<SEC-DOCUMENT>0001144204-12-050841.txt : 20120912
<SEC-HEADER>0001144204-12-050841.hdr.sgml : 20120912
<ACCEPTANCE-DATETIME>20120912140757
ACCESSION NUMBER:		0001144204-12-050841
CONFORMED SUBMISSION TYPE:	424B3
PUBLIC DOCUMENT COUNT:		3
FILED AS OF DATE:		20120912
DATE AS OF CHANGE:		20120912

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			CORNERSTONE BANCSHARES INC
		CENTRAL INDEX KEY:			0001038773
		STANDARD INDUSTRIAL CLASSIFICATION:	NATIONAL COMMERCIAL BANKS [6021]
		IRS NUMBER:				621175427
		STATE OF INCORPORATION:			TN
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		424B3
		SEC ACT:		1933 Act
		SEC FILE NUMBER:	333-166625
		FILM NUMBER:		121087525

	BUSINESS ADDRESS:	
		STREET 1:		4154 RINGGOLD RD
		CITY:			CHATTANOOGA
		STATE:			TN
		ZIP:			37412-416
		BUSINESS PHONE:		4236982454

	MAIL ADDRESS:	
		STREET 1:		4154 RINGGOLD RD
		CITY:			CHATTANOOGA
		STATE:			TN
		ZIP:			37412-0416

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	EAST RIDGE BANCSHARES INC
		DATE OF NAME CHANGE:	19970507
</SEC-HEADER>
<DOCUMENT>
<TYPE>424B3
<SEQUENCE>1
<FILENAME>v323579_424b3.htm
<DESCRIPTION>FORM 424B3
<TEXT>
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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: right">Filed Pursuant to Rule 424(b)(3)</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: right">Registration Number 333-166625</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="text-transform: uppercase">Prospectus
Supplement No. 2</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">to Prospectus dated</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">June 26, 2012&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">CORNERSTONE BANCSHARES, INC.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">This Prospectus Supplement No. 2 (the &ldquo;Supplement&rdquo;)
supplements our Prospectus dated June 26, 2012 (the &ldquo;Prospectus&rdquo;) relating to the offer and sale by Cornerstone Bancshares,
Inc. (the &ldquo;Company&rdquo;) of up to 600,000 shares of Series A Convertible Preferred Stock (&ldquo;Preferred Stock&rdquo;).</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The purpose of this Supplement is to inform
you of certain developments that have occurred since the date of the Prospectus. This Supplement should be read together with,
and may not be delivered or utilized without, the Prospectus. The information contained in this Supplement is qualified by reference
to the Prospectus, except to the extent that the information in this Supplement updates or supersedes the information contained
in the Prospectus.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Quarter Report on Form 10-Q</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">This Supplement includes the attached Quarterly
Report on Form 10-Q for the period ending June 30, 2012 of Cornerstone Bancshares, Inc., as filed by us with the Securities and
Exchange Commission.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">NEITHER THE SECURITIES AND EXCHANGE COMMISSION
NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS SUPPLEMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">The date of this Prospectus Supplement is
September 12, 2012.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>



<P STYLE="margin: 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 12pt; color: #000000"><B>United
States Securities and Exchange Commission</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 12pt; color: #000000"><B>Washington,
D.C. 20549</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 10pt; color: #000000"><B>&nbsp;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 12pt; color: #000000"><B>FORM
10-Q</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: #000000">(Mark One)</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0%"></TD><TD STYLE="width: 0.75in"><FONT STYLE="font-family: Wingdings; color: #000000"><B>x</B></FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif; color: #000000"><B>QUARTERLY
                                                                                                                              REPORT
                                                                                                                              UNDER
                                                                                                                              SECTION
                                                                                                                              13
                                                                                                                              OR
                                                                                                                              15(d)
                                                                                                                              OF
                                                                                                                              THE
                                                                                                                              SECURITIES
                                                                                                                              EXCHANGE
                                                                                                                              ACT
                                                                                                                              OF
                                                                                                                              1934</B></FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.75in"><FONT STYLE="color: #000000">For the quarterly period
ended June 30, 2012</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0%"></TD><TD STYLE="width: 0.75in"><FONT STYLE="font-family: Wingdings; color: #000000">&uml;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif; color: #000000"><B>TRANSITION
                                                                                                                           REPORT
                                                                                                                           PURSUANT
                                                                                                                           SECTION
                                                                                                                           13
                                                                                                                           OR
                                                                                                                           15(d)
                                                                                                                           OF
                                                                                                                           THE
                                                                                                                           SECURITIES
                                                                                                                           EXCHANGE
                                                                                                                           ACT
                                                                                                                           OF
                                                                                                                           1934</B></FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.75in"><FONT STYLE="color: #000000">For the transition
period from __________to__________ <U> </U></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: #000000">Commission
File Number:<B> 000-30497</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; text-align: center; margin-bottom: 0pt"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; text-align: center; margin-bottom: 0pt"><FONT STYLE="color: #000000"><img src="logo.jpg"></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; text-align: center; margin-bottom: 0pt"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: #000000">(Exact name
of small business issuer as specified in its charter)</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 48%; border-bottom: windowtext 1pt solid; layout-grid-mode: line; text-align: center"><FONT STYLE="color: #000000">Tennessee</FONT></TD>
    <TD STYLE="width: 4%; layout-grid-mode: line; text-align: center"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="width: 48%; border-bottom: windowtext 1pt solid; layout-grid-mode: line; text-align: center"><FONT STYLE="color: #000000">62-1173944.</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="layout-grid-mode: line"><FONT STYLE="color: #000000">(State or other jurisdiction of incorporation or organization)</FONT></TD>
    <TD STYLE="layout-grid-mode: line; text-align: center"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="layout-grid-mode: line"><FONT STYLE="color: #000000">(I.R.S. Employer Identification No.)</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="layout-grid-mode: line; text-align: center"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="layout-grid-mode: line; text-align: center"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="layout-grid-mode: line; text-align: center"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="border-bottom: windowtext 1pt solid; layout-grid-mode: line; text-align: center"><FONT STYLE="color: #000000">835
    Georgia Avenue Chattanooga, Tennessee</FONT></TD>
    <TD STYLE="layout-grid-mode: line; text-align: center"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: windowtext 1pt solid; layout-grid-mode: line; text-align: center"><FONT STYLE="color: #000000">37402</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="layout-grid-mode: line"><FONT STYLE="color: #000000">(Address of principal executive offices)</FONT></TD>
    <TD STYLE="layout-grid-mode: line; text-align: center"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="layout-grid-mode: line"><FONT STYLE="color: #000000">(Zip Code)</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="layout-grid-mode: line; text-align: center"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="layout-grid-mode: line; text-align: center"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="layout-grid-mode: line; text-align: center"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="border-bottom: windowtext 1pt solid; layout-grid-mode: line; text-align: center"><FONT STYLE="color: #000000">423-385-3000</FONT></TD>
    <TD STYLE="layout-grid-mode: line; text-align: center"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: windowtext 1pt solid; layout-grid-mode: line; text-align: center"><FONT STYLE="color: #000000">Not
    Applicable.</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="layout-grid-mode: line"><FONT STYLE="color: #000000">(Registrant&rsquo;s telephone number, including area code)</FONT></TD>
    <TD STYLE="layout-grid-mode: line; text-align: center"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="layout-grid-mode: line"><FONT STYLE="color: #000000">(Former name, former address and former fiscal year, if changes
    since last report)</FONT></TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">Indicate
by check mark whether the registrant: (1) has filed all reports required to be filed by Section&nbsp;13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90 days.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; color: #000000">Yes
</FONT><FONT STYLE="font-family: Wingdings">x</FONT><FONT STYLE="font-family: Times New Roman, Times, Serif"> No </FONT><FONT STYLE="font-family: Wingdings">&uml;
</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: #000000">Indicate by check mark whether
the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required
to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such period that the
registrant was required to submit and post such files).</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; color: #000000">Yes
</FONT><FONT STYLE="font-family: Wingdings">&uml;</FONT><FONT STYLE="font-family: Times New Roman, Times, Serif"> No </FONT><FONT STYLE="font-family: Wingdings">&uml;
</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: #000000">Indicate by check mark whether
the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of &ldquo;large accelerated filer&rdquo;, &ldquo;accelerated filer&rdquo; and &ldquo;smaller reporting company&rdquo;
in Rule 12b-2 of the Exchange Act. (Check one):&nbsp;</FONT></P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 97%; border-collapse: collapse; margin-left: 0.25in">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 25%; layout-grid-mode: line"><FONT STYLE="font-family: Times New Roman, Times, Serif; color: #000000">Large
    accelerated filer </FONT><FONT STYLE="font-family: Wingdings">&uml;</FONT></TD>
    <TD STYLE="width: 22%; layout-grid-mode: line"><FONT STYLE="font-family: Times New Roman, Times, Serif; color: #000000">Accelerated
    filer </FONT><FONT STYLE="font-family: Wingdings">&uml;</FONT></TD>
    <TD STYLE="width: 22%; layout-grid-mode: line"><FONT STYLE="font-family: Times New Roman, Times, Serif; color: #000000">Non-accelerated
    filer </FONT><FONT STYLE="font-family: Wingdings">&uml;</FONT><FONT STYLE="font-family: Times New Roman, Times, Serif"> </FONT></TD>
    <TD STYLE="width: 31%; layout-grid-mode: line"><FONT STYLE="font-family: Times New Roman, Times, Serif; color: #000000">Smaller
    reporting company </FONT><FONT STYLE="font-family: Wingdings">x</FONT></TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: #000000">Indicate by check mark whether
the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; color: #000000">Yes
</FONT><FONT STYLE="font-family: Wingdings">&uml;</FONT><FONT STYLE="font-family: Times New Roman, Times, Serif"> No </FONT><FONT STYLE="font-family: Wingdings">x</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">As of August
3, 2012 there were 6,500,396 shares of common stock, $1.00 par value per share, issued and outstanding.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; text-indent: 0.5in"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><FONT STYLE="color: #000000"><B>TABLE
OF CONTENTS</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: #000000"><B>&nbsp;</B></FONT></P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top; background-color: rgb(204,255,204)">
    <TD COLSPAN="2" STYLE="layout-grid-mode: line; font-weight: bold; text-align: center"><FONT STYLE="color: #000000">PART I
    &ndash;FINANCIAL INFORMATION</FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD STYLE="layout-grid-mode: line; text-align: center; width: 90%"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="layout-grid-mode: line; text-align: right; width: 10%"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,255,204)">
    <TD STYLE="layout-grid-mode: line"><FONT STYLE="color: #000000">Item 1.&nbsp; Financial Statements (Unaudited)</FONT></TD>
    <TD STYLE="layout-grid-mode: line; text-align: right">4<FONT STYLE="color: #000000"></FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD STYLE="layout-grid-mode: line"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="layout-grid-mode: line; text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,255,204)">
    <TD STYLE="layout-grid-mode: line"><FONT STYLE="color: #000000">Item 2.&nbsp; Management&rsquo;s Discussion and Analysis of
    Financial Condition and Results of Operations</FONT></TD>
    <TD STYLE="layout-grid-mode: line; text-align: right">28</TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD STYLE="layout-grid-mode: line"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="layout-grid-mode: line; text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,255,204)">
    <TD STYLE="layout-grid-mode: line"><FONT STYLE="color: #000000">Item 3.&nbsp; Quantitative and Qualitative Disclosures about
    Market Risk</FONT></TD>
    <TD STYLE="layout-grid-mode: line; text-align: right"><FONT STYLE="color: #000000">39</FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD STYLE="layout-grid-mode: line"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="layout-grid-mode: line; text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,255,204)">
    <TD STYLE="layout-grid-mode: line"><FONT STYLE="color: #000000">Item 4.Controls and Procedures</FONT></TD>
    <TD STYLE="layout-grid-mode: line; text-align: right">39</TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD STYLE="layout-grid-mode: line; font-weight: bold"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="layout-grid-mode: line; font-weight: bold; text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,255,204)">
    <TD COLSPAN="2" STYLE="layout-grid-mode: line; font-weight: bold; text-align: center"><FONT STYLE="color: #000000">PART II
    &ndash; OTHER INFORMATION</FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD STYLE="layout-grid-mode: line"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="layout-grid-mode: line; text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,255,204)">
    <TD STYLE="layout-grid-mode: line"><FONT STYLE="color: #000000">Item 1. Legal Proceedings</FONT></TD>
    <TD STYLE="layout-grid-mode: line; text-align: right"><FONT STYLE="color: #000000">40</FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD STYLE="layout-grid-mode: line"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="layout-grid-mode: line; text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,255,204)">
    <TD STYLE="layout-grid-mode: line"><FONT STYLE="color: #000000">Item 1A. Risk Factors</FONT></TD>
    <TD STYLE="layout-grid-mode: line; text-align: right"><FONT STYLE="color: #000000">&nbsp;40</FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD STYLE="layout-grid-mode: line"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="layout-grid-mode: line; text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,255,204)">
    <TD STYLE="layout-grid-mode: line"><FONT STYLE="color: #000000">Item 2. Unregistered Sales of Equity Securities and Use of
    Proceeds</FONT></TD>
    <TD STYLE="layout-grid-mode: line; text-align: right"><FONT STYLE="color: #000000">&nbsp;40</FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD STYLE="layout-grid-mode: line"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="layout-grid-mode: line; text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,255,204)">
    <TD STYLE="layout-grid-mode: line"><FONT STYLE="color: #000000">Item 3. Defaults Upon Senior Securities</FONT></TD>
    <TD STYLE="layout-grid-mode: line; text-align: right"><FONT STYLE="color: #000000">&nbsp;40</FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD STYLE="layout-grid-mode: line"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="layout-grid-mode: line; text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,255,204)">
    <TD STYLE="layout-grid-mode: line"><FONT STYLE="color: #000000">Item 4. Mine Safety Disclosures</FONT></TD>
    <TD STYLE="layout-grid-mode: line; text-align: right"><FONT STYLE="color: #000000">&nbsp;40</FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD STYLE="layout-grid-mode: line"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="layout-grid-mode: line; text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,255,204)">
    <TD STYLE="layout-grid-mode: line"><FONT STYLE="color: #000000">Item 5. Other Information</FONT></TD>
    <TD STYLE="layout-grid-mode: line; text-align: right"><FONT STYLE="color: #000000">&nbsp;40</FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD STYLE="layout-grid-mode: line"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="layout-grid-mode: line; text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,255,204)">
    <TD STYLE="layout-grid-mode: line"><FONT STYLE="color: #000000">Item 6. Exhibits</FONT></TD>
    <TD STYLE="layout-grid-mode: line; text-align: right"><FONT STYLE="color: #000000">&nbsp;40</FONT></TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: #000000"><B>&nbsp;</B></FONT></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: #000000"><B>&nbsp;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: #000000"><B>FORWARD-LOOKING
STATEMENTS</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: #000000"><B>&nbsp;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">Cornerstone
Bancshares, Inc. (&ldquo;Cornerstone&rdquo;) may from time to time make written or oral statements, including statements contained
in this report (including, without limitation, certain statements in &ldquo;Management&rsquo;s Discussion and Analysis of Financial
Condition and Results of Operations&rdquo; in Item 2), that constitute forward-looking statements within the meaning of Section&nbsp;21E
of the Securities Exchange Act of 1934 (the &ldquo;Exchange Act&rdquo;). The words &ldquo;expect,&rdquo; &ldquo;anticipate,&rdquo;
&ldquo;intend,&rdquo; &ldquo;consider,&rdquo; &ldquo;plan,&rdquo; &ldquo;believe,&rdquo; &ldquo;seek,&rdquo; &ldquo;should,&rdquo;
&ldquo;estimate,&rdquo; and similar expressions are intended to identify such forward-looking statements, but other statements
may constitute forward-looking statements. These statements should be considered subject to various risks and uncertainties. Such
forward-looking statements are made based upon management&rsquo;s belief as well as assumptions made by, and information currently
available to, management pursuant to &ldquo;safe harbor&rdquo; provisions of the Private Securities Litigation Reform Act of 1995.
