style="text-align: right; border-bottom: Black 2.5pt double">25,324</td><td style="text-align: left; padding-bottom: 2.5pt"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="text-align: left; border-bottom: Black 2.5pt double">$</td><td style="text-align: right; border-bottom: Black 2.5pt double">0</td><td style="text-align: left; padding-bottom: 2.5pt"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="text-align: left; border-bottom: Black 2.5pt double">$</td><td style="text-align: right; border-bottom: Black 2.5pt double">25,324</td><td style="text-align: left; padding-bottom: 2.5pt"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">The tables below summarize assets at December 31, 2011 and 2010
measured at fair value on a non-recurring basis (in thousands of dollars):</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="font-weight: bold; text-indent: -10pt; padding-left: 10pt; text-align: center"> </td><td style="font-weight: bold; padding-bottom: 1pt; text-align: center"> </td>
<td style="border-bottom: Black 1pt solid; font-weight: bold; text-align: center"> </td><td style="border-bottom: Black 1pt solid; font-weight: bold; text-align: center">Level 1</td><td style="padding-bottom: 1pt; font-weight: bold; text-align: center"> </td><td style="font-weight: bold; padding-bottom: 1pt; text-align: center"> </td>
<td style="border-bottom: Black 1pt solid; font-weight: bold; text-align: center"> </td><td style="border-bottom: Black 1pt solid; font-weight: bold; text-align: center">Level 2</td><td style="padding-bottom: 1pt; font-weight: bold; text-align: center"> </td><td style="font-weight: bold; padding-bottom: 1pt; text-align: center"> </td>
<td style="border-bottom: Black 1pt solid; font-weight: bold; text-align: center"> </td><td style="border-bottom: Black 1pt solid; font-weight: bold; text-align: center">Level 3</td><td style="padding-bottom: 1pt; font-weight: bold; text-align: center"> </td><td style="font-weight: bold; padding-bottom: 1pt; text-align: center"> </td>
<td style="border-bottom: Black 1pt solid; font-weight: bold; text-align: center"> </td><td style="border-bottom: Black 1pt solid; font-weight: bold; text-align: center"><b>Total
Fair Value<u> </u>Measurements</b></td><td style="padding-bottom: 1pt; font-weight: bold; text-align: center"> </td><td style="font-weight: bold; padding-bottom: 1pt; text-align: center"> </td>
<td style="border-bottom: Black 1pt solid; font-weight: bold; text-align: center"> </td><td style="border-bottom: Black 1pt solid; font-weight: bold; text-align: center"><b>Twelve
Months Ended December 31, 2011<br />
Total gains/(losses)</b></td><td style="padding-bottom: 1pt; font-weight: bold; text-align: center"> </td></tr>
<tr style="vertical-align: bottom">
<td style="font-weight: bold; padding-left: 10pt; text-indent: -10pt"> </td><td style="font-weight: bold"> </td>
<td style="font-weight: bold; text-align: left"> </td><td style="font-weight: bold; text-align: right"> </td><td style="font-weight: bold; text-align: left"> </td><td style="font-weight: bold"> </td>
<td style="font-weight: bold; text-align: left"> </td><td style="font-weight: bold; text-align: right"> </td><td style="font-weight: bold; text-align: left"> </td><td style="font-weight: bold"> </td>
<td style="font-weight: bold; text-align: left"> </td><td style="font-weight: bold; text-align: right"> </td><td style="font-weight: bold; text-align: left"> </td><td style="font-weight: bold"> </td>
<td style="font-weight: bold; text-align: left"> </td><td style="font-weight: bold; text-align: right"> </td><td style="font-weight: bold; text-align: left"> </td><td style="font-weight: bold"> </td>
<td style="font-weight: bold; text-align: left"> </td><td style="font-weight: bold; text-align: right"> </td><td style="font-weight: bold; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 26%; text-align: left; padding-left: 10pt; text-indent: -10pt">Other real estate owned</td><td style="width: 3%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">0</td><td style="width: 1%; text-align: left"> </td><td style="width: 3%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">5,862</td><td style="width: 1%; text-align: left"> </td><td style="width: 3%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">1,208</td><td style="width: 1%; text-align: left"> </td><td style="width: 3%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">7,070</td><td style="width: 1%; text-align: left"> </td><td style="width: 3%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 13%; text-align: right">(912</td><td style="width: 1%; text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-left: 10pt; text-indent: -10pt; padding-bottom: 1pt">Impaired Loans</td><td style="padding-bottom: 1pt"> </td>
<td style="text-align: left; border-bottom: Black 1pt solid"> </td><td style="text-align: right; border-bottom: Black 1pt solid">0</td><td style="text-align: left; padding-bottom: 1pt"> </td><td style="padding-bottom: 1pt"> </td>
<td style="text-align: left; border-bottom: Black 1pt solid"> </td><td style="text-align: right; border-bottom: Black 1pt solid">4,771</td><td style="text-align: left; padding-bottom: 1pt"> </td><td style="padding-bottom: 1pt"> </td>
<td style="text-align: left; border-bottom: Black 1pt solid"> </td><td style="text-align: right; border-bottom: Black 1pt solid">565</td><td style="text-align: left; padding-bottom: 1pt"> </td><td style="padding-bottom: 1pt"> </td>
<td style="text-align: left; border-bottom: Black 1pt solid"> </td><td style="text-align: right; border-bottom: Black 1pt solid">5,336</td><td style="text-align: left; padding-bottom: 1pt"> </td><td style="padding-bottom: 1pt"> </td>
<td style="text-align: left; border-bottom: Black 1pt solid"> </td><td style="text-align: right; border-bottom: Black 1pt solid">0</td><td style="text-align: left; padding-bottom: 1pt"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-left: 10pt; text-indent: -10pt; padding-bottom: 2.5pt">Total</td><td style="padding-bottom: 2.5pt"> </td>
