4 while total investments increased to24

For thefull year ended December 31, 2008 the company posted a consolidated net incomeof $308,948 a reduction from net income of $742,609 for 2007. Net income perbasic share for the year ended December 31, 2008 was $0.44 as compared to $1.02per share for the year ended December 31, 2007 or a reduction of 56.9. Netincome per fully diluted share was $0.41 as compared to $0.94 per diluted sharefor fiscal year 2007.Net income for the fourth quarter ended December 31, 2008 was $45,936 or $0.06per diluted share, as compared to $130,144 or $0.17 per diluted share for thefourth quarter of 2007.Dann H. Bowman, President and Chief Executive Officer stated, "Despite lower netearnings in 2008, we are very pleased with the current condition of the Bank andits prospects for the next year.

During 2008 the Bank made significantprovisions to Loan Loss Reserve which reduced earnings; however, at year-end theBank had no delinquent loans, and continues to be in a strong financialcondition.In part, because of the solid financial condition of the Bank and its low numberof problem loans, the Board of Directors chose not to apply for Governmentsupport through the TARP program. The financialcondition of the Bank is strong, and loan quality is good; and we see manyopportunities for growth and expansion over the next several years."Financial ConditionTotal deposits increased by 0.9 to $71.0 million at December 31, 2008 a slightincrease from $70.4 million at December 31, 2007. Although we experienced adecrease in core deposits of 3.4, from $68.2 million at December 31, 2007 to$65.9 million at December 31, 2008, our core deposits to total deposits remainsvery favorable at 92.9.At December 31, 2008, total assets were $83.4 million, a increase of $3.4million or 4.3 from December 31, 2007.Gross loans declined to $49.8 million at December 31, 2008 from $53.2 million atDecember 31, 2007 or a decrease of 6.4, while total investments increased to$24.5 million from $11.3 million at December 31, 2007, a 116.2 increase.EarningsThe Company posted net interest income of $3,425,701 for the year ended December31, 2008 as compared to $4,170,211 for the year ended December 31, 2007. Averageinterest-earning assets were $68.3 million with average interest-bearingliabilities of $34.0 million yielding a net interest margin of 5.02 for theyear ended December 31, 2008 as compared to average interest-bearing assets of$75.4 million with average interest-bearing liabilities of $31.6 millionyielding a net interest margin of 5.53 for the year ended December 31, 2007.The 51 basis points decrease in the net interest margin was primarily a resultof the higher average balances in interest-bearing liabilities and the effect ofdownward re-pricing of the benchmark for Federal funds rate and related Primerate.The Bank posted net interest income of $799,650 for the three months endedDecember 31, 2008 as compared to $960,846 for the three months ended December31, 2007. Service charges on depositaccounts increased 18.5 to $950,257 due to higher volume of returned itemsactivity.Non-interest income for the quarter ended December 31, 2008 totaled $273,276 ora 14.9 increase from the fourth quarter of 2007. Service charges on depositaccounts similarly increased 17.3 to $241,512 due to increased of overdraft andreturn item charges.General and administrative expenses were $879,843 for the three months endedDecember 31, 2008 or a decrease of 2.0 as compared to $897,515 for the threemonths ended December 31, 2007. General and administrative expenses were$3,573,902 for the year ended December 31, 2008 as compared to $3,714,375 forthe year ended December 31, 2007.

Salary and benefits expense were$1,924,635 for the year ended December 31, 2008 as compared to $1,904,215 forthe year ended December 31, 2007. Income tax expenses were $163,842 for the year ended December31, 2008 as compared to $468,909 for the year ended December 31, 2007. Theeffective income tax rate for 2008 and 2007 was approximately 35 and 39,respectively.The foregoing contains forward-looking statements within the meaning of thePrivate Securities Litigation Reform Act of 1995. Such statements are nothistorical facts and include expressions about the Bank's plans, objectives,management's expectations, intentions, relationships, opportunities, andtechnology and market condition statements. These forward-looking statements areinherently subject to significant business, economic and competitiveuncertainties and contingencies, many of which are beyond the Bank's control.