Cornerstone&rsquo;s actual results may differ materially from the results anticipated in forward-looking statements due to a variety
of factors. Such factors include, without limitation, those specifically described in Item 1A of Part I of the Annual Report on
Form 10-K for the fiscal year ended December 31, 2011, as well as the following:&nbsp;&nbsp;(i) our ability to continue as a going
concern, (ii) the effect of enforcement actions to which the Bank is subject, (iii) the relatively greater credit risk of residential
construction and land development loans in our loan portfolio, (iv) the possibility that our asset quality will continue to decline
or that we will continue to experience greater loan losses than anticipated, (v) increased levels of other real estate, primarily
as a result of foreclosures, (vi) the impact of our Series A Preferred Stock on net income available to holders of our Common
Stock and earnings per common share, (vii) our ability to obtain additional capital and, if obtained, the possibly significant
dilution to current shareholders, (viii) the impact of liquidity needs on our results of operations and financial condition, (ix)
economic conditions in the local markets where we operate, (x) the impact of continuing negative developments in the financial
industry and U.S. and global capital and credit markets, (xi) uncertainty that recently enacted legislation will stabilize the
U.S. financial system, (xii) the unpredictable impact of recently enacted legislation on our business, (xiii) the impact of federal
and state regulations on our operations and financial performance, (xiv) whether a significant deferred tax asset we have can
be fully realized, (xv) competition from financial institutions and other financial service providers, (xvi) changes in interest
rates, (xvii) our ability to retain the services of key personnel, (xviii) the impact of Tennessee&rsquo;s anti-takeover statutes
and certain charter provisions on potential acquisitions of the holding company, and (xix) our ability to adapt to technological
changes. Many of such factors are beyond Cornerstone&rsquo;s ability to control or predict, and readers are cautioned not to put
undue reliance on such forward-looking statements. Cornerstone does not intend to update or reissue any forward-looking statements
contained in this report as a result of new information or other circumstances that may become known to Cornerstone.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="color: #000000"></FONT></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="color: #000000">&nbsp;&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 4.65pt">Cornerstone Bancshares, Inc. and Subsidiary</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 4.65pt">Consolidated Balance Sheets</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">Unaudited</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid">June 30,</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid">December 31,</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: center; padding-bottom: 1pt"></TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid">2012</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid">2011</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: center">ASSETS</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 70%; text-align: left; text-indent: -0.1in; padding-left: 0.1in">Cash and due from banks</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">1,551,248</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">1,660,204</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -0.1in; padding-left: 0.1in">Interest-bearing deposits at other financial institutions</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">35,327,857</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">37,222,487</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 16.2pt">Total cash and cash equivalents</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">36,879,105</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">38,882,691</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-indent: -0.1in; padding-left: 0.1in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Securities available for sale</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">86,538,060</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">86,057,437</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Securities held to maturity (fair value approximates of $58,394 and $70,484 at June 30, 2012 and December 31, 2011, respectively)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">56,879</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">68,643</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Federal Home Loan Bank stock, at cost</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,322,900</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,322,900</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Loans, net of allowance for loan losses of $6,028,690 at June 30, 2012 and $7,400,049 at December 31, 2011</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">257,720,495</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">260,364,569</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Bank premises and equipment, net</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">5,574,683</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">5,712,003</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Accrued interest receivable</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,246,603</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,327,458</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Foreclosed assets</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">22,143,571</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">18,523,960</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -0.1in; padding-left: 0.1in">Other assets</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">8,391,530</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">9,395,721</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt; padding-left: 0.5in">Total Assets</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">420,873,826</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">422,655,382</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-indent: -0.1in; padding-left: 0.1in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: center; text-indent: -0.1in; padding-left: 0.1in">LIABILITIES AND STOCKHOLDERS' EQUITY</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-indent: -0.1in; padding-left: 0.1in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.1in; padding-left: 0.1in">Deposits:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Noninterest-bearing demand deposits</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">43,006,586</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">43,989,943</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Interest-bearing demand deposits</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">28,501,796</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">22,353,384</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Savings deposits and money market accounts</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">60,693,247</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">46,857,118</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -0.1in; padding-left: 0.1in">Time deposits</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">189,537,978</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">200,841,499</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.6in">Total deposits</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">321,739,607</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">314,041,944</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Federal funds purchased and securities sold under agreements to repurchase</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">23,299,119</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">29,390,810</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Federal Home Loan Bank advances and other borrowings</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">37,610,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">43,045,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Accrued interest payable</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">114,503</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">110,703</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -0.1in; padding-left: 0.1in">Other liabilities</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">1,351,440</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">858,620</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -0.1in; padding-left: 0.6in">Total Liabilities</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">384,114,669</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">387,447,077</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-indent: -0.1in; padding-left: 0.1in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Stockholders' Equity:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Preferred stock - no par value; 2,000,000 shares authorized; 448,049 shares issued and outstanding in 2012 and 403,989 shares issued and outstanding in 2011</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">11,018,339</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">9,899,544</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.1in; padding-left: 0.1in">Common stock - $l.00 par value; 20,000,000 shares authorized;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.35in">6,709,199 issued in 2012 and 2011;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.35in">6,500,396 outstanding in 2012 and 2011</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">6,500,396</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">6,500,396</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Additional paid-in capital</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">21,353,462</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">21,316,438</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Retained deficit</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(3,429,846</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(3,627,208</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -0.1in; padding-left: 0.1in">Accumulated other comprehensive income</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">1,316,806</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">1,119,135</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -0.1in; padding-left: 0.6in">Total Stockholders' Equity</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">36,759,157</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">35,208,305</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt; text-indent: -0.1in; padding-left: 0.6in">Total Liabilities and Stockholders' Equity</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">420,873,826</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">422,655,382</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Notes to Consolidated Financial Statements are an integral
part of these statements.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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    <!-- Field: /Page -->
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Cornerstone Bancshares, Inc. and Subsidiary</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Consolidated Statements of Income</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="6" STYLE="text-align: center">Unaudited</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="6" STYLE="text-align: center">Unaudited</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="6" STYLE="text-align: center">Three months ended</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="6" STYLE="text-align: center">Six months ended</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="6" STYLE="text-align: center; border-bottom: Black 1pt solid">June 30,</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="6" STYLE="text-align: center; border-bottom: Black 1pt solid">June 30,</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid">2012</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid">2011</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid">2012</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid">2011</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">INTEREST INCOME</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 56%; text-align: left">Loans, including fees</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 8%; text-align: right">4,185,757</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 8%; text-align: right">4,521,370</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 8%; text-align: right">8,329,701</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 8%; text-align: right">9,160,175</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Investment securities</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">618,255</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">621,108</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,085,261</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,189,780</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Federal funds sold &amp; other earning assets</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">13,341</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">17,325</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">28,428</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">28,328</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Total interest income</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">4,817,353</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">5,159,803</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">9,443,390</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">10,378,283</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">INTEREST EXPENSE</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Time deposits</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">634,961</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,011,776</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,334,055</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,064,225</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Other deposits</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">133,459</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">99,936</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">254,702</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">192,548</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Federal funds purchased and securities sold under agreements to repurchase</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">23,074</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">33,712</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">55,304</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">64,715</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Federal Home Loan Bank advances and other borrowings</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">425,737</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">545,413</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">886,944</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,125,071</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Total interest expense</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">1,217,231</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">1,690,837</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">2,531,005</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">3,446,559</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Net interest income before provision for loan losses</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3,600,122</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3,468,966</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">6,912,385</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">6,931,724</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Provision for loan losses</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">15,000</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">30,000</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Net interest income after provision for loan losses</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">3,600,122</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">3,453,966</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">6,912,385</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">6,901,724</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">NONINTEREST INCOME</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Customer service fees</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">207,164</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">225,263</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">404,598</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">440,714</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Net gains from sale of securities</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">47,742</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">47,742</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Net gains from sale of loans and other assets</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">26,246</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">21,517</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">75,910</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">55,544</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Other noninterest income</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">18,612</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">21,531</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">38,900</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">41,810</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Total noninterest income</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">252,022</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">316,053</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">519,408</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">585,810</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">NONINTEREST EXPENSE</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Salaries and employee benefits</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,569,555</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,501,836</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3,160,690</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3,044,538</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Net occupancy and equipment expense</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">347,928</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">350,280</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">683,741</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">756,614</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Depository insurance</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">206,866</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">241,505</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">409,649</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">564,160</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Foreclosed assets, net</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">480,755</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">716,505</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">631,075</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,078,075</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Other operating expenses</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">818,255</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">847,281</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">1,612,336</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">1,630,635</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Total noninterest expenses</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">3,423,359</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">3,657,407</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">6,497,491</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">7,074,022</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Income before provision for income taxes</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">428,785</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">112,612</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">934,302</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">413,512</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Provision (benefit) for income taxes</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">118,200</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(28,675</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">267,200</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">19,950</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Net income</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">310,585</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">141,287</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">667,102</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">393,562</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Preferred stock dividend requirements</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">280,031</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">118,013</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">545,887</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">211,088</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Accretion on preferred stock discount</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">15,241</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">9,000</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">29,709</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">9,000</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt">Net income available to common shareholders</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">15,313</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">14,274</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">91,506</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">173,474</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>EARNINGS PER COMMON SHARE</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>Basic</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">0.01</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">0.02</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>Diluted</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">0.01</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">0.02</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>DIVIDENDS DECLARED PER COMMON SHARE</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Notes to Consolidated Financial Statements are an integral
part of these statements.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<!-- Field: Page; Sequence: 6; Value: 2 -->
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    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif"><TR><TD STYLE="text-align: center; width: 100%">&nbsp;</TD></TR></TABLE></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Cornerstone Bancshares, Inc. and Subsidiary</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Consolidated Statements of Comprehensive Income</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD NOWRAP>&nbsp;</TD>
    <TD COLSPAN="6" NOWRAP STYLE="text-align: center">(Unaudited)</TD><TD NOWRAP>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="6" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid">Three Months Ended</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="6" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid">June 30,</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid">2012</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid">2011</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 78%; text-align: left">Net income</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 8%; text-align: right">310,585</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 8%; text-align: right">141,287</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Other comprehensive income, net of tax:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Net unrealized gains on securities available for sale,</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt">net of reclassification adjustment</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">235,651</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">548,868</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt">Comprehensive income</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">546,236</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">690,155</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD NOWRAP>&nbsp;</TD>
    <TD COLSPAN="6" NOWRAP STYLE="text-align: center">(Unaudited)</TD><TD NOWRAP>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="6" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid">Six Months Ended</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="6" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid">June 30,</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid">2012</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid">2011</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 78%; text-align: left">Net income</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 8%; text-align: right">667,102</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 8%; text-align: right">393,562</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Other comprehensive income, net of tax:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Net unrealized gains on securities available for sale,</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt">net of reclassification adjustment</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">197,671</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">895,570</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt">Comprehensive income</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">864,773</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">1,289,132</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Notes to Consolidated Financial Statements are an integral
part of these statements.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif"><TR><TD STYLE="text-align: center; width: 100%">&nbsp;</TD></TR></TABLE></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Cornerstone Bancshares, Inc. and Subsidiary</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Consolidated Statement of Changes in Stockholders' Equity -
Unaudited</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">For the six months ended June 30, 2012</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">Accumulated</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">Additional</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">Other</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">Total</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">Preferred</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">Common</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">Paid-in</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">Retained</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">Comprehensive</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">Stockholders'</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid">Stock</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid">Stock</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid">Capital</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid">Deficit</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid">Income</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid">Equity</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 34%">BALANCE, December 31, 2011</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 8%; text-align: right">9,899,544</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 8%; text-align: right">6,500,396</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 8%; text-align: right">21,316,438</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 8%; text-align: right">(3,627,208</TD><TD STYLE="width: 1%; text-align: left">)</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 8%; text-align: right">1,119,135</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 8%; text-align: right">35,208,305</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Employee compensation stock option expense</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">37,024</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">37,024</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Issuance of Series A Convertible Preferred Stock</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,089,086</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,089,086</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Preferred stock dividends paid</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(440,031</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(440,031</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Accretion on preferred stock</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">29,709</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(29,709</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Net Income</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">667,102</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">667,102</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Other comprehensive income, net of tax</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">197,671</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">197,671</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="padding-bottom: 2.5pt">BALANCE, June 30, 2012</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">11,018,339</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">6,500,396</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">21,353,462</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(3,429,846</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">1,316,806</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">36,759,157</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Notes to Consolidated Financial Statements are an integral
part of this statement.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Cornerstone Bancshares, Inc. and Subsidiary</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Consolidated Statements of Cash Flows</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD NOWRAP>&nbsp;</TD>
    <TD COLSPAN="6" NOWRAP STYLE="text-align: center">Unaudited</TD><TD NOWRAP>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="6" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid">Six months ended June 30,</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid">2012</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid">2011</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">CASH FLOWS FROM OPERATING ACTIVITIES</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 78%; text-align: left">Net income</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 8%; text-align: right">667,102</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 8%; text-align: right">393,562</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Adjustments to reconcile net income to net cash</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">provided by operating activities:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Depreciation and amortization</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">234,632</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">155,415</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Provision for loan losses</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">30,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Stock compensation expense</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">37,024</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">39,570</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Net losses on sales of loans and other assets</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">508,636</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">858,143</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Changes in other operating assets and liabilities:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Net change in loans held for sale</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">198,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(298,500</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Accrued interest receivable</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">80,855</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">28,874</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Accrued interest payable</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3,800</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3,462</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Other assets and liabilities</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">1,372,491</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">818,835</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Net cash provided by operating activities</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">3,102,540</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">2,029,361</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">CASH FLOWS FROM INVESTING ACTIVITIES</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Proceeds from security transactions:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Securities available for sale</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">19,474,936</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">689,587</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Securities held to maturity</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">11,523</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">13,872</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Purchase of securities available for sale</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(19,672,373</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(250,000</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Loan originations and principal collections, net</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(3,595,662</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3,235,943</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Purchase of bank premises and equipment</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(61,432</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">92,018</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Proceeds from sale of other real estate and other assets</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">1,916,855</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">3,474,865</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Net cash (used in) provided by investing activities</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(1,926,153</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">7,256,285</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">CASH FLOWS FROM FINANCING ACTIVITIES</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Net increase / (decrease) in deposits</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">7,697,663</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(526,125</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Net (decrease) / increase in federal funds purchased and</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">securities sold under agreements to repurchase</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(6,091,691</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,685,897</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Net payments on Federal Home Loan Bank</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">advances and other borrowings</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(5,435,000</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(6,235,000</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Payment of dividends on preferred stock</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(440,031</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(92,325</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Issuance of preferred stock</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,089,086</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,804,092</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Net cash (used in) financing activities</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(3,179,973</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(2,363,461</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">NET (DECREASE) / INCREASE IN CASH AND CASH EQUIVALENTS</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(2,003,586</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">6,922,185</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt">CASH AND CASH EQUIVALENTS, beginning of period</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">38,882,691</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">22,981,952</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt">CASH AND CASH EQUIVALENTS, end of period</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">36,879,105</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">29,904,137</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Cash paid during the period for interest</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">2,527,205</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">3,443,097</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt">Cash paid during the period for taxes</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">913,327</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">-</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">NONCASH INVESTING AND FINANCING ACTIVITIES</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt">Acquisition of real estate through foreclosure</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">6,121,012</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">9,838,317</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Notes to Consolidated Financial Statements are an integral
part of these statements.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1pt; text-align: center; text-indent: -1pt"><FONT STYLE="color: #000000"><B>CORNERSTONE
BANCSHARES, INC.</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1pt; text-align: center; text-indent: -1pt"><FONT STYLE="color: #000000"><B>NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1pt; text-indent: -1pt"><FONT STYLE="color: #000000"><B>&nbsp;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1pt; text-align: justify; text-indent: -1pt"><FONT STYLE="color: #000000"><B>Note
1. Presentation of Financial Information</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1pt; text-align: justify; text-indent: 12.5pt"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1pt; text-align: justify; text-indent: -1pt">&nbsp;&nbsp;&nbsp;<FONT STYLE="color: #000000"><I>Nature
of Business</I>-Cornerstone is a bank holding company whose primary business is performed by its wholly-owned subsidiary, Cornerstone
Community Bank (the &ldquo;Bank&rdquo;). The Bank provides a full range of banking services to the Chattanooga, Tennessee market.
The Bank has also established a loan production office (&ldquo;LPO&rdquo;) in Dalton, Georgia to further enhance the Bank&rsquo;s
lending markets.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1pt; text-align: justify; text-indent: 35pt"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1pt; text-align: justify; text-indent: -1pt">&nbsp;&nbsp;&nbsp;<FONT STYLE="color: #000000"><I>Interim
Financial Information (Unaudited)-</I>The financial information in this report for June 30, 2012 and June 30, 2011 has not been
audited. The information included herein should be read in conjunction with the annual consolidated financial statements and footnotes
thereto included in the 2011 Annual Report to Shareholders which was furnished to each shareholder of Cornerstone in April of
2012. The consolidated financial statements presented herein conform to U.S. generally accepted accounting principles and to general
industry practices. In the opinion of Cornerstone&rsquo;s management, the accompanying interim financial statements contain all
material adjustments, consisting only of normal recurring adjustments, necessary to present fairly the financial condition, the
results of operations, and cash flows for the interim period. Results for interim periods are not necessarily indicative of the
results to be expected for a full year.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1pt; text-align: justify; text-indent: -1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1pt; text-align: justify; text-indent: -1pt">&nbsp;&nbsp;&nbsp;<FONT STYLE="color: #000000"><I>Use
of Estimates</I>-The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent
assets and liabilities as of the balance sheet date and the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates. Material estimates that are particularly susceptible to significant change in
the near term include the determination of the allowance for loan losses.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1pt; text-align: justify; text-indent: -1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1pt; text-align: justify; text-indent: -1pt">&nbsp;&nbsp;&nbsp;<FONT STYLE="color: #000000"><I>Consolidation</I>-The
accompanying consolidated financial statements include the accounts of Cornerstone, the Bank and Eagle. Substantially all intercompany
transactions, profits and balances have been eliminated.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1pt; text-align: justify; text-indent: -1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1pt; text-align: justify; text-indent: -1pt">&nbsp;&nbsp;&nbsp;<FONT STYLE="color: #000000"><I>Reclassification-</I>Certain
amounts in the prior consolidated financial statements have been reclassified to conform to the current period presentation. The
reclassifications had no effect on net income or stockholders&rsquo; equity as previously reported.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1pt; text-align: justify; text-indent: -1pt"><FONT STYLE="color: #000000"><I>&nbsp;</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1pt; text-align: justify; text-indent: -1pt"><FONT STYLE="color: #000000"><I>&nbsp;&nbsp;&nbsp;Accounting
Policies</I>-During interim periods, Cornerstone follows the accounting policies set forth in its Annual Report on Form 10-K for
the year ended December 31, 2011 as filed with the Securities and Exchange Commission. Since December 31, 2011, there have been
no significant changes in any accounting principles or practices, or in the method of applying any such principles or practices,
except for the following:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1pt; text-align: justify; text-indent: -1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1pt; text-align: justify; text-indent: -1pt">&nbsp;&nbsp;&nbsp;<FONT STYLE="color: #000000"><I>Comprehensive
Income-</I>In June 2011, the FASB issued ASU No. 2011-05, <I>Presentation of Comprehensive Income</I>. The provisions of ASU No.