<td style="text-align: left; border-bottom: Black 2.5pt double">$</td><td style="text-align: right; border-bottom: Black 2.5pt double">0</td><td style="text-align: left; padding-bottom: 2.5pt"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="text-align: left; border-bottom: Black 2.5pt double">$</td><td style="text-align: right; border-bottom: Black 2.5pt double">10,633</td><td style="text-align: left; padding-bottom: 2.5pt"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="text-align: left; border-bottom: Black 2.5pt double">$</td><td style="text-align: right; border-bottom: Black 2.5pt double">1,773</td><td style="text-align: left; padding-bottom: 2.5pt"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="text-align: left; border-bottom: Black 2.5pt double">$</td><td style="text-align: right; border-bottom: Black 2.5pt double">12,406</td><td style="text-align: left; padding-bottom: 2.5pt"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="text-align: left; border-bottom: Black 2.5pt double">$</td><td style="text-align: right; border-bottom: Black 2.5pt double">(912</td><td style="text-align: left; padding-bottom: 2.5pt">)</td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="font-weight: bold; padding-left: 10pt; text-align: center; text-indent: -10pt"> </td><td style="font-weight: bold; text-align: center"> </td>
<td style="font-weight: bold; text-align: center"> </td><td style="font-weight: bold; text-align: center"> </td><td style="font-weight: bold; text-align: center"> </td><td style="font-weight: bold; text-align: center"> </td>
<td style="font-weight: bold; text-align: center"> </td><td style="font-weight: bold; text-align: center"> </td><td style="font-weight: bold; text-align: center"> </td><td style="font-weight: bold; text-align: center"> </td>
<td style="font-weight: bold; text-align: center"> </td><td style="font-weight: bold; text-align: center"> </td><td style="font-weight: bold; text-align: center"> </td><td style="font-weight: bold; text-align: center"> </td>
<td style="font-weight: bold; text-align: center"> </td><td style="font-weight: bold; text-align: center"> </td><td style="font-weight: bold; text-align: center"> </td><td style="font-weight: bold; text-align: center"> </td>
<td style="font-weight: bold; text-align: center"> </td><td style="font-weight: bold; text-align: center">Twelve Months Ended December 31, 2010</td><td style="font-weight: bold; text-align: center"> </td></tr>
<tr style="vertical-align: bottom">
<td style="font-weight: bold; text-indent: -10pt; padding-left: 10pt; text-align: center"> </td><td style="font-weight: bold; padding-bottom: 1pt; text-align: center"> </td>
<td style="border-bottom: Black 1pt solid; font-weight: bold; text-align: center"> </td><td style="border-bottom: Black 1pt solid; font-weight: bold; text-align: center">Level 1</td><td style="padding-bottom: 1pt; font-weight: bold; text-align: center"> </td><td style="font-weight: bold; padding-bottom: 1pt; text-align: center"> </td>
<td style="border-bottom: Black 1pt solid; font-weight: bold; text-align: center"> </td><td style="border-bottom: Black 1pt solid; font-weight: bold; text-align: center">Level 2</td><td style="padding-bottom: 1pt; font-weight: bold; text-align: center"> </td><td style="font-weight: bold; padding-bottom: 1pt; text-align: center"> </td>
<td style="border-bottom: Black 1pt solid; font-weight: bold; text-align: center"> </td><td style="border-bottom: Black 1pt solid; font-weight: bold; text-align: center">Level 3</td><td style="padding-bottom: 1pt; font-weight: bold; text-align: center"> </td><td style="font-weight: bold; padding-bottom: 1pt; text-align: center"> </td>
<td style="border-bottom: Black 1pt solid; font-weight: bold; text-align: center"> </td><td style="border-bottom: Black 1pt solid; font-weight: bold; text-align: center"><b>Total
Fair Value Measurements</b></td><td style="padding-bottom: 1pt; font-weight: bold; text-align: center"> </td><td style="font-weight: bold; padding-bottom: 1pt; text-align: center"> </td>
<td style="border-bottom: Black 1pt solid; font-weight: bold; text-align: center"> </td><td style="border-bottom: Black 1pt solid; font-weight: bold; text-align: center">Total Gains/(Losses)</td><td style="padding-bottom: 1pt; font-weight: bold; text-align: center"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 26%; text-align: left; padding-left: 10pt; text-indent: -10pt">Other real estate owned</td><td style="width: 3%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">0</td><td style="width: 1%; text-align: left"> </td><td style="width: 3%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">1,042</td><td style="width: 1%; text-align: left"> </td><td style="width: 3%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">3,658</td><td style="width: 1%; text-align: left"> </td><td style="width: 3%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">4,700</td><td style="width: 1%; text-align: left"> </td><td style="width: 3%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 13%; text-align: right">(88</td><td style="width: 1%; text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-left: 10pt; text-indent: -10pt; padding-bottom: 1pt">Impaired Loans</td><td style="padding-bottom: 1pt"> </td>
<td style="text-align: left; border-bottom: Black 1pt solid">$</td><td style="text-align: right; border-bottom: Black 1pt solid">0</td><td style="text-align: left; padding-bottom: 1pt"> </td><td style="padding-bottom: 1pt"> </td>
<td style="text-align: left; border-bottom: Black 1pt solid">$</td><td style="text-align: right; border-bottom: Black 1pt solid">0</td><td style="text-align: left; padding-bottom: 1pt"> </td><td style="padding-bottom: 1pt"> </td>
<td style="text-align: left; border-bottom: Black 1pt solid">$</td><td style="text-align: right; border-bottom: Black 1pt solid">4,915</td><td style="text-align: left; padding-bottom: 1pt"> </td><td style="padding-bottom: 1pt"> </td>