2011-05 allow an entity the option to present the total of comprehensive income, the components of net income, and the components
of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive
statements. In both options, an entity is required to present each component of net income along with total net income, each component
of other income along with a total for other comprehensive income, and a total amount for comprehensive income. Under either method,
entities are required to present on the face of the financial statements reclassification adjustments for items that are reclassified
from other comprehensive income to net income in the statement(s) where the components of net income and the components of other
comprehensive income are presented. ASU No. 2011-05 also eliminates the option to present the components of other comprehensive
income as part of the statement of changes in shareholders&rsquo; equity but does not change the items that must be reported in
other comprehensive income or when an item of other comprehensive income must be reclassified to net income. ASU No. 2011-05 was
effective for Cornerstone&rsquo;s interim reporting period beginning on or after January 1, 2012, with retrospective application
required. In December 2011, the FASB issued ASU No. 2011-12, <I>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</I>. The
provisions of ASU No. 2011-12 defer indefinitely the requirement for entities to present reclassification adjustments out of accumulated
other comprehensive income by component in both the statement in which net income is presented and the statement in which other
comprehensive income is presented. ASU No. 2011-12, which shares the same effective date as ASU No. 2011-05, does not defer the
requirement for entities to present components of comprehensive income in either a single continuous statement of comprehensive
income or in two separate but consecutive statements. Cornerstone adopted, in the first quarter of 2012, the provisions of ASU
No. 2011-05 and ASU No. 2011-12 which resulted in a new statement of comprehensive income. The adoption of ASU No. 2011-05 and
ASU No. 2011-12 had no impact on Cornerstone&rsquo;s statements of income and condition.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1pt; text-align: center; text-indent: -1pt"><FONT STYLE="color: #000000"><B>CORNERSTONE
BANCSHARES, INC.</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1pt; text-align: center; text-indent: -1pt"><FONT STYLE="color: #000000"><B>NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)</B></FONT></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1pt; text-align: justify; text-indent: -1pt">&nbsp;&nbsp;&nbsp;<FONT STYLE="color: #000000"><I>Future
Application of Accounting Pronouncements-</I>In December 2011, the FASB issued ASU No. 2011-11, <I>Disclosures About Offsetting
Assets and Liabilities</I>. This project began as an attempt to converge the offsetting requirements under U.S. GAAP and IFRS.
However, the Boards were not able to reach a converged solution with regards to offsetting requirements, the Boards developed
convergent disclosure requirements to assist in reconciling the differences in the offsetting requirements under U.S. GAAP and
IFRS. The new disclosure requirements mandate that entities disclose both gross and net information about instruments and transactions
eligible for offset in the statement of financial position as well as instruments and transactions subject to an agreement similar
to a master netting arrangement. ASU No. 2011-11 also requires disclosure of collateral received and posted in connection with
master netting agreements or similar arrangements. ASU No. 2011-11 is effective for interim and annual reporting periods beginning
on or after January 1, 2013. As the provision of ASU No. 2011-11 only impact the disclosure requirements related to the offsetting
of assets and liabilities, the adoption will have no impact on Cornerstone&rsquo;s Consolidated Financial Statements.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1pt; text-align: justify; text-indent: -1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1pt; text-align: justify; text-indent: -1pt"><FONT STYLE="color: #000000"><I>&nbsp;&nbsp;&nbsp;Earnings
per Common Share</I>- Basic earnings per share (&ldquo;EPS&rdquo;) is computed by dividing income available to common shareholders
(numerator) by the weighted average number of common shares outstanding during the period (denominator). Diluted EPS is computed
by dividing income available to common shareholders (numerator) by the adjusted weighted average number of shares outstanding
(denominator). The adjusted weighted average number of shares outstanding reflects the potential dilution occurring if securities
or other contracts to issue common stock were exercised or converted into common stock resulting in the issuance of common stock
that share in the earnings of the entity.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in"><FONT STYLE="color: #000000">The
following is a summary of the basic and diluted earnings per share for the three and six month periods ended June 30, 2012 and
June 30, 2011.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in"><FONT STYLE="color: #000000"><I>&nbsp;</I></FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: left; padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="6" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="color: #000000">Three Months
    Ended June 30,</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: left; padding-bottom: 1pt"><FONT STYLE="color: #000000">Basic earnings per common share calculation:&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="color: #000000">2012</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="color: #000000">2011</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 74%; text-align: left; text-indent: 0in"><FONT STYLE="color: #000000">Numerator: Net income available to
    common shareholders</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="color: #000000">15,313</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="color: #000000">14,274</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: 0in"><FONT STYLE="color: #000000">Denominator: Weighted avg. common shares outstanding</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">6,500,396</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">6,500,396</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: 0in"><FONT STYLE="color: #000000">Effect of dilutive stock options</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">81,002</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: 0in"><FONT STYLE="color: #000000">Diluted shares</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">6,581,398</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">6,500,396</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: 0in"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: 0in; padding-bottom: 2.5pt"><FONT STYLE="color: #000000">Basic earnings per common
    share</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; border-bottom: Black 2.5pt double"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double"><FONT STYLE="color: #000000">0.00</FONT></TD><TD STYLE="text-align: left; padding-bottom: 2.5pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; border-bottom: Black 2.5pt double"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double"><FONT STYLE="color: #000000">0.00</FONT></TD><TD STYLE="text-align: left; padding-bottom: 2.5pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: 0in; padding-bottom: 2.5pt"><FONT STYLE="color: #000000">Diluted earnings per common
    share</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; border-bottom: Black 2.5pt double"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double"><FONT STYLE="color: #000000">0.00</FONT></TD><TD STYLE="text-align: left; padding-bottom: 2.5pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; border-bottom: Black 2.5pt double"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double"><FONT STYLE="color: #000000">0.00</FONT></TD><TD STYLE="text-align: left; padding-bottom: 2.5pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in"><FONT STYLE="color: #000000"><I>&nbsp;</I></FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: left; padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="6" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="color: #000000">Six Months Ended June 30,</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Basic earnings per common share calculation:&nbsp;</TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="color: #000000">2012</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="color: #000000">2011</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 74%; text-align: left; text-indent: 0in"><FONT STYLE="color: #000000">Numerator: Net income available to
    common shareholders</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="color: #000000">91,506</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="color: #000000">173,474</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: 0in"><FONT STYLE="color: #000000">Denominator: Weighted avg. common shares outstanding</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">6,500,396</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">6,500,396</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: 0in"><FONT STYLE="color: #000000">Effect of dilutive stock options</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">83,498</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: 0in"><FONT STYLE="color: #000000">Diluted shares</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">6,583,894</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">6,500,396</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: 0in"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: 0in; padding-bottom: 2.5pt"><FONT STYLE="color: #000000">Basic earnings per common
    share</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; border-bottom: Black 2.5pt double"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double"><FONT STYLE="color: #000000">0.01</FONT></TD><TD STYLE="text-align: left; padding-bottom: 2.5pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; border-bottom: Black 2.5pt double"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double"><FONT STYLE="color: #000000">0.02</FONT></TD><TD STYLE="text-align: left; padding-bottom: 2.5pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: 0in; padding-bottom: 2.5pt"><FONT STYLE="color: #000000">Diluted earnings per common
    share</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; border-bottom: Black 2.5pt double"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double"><FONT STYLE="color: #000000">0.01</FONT></TD><TD STYLE="text-align: left; padding-bottom: 2.5pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; border-bottom: Black 2.5pt double"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double"><FONT STYLE="color: #000000">0.02</FONT></TD><TD STYLE="text-align: left; padding-bottom: 2.5pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 72.6pt"><FONT STYLE="color: #000000"><B>&nbsp;</B></FONT></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 72.6pt"><FONT STYLE="color: #000000"><B>&nbsp;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1pt; text-align: center; text-indent: -1pt"><FONT STYLE="color: #000000"><B>CORNERSTONE
BANCSHARES, INC.</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1pt; text-align: center; text-indent: -1pt"><FONT STYLE="color: #000000"><B>NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 72.6pt"><FONT STYLE="color: #000000"><B>&nbsp;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000"><B>Note
2. Stock Based Compensation</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 72.6pt"><FONT STYLE="color: #000000"><B>&nbsp;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1pt; text-align: justify; text-indent: -1pt"><FONT STYLE="color: #000000"><I>&nbsp;&nbsp;&nbsp;Accounting
Policies-</I> Cornerstone, as required by FASB, applies the fair value recognition provisions of ASC 718, <I>Compensation &ndash;Stock
Compensation</I>. As a result, for the six month period ended June 30, 2012, the compensation cost charged to earnings related
to the vested incentive stock options was approximately $37,000, which had no material impact on earnings per share.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1pt; text-align: justify; text-indent: 0in"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1pt; text-align: justify; text-indent: -1pt"><FONT STYLE="color: #000000"><I>&nbsp;&nbsp;&nbsp;Officer
and Employee Plans</I>-Cornerstone has two stock option plans under which officers and employees can be granted incentive stock
options or non-qualified stock options to purchase a total of up to 1,420,000 shares of Cornerstone&rsquo;s common stock. The
exercise price for incentive stock options must be not less than 100&nbsp;percent of the fair market value of the common stock
on the date of the grant. The exercise price of the non-qualified stock options may be equal to or more or less than the fair
market value of the common stock on the date of the grant. The incentive stock options vest 30 percent on the second anniversary
of the grant date, 60 percent on the third anniversary of the grant date and 100 percent on the fourth anniversary of the grant
date, and the non-qualified stock options vest 50 percent on the first anniversary of the grant date and 100 percent on the second
anniversary of the grant date. The options expire ten years from the grant date. At June 30, 2012, the total remaining compensation
cost to be recognized on non-vested options is approximately $375,000. A summary of the status of these stock option plans is
presented in the following table:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 95%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">Weighted-</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">Average</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">Weighted</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">Contractual</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">Average</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">Remaining</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">Aggregate</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">Exercisable</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">Term</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">Intrinsic</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="color: #000000">Number</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="color: #000000">Price</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="color: #000000">(in years)</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="color: #000000">Value</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 50%"><FONT STYLE="color: #000000">Outstanding at December 31, 2011</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="color: #000000">572,600</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="color: #000000">4.63</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="width: 10%; text-align: center"><FONT STYLE="color: #000000">5.7&nbsp; Years</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="width: 10%; text-align: right">-</TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-left: 9pt"><FONT STYLE="color: #000000">Granted</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">202,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">1.65</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: center"><FONT STYLE="color: #000000">9.7 Years</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="padding-left: 9pt"><FONT STYLE="color: #000000">Exercised</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: center"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 1pt; padding-left: 9pt"><FONT STYLE="color: #000000">Forfeited</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="color: #000000">44,800</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="color: #000000">3.37</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: center; padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="color: #000000">Outstanding at June 30, 2012</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="color: #000000">729,800</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="color: #000000">3.89</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: center; padding-bottom: 2.5pt"><FONT STYLE="color: #000000">6.7 Years</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: right"><FONT STYLE="color: #000000">135,270</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="color: #000000">Options exercisable at June 30, 2012</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="color: #000000">297,980</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="color: #000000">6.93</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: center; padding-bottom: 2.5pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1pt; text-align: justify; text-indent: -1pt"><FONT STYLE="color: #000000"><I>&nbsp;&nbsp;&nbsp;Board
of Directors Plan</I>-Cornerstone has a stock option plan under which members of the Board of Directors, at the formation of the
Bank, were granted options to purchase a total of up to 600,000 shares of the Bank's common stock. On October&nbsp;15, 1997, the
Bank stock options were converted to Cornerstone stock options. Only non-qualified stock options may be granted under the plan.
The exercise price of each option equals the market price of Cornerstone&rsquo;s stock on the date of grant and the maximum term
is ten years. Vesting is 50 percent on the first anniversary of the grant date and 100 percent on the second anniversary of the
grant date. At June 30, 2012, the total remaining compensation cost to be recognized on non-vested options is approximately $70,000.
A summary of the status of this stock option plan is presented in the following table:&#9;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 95%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">Weighted-</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">Average</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">Weighted</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">Contractual</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">Average</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">Remaining</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">Aggregate</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">Exercisable</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">Term</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">Intrinsic</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="color: #000000">Number</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="color: #000000">Price</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="color: #000000">(in years)</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="color: #000000">Value</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 50%"><FONT STYLE="color: #000000">Outstanding at December 31, 2011</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="color: #000000">55,250</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="color: #000000">5.98</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="width: 10%; text-align: center"><FONT STYLE="color: #000000">4.9 Years</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="width: 10%; text-align: right">-</TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-left: 9pt"><FONT STYLE="color: #000000">Granted</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">90,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">1.65</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: center"><FONT STYLE="color: #000000">9.7 Years</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="padding-left: 9pt"><FONT STYLE="color: #000000">Exercised</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT>-</TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: center"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 1pt; padding-left: 9pt"><FONT STYLE="color: #000000">Forfeited</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="color: #000000">-</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: center; padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="color: #000000">Outstanding at June 30, 2012</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="color: #000000">145,250</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="color: #000000">3.30</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: center; padding-bottom: 2.5pt"><FONT STYLE="color: #000000">7.7 Years</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: right"><FONT STYLE="color: #000000">30,600</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="color: #000000">Options exercisable at June 30, 2012</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="color: #000000">55,250</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="color: #000000">5.98</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: center; padding-bottom: 2.5pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1pt; text-align: center; text-indent: -1pt"><FONT STYLE="color: #000000"><B>CORNERSTONE
BANCSHARES, INC.</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1pt; text-align: center; text-indent: -1pt"><FONT STYLE="color: #000000"><B>NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">The weighted
average grant date fair value of all stock options granted during the six months ended June 30, 2012 was $0.78. This was determined
using the Black-Scholes option-pricing model with the following weighted-average assumptions:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 40%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 87%; text-align: justify"><FONT STYLE="color: #000000">Dividend yield</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP STYLE="width: 10%; text-align: right"><FONT STYLE="color: #000000">0.0</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: justify"><FONT STYLE="color: #000000">Expected life</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP STYLE="text-align: right"><FONT STYLE="color: #000000">7.0
                                                                                Years</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: justify"><FONT STYLE="color: #000000">Expected volatility</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP STYLE="text-align: right"><FONT STYLE="color: #000000">44.62</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: justify"><FONT STYLE="color: #000000">Risk-free interest rate</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP STYLE="text-align: right"><FONT STYLE="color: #000000">1.44</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">%</FONT></TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0in"><FONT STYLE="color: #000000"><B>&nbsp;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in"><FONT STYLE="color: #000000"><B>Note
3. Securities</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in"><FONT STYLE="color: #000000"><B>&nbsp;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in"><FONT STYLE="color: #000000">The
amortized cost and fair value of securities available-for-sale and held-to-maturity at June 30, 2012 and December 31, 2011 are
summarized as follows:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="14" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="color: #000000">June 30, 2012</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">Gross</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">Gross</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">Amortized</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">Unrealized</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">Unrealized</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">Fair</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: left"><FONT STYLE="color: #000000">Debt securities available-for-sale:&nbsp;</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="color: #000000">Cost</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="color: #000000">Gains</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="color: #000000">Losses</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="color: #000000">Value</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 48%; text-align: left; text-indent: 0in; padding-left: 9pt"><FONT STYLE="color: #000000">U.S. Government
    agencies</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="color: #000000">4,061,088</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="color: #000000">13,153</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="width: 10%; text-align: right">-</TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="color: #000000">4,074,241</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: 0in"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: 0in; padding-left: 9pt"><FONT STYLE="color: #000000">State and municipal securities</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">22,022,213</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">1,946,691</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">(32,142</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">)</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">23,936,762</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: 0in; padding-left: 9pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: 0in; padding-left: 9pt"><FONT STYLE="color: #000000">Mortgage-backed securities:</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.35in"><FONT STYLE="color: #000000">Residential mortgage
    guaranteed by GNMA</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">10,627,424</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">149,250</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">10,776,674</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: 0in"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -0.1in; padding-left: 0.35in"><FONT STYLE="color: #000000">Collateralized
    mortgage obligations issued or guaranteed by U.S. Government agencies or sponsored agencies</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="color: #000000">47,685,221</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="color: #000000">77,942</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="color: #000000">(12,780</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="color: #000000">)</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="color: #000000">47,750,383</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: 0in"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt; text-indent: 0in"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="color: #000000">84,395,946</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="color: #000000">2,187,036</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="color: #000000">(44,922</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="color: #000000">)</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="color: #000000">86,538,060</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: 0in"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: 0in"><FONT STYLE="color: #000000">Debt securities held to maturity:</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: 0in; padding-left: 9pt"><FONT STYLE="color: #000000">Mortgage-backed securities:</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt; text-indent: -0.1in; padding-left: 0.35in"><FONT STYLE="color: #000000">Residential
    mortgage guaranteed by GNMA</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="color: #000000">56,879</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="color: #000000">1,515</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">-</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="color: #000000">58,394</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1pt; text-align: center; text-indent: -1pt"><FONT STYLE="color: #000000"><B>&nbsp;</B></FONT></P>

<!-- Field: Page; Sequence: 13; Value: 2 -->
    <DIV STYLE="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1pt solid"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif"><TR><TD STYLE="text-align: center; width: 100%"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->12<!-- Field: /Sequence --></TD></TR></TABLE></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif"><TR><TD STYLE="text-align: center; width: 100%">&nbsp;</TD></TR></TABLE></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1pt; text-align: center; text-indent: -1pt"><FONT STYLE="color: #000000"><B>&nbsp;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1pt; text-align: center; text-indent: -1pt"><FONT STYLE="color: #000000"><B>CORNERSTONE
BANCSHARES, INC.</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1pt; text-align: center; text-indent: -1pt"><FONT STYLE="color: #000000"><B>NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in"><FONT STYLE="color: #000000">&nbsp;&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="14" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="color: #000000">December 31, 2011</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center"><FONT STYLE="color: #000000">Gross</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center"><FONT STYLE="color: #000000">Gross</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center"><FONT STYLE="color: #000000">Amortized</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center"><FONT STYLE="color: #000000">Unrealized</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center"><FONT STYLE="color: #000000">Unrealized</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center"><FONT STYLE="color: #000000">Fair</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">Debt securities available-for-sale:&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="color: #000000">Cost</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="color: #000000">Gains</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="color: #000000">Losses</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="color: #000000">Value</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 48%; text-align: left; text-indent: 0in; padding-left: 9pt"><FONT STYLE="color: #000000">U.S. Government
    agencies</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="color: #000000">4,176,301</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="color: #000000">13,978</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="width: 10%; text-align: right">-</TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="color: #000000">4,190,279</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: 0in; padding-left: 9pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: 0in; padding-left: 9pt"><FONT STYLE="color: #000000">State and municipal securities</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">22,902,892</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">1,584,284</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">(50,919</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">)</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">24,436,257</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: 0in"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: 0in; padding-left: 9pt"><FONT STYLE="color: #000000">Mortgage-backed securities:</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.35in"><FONT STYLE="color: #000000">Residential mortgage
    guaranteed by GNMA</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">11,723,499</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">150,767</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">(3,096</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">)</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">11,871,170</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: 0in"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -0.1in; padding-left: 0.35in"><FONT STYLE="color: #000000">Collateralized
    mortgage obligations issued or guaranteed by U.S. Government agencies or sponsored agencies</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="color: #000000">45,431,456</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="color: #000000">131,215</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="color: #000000">(2,940</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="color: #000000">)</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="color: #000000">45,559,731</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: 0in"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt; text-indent: 0in"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="color: #000000">84,234,148</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="color: #000000">1,880,244</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="color: #000000">(56,955</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="color: #000000">)</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="color: #000000">86,057,437</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: 0in"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: 0in"><FONT STYLE="color: #000000">Debt securities held to maturity:</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: 0in; padding-left: 9pt"><FONT STYLE="color: #000000">Mortgage-backed securities:</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt; text-indent: -0.1in; padding-left: 0.35in"><FONT STYLE="color: #000000">Residential
    mortgage guaranteed by GNMA</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="color: #000000">68,643</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="color: #000000">1,841</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">-</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="color: #000000">70,484</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in"><FONT STYLE="color: #000000">At
June 30, 2012, securities with a fair value totaling approximately $77 million were pledged to secure public funds, securities
sold under agreements to repurchase, the Federal Home Loan Bank (sometimes referred to herein as &ldquo;FHLB&rdquo;) as collateral
for the Bank&rsquo;s borrowings, as collateral for federal funds purchased from other financial institutions and serve as collateral
for borrowings at the Federal Reserve Discount Window.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in"><FONT STYLE="color: #000000">The
amortized cost and estimated market value of securities at June 30, 2012, by contractual maturity, are shown below. 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.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="6" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="color: #000000">Securities Available-for-Sale</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="6" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="color: #000000">Securities Held to
    Maturity</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center"><FONT STYLE="color: #000000">Amortized</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center"><FONT STYLE="color: #000000">Fair</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center"><FONT STYLE="color: #000000">Amortized</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center"><FONT STYLE="color: #000000">Fair</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="color: #000000">Cost</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="color: #000000">Value</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="color: #000000">Cost</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="color: #000000">Value</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: 0in"><FONT STYLE="color: #000000">Due in one year or less</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="text-align: right">-<FONT STYLE="color: #000000"></FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT>-</TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 48%; text-align: left; text-indent: 0in"><FONT STYLE="color: #000000">Due from one year to five years</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="color: #000000">873,503</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="color: #000000">963,408</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="color: #000000">-</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="color: #000000">-</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: 0in"><FONT STYLE="color: #000000">Due from five years to ten years</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">5,727,473</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">6,335,499</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: 0in"><FONT STYLE="color: #000000">Due after ten years</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="color: #000000">19,482,325</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="color: #000000">20,712,096</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="color: #000000">-</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="color: #000000">-</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: 0in"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">26,083,301</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">28,011,003</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: 0in"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: 0in"><FONT STYLE="color: #000000">Mortgage-backed securities</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="color: #000000">58,312,645</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="color: #000000">58,527,057</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="color: #000000">56,879</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="color: #000000">58,394</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: 0in"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt; text-indent: 0in"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="color: #000000">84,395,946</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="color: #000000">86,538,060</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="color: #000000">56,879</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="color: #000000">58,394</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

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    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1pt; text-align: center; text-indent: -1pt"><FONT STYLE="color: #000000"><B>CORNERSTONE
BANCSHARES, INC.</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1pt; text-align: center; text-indent: -1pt"><FONT STYLE="color: #000000"><B>NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in"><FONT STYLE="color: #000000">&nbsp;&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in"><FONT STYLE="color: #000000">The
following tables present the gross unrealized losses and fair value, aggregated by investment category and length of time that
individual securities available for sale have been in a continuous unrealized loss position, as of June 30, 2012 and as of December
31, 2011:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: left"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="22" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 7pt; color: #000000">As
    of June 30, 2012</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: left"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="6" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 7pt; color: #000000">Less
    than 12 Months</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="6" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 7pt; color: #000000">12
    Months or Greater</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="6" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 7pt; color: #000000">Total</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: left"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 7pt; color: #000000">Gross</FONT></TD><TD NOWRAP><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 7pt; color: #000000">Gross</FONT></TD><TD NOWRAP><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 7pt; color: #000000">Gross</FONT></TD><TD NOWRAP><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: left"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 7pt; color: #000000">Fair</FONT></TD><TD NOWRAP><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 7pt; color: #000000">Unrealized</FONT></TD><TD NOWRAP><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 7pt; color: #000000">Fair</FONT></TD><TD NOWRAP><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 7pt; color: #000000">Unrealized</FONT></TD><TD NOWRAP><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 7pt; color: #000000">Fair</FONT></TD><TD NOWRAP><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 7pt; color: #000000">Unrealized</FONT></TD><TD NOWRAP><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: left"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 7pt; color: #000000">Value</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 7pt; color: #000000">Losses</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 7pt; color: #000000">Value</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 7pt; color: #000000">Losses</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 7pt; color: #000000">Value</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 7pt; color: #000000">Losses</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD NOWRAP STYLE="text-align: left"><FONT STYLE="font-size: 7pt; color: #000000">Debt securities available for sale:</FONT></TD><TD NOWRAP><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 40%; text-align: left; text-indent: -0.1in; padding-left: 0.24in"><FONT STYLE="font-size: 7pt; color: #000000">State
    and municipal securities</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 7pt; color: #000000">$</FONT></TD><TD STYLE="width: 7%; text-align: right"><FONT STYLE="font-size: 7pt; color: #000000">951,674</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 7pt; color: #000000">$</FONT></TD><TD STYLE="width: 7%; text-align: right"><FONT STYLE="font-size: 7pt; color: #000000">(32,142</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 7pt; color: #000000">)</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 7pt; color: #000000">$</FONT></TD><TD STYLE="width: 7%; text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 7pt; color: #000000">$</FONT></TD><TD STYLE="width: 7%; text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 7pt; color: #000000">$</FONT></TD><TD STYLE="width: 7%; text-align: right"><FONT STYLE="font-size: 7pt; color: #000000">951,674</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 7pt; color: #000000">$</FONT></TD><TD STYLE="width: 7%; text-align: right"><FONT STYLE="font-size: 7pt; color: #000000">(32,142</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 7pt; color: #000000">)</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: 0in"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -0.1in; padding-left: 0.35in"><FONT STYLE="font-size: 7pt; color: #000000">Collateralized
    mortgage obligations issued or guaranteed by U.S. Government agencies or sponsored agencies</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 7pt; color: #000000">14,709,818</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 7pt; color: #000000">(10,543</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 7pt; color: #000000">)</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 7pt; color: #000000">5,114,933</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 7pt; color: #000000">(2,237</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 7pt; color: #000000">)</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 7pt; color: #000000">19,824,751</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 7pt; color: #000000">(12,780</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 7pt; color: #000000">)</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt; text-indent: 0in"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 7pt; color: #000000">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 7pt; color: #000000">15,661,492</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 7pt; color: #000000">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 7pt; color: #000000">(42,685</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 7pt; color: #000000">)</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 7pt; color: #000000">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 7pt; color: #000000">5,114,933</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 7pt; color: #000000">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 7pt; color: #000000">(2,237</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 7pt; color: #000000">)</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 7pt; color: #000000">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 7pt; color: #000000">20,776,425</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 7pt; color: #000000">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 7pt; color: #000000">(44,922</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 7pt; color: #000000">)</FONT></TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: left"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="22" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 7pt; color: #000000">As
    of December 31, 2011</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: left"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="6" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 7pt; color: #000000">Less
    than 12 Months</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="6" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 7pt; color: #000000">12
    Months or Greater</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="6" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 7pt; color: #000000">Total</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: left"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 7pt; color: #000000">Gross</FONT></TD><TD NOWRAP><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 7pt; color: #000000">Gross</FONT></TD><TD NOWRAP><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 7pt; color: #000000">Gross</FONT></TD><TD NOWRAP><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: left"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 7pt; color: #000000">Fair</FONT></TD><TD NOWRAP><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 7pt; color: #000000">Unrealized</FONT></TD><TD NOWRAP><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 7pt; color: #000000">Fair</FONT></TD><TD NOWRAP><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 7pt; color: #000000">Unrealized</FONT></TD><TD NOWRAP><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 7pt; color: #000000">Fair</FONT></TD><TD NOWRAP><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 7pt; color: #000000">Unrealized</FONT></TD><TD NOWRAP><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: left"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 7pt; color: #000000">Value</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 7pt; color: #000000">Losses</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 7pt; color: #000000">Value</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 7pt; color: #000000">Losses</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 7pt; color: #000000">Value</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 7pt; color: #000000">Losses</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD NOWRAP STYLE="text-align: left"><FONT STYLE="font-size: 7pt; color: #000000">Debt securities available for sale:&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 40%; text-align: left; text-indent: -0.1in; padding-left: 0.24in"><FONT STYLE="font-size: 7pt; color: #000000">State
    and municipal securities</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 7pt; color: #000000">$</FONT></TD><TD STYLE="width: 7%; text-align: right"><FONT STYLE="font-size: 7pt; color: #000000">1,735,771</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 7pt; color: #000000">$</FONT></TD><TD STYLE="width: 7%; text-align: right"><FONT STYLE="font-size: 7pt; color: #000000">(50,919</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 7pt; color: #000000">)</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 7pt; color: #000000">$</FONT></TD><TD STYLE="width: 7%; text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 7pt; color: #000000">$</FONT></TD><TD STYLE="width: 7%; text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 7pt; color: #000000">$</FONT></TD><TD STYLE="width: 7%; text-align: right"><FONT STYLE="font-size: 7pt; color: #000000">1,735,771</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 7pt; color: #000000">$</FONT></TD><TD STYLE="width: 7%; text-align: right"><FONT STYLE="font-size: 7pt; color: #000000">(50,919</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 7pt; color: #000000">)</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: 0in"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: 0in; padding-left: 9pt"><FONT STYLE="font-size: 7pt; color: #000000">Mortgage-backed
    securities:</FONT></TD><TD><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.35in"><FONT STYLE="font-size: 7pt; color: #000000">Residential
    mortgage guaranteed by GNMA</FONT></TD><TD><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt; color: #000000">3,133,826</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt; color: #000000">(3,096</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt; color: #000000">)</FONT></TD><TD><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt; color: #000000">3,133,826</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt; color: #000000">(3,096</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt; color: #000000">)</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: 0in"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -0.1in; padding-left: 0.35in"><FONT STYLE="font-size: 7pt; color: #000000">Collateralized
    mortgage obligations issued or guaranteed by U.S. Government agencies or sponsored agencies</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 7pt; color: #000000">-</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 7pt; color: #000000">6,954,999</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 7pt; color: #000000">(2,939</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 7pt; color: #000000">)</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 7pt; color: #000000">6,954,999</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 7pt; color: #000000">(2,940</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 7pt; color: #000000">)</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt; text-indent: 0in"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 7pt; color: #000000">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 7pt; color: #000000">1,735,771</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 7pt; color: #000000">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 7pt; color: #000000">(50,919</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 7pt; color: #000000">)</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 7pt; color: #000000">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 7pt; color: #000000">10,088,825</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 7pt; color: #000000">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 7pt; color: #000000">(6,036</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 7pt; color: #000000">)</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 7pt; color: #000000">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 7pt; color: #000000">11,824,596</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 7pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 7pt; color: #000000">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 7pt; color: #000000">(56,955</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 7pt; color: #000000">)</FONT></TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1pt; text-align: center; text-indent: -1pt"><FONT STYLE="color: #000000"><B>CORNERSTONE
BANCSHARES, INC.</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1pt; text-align: center; text-indent: -1pt"><FONT STYLE="color: #000000"><B>NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">Upon acquisition
of a security, the Bank determines the appropriate impairment model that is applicable.&nbsp;&nbsp;If the security is a beneficial
interest in securitized financial assets, the Bank uses the beneficial interests in securitized financial assets impairment model.&nbsp;&nbsp;If
the security is not a beneficial interest in securitized financial assets, the Bank uses the debt and equity securities impairment
model.&nbsp;&nbsp;The Bank conducts periodic reviews to evaluate each security to determine whether an other-than-temporary impairment
has occurred.&nbsp;&nbsp;The Bank does not have any securities that have been classified as other-than-temporarily-impaired at
June 30, 2012 or December 31, 2011.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">At June 30,
2012 and December 31, 2011, the significant categories of temporarily impaired securities, and management&rsquo;s evaluation of
those securities are as follows:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1pt; text-align: center; text-indent: -1pt"><FONT STYLE="color: #000000"><B>&nbsp;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000"><I>State
and municipal securities: </I>At June 30, 2012, two investments in obligations of state and municipal securities had unrealized
losses. The Bank believes the unrealized losses on those investments were caused by the interest rate environment and does not
relate to the underlying credit quality of the issuers. Because the Bank has the intent and ability to hold those investments
for a time necessary to recover their amortized cost bases, which may be maturity, the Bank does not consider those investments
to be other-than-temporarily impaired at June 30, 2012.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.75in"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000"><I>Mortgage-backed
securities: </I>At June 30, 2012, seven investments in residential mortgage-backed securities had unrealized losses.&nbsp;&nbsp;This
impairment is believed to be caused by the current interest rate environment.&nbsp;&nbsp;The contractual cash flows of those investments
are guaranteed or issued by an agency of the U.S. Government.&nbsp;&nbsp;Because the decline in market value is attributable to
the current interest rate environment and not credit quality, and because the Bank does not intend to sell the investments and
it is not more likely than not that the Bank will be required to sell the investments before recovery of their amortized cost
bases, which may be maturity, the Bank does not deem those investments to be other-than-temporarily impaired at June 30, 2012.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in"><FONT STYLE="color: #000000"><B>Note
4. Loans and Allowance for Loan Losses</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in"><FONT STYLE="color: #000000">At
June 30, 2012 and December 31, 2011, loans are summarized as follows (in thousands):</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 70%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">June 30,</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">December 31,</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="color: #000000">2012</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="color: #000000">2011</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: 0in"><FONT STYLE="color: #000000">Commercial real estate-mortgage:</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 74%; text-align: left; text-indent: 0in; padding-left: 9pt"><FONT STYLE="color: #000000">Owner-occupied</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="color: #000000">60,068</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="color: #000000">62,999</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: 0in; padding-left: 9pt"><FONT STYLE="color: #000000">All other</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">61,671</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">63,058</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: 0in"><FONT STYLE="color: #000000">Consumer real estate-mortgage</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">72,044</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">70,543</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: 0in"><FONT STYLE="color: #000000">Construction and land development</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">29,310</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">31,031</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: 0in"><FONT STYLE="color: #000000">Commercial and industrial</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">38,644</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">37,458</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: 0in"><FONT STYLE="color: #000000">Consumer and other</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="color: #000000">2,012</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="color: #000000">2,676</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: 0in"><FONT STYLE="color: #000000">Total loans</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">263,749</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">267,765</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: 0in"><FONT STYLE="color: #000000">Less: Allowance for loan
    losses</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="color: #000000">(6,029</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="color: #000000">)</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="color: #000000">(7,400</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="color: #000000">)</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: 0in"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt; text-indent: 0in"><FONT STYLE="color: #000000">Loans, net</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="color: #000000">257,720</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="color: #000000">260,365</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">Cornerstone
follows the loan impairment accounting guidance in ASC Topic 310. A loan is considered impaired when, based on current information
and events, it is probable that Cornerstone will be unable to collect all amounts due from the borrower in accordance with the
contractual terms of the loan. Impaired loans include nonperforming loans and loans modified in troubled debt restructurings where
concessions have been granted to borrowers experiencing financial difficulties. These concessions could include a reduction in
interest rates, payment extensions, forgiveness of principal, forbearance or other actions intended to maximize collections.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1pt; text-align: center; text-indent: -1pt"><FONT STYLE="color: #000000"><B>CORNERSTONE
BANCSHARES, INC.</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1pt; text-align: center; text-indent: -1pt"><FONT STYLE="color: #000000"><B>NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">&nbsp;&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">The composition
of loans by loan classification for impaired and performing loan status at June 30, 2012 and December 31, 2011, is summarized