<td style="text-align: left; border-bottom: Black 1pt solid">$</td><td style="text-align: right; border-bottom: Black 1pt solid">4,915</td><td style="text-align: left; padding-bottom: 1pt"> </td><td style="padding-bottom: 1pt"> </td>
<td style="text-align: left; border-bottom: Black 1pt solid">$</td><td style="text-align: right; border-bottom: Black 1pt solid">0</td><td style="text-align: left; padding-bottom: 1pt"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-left: 10pt; text-indent: -10pt; padding-bottom: 2.5pt">Total</td><td style="padding-bottom: 2.5pt"> </td>
<td style="text-align: left; border-bottom: Black 2.5pt double">$</td><td style="text-align: right; border-bottom: Black 2.5pt double">0</td><td style="text-align: left; padding-bottom: 2.5pt"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="text-align: left; border-bottom: Black 2.5pt double">$</td><td style="text-align: right; border-bottom: Black 2.5pt double">1,042</td><td style="text-align: left; padding-bottom: 2.5pt"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="text-align: left; border-bottom: Black 2.5pt double">$</td><td style="text-align: right; border-bottom: Black 2.5pt double">8,573</td><td style="text-align: left; padding-bottom: 2.5pt"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="text-align: left; border-bottom: Black 2.5pt double">$</td><td style="text-align: right; border-bottom: Black 2.5pt double">9,615</td><td style="text-align: left; padding-bottom: 2.5pt"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="text-align: left; border-bottom: Black 2.5pt double">$</td><td style="text-align: right; border-bottom: Black 2.5pt double">(88</td><td style="text-align: left; padding-bottom: 2.5pt">)</td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The information above discusses financial instruments
carried on the Company’s balance sheet at fair value. Other financial instruments on the Company’s balance sheet, while
not carried at fair value, do have market values which may differ from the carrying value. The following information shows the
carrying values and estimated fair values of financial instruments and discusses the methods and assumptions used in determining
these fair values.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="letter-spacing: 0pt">The fair
value of the Company's assets and liabilities is influenced heavily by market conditions. Fair value applies to both assets and
liabilities, either on or off the balance sheet. Fair value is defined as the amount at which a financial instrument could be exchanged
in a current transaction between willing parties, other than in a forced or liquidation sale.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="letter-spacing: 0pt"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="letter-spacing: 0pt">The methods
and assumptions detailed below were used to estimate the fair value of each class of financial instruments for which it is practicable
to estimate that value.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="letter-spacing: 0pt"><u>Cash,
Due from Banks and Money Market Investments</u></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="letter-spacing: 0pt">The carrying
amount of cash, due from bank balances, interest bearing deposits and federal funds sold is a reasonable estimate of fair value.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="letter-spacing: 0pt"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="letter-spacing: 0pt"><u>Securities</u></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="letter-spacing: 0pt">Fair values
of securities are based on quoted market prices or dealer quotes. If a quoted market price is not available, fair value is estimated
using quoted market prices for similar securities.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="letter-spacing: 0pt"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="letter-spacing: 0pt"><u>Restricted
Investments</u></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="letter-spacing: 0pt">The carrying
amount of restricted investments is a reasonable estimate of fair value, and considers the limited marketability of such securities.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="letter-spacing: 0pt"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="letter-spacing: 0pt"><u>Loans</u></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="letter-spacing: 0pt">The fair
value of loans is estimated by discounting the future cash flows using the current rates at which similar loans would be made to
borrowers with similar credit ratings and for the same remaining maturities, taking into consideration the credit risk in various
loan categories.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="letter-spacing: 0pt"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="letter-spacing: 0pt"><u>Deposits</u></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="letter-spacing: 0pt">The fair
value of demand, interest checking, regular savings and money market deposits is the amount payable on demand at the reporting
date. The fair value of fixed maturity certificates of deposit is estimated using the rates currently offered for deposits of similar
remaining maturities.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="letter-spacing: 0pt"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="letter-spacing: 0pt"><u>Long-Term
Debt Instruments</u></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="letter-spacing: 0pt">The fair
value of fixed rate loans is estimated using the rates currently offered by the Federal Home Loan Bank for indebtedness with similar
maturities.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="letter-spacing: 0pt"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="letter-spacing: 0pt"><u>Interest
Payable and Receivable</u></font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">The carrying values of interest receivable
and payable are reasonable estimates of fair value.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><u>Life Insurance</u></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="letter-spacing: 0pt">The carrying
amount of life insurance contracts is assumed to be a reasonable fair value. Life insurance contracts are carried on the balance
sheet at their redemption value as of December 31, 2011 and 2010. This redemption value is based on existing market conditions
and therefore represents the fair value of the contract.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="letter-spacing: 0pt"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="letter-spacing: 0pt"><u>Off-Balance-Sheet
Items</u></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="letter-spacing: 0pt">The carrying
amount and estimated fair value of off-balance-sheet items were not material at December 31, 2011 or 2010.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">The carrying amount and estimated fair values of financial instruments
as of December 31, 2011 and 2010 are shown in the table below (in thousands of dollars):</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">  </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"></p>
<table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="text-align: center; padding-left: 10pt; text-indent: -10pt"> </td><td style="text-align: center; padding-bottom: 1pt"> </td>
<td colspan="6" style="text-align: center; border-bottom: Black 1pt solid">December 31, 2011</td><td style="text-align: center; padding-bottom: 1pt"> </td><td style="text-align: center; padding-bottom: 1pt"> </td>
<td colspan="6" style="text-align: center; border-bottom: Black 1pt solid">December 31, 2010</td><td style="text-align: center; padding-bottom: 1pt"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: center; padding-left: 10pt; text-indent: -10pt"> </td><td style="text-align: center"> </td>
<td style="text-align: center"> </td><td style="text-align: center">Carrying<br />
Amount</td><td style="text-align: center"> </td><td style="text-align: center"> </td>
<td style="text-align: center"> </td><td style="text-align: center">Estimated<br />
Fair Value</td><td style="text-align: center"> </td><td style="text-align: center"> </td>
<td style="text-align: center"> </td><td style="text-align: center">Carrying<br />
Amount</td><td style="text-align: center"> </td><td style="text-align: center"> </td>
<td style="text-align: center"> </td><td style="text-align: center">Estimated<br />
Fair Value</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: left; padding-left: 10pt; text-indent: -10pt">Financial Assets:</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 56%; text-align: left; padding-left: 10pt; text-indent: -10pt">Cash and due from banks</td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 7%; text-align: right">9,321</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 7%; text-align: right">9,321</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 7%; text-align: right">8,282</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 7%; text-align: right">8,282</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-left: 10pt; text-indent: -10pt">Interest bearing deposits</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">2,329</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">2,329</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">3,532</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">3,532</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-left: 10pt; text-indent: -10pt">Federal funds sold</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">11,253</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">11,253</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">5,836</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">5,836</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-left: 10pt; text-indent: -10pt">Securities available for sale</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">39,557</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">39,557</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">25,324</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">25,324</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-left: 10pt; text-indent: -10pt">Restricted investments</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">1,741</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">1,741</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">2,087</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">2,087</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-left: 10pt; text-indent: -10pt">Loans, net</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">306,945</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">307,629</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">323,929</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">324,780</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-left: 10pt; text-indent: -10pt">Interest receivable</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">1,513</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">1,513</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">1,791</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">1,791</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-left: 10pt; text-indent: -10pt">Life insurance contracts</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">7,300</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">7,300</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">7,031</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">7,031</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-left: 10pt; text-indent: -10pt"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-left: 10pt; text-indent: -10pt">Financial Liabilities:</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-left: 