in the tables below (amounts in thousands):</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="color: #000000">June&nbsp;30,&nbsp;2012</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">Commercial</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">Consumer</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">Construction</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">Commercial</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">Real&nbsp;Estate-</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">Real&nbsp;Estate-</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">and&nbsp;Land</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">and</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">Consumer</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="color: #000000">Mortgage</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="color: #000000">Mortgage</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="color: #000000">Development</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="color: #000000">Industrial</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="color: #000000">and&nbsp;Other</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="color: #000000">Total</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 22%; text-align: justify"><FONT STYLE="color: #000000">Performing loans</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="color: #000000">111,306</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="color: #000000">66,525</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="color: #000000">28,347</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="color: #000000">35,817</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="color: #000000">2,012</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="color: #000000">244,007</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: justify; padding-bottom: 1pt"><FONT STYLE="color: #000000">Impaired loans</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="color: #000000">10,433</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="color: #000000">5,519</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="color: #000000">963</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="color: #000000">2,827</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="color: #000000">&nbsp;-</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="color: #000000">19,742</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: justify; padding-bottom: 2.5pt"><FONT STYLE="color: #000000">Total</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="color: #000000">121,739</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="color: #000000">72,044</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="color: #000000">29,310</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="color: #000000">38,644</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="color: #000000">2,012</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="color: #000000">263,749</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="color: #000000">December&nbsp;31,&nbsp;2011</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">Commercial</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">Consumer</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">Construction</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">Commercial</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">Real&nbsp;Estate-</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">Real&nbsp;Estate-</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">and&nbsp;Land</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">and</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">Consumer</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="color: #000000">Mortgage</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="color: #000000">Mortgage</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="color: #000000">Development</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="color: #000000">Industrial</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="color: #000000">and&nbsp;Other</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="color: #000000">Total</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 22%; text-align: justify"><FONT STYLE="color: #000000">Performing loans</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="color: #000000">112,064</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="color: #000000">64,026</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="color: #000000">29,323</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="color: #000000">34,259</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="color: #000000">2,676</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="color: #000000">242,348</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: justify; padding-bottom: 1pt"><FONT STYLE="color: #000000">Impaired loans</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="color: #000000">13,993</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="color: #000000">6,517</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="color: #000000">1,708</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="color: #000000">3,199</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="color: #000000">&nbsp;-</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="color: #000000">25,417</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: justify; padding-bottom: 2.5pt"><FONT STYLE="color: #000000">Total</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="color: #000000">126,057</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="color: #000000">70,543</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="color: #000000">31,031</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="color: #000000">37,458</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="color: #000000">2,676</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="color: #000000">267,765</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 45pt; text-align: justify"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">The following
tables show the allowance for loan losses allocation by loan classification for impaired and performing loans as of June 30, 2012
and December 31, 2011 (amounts in thousands):</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 45pt; text-align: justify"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 95%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="color: #000000">June&nbsp;30,&nbsp;2012</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">Commercial</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">Consumer</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">Construction</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">Commercial</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">Real&nbsp;Estate-</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">Real&nbsp;Estate-</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">and&nbsp;Land</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">and</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">Consumer</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">Allowance&nbsp;related&nbsp;to:</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="color: #000000">Mortgage</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="color: #000000">Mortgage</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="color: #000000">Development</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="color: #000000">Industrial</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="color: #000000">and&nbsp;Other</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="color: #000000">Total</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 22%; text-align: justify"><FONT STYLE="color: #000000">Performing loans</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="color: #000000">871</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="color: #000000">1,271</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="color: #000000">409</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="color: #000000">111</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="color: #000000">10</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="color: #000000">2,672</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: justify; padding-bottom: 1pt"><FONT STYLE="color: #000000">Impaired loans</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="color: #000000">1,932</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="color: #000000">781</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="color: #000000">459</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="color: #000000">185</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="color: #000000">&nbsp;-</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="color: #000000">3,357</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: justify; padding-bottom: 2.5pt"><FONT STYLE="color: #000000">Total</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="color: #000000">2,803</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="color: #000000">2,052</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="color: #000000">868</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="color: #000000">296</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="color: #000000">10</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="color: #000000">6,029</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 45pt; text-align: justify"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 95%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="color: #000000">December&nbsp;31,&nbsp;2011</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">Commercial</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">Consumer</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">Construction</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">Commercial</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">Real&nbsp;Estate-</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">Real&nbsp;Estate-</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">and&nbsp;Land</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">and</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">Consumer</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">Allowance&nbsp;related&nbsp;to:</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="color: #000000">Mortgage</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="color: #000000">Mortgage</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="color: #000000">Development</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="color: #000000">Industrial</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="color: #000000">and&nbsp;Other</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="color: #000000">Total</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 22%; text-align: justify"><FONT STYLE="color: #000000">Performing loans</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="color: #000000">952</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="color: #000000">1,264</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="color: #000000">174</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="color: #000000">18</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="color: #000000">16</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="color: #000000">2,424</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: justify; padding-bottom: 1pt"><FONT STYLE="color: #000000">Impaired loans</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="color: #000000">2,605</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="color: #000000">1,254</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="color: #000000">653</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="color: #000000">464</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="color: #000000">&nbsp;-</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="color: #000000">4,976</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: justify; padding-bottom: 2.5pt"><FONT STYLE="color: #000000">Total</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="color: #000000">3,557</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="color: #000000">2,518</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="color: #000000">827</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="color: #000000">482</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="color: #000000">16</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="color: #000000">7,400</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 45pt; text-align: justify"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">The following
tables detail the changes in the allowance for loan losses for the six month period ending June 30, 2012 and year ending December
31, 2011, by loan classification (amounts in thousands):</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 45pt; text-align: justify"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="color: #000000">June&nbsp;30,&nbsp;2012</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">Commercial</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">Consumer</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">Construction</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">Commercial</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">Real&nbsp;Estate-</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">Real&nbsp;Estate-</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">and&nbsp;Land</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">And</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">Consumer</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="color: #000000">Mortgage</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="color: #000000">Mortgage</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="color: #000000">Development</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="color: #000000">Industrial</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="color: #000000">and&nbsp;Other</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="color: #000000">Total</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 22%; text-align: justify"><FONT STYLE="color: #000000">Beginning balance</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="color: #000000">3,557</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="color: #000000">2,518</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="color: #000000">827</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="color: #000000">482</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="color: #000000">16</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="color: #000000">7,400</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-left: 9pt"><FONT STYLE="color: #000000">Charged-off loans</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">(597</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">)</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">(214</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">)</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">(698</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">)</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">(57</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">)</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">(16</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">)</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">(1,582</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">)</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="padding-left: 9pt"><FONT STYLE="color: #000000">Recovery of charge-offs</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">43</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">13</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">85</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">59</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">11</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">211</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 9pt"><FONT STYLE="color: #000000">Provision for loan losses</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="color: #000000">(200</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="color: #000000">)</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="color: #000000">(265</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="color: #000000">)</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="color: #000000">654</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="color: #000000">(188</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="color: #000000">)</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="color: #000000">(1</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="color: #000000">)</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="color: #000000">&nbsp;-</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: justify; padding-bottom: 2.5pt"><FONT STYLE="color: #000000">Ending balance</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="color: #000000">2,803</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="color: #000000">2,052</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="color: #000000">868</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="color: #000000">296</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="color: #000000">10</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="color: #000000">6,029</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 45pt; text-align: justify"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="color: #000000">December&nbsp;31,&nbsp;2011</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">Commercial</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">Consumer</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">Construction</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">Commercial</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">Real&nbsp;Estate-</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">Real&nbsp;Estate-</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">and&nbsp;Land</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">And</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">Consumer</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="color: #000000">Mortgage</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="color: #000000">Mortgage</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="color: #000000">Development</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="color: #000000">Industrial</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="color: #000000">and&nbsp;Other</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="color: #000000">Total</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 22%; text-align: justify"><FONT STYLE="color: #000000">Beginning balance</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="color: #000000">1,793</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="color: #000000">3,111</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="color: #000000">3,238</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="color: #000000">925</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="color: #000000">65</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="color: #000000">9,132</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-left: 9pt"><FONT STYLE="color: #000000">Charged-off loans</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">(1,238</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">)</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">(1,613</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">)</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">(232</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">)</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">(56</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">)</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">(29</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">)</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">(3,148</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">)</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="padding-left: 9pt"><FONT STYLE="color: #000000">Recovery of charge-offs</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">259</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">65</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">532</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">94</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">21</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">971</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 9pt"><FONT STYLE="color: #000000">Provision for loan losses</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="color: #000000">2,743</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="color: #000000">955</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="color: #000000">(2,711</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="color: #000000">)</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="color: #000000">(501</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="color: #000000">)</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="color: #000000">(41</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="color: #000000">)</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="color: #000000">445</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: justify; padding-bottom: 2.5pt"><FONT STYLE="color: #000000">Ending balance</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="color: #000000">3,557</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="color: #000000">2,518</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="color: #000000">827</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="color: #000000">482</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="color: #000000">16</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="color: #000000">7,400</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1pt; text-align: center; text-indent: -1pt"><FONT STYLE="color: #000000"><B>&nbsp;</B></FONT></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1pt; text-align: center; text-indent: -1pt"><FONT STYLE="color: #000000"><B>&nbsp;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1pt; text-align: center; text-indent: -1pt"><FONT STYLE="color: #000000"><B>CORNERSTONE
BANCSHARES, INC.</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1pt; text-align: center; text-indent: -1pt"><FONT STYLE="color: #000000"><B>NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 45pt; text-align: justify"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: #000000">Credit quality indicators:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 45pt; text-align: justify"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">Federal regulations
require the Bank to review and classify its assets on a regular basis. To fulfill this requirement, the Bank systematically reviews
its loan portfolio to ensure the Bank&rsquo;s large loan relationships are being maintained within its loan policy guidelines,
remains properly underwritten and is properly classified by loan grade. This review process is performed by the Bank's management,
loan review, internal auditors and state and federal regulators.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 38.5pt; text-align: justify"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">The Bank&rsquo;s
loan grading process is as follows:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 38.5pt; text-align: justify"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Wingdings; color: #000000">&sect;</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; color: #000000">All
                                                                                                                               loans
                                                                                                                               are
                                                                                                                               assigned
                                                                                                                               a
                                                                                                                               loan
                                                                                                                               grade
                                                                                                                               at
                                                                                                                               the
                                                                                                                               time
                                                                                                                               of
                                                                                                                               origination
                                                                                                                               by
                                                                                                                               the
                                                                                                                               relationship
                                                                                                                               manager.
                                                                                                                               Typically,
                                                                                                                               a
                                                                                                                               loan
                                                                                                                               is
                                                                                                                               assigned
                                                                                                                               a
                                                                                                                               loan
                                                                                                                               grade
                                                                                                                               of
                                                                                                                               &ldquo;pass&rdquo;
                                                                                                                               at
                                                                                                                               origination.</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.75in; text-align: justify; text-indent: -0.25in"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Wingdings; color: #000000">&sect;</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; color: #000000">Loans
                                                                                                                               greater
                                                                                                                               than
                                                                                                                               or
                                                                                                                               equal
                                                                                                                               to
                                                                                                                               $500
                                                                                                                               thousand
                                                                                                                               are
                                                                                                                               reviewed
                                                                                                                               by
                                                                                                                               the
                                                                                                                               Bank&rsquo;s
                                                                                                                               internal
                                                                                                                               loan
                                                                                                                               review
                                                                                                                               department
                                                                                                                               within
                                                                                                                               90
                                                                                                                               days
                                                                                                                               of
                                                                                                                               origination.</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.75in; text-align: justify; text-indent: -0.25in"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Wingdings; color: #000000">&sect;</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; color: #000000">Loan
                                                                                                                               relationships
                                                                                                                               greater
                                                                                                                               than
                                                                                                                               or
                                                                                                                               equal
                                                                                                                               to
                                                                                                                               $1
                                                                                                                               million
                                                                                                                               are
                                                                                                                               reviewed
                                                                                                                               annually
                                                                                                                               by
                                                                                                                               the
                                                                                                                               internal
                                                                                                                               loan
                                                                                                                               review
                                                                                                                               department.</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.75in; text-align: justify; text-indent: -0.25in"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Wingdings; color: #000000">&sect;</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; color: #000000">The
                                                                                                                               Bank&rsquo;s
                                                                                                                               internal
                                                                                                                               loan
                                                                                                                               review
                                                                                                                               department
                                                                                                                               samples
                                                                                                                               approximately
                                                                                                                               25
                                                                                                                               percent
                                                                                                                               of
                                                                                                                               all
                                                                                                                               other
                                                                                                                               loans
                                                                                                                               less
                                                                                                                               than
                                                                                                                               $1
                                                                                                                               million
                                                                                                                               on
                                                                                                                               an
                                                                                                                               annual
                                                                                                                               basis
                                                                                                                               for
                                                                                                                               review.
                                                                                                                               </FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.75in; text-align: justify; text-indent: -0.25in"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Wingdings; color: #000000">&sect;</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; color: #000000">If
                                                                                                                               a
                                                                                                                               loan
                                                                                                                               is
                                                                                                                               delinquent
                                                                                                                               60
                                                                                                                               days
                                                                                                                               or
                                                                                                                               more
                                                                                                                               or
                                                                                                                               a
                                                                                                                               pattern
                                                                                                                               of
                                                                                                                               delinquency
                                                                                                                               exists
                                                                                                                               the
                                                                                                                               loan
                                                                                                                               will
                                                                                                                               be
                                                                                                                               selected
                                                                                                                               for
                                                                                                                               review.</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.75in; text-align: justify; text-indent: -0.25in"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Wingdings; color: #000000">&sect;</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; color: #000000">Generally,
                                                                                                                               all
                                                                                                                               loans
                                                                                                                               on
                                                                                                                               the
                                                                                                                               Bank&rsquo;s
                                                                                                                               internal
                                                                                                                               watchlist
                                                                                                                               are
                                                                                                                               reviewed
                                                                                                                               annually
                                                                                                                               by
                                                                                                                               internal
                                                                                                                               loan
                                                                                                                               review.</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.75in; text-align: justify; text-indent: -0.25in"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Wingdings; color: #000000">&sect;</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; color: #000000">The
                                                                                                                               Bank
                                                                                                                               also
                                                                                                                               contracts
                                                                                                                               with
                                                                                                                               an
                                                                                                                               independent
                                                                                                                               third
                                                                                                                               party
                                                                                                                               to
                                                                                                                               perform
                                                                                                                               loan
                                                                                                                               reviews.
                                                                                                                               This
                                                                                                                               external
                                                                                                                               party
                                                                                                                               reviews
                                                                                                                               approximately
                                                                                                                               40
                                                                                                                               percent
                                                                                                                               of
                                                                                                                               the
                                                                                                                               Bank&rsquo;s
                                                                                                                               loan
                                                                                                                               portfolio
                                                                                                                               annually.</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 38.5pt; text-align: justify"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">If a loan
is classified as a problem asset, it will be assigned one of the following loan grades: substandard, substandard-impaired, doubtful,
and loss. &ldquo;Substandard assets&rdquo; must have one or more defined weaknesses and are characterized by the distinct possibility
that we will sustain some loss if the deficiencies are not corrected. &ldquo;Doubtful assets&rdquo; have the weaknesses of substandard
assets with the additional characteristic that the weaknesses make collection or liquidation in full on the basis of currently
existing facts, conditions and values questionable, and there is a high possibility of loss. An asset classified &ldquo;loss&rdquo;
is considered uncollectible and of such little value that continuance as an asset of the institution is not warranted. The regulations
also provide for a &ldquo;special mention&rdquo; category, described as assets which do not currently expose an institution to
a sufficient degree of risk to warrant classification but do possess credit deficiencies or potential weaknesses deserving close
attention. When the Bank classifies an asset as substandard, or doubtful a specific allowance for loan losses may be established.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 81pt; text-align: justify"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 81pt; text-align: justify"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1pt; text-align: center; text-indent: -1pt"><FONT STYLE="color: #000000"><B>CORNERSTONE
BANCSHARES, INC.</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1pt; text-align: center; text-indent: -1pt"><FONT STYLE="color: #000000"><B>NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1pt; text-align: center; text-indent: -1pt"><FONT STYLE="color: #000000"><B>&nbsp;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">The following
tables outline the amount of each loan classification and the amount categorized into each risk rating as of June 30, 2012 and
December 31, 2011 (amounts in thousands):</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 45pt; text-align: justify"><FONT STYLE="color: #000000">&nbsp;&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 95%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="color: #000000">June 30, 2012</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">Commercial</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">Consumer</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">Construction</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">Commercial</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">Real estate-</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">Real Estate-</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">and Land</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">and</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">Consumer</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="color: #000000">Mortgage</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="color: #000000">Mortgage</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="color: #000000">Development</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="color: #000000">Industrial</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="color: #000000">and Other</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="color: #000000">Total</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 22%; text-align: justify"><FONT STYLE="color: #000000">Pass</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="color: #000000">103,611</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="color: #000000">56,086</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="color: #000000">24,562</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="color: #000000">34,690</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="color: #000000">1,987</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="color: #000000">220,936</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: justify"><FONT STYLE="color: #000000">Special mention</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">6,894</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">6,497</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">2,911</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">935</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">21</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">17,258</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: justify"><FONT STYLE="color: #000000">Substandard</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">801</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">3,942</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">874</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">192</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">4</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">5,813</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: justify; padding-bottom: 1pt"><FONT STYLE="color: #000000">Substandard-impaired</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="color: #000000">10,433</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="color: #000000">5,519</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="color: #000000">963</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="color: #000000">2,827</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="color: #000000">19,742</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: justify; padding-bottom: 2.5pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="color: #000000">121,739</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="color: #000000">72,044</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="color: #000000">29,310</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="color: #000000">38,644</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="color: #000000">2,012</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="color: #000000">263,749</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 45pt; text-align: justify"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 45pt; text-align: justify"></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 95%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="layout-grid-mode: line">December&nbsp;31,&nbsp;2011</TD>
    <TD NOWRAP STYLE="layout-grid-mode: line">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="layout-grid-mode: line; text-align: center">Commercial</TD>
    <TD NOWRAP STYLE="layout-grid-mode: line">&nbsp;</TD>
    <TD NOWRAP STYLE="layout-grid-mode: line">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="layout-grid-mode: line; text-align: center">Consumer</TD>
    <TD NOWRAP STYLE="layout-grid-mode: line">&nbsp;</TD>
    <TD NOWRAP STYLE="layout-grid-mode: line">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="layout-grid-mode: line; text-align: center">Construction</TD>
    <TD NOWRAP STYLE="layout-grid-mode: line">&nbsp;</TD>
    <TD NOWRAP STYLE="layout-grid-mode: line">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="layout-grid-mode: line; text-align: center">Commercial</TD>
    <TD NOWRAP STYLE="layout-grid-mode: line">&nbsp;</TD>
    <TD NOWRAP STYLE="layout-grid-mode: line">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="layout-grid-mode: line; text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="layout-grid-mode: line">&nbsp;</TD>
    <TD NOWRAP STYLE="layout-grid-mode: line">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="layout-grid-mode: line; text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="layout-grid-mode: line">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="layout-grid-mode: line; text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="layout-grid-mode: line">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="layout-grid-mode: line; text-align: center">Real&nbsp;Estate-</TD>
    <TD NOWRAP STYLE="layout-grid-mode: line">&nbsp;</TD>
    <TD NOWRAP STYLE="layout-grid-mode: line">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="layout-grid-mode: line; text-align: center">Real&nbsp;Estate-</TD>
    <TD NOWRAP STYLE="layout-grid-mode: line">&nbsp;</TD>
    <TD NOWRAP STYLE="layout-grid-mode: line">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="layout-grid-mode: line; text-align: center">and&nbsp;Land</TD>
    <TD NOWRAP STYLE="layout-grid-mode: line">&nbsp;</TD>
    <TD NOWRAP STYLE="layout-grid-mode: line">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="layout-grid-mode: line; text-align: center">and</TD>
    <TD NOWRAP STYLE="layout-grid-mode: line">&nbsp;</TD>
    <TD NOWRAP STYLE="layout-grid-mode: line">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="layout-grid-mode: line; text-align: center">Consumer</TD>
    <TD NOWRAP STYLE="layout-grid-mode: line">&nbsp;</TD>
    <TD NOWRAP STYLE="layout-grid-mode: line">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="layout-grid-mode: line; text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="layout-grid-mode: line">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="layout-grid-mode: line; text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="padding-bottom: 1pt; layout-grid-mode: line">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="border-bottom: black 1pt solid; layout-grid-mode: line; text-align: center">Mortgage</TD>
    <TD NOWRAP STYLE="padding-bottom: 1pt; layout-grid-mode: line">&nbsp;</TD>
    <TD NOWRAP STYLE="padding-bottom: 1pt; layout-grid-mode: line">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="border-bottom: black 1pt solid; layout-grid-mode: line; text-align: center">Mortgage</TD>
    <TD NOWRAP STYLE="padding-bottom: 1pt; layout-grid-mode: line">&nbsp;</TD>
    <TD NOWRAP STYLE="padding-bottom: 1pt; layout-grid-mode: line">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="border-bottom: black 1pt solid; layout-grid-mode: line; text-align: center">Development</TD>
    <TD NOWRAP STYLE="padding-bottom: 1pt; layout-grid-mode: line">&nbsp;</TD>
    <TD NOWRAP STYLE="padding-bottom: 1pt; layout-grid-mode: line">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="border-bottom: black 1pt solid; layout-grid-mode: line; text-align: center">Industrial</TD>
    <TD NOWRAP STYLE="padding-bottom: 1pt; layout-grid-mode: line">&nbsp;</TD>
    <TD NOWRAP STYLE="padding-bottom: 1pt; layout-grid-mode: line">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="border-bottom: black 1pt solid; layout-grid-mode: line; text-align: center">and&nbsp;Other</TD>
    <TD NOWRAP STYLE="padding-bottom: 1pt; layout-grid-mode: line">&nbsp;</TD>
    <TD NOWRAP STYLE="padding-bottom: 1pt; layout-grid-mode: line">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="border-bottom: black 1pt solid; layout-grid-mode: line; text-align: center">Total</TD>
    <TD NOWRAP STYLE="padding-bottom: 1pt; layout-grid-mode: line">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 22%; layout-grid-mode: line; text-align: justify">Pass</TD>
    <TD STYLE="width: 1%; layout-grid-mode: line">&nbsp;</TD>
    <TD STYLE="width: 1%; layout-grid-mode: line">$</TD>
    <TD STYLE="width: 10%; layout-grid-mode: line; text-align: right">101,161</TD>
    <TD STYLE="width: 1%; layout-grid-mode: line">&nbsp;</TD>
    <TD STYLE="width: 1%; layout-grid-mode: line">&nbsp;</TD>
    <TD STYLE="width: 1%; layout-grid-mode: line">$</TD>
    <TD STYLE="width: 10%; layout-grid-mode: line; text-align: right">55,160</TD>
    <TD STYLE="width: 1%; layout-grid-mode: line">&nbsp;</TD>
    <TD STYLE="width: 1%; layout-grid-mode: line">&nbsp;</TD>
    <TD STYLE="width: 1%; layout-grid-mode: line">$</TD>
    <TD STYLE="width: 10%; layout-grid-mode: line; text-align: right">27,207</TD>
    <TD STYLE="width: 1%; layout-grid-mode: line">&nbsp;</TD>
    <TD STYLE="width: 1%; layout-grid-mode: line">&nbsp;</TD>
    <TD STYLE="width: 1%; layout-grid-mode: line">$</TD>
    <TD STYLE="width: 10%; layout-grid-mode: line; text-align: right">31,426</TD>
    <TD STYLE="width: 1%; layout-grid-mode: line">&nbsp;</TD>
    <TD STYLE="width: 1%; layout-grid-mode: line">&nbsp;</TD>
    <TD STYLE="width: 1%; layout-grid-mode: line">$</TD>
    <TD STYLE="width: 10%; layout-grid-mode: line; text-align: right">2,648</TD>
    <TD STYLE="width: 1%; layout-grid-mode: line">&nbsp;</TD>
    <TD STYLE="width: 1%; layout-grid-mode: line">&nbsp;</TD>
    <TD STYLE="width: 1%; layout-grid-mode: line">$</TD>
    <TD STYLE="width: 10%; layout-grid-mode: line; text-align: right">217,602</TD>
    <TD STYLE="width: 1%; layout-grid-mode: line">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="layout-grid-mode: line; text-align: justify">Special mention</TD>
    <TD STYLE="layout-grid-mode: line">&nbsp;</TD>
    <TD STYLE="layout-grid-mode: line">&nbsp;</TD>
    <TD STYLE="layout-grid-mode: line; text-align: right">9,805</TD>
    <TD STYLE="layout-grid-mode: line">&nbsp;</TD>
    <TD STYLE="layout-grid-mode: line">&nbsp;</TD>
    <TD STYLE="layout-grid-mode: line">&nbsp;</TD>
    <TD STYLE="layout-grid-mode: line; text-align: right">5,122</TD>
    <TD STYLE="layout-grid-mode: line">&nbsp;</TD>
    <TD STYLE="layout-grid-mode: line">&nbsp;</TD>
    <TD STYLE="layout-grid-mode: line">&nbsp;</TD>
    <TD STYLE="layout-grid-mode: line; text-align: right">804</TD>
    <TD STYLE="layout-grid-mode: line">&nbsp;</TD>
    <TD STYLE="layout-grid-mode: line">&nbsp;</TD>
    <TD STYLE="layout-grid-mode: line">&nbsp;</TD>
    <TD STYLE="layout-grid-mode: line; text-align: right">2,620</TD>
    <TD STYLE="layout-grid-mode: line">&nbsp;</TD>
    <TD STYLE="layout-grid-mode: line">&nbsp;</TD>
    <TD STYLE="layout-grid-mode: line">&nbsp;</TD>
    <TD STYLE="layout-grid-mode: line; text-align: right">7</TD>
    <TD STYLE="layout-grid-mode: line">&nbsp;</TD>
    <TD STYLE="layout-grid-mode: line">&nbsp;</TD>
    <TD STYLE="layout-grid-mode: line">&nbsp;</TD>
    <TD STYLE="layout-grid-mode: line; text-align: right">18,358</TD>
    <TD STYLE="layout-grid-mode: line">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="layout-grid-mode: line; text-align: justify">Substandard</TD>
    <TD STYLE="layout-grid-mode: line">&nbsp;</TD>
    <TD STYLE="layout-grid-mode: line">&nbsp;</TD>
    <TD STYLE="layout-grid-mode: line; text-align: right">1,098</TD>
    <TD STYLE="layout-grid-mode: line">&nbsp;</TD>
    <TD STYLE="layout-grid-mode: line">&nbsp;</TD>
    <TD STYLE="layout-grid-mode: line">&nbsp;</TD>
    <TD STYLE="layout-grid-mode: line; text-align: right">3,744</TD>
    <TD STYLE="layout-grid-mode: line">&nbsp;</TD>
    <TD STYLE="layout-grid-mode: line">&nbsp;</TD>
    <TD STYLE="layout-grid-mode: line">&nbsp;</TD>
    <TD STYLE="layout-grid-mode: line; text-align: right">1,312</TD>
    <TD STYLE="layout-grid-mode: line">&nbsp;</TD>
    <TD STYLE="layout-grid-mode: line">&nbsp;</TD>
    <TD STYLE="layout-grid-mode: line">&nbsp;</TD>
    <TD STYLE="layout-grid-mode: line; text-align: right">213</TD>
    <TD STYLE="layout-grid-mode: line">&nbsp;</TD>
    <TD STYLE="layout-grid-mode: line">&nbsp;</TD>
    <TD STYLE="layout-grid-mode: line">&nbsp;</TD>
    <TD STYLE="layout-grid-mode: line; text-align: right">21</TD>
    <TD STYLE="layout-grid-mode: line">&nbsp;</TD>
    <TD STYLE="layout-grid-mode: line">&nbsp;</TD>
    <TD STYLE="layout-grid-mode: line">&nbsp;</TD>
    <TD STYLE="layout-grid-mode: line; text-align: right">6,388</TD>
    <TD STYLE="layout-grid-mode: line">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 1pt; layout-grid-mode: line; text-align: justify">Substandard-impaired</TD>
    <TD STYLE="padding-bottom: 1pt; layout-grid-mode: line">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; layout-grid-mode: line; text-align: right">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; layout-grid-mode: line; text-align: right">11,493</TD>
    <TD STYLE="padding-bottom: 1pt; layout-grid-mode: line; text-align: right">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; layout-grid-mode: line; text-align: right">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; layout-grid-mode: line; text-align: right">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; layout-grid-mode: line; text-align: right">6,517</TD>
    <TD STYLE="padding-bottom: 1pt; layout-grid-mode: line; text-align: right">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; layout-grid-mode: line; text-align: right">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; layout-grid-mode: line; text-align: right">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; layout-grid-mode: line; text-align: right">1,708</TD>
    <TD STYLE="padding-bottom: 1pt; layout-grid-mode: line; text-align: right">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; layout-grid-mode: line; text-align: right">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; layout-grid-mode: line; text-align: right">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; layout-grid-mode: line; text-align: right">3,199</TD>
    <TD STYLE="padding-bottom: 1pt; layout-grid-mode: line; text-align: right">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; layout-grid-mode: line; text-align: right">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; layout-grid-mode: line; text-align: right">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; layout-grid-mode: line; text-align: right">-</TD>
    <TD STYLE="padding-bottom: 1pt; layout-grid-mode: line; text-align: right">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; layout-grid-mode: line; text-align: right">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; layout-grid-mode: line; text-align: right">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; layout-grid-mode: line; text-align: right">22,917</TD>
    <TD STYLE="padding-bottom: 1pt; layout-grid-mode: line; text-align: right">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="padding-bottom: 1pt; layout-grid-mode: line; text-align: justify">Doubtful</TD>
    <TD STYLE="padding-bottom: 1pt; layout-grid-mode: line">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; layout-grid-mode: line; text-align: right">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; layout-grid-mode: line; text-align: right">2,500</TD>
    <TD STYLE="padding-bottom: 1pt; layout-grid-mode: line; text-align: right">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; layout-grid-mode: line; text-align: right">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; layout-grid-mode: line; text-align: right">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; layout-grid-mode: line; text-align: right">-</TD>
    <TD STYLE="padding-bottom: 1pt; layout-grid-mode: line; text-align: right">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; layout-grid-mode: line; text-align: right">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; layout-grid-mode: line; text-align: right">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; layout-grid-mode: line; text-align: right">-</TD>
    <TD STYLE="padding-bottom: 1pt; layout-grid-mode: line; text-align: right">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; layout-grid-mode: line; text-align: right">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; layout-grid-mode: line; text-align: right">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; layout-grid-mode: line; text-align: right">-</TD>
    <TD STYLE="padding-bottom: 1pt; layout-grid-mode: line; text-align: right">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; layout-grid-mode: line; text-align: right">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; layout-grid-mode: line; text-align: right">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; layout-grid-mode: line; text-align: right">-</TD>
    <TD STYLE="padding-bottom: 1pt; layout-grid-mode: line; text-align: right">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; layout-grid-mode: line; text-align: right">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; layout-grid-mode: line; text-align: right">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; layout-grid-mode: line; text-align: right">2,500</TD>
    <TD STYLE="padding-bottom: 1pt; layout-grid-mode: line; text-align: right">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 2.5pt; layout-grid-mode: line; text-align: justify">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; layout-grid-mode: line">&nbsp;</TD>
    <TD STYLE="border-bottom: black 2.25pt double; layout-grid-mode: line">$</TD>
    <TD STYLE="border-bottom: black 2.25pt double; layout-grid-mode: line; text-align: right">126,057</TD>
    <TD STYLE="padding-bottom: 2.5pt; layout-grid-mode: line">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; layout-grid-mode: line">&nbsp;</TD>
    <TD STYLE="border-bottom: black 2.25pt double; layout-grid-mode: line">$</TD>
    <TD STYLE="border-bottom: black 2.25pt double; layout-grid-mode: line; text-align: right">70,543</TD>
    <TD STYLE="padding-bottom: 2.5pt; layout-grid-mode: line">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; layout-grid-mode: line">&nbsp;</TD>
    <TD STYLE="border-bottom: black 2.25pt double; layout-grid-mode: line">$</TD>
    <TD STYLE="border-bottom: black 2.25pt double; layout-grid-mode: line; text-align: right">31,031</TD>
    <TD STYLE="padding-bottom: 2.5pt; layout-grid-mode: line">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; layout-grid-mode: line">&nbsp;</TD>
    <TD STYLE="border-bottom: black 2.25pt double; layout-grid-mode: line">$</TD>
    <TD STYLE="border-bottom: black 2.25pt double; layout-grid-mode: line; text-align: right">37,458</TD>
    <TD STYLE="padding-bottom: 2.5pt; layout-grid-mode: line">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; layout-grid-mode: line">&nbsp;</TD>
    <TD STYLE="border-bottom: black 2.25pt double; layout-grid-mode: line">$</TD>
    <TD STYLE="border-bottom: black 2.25pt double; layout-grid-mode: line; text-align: right">2,676</TD>
    <TD STYLE="padding-bottom: 2.5pt; layout-grid-mode: line">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; layout-grid-mode: line">&nbsp;</TD>
    <TD STYLE="border-bottom: black 2.25pt double; layout-grid-mode: line">$</TD>
    <TD STYLE="border-bottom: black 2.25pt double; layout-grid-mode: line; text-align: right">267,765</TD>
    <TD STYLE="padding-bottom: 2.5pt; layout-grid-mode: line">&nbsp;</TD></TR>
</TABLE>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 45pt; text-align: justify"><FONT STYLE="color: #000000"></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 45pt; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 45pt; text-align: justify"><FONT STYLE="color: #000000">&nbsp;&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">After the
Bank&rsquo;s independent loan review department completes the loan grade assignment, a loan impairment analysis is performed on
loans graded substandard or worse. The following tables present summary information pertaining to impaired loans by loan classification
as of June 30, 2012 and December 31, 2011 (in thousands):</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="6" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">For the quarter ended</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="10" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="color: #000000">At June 30,
    2012</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="6" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="color: #000000">June 30, 2012</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">Unpaid</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">Average</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">Interest</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">Recorded</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">Principal</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">Related</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">Recorded</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">Income</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="color: #000000">Investment</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="color: #000000">Balance</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="color: #000000">Allowance</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="color: #000000">Investment</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="color: #000000">Recognized</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">Impaired loans without a valuation allowance:</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 35%; text-align: left"><FONT STYLE="color: #000000">Commercial real estate &ndash; mortgage</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="color: #000000">2,675</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="color: #000000">2,692</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="width: 10%; text-align: right">-</TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="color: #000000">4,314</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="color: #000000">98</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">Consumer real estate &ndash; mortgage</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">1,918</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">2,601</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">1,399</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">96</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">Construction and land development</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">244</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">251</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right">-<FONT STYLE="color: #000000"></FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">591</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">9</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt"><FONT STYLE="color: #000000">Commercial and industrial</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="color: #000000">2,342</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="color: #000000">2,351</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-<FONT STYLE="color: #000000"></FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="color: #000000">2,488</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="color: #000000">7</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD><FONT STYLE="color: #000000">Total</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">7,179</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">7,895</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">8,792</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">210</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">Impaired loans with a valuation allowance:</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">Commercial real estate &ndash; mortgage</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">7,758</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">7,770</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">1,932</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">8,034</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">246</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">Consumer real estate &ndash; mortgage</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">3,601</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">3,702</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">781</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">4,838</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">98</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">Construction and land development</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">719</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">719</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">459</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">679</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">25</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt"><FONT STYLE="color: #000000">Commercial and industrial</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="color: #000000">485</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="color: #000000">485</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="color: #000000">185</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="color: #000000">500</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="color: #000000">30</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">Total</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; border-bottom: Black 1pt solid"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid"><FONT STYLE="color: #000000">12,563</FONT></TD><TD STYLE="text-align: left; padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; border-bottom: Black 1pt solid"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid"><FONT STYLE="color: #000000">12,676</FONT></TD><TD STYLE="text-align: left; padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; border-bottom: Black 1pt solid"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid"><FONT STYLE="color: #000000">3,357</FONT></TD><TD STYLE="text-align: left; padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; border-bottom: Black 1pt solid"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid"><FONT STYLE="color: #000000">14,051</FONT></TD><TD STYLE="text-align: left; padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; border-bottom: Black 1pt solid"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid"><FONT STYLE="color: #000000">399</FONT></TD><TD STYLE="text-align: left; padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt"><FONT STYLE="color: #000000">Total impaired loans</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="color: #000000">19,742</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="color: #000000">20,571</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="color: #000000">3,357</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="color: #000000">22,843</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="color: #000000">609</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1pt; text-align: center; text-indent: -1pt"><FONT STYLE="color: #000000"><B>&nbsp;</B></FONT></P>