10pt; text-indent: -10pt">Demand and savings deposits</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">144,625</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">144,625</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">132,085</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">132,085</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-left: 10pt; text-indent: -10pt">Time deposits</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">199,447</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">201,074</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">210,727</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">211,590</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-left: 10pt; text-indent: -10pt">Long term debt instruments</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">11,245</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">11,667</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">9,393</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">10,142</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-left: 10pt; text-indent: -10pt">Interest payable</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">359</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">359</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">488</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">488</td><td style="text-align: left"> </td></tr></table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b>NOTE TWENTY ONE: INTANGIBLE ASSETS</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company’s balance sheet contains
several components of intangible assets. At December 31, 2011, the total balance of intangible assets was comprised of Goodwill
and Core Deposit Intangible Assets acquired as a result of the acquisition of other banks and also an intangible asset related
to the purchased naming rights for a performing arts center located within the Company’s primary business area.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">A summary of the changes in balances of intangible assets for the
twelve month periods ended December 31, 2011 and 2010 are shown below (in thousands of dollars):</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="text-indent: -10pt; padding-left: 10pt"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: center">2011</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: center">2010</td><td style="padding-bottom: 1pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 78%; padding-left: 10pt; text-indent: -10pt">Balance beginning of period</td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 7%; text-align: right">2,364</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 7%; text-align: right">2,554</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-left: 10pt; text-indent: -10pt"><font style="font: 10pt Times New Roman, Times, Serif">Additional
intangible assets</font></td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">17</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">0</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; text-indent: -10pt; padding-left: 10pt">Amortization of intangible assets</td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">(187</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">(190</td><td style="padding-bottom: 1pt; text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-indent: -10pt; padding-left: 10pt">Balance end of period</td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">2,194</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">2,364</td><td style="padding-bottom: 2.5pt; text-align: left"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">The expected amortization of the intangible balances at December
31, 2011 for the next five years is summarized in the table below (in thousands of dollars):</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="text-decoration: underline; text-align: left">Year</td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: center">Expected Expense</td><td style="padding-bottom: 1pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 86%; text-align: left">2012</td><td style="width: 3%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 9%; text-align: right">182</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">2013</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">169</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">2014</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">168</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">2015</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">140</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">2016</td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">1</td><td style="padding-bottom: 1pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">Total</td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">660</td><td style="padding-bottom: 2.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr></table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b>NOTE TWENTY TWO: SUBSEQUENT EVENTS</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company evaluates subsequent events
that have occurred after the balance sheet, but before the financial statements are issued. There are two types of subsequent events:
(1) recognized, or those that provide additional evidence about conditions that existed at the date of the balance sheet, including
the estimates inherent in the process of preparing financial statements, and (2) non-recognized, or those that provide evidence
about conditions that did not exist at the date of the balance sheet but arose after that date.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">Based on management’s evaluation
through the date these financial statements were issued, the Company did not identify any recognized or non-recognized subsequent
events that would have required adjustment or disclosure in the consolidated financial statements.</p>