<!-- Field: Page; Sequence: 19; Value: 2 -->
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    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif"><TR><TD STYLE="text-align: center; width: 100%">&nbsp;</TD></TR></TABLE></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1pt; text-align: center; text-indent: -1pt"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1pt; text-align: center; text-indent: -1pt"><FONT STYLE="color: #000000"><B>&nbsp;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1pt; text-align: center; text-indent: -1pt"><FONT STYLE="color: #000000"><B>CORNERSTONE
BANCSHARES, INC.</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1pt; text-align: center; text-indent: -1pt"><FONT STYLE="color: #000000"><B>NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 45pt; text-align: justify"><FONT STYLE="color: #000000">&nbsp;&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="6" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">For the year ended</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="10" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="color: #000000">At December
    31, 2011</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="6" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="color: #000000">December 31,
    2011</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">Unpaid</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">Average</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">Interest</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">Recorded</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">Principal</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">Related</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">Recorded</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">Income</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="color: #000000">Investment</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="color: #000000">Balance</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="color: #000000">Allowance</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="color: #000000">Investment</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="color: #000000">Recognized</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">Impaired loans without a valuation allowance:</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 35%; text-align: left"><FONT STYLE="color: #000000">Commercial real estate &ndash; mortgage</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="color: #000000">4,354</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="color: #000000">4,354</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="color: #000000">-</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="color: #000000">5,378</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="color: #000000">330</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">Consumer real estate &ndash; mortgage</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">322</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">322</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right">-<FONT STYLE="color: #000000"></FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">3,589</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">21</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">Construction and land development</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">829</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">1,023</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right">-<FONT STYLE="color: #000000"></FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">1,099</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">59</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt"><FONT STYLE="color: #000000">Commercial and industrial</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="color: #000000">2,691</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="color: #000000">2,691</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-<FONT STYLE="color: #000000"></FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="color: #000000">1,207</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="color: #000000">165</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD><FONT STYLE="color: #000000">Total</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">8,196</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">8,390</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">11,273</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">575</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">Impaired loans with a valuation allowance:</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">Commercial real estate &ndash; mortgage</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">9,639</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">9,694</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">2,605</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">5,912</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">645</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">Consumer real estate &ndash; mortgage</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">6,195</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">6,257</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">1,254</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">5,333</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">294</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">Construction and land development</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">879</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">879</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">653</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">294</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">62</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt"><FONT STYLE="color: #000000">Commercial and industrial</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="color: #000000">508</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="color: #000000">508</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="color: #000000">464</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="color: #000000">784</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="color: #000000">65</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">Total</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; border-bottom: Black 1pt solid"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid"><FONT STYLE="color: #000000">17,221</FONT></TD><TD STYLE="text-align: left; padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; border-bottom: Black 1pt solid"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid"><FONT STYLE="color: #000000">17,338</FONT></TD><TD STYLE="text-align: left; padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; border-bottom: Black 1pt solid"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid"><FONT STYLE="color: #000000">4,976</FONT></TD><TD STYLE="text-align: left; padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; border-bottom: Black 1pt solid"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid"><FONT STYLE="color: #000000">12,323</FONT></TD><TD STYLE="text-align: left; padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; border-bottom: Black 1pt solid"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid"><FONT STYLE="color: #000000">1,066</FONT></TD><TD STYLE="text-align: left; padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt"><FONT STYLE="color: #000000">Total impaired loans</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="color: #000000">25,417</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="color: #000000">25,728</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="color: #000000">4,976</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="color: #000000">23,596</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="color: #000000">1,641</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 45pt; text-align: justify"><FONT STYLE="color: #000000">&nbsp;&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">The following
tables present an aged analysis of past due loans as of June 30, 2012 and December 31, 2011 (dollars in thousands):</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="color: #000000">June 30, 2012</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">30-89 Days</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">Past Due 90</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">Past Due and</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">Days or More</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">Total</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">Current</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">Total</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="color: #000000">Accruing</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="color: #000000">and Accruing</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="color: #000000">Nonaccrual</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="color: #000000">Past Due</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="color: #000000">Loans</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="color: #000000">Loans</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">Commercial real estate-mortgage:</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 34%; padding-left: 9pt"><FONT STYLE="color: #000000">Owner-occupied</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="width: 8%; text-align: right"><FONT STYLE="color: #000000">1,195</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="width: 8%; text-align: right"><FONT STYLE="color: #000000">-</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="width: 8%; text-align: right"><FONT STYLE="color: #000000">895</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="width: 8%; text-align: right"><FONT STYLE="color: #000000">2,090</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="width: 8%; text-align: right"><FONT STYLE="color: #000000">57,978</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="width: 8%; text-align: right"><FONT STYLE="color: #000000">60,068</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-left: 9pt"><FONT STYLE="color: #000000">All other</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">253</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right">-<FONT STYLE="color: #000000"></FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">919</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">1,172</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">60,499</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">61,671</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">Consumer real estate-mortgage</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">821</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right">-<FONT STYLE="color: #000000"></FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">2,745</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">3,566</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">68,478</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">72,044</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">Construction and land development</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right">-<FONT STYLE="color: #000000"></FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">174</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">174</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">29,136</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">29,310</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">Commercial and industrial</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">205</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right">-<FONT STYLE="color: #000000"></FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">2,391</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">2,596</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">36,048</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">38,644</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt"><FONT STYLE="color: #000000">Consumer and other</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="color: #000000">22</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="color: #000000">-</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="color: #000000">22</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="color: #000000">1,990</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="color: #000000">2,012</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="color: #000000">Total</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="color: #000000">2,495</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">-<FONT STYLE="color: #000000"></FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="color: #000000">7,124</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="color: #000000">9,620</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="color: #000000">254,129</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="color: #000000">263,749</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 45pt; text-align: justify"><FONT STYLE="color: #000000">&nbsp;&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="color: #000000">December 31, 2011</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">30-89 Days</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">Past Due 90</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">Past Due and</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">Days or More</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">Total</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">Current</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">Total</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="color: #000000">Accruing</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="color: #000000">and Accruing</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="color: #000000">Nonaccrual</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="color: #000000">Past Due</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="color: #000000">Loans</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="color: #000000">Loans</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">Commercial real estate-mortgage:</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 34%; padding-left: 9pt"><FONT STYLE="color: #000000">Owner-occupied</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="width: 8%; text-align: right"><FONT STYLE="color: #000000">4,791</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="width: 8%; text-align: right"><FONT STYLE="color: #000000">-</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="width: 8%; text-align: right"><FONT STYLE="color: #000000">63</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="width: 8%; text-align: right"><FONT STYLE="color: #000000">4,854</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="width: 8%; text-align: right"><FONT STYLE="color: #000000">58,145</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="width: 8%; text-align: right"><FONT STYLE="color: #000000">62,999</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-left: 9pt"><FONT STYLE="color: #000000">All other</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">497</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right">-<FONT STYLE="color: #000000"></FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">2,500</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">2,997</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">60,061</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">63,058</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">Consumer real estate-mortgage</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">1,163</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right">-<FONT STYLE="color: #000000"></FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">3,641</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">4,804</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">65,739</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">70,543</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">Construction and land development</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">103</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right">-<FONT STYLE="color: #000000"></FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">1,622</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">1,725</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">29,306</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">31,031</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">Commercial and industrial</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">1,578</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right">-<FONT STYLE="color: #000000"></FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">42</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">1,620</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">35,838</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">37,458</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt"><FONT STYLE="color: #000000">Consumer and other</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="color: #000000">26</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-<FONT STYLE="color: #000000"></FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="color: #000000">14</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="color: #000000">40</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="color: #000000">2,636</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="color: #000000">2,676</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="color: #000000">Total</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="color: #000000">8,158</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">-<FONT STYLE="color: #000000"></FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="color: #000000">7,882</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="color: #000000">16,040</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="color: #000000">251,725</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="color: #000000">267,765</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1pt; text-align: center; text-indent: -1pt"><FONT STYLE="color: #000000"><B>&nbsp;</B></FONT></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1pt; text-align: center; text-indent: -1pt"><FONT STYLE="color: #000000"><B>&nbsp;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1pt; text-align: center; text-indent: -1pt"><FONT STYLE="color: #000000"><B>CORNERSTONE
BANCSHARES, INC.</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1pt; text-align: center; text-indent: -1pt"><FONT STYLE="color: #000000"><B>NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1pt; text-align: center; text-indent: -1pt"><FONT STYLE="color: #000000"><B>&nbsp;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">Impaired
loans also include loans that the Bank has elected to formally restructure when, due to the weakening credit status of a borrower,
the restructuring may facilitate a repayment plan that seeks to minimize the potential losses that the Bank may have to otherwise
incur. If on nonaccruing status as of the date of restructuring, the loans are included in nonperforming loans and are classified
as impaired loans. Loans that have been restructured that were performing as of the restructure date are reported as troubled
debt restructurings. At June 30, 2012 and December 31, 2011, the Bank has loans of approximately $7,329,000 and $5,026,000, respectively,
that were modified for troubled debt restructuring. Troubled commercial loans are restructured by specialists within our Special
Asset department and all restructurings are approved by committees and credit officers separate and apart from the normal loan
approval process. These specialists are trained to reduce the Bank&rsquo;s overall risk and exposure to loss in the event of a
restructuring through obtaining either or all of the following: improved documentation, additional guaranties, increase in curtailments,
reduction in collateral terms, additional collateral or other similar strategies.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">The following
table presents a summary of loans that were modified as troubled debt restructurings during the six month ending period June 30,
2012 (amounts in thousands):</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 9pt; text-align: justify; text-indent: 0in"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">Pre-Modification</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">Post-Modification</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">Outstanding</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">Outstanding</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">Recorded</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">Recorded</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD NOWRAP STYLE="padding-bottom: 1pt; text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="border-bottom: Black 1pt solid; text-align: center"><FONT STYLE="color: #000000">Number&nbsp;of&nbsp;Contracts</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="color: #000000">Investment</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="color: #000000">Investment</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: center"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: center">&nbsp;</TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 61%; text-align: left"><FONT STYLE="color: #000000">Consumer real estate-mortgage</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="width: 10%; text-align: center"><FONT STYLE="color: #000000">1</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="color: #000000">65</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="color: #000000">65</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">Construction and land development</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: center"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: center"><FONT STYLE="color: #000000">3</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">1,178</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">1,178</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">Commercial and industrial</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: center"><FONT STYLE="color: #000000">3</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">2,389</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">2,389</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in"><FONT STYLE="color: #000000"><B>&nbsp;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1pt; text-indent: -1pt"><FONT STYLE="color: #000000">There
were no loans that were modified as troubled debt restructurings during the past twelve months and for which there was a subsequent
payment default.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in"><FONT STYLE="color: #000000"><B>&nbsp;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in"><FONT STYLE="color: #000000"><B>Note
5. Commitments and Contingent Liabilities</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000"><I>Off Balance
Sheet Arrangements</I> - In the normal course of business, the Bank has entered into off-balance sheet financial instruments which
include commitments to extend credit (i.e., including unfunded lines of credit) and standby letters of credit. Commitments to
extend credit are usually the result of lines of credit granted to existing borrowers under agreements that the total outstanding
indebtedness will not exceed a specific amount during the term of the indebtedness. Typical borrowers are commercial concerns
that use lines of credit to supplement their treasury management functions; thus their total outstanding indebtedness may fluctuate
during any time period based on the seasonality of their business and the resultant timing of their cash flows. Other typical
lines of credit are related to home equity loans granted to consumers. Commitments to extend credit generally have fixed expiration
dates or other termination clauses and may require payment of a fee.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">Standby letters
of credit are generally issued on behalf of an applicant (our customer) to a specifically named beneficiary and are the result
of a particular business arrangement that exists between the applicant and the beneficiary. Standby letters of credit have fixed
expiration dates and are usually for terms of two years or less unless terminated beforehand due to criteria specified in the
standby letter of credit. A typical arrangement involves the applicant routinely being indebted to the beneficiary for such items
as inventory purchases, insurance, utilities, lease guarantees or other third party commercial transactions. The standby letter
of credit would permit the beneficiary to obtain payment from the Bank under certain prescribed circumstances. Subsequently, the
Bank would then seek reimbursement from the applicant pursuant to the terms of the standby letter of credit.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1pt; text-align: justify; text-indent: -1pt"><FONT STYLE="color: #000000">The
Bank follows the same credit policies and underwriting practices when making these commitments as it does for on-balance sheet
instruments. Each customer&rsquo;s creditworthiness is evaluated on a case-by-case basis, and the amount of collateral obtained,
if any, is based on management&rsquo;s credit evaluation of the customer. Collateral held varies but may include cash, real estate
and improvements, marketable securities, accounts receivable, inventory, equipment and personal property.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1pt; text-align: justify; text-indent: -1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1pt; text-align: justify; text-indent: -1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1pt; text-align: center; text-indent: -1pt"><FONT STYLE="color: #000000"><B>CORNERSTONE
BANCSHARES, INC.</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1pt; text-align: center; text-indent: -1pt"><FONT STYLE="color: #000000"><B>NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">The contractual
amounts of these commitments are not reflected in the consolidated financial statements and would only be reflected if drawn upon.
Since many of the commitments are expected to expire without being drawn upon, the contractual amounts do not necessarily represent
future cash requirements. However, should the commitments be drawn upon and should customers default on their resulting obligation
to, the Bank&rsquo;s maximum exposure to credit loss, without consideration of collateral, is represented by the contractual amount
of those instruments.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">A summary
of the Bank&rsquo;s total contractual amount for all off-balance sheet commitments at June 30, 2012 is as follows:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 87%; text-align: left"><FONT STYLE="color: #000000">Commitments to extend credit</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">$&nbsp;</FONT></TD><TD NOWRAP STYLE="width: 10%; text-align: right"><FONT STYLE="color: #000000">31.2
                                                                                            million</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">Standby letters of credit</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">$&nbsp;</FONT></TD><TD NOWRAP STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;&nbsp;&nbsp;
                                                                                 2.7 million</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">Various legal
claims also arise from time to time in the normal course of business. In the opinion of management, the resolution of claims outstanding
at June 30, 2012 will not have a material effect on Cornerstone&rsquo;s consolidated financial statements.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in"><FONT STYLE="color: #000000"><B>&nbsp;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in"><FONT STYLE="color: #000000"><B>Note
6. Fair Value Disclosures</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">Fair Value
Measurements:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">Cornerstone
uses fair value measurements to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures.
In accordance with the &ldquo;Fair Value Measurements and Disclosures&rdquo; ASC Topic 820, 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 upon quoted market prices. In cases where quoted market
prices are not 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: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">ASC Topic
820 provides a consistent definition of fair value, which focuses on exit price in an orderly transaction between market participants
at 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 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
point within the range that is most representative of fair value under current market conditions.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 45pt; text-align: justify"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">ASC Topic
820 also establishes a three-tier fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize
the use of unobservable inputs when measuring fair value, as follows:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify"><FONT STYLE="color: #000000">Level
1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities that Cornerstone has the ability to access.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-align: justify"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify"><FONT STYLE="color: #000000">Level
2 - Significant other observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities in
active markets, quoted prices in markets that are not active and other inputs that are observable or can be corroborated by observable
market data.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-align: justify"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify"><FONT STYLE="color: #000000">Level
3 - Significant unobservable inputs that reflect a company&rsquo;s own assumptions about the assumptions that market participants
would use in pricing an asset or liability.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 45pt; text-align: justify"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">A financial
instrument&rsquo;s categorization within the valuation hierarchy is based upon the lowest level of input that is significant to
the fair value measurement.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 45pt; text-align: justify"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">The following
methods and assumptions were used by Cornerstone in estimating fair value disclosures for financial instruments. There have been
no changes in the methodologies used at June 30, 2012 and December 31, 2011.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 45pt; text-align: justify"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">Cash and
cash equivalents:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 45pt; text-align: justify"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">The carrying
amounts of cash and cash equivalents approximate fair values based on the short-term nature of the assets.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 45pt; text-align: justify"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 45pt; text-align: justify"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1pt; text-align: center; text-indent: -1pt"><FONT STYLE="color: #000000"><B>CORNERSTONE
BANCSHARES, INC.</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1pt; text-align: center; text-indent: -1pt"><FONT STYLE="color: #000000"><B>NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">Securities:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 45pt; text-align: justify"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">Fair values
are estimated using pricing models and discounted cash flows that consider standard input factors such as observable market data,
benchmark yields, interest rate volatilities, broker/dealer quotes, and credit spreads. Securities classified as available for
sale are reported at fair value utilizing Level 2 inputs.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">The carrying
value of Federal Home Loan Bank stock approximates fair value based on the redemption provisions of the Federal Home Loan Bank.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 45pt; text-align: justify"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">Loans:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 45pt; text-align: justify"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">For variable-rate
loans that reprice frequently and with no significant change in credit risk, fair values are based on carrying values. Fair values
for fixed-rate loans are estimated using discounted cash flow analysis, using market interest rates for comparable loans. Loans
for which it is probable that payment of interest and principal will not be made in accordance with the contractual terms of the
loan agreement are considered impaired. Once a loan is identified as individually impaired, management measures impairment in
accordance with ASC Topic 310, <I>Accounting by Creditors for Impairment of a Loan</I>. The fair value of impaired loans is estimated
using several methods including collateral value, liquidation value and discounted cash flows.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 45pt; text-align: justify"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">Those impaired
loans not requiring an allowance represent loans for which the fair value of the expected repayments or collateral exceed the
recorded investments in such loans. At June 30, 2012, substantially all of the total impaired loans were evaluated based on the
fair value of collateral. In accordance with ASC Topic 820, impaired loans where an allowance is established based on the fair
value of collateral require classification in the fair value hierarchy. When the fair value of the collateral is based on an observable
market price or a current appraised value, Cornerstone records the impaired loan as nonrecurring Level&nbsp;2. When an appraised
value is not available or management determines the fair value of the collateral is further impaired below the appraised value
and there is no observable market price, Cornerstone records the impaired loan as nonrecurring Level 3.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 45pt; text-align: justify"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">Cash surrender
value of life insurance:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 45pt; text-align: justify"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">The carrying
amounts of cash surrender value of life insurance approximate their fair value. The carrying amount is based on information received
from the insurance carriers indicating the financial performance of the policies and the amount Cornerstone would receive should
the policies be surrendered. Cornerstone reflects these assets within Level&nbsp;2 of the valuation hierarchy.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 45pt; text-align: justify"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">Foreclosed
assets:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 45pt; text-align: justify"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">Foreclosed
assets, consisting of properties obtained through foreclosure or in satisfaction of loans, are initially recorded at fair value,
determined on the basis of current appraisals, comparable sales, and other estimates of value obtained principally from independent
sources, adjusted for estimated selling costs. At the time of foreclosure, any excess of the loan balance over the fair value
of the real estate held as collateral is treated as a charge against the allowance for loan losses. Gains or losses on sale and
any subsequent adjustment to the fair value are recorded as a component of foreclosed real estate expense. Foreclosed assets are
included in Level&nbsp;2 of the valuation hierarchy.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000"></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">Deposits:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">The fair
value of deposits with no stated maturity, such as noninterest-bearing and interest-bearing demand deposits, savings deposits,
and money market accounts, is equal to the amount payable on demand at the reporting date. The carrying amounts of variable-rate,
fixed-term certificates of deposit approximate their fair values at the reporting date. Fair values for fixed-rate certificates
of deposit are estimated using a discounted cash flow calculation that applies market interest rates on comparable instruments
to a schedule of aggregated expected monthly maturities on time deposits.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">Securities
sold under agreements to repurchase:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">The carrying
amount of these liabilities approximates their estimated fair value.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">Federal Home
Loan Bank advances and other borrowings:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">The carrying
amounts of FHLB advances and other borrowings approximate their fair value.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">Accrued interest:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">The carrying
amounts of accrued interest approximate fair value.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1pt; text-align: center; text-indent: -1pt"><FONT STYLE="color: #000000"><B>CORNERSTONE
BANCSHARES, INC.</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1pt; text-align: center; text-indent: -1pt"><FONT STYLE="color: #000000"><B>NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">Commitments
to extend credit, letters of credit and lines of credit:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">The fair
value of commitments is estimated using the fees currently charged to enter into similar agreements, taking into account the remaining
terms of the agreements and the present creditworthiness of the counterparties. For fixed-rate loan commitments, fair value also
considers the difference between current levels of interest rates and the committed rates.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">Assets and
liabilities recorded at fair value on a recurring basis are as follows.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">Quoted Prices in</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">Significant</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">Significant</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">Active Markets</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">Other</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">Other</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">Balance as of</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">for Identical</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">Observable</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">Unobservable</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">June 30,</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">Assets</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">Inputs</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">Inputs</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="color: #000000">2012</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="color: #000000">(Level 1)</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="color: #000000">(Level 2)</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="color: #000000">(Level 3)</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">Debt securities available for sale:</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 48%; text-align: left; padding-left: 9pt"><FONT STYLE="color: #000000">U.S. Government agencies</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="color: #000000">4,074,241</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="color: #000000">-&nbsp;</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="color: #000000">4,074,241</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="color: #000000">-</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt"><FONT STYLE="color: #000000">State and municipal securities</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">23,936,762</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right">-<FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">23,936,762</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="padding-left: 9pt"><FONT STYLE="color: #000000">Mortgage-backed securities:</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.35in"><FONT STYLE="color: #000000">Residential mortgage
    guaranteed by GNMA</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">10,776,674</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right">-<FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">10,776,674</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -0.1in; padding-left: 0.35in"><FONT STYLE="color: #000000">Collateralized
    mortgage obligations issued or guaranteed by U.S. Government agencies or sponsored agencies</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="color: #000000">47,750,383</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="color: #000000">-&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="color: #000000">47,750,383</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="color: #000000">&nbsp;-</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt; text-indent: -0.1in; padding-left: 16.2pt"><FONT STYLE="color: #000000">Total
    securities available for sale</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="color: #000000">86,538,060</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">-<FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="color: #000000">86,538,060</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="color: #000000">&nbsp;-</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt; text-indent: -0.1in; padding-left: 16.2pt"><FONT STYLE="color: #000000">Cash
    surrender value of life insurance</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="color: #000000">1,183,250</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">-<FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="color: #000000">1,183,250</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="color: #000000">&nbsp;-</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">Quoted Prices in</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">Significant</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">Significant</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">Active Markets</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">Other</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">Other</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">Balance as of</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">for Identical</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">Observable</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">Unobservable</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">December 31,</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">Assets</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">Inputs</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">Inputs</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="color: #000000">2011</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="color: #000000">(Level 1)</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="color: #000000">(Level 2)</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="color: #000000">(Level 3)</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">Debt securities available for sale:</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 48%; text-align: left; padding-left: 9pt"><FONT STYLE="color: #000000">U.S. Government agencies</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="color: #000000">4,190,279</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="color: #000000">&nbsp;-</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="color: #000000">4,190,279</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="color: #000000">&nbsp;-</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt"><FONT STYLE="color: #000000">State and municipal securities</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">24,436,257</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">24,436,257</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="padding-left: 9pt"><FONT STYLE="color: #000000">Mortgage-backed securities:</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.35in"><FONT STYLE="color: #000000">Residential mortgage
    guaranteed by GNMA</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">11,871,170</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">11,871,170</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -0.1in; padding-left: 0.35in"><FONT STYLE="color: #000000">Collateralized
    mortgage obligations issued or guaranteed by U.S. Government agencies or sponsored agencies</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="color: #000000">45,559,731</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT>-</TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="color: #000000">45,559,731</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="color: #000000">&nbsp;-</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt; text-indent: -0.1in; padding-left: 16.2pt"><FONT STYLE="color: #000000">Total
    securities available for sale</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="color: #000000">88,057,437</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="color: #000000">&nbsp;-</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="color: #000000">88,057,437</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="color: #000000">&nbsp;-</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt; text-indent: -0.1in; padding-left: 16.2pt"><FONT STYLE="color: #000000">Cash
    surrender value of life insurance</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="color: #000000">1,166,774</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="color: #000000">&nbsp;-</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="color: #000000">1,166,774</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="color: #000000">&nbsp;-</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1pt; text-align: center; text-indent: -1pt"><FONT STYLE="color: #000000"><B>CORNERSTONE
BANCSHARES, INC.</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1pt; text-align: center; text-indent: -1pt"><FONT STYLE="color: #000000"><B>NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">Cornerstone
has no assets or liabilities whose fair values are measured on a recurring basis using Level&nbsp;3 inputs.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">Certain assets
and liabilities are measured at fair value on a nonrecurring basis, which means the assets and liabilities are not measured at
fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances (for example, when there is
evidence of impairment). The tables below present information about assets and liabilities on the balance sheet at June 30, 2012
for which a nonrecurring change in fair value was recorded (amounts in thousands).</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">Quoted&nbsp;Prices&nbsp;in</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">Significant</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">Significant</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">Active&nbsp;Markets</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">Other</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">Other</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">Balance&nbsp;as&nbsp;of</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">for&nbsp;Identical</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">Observable</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">Unobservable</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">June&nbsp;30,</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">Assets</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">Inputs</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">Inputs</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="padding-bottom: 1pt"></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="color: #000000">2012</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="color: #000000">(Level&nbsp;1)</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="color: #000000">(Level&nbsp;2)</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="color: #000000">(Level&nbsp;3)</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 49%; text-align: left"><FONT STYLE="color: #000000">Impaired loans</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="color: #000000">9,206</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD>
    <TD STYLE="width: 10%; text-align: right"><FONT STYLE="color: #000000">-</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="color: #000000">9,206</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="width: 10%; text-align: right">-<FONT STYLE="color: #000000"></FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">Foreclosed assets <I>(OREO &amp; Repossessions)</I></FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">22,144</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: center"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="color: #000000">-</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">22,144</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">Quoted&nbsp;Prices&nbsp;in</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">Significant</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">Significant</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">Active&nbsp;Markets</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">Other</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">Other</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">Balance&nbsp;as&nbsp;of</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">for&nbsp;Identical</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">Observable</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">Unobservable</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">December&nbsp;31,</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">Assets</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">Inputs</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="color: #000000">Inputs</FONT></TD><TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="color: #000000">2011</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="color: #000000">(Level&nbsp;1)</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="color: #000000">(Level&nbsp;2)</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="color: #000000">(Level&nbsp;3)</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 49%; text-align: left"><FONT STYLE="color: #000000">Impaired loans</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="color: #000000">12,245</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD>
    <TD STYLE="width: 10%; text-align: right"><FONT STYLE="color: #000000">-</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="color: #000000">12,245</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="width: 10%; text-align: right">-</TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">Foreclosed assets <I>(OREO &amp; Repossessions)</I></FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">18,524</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: center"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="color: #000000">-</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">18,524</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: #000000">Loans include impaired loans held
for investment for which an allowance for loan losses has been calculated based upon the fair value of the loans at June 30, 2012
and December 31, 2011. Losses derived from Level 2 inputs were calculated by models incorporating significant observable market
data.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 45pt; text-align: justify"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1pt; text-align: center; text-indent: -1pt"><FONT STYLE="color: #000000"><B>CORNERSTONE
BANCSHARES, INC.</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1pt; text-align: center; text-indent: -1pt"><FONT STYLE="color: #000000"><B>NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">The carrying
amount and estimated fair value of Cornerstone's financial instruments at June 30, 2012 and December 31, 2011 are as follows (in
thousands):</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: left; padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="6" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="color: #000000">June 30, 2012</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="6" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="color: #000000">December 31, 2011</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center"><FONT STYLE="color: #000000">Carrying</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center"><FONT STYLE="color: #000000">Estimated</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center"><FONT STYLE="color: #000000">Carrying</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center"><FONT STYLE="color: #000000">Estimated</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="color: #000000">Amount</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="color: #000000">Fair Value</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="color: #000000">Amount</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="color: #000000">Fair Value</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: 0in"><FONT STYLE="color: #000000">Assets:</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 48%; text-align: left; text-indent: 0in; padding-left: 9pt"><FONT STYLE="color: #000000">Cash and cash equivalents</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="color: #000000">36,879</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="color: #000000">36,879</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="color: #000000">38,883</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">$</FONT></TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="color: #000000">38,883</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: 0in; padding-left: 9pt"><FONT STYLE="color: #000000">Securities</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">86,595</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">86,596</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">86,126</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">86,128</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: 0in; padding-left: 9pt"><FONT STYLE="color: #000000">Federal Home Loan Bank stock</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">2,323</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">2,323</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">2,323</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">2,323</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: 0in; padding-left: 9pt"><FONT STYLE="color: #000000">Loans, net</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">257,720</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">258,821</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">260,365</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">260,515</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: 0in; padding-left: 9pt"><FONT STYLE="color: #000000">Cash surrender value of life
    insurance</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">1,183</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">1,183</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">1,167</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">1,167</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: 0in; padding-left: 9pt"><FONT STYLE="color: #000000">Accrued interest receivable</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">1,247</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">1,247</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">1,327</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">1,327</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: 0in"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: 0in"><FONT STYLE="color: #000000">Liabilities:</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: 0in; padding-left: 9pt"><FONT STYLE="color: #000000">Noninterest-bearing demand
    deposits</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">43,007</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">43,007</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">43,990</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">43,990</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: 0in; padding-left: 9pt"><FONT STYLE="color: #000000">Interest-bearing demand deposits</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">28,502</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">28,502</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">22,353</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">22,353</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: 0in; padding-left: 9pt"><FONT STYLE="color: #000000">Savings deposits and money
    market &nbsp;accounts</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">60,693</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">60,693</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">46,857</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">46,857</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: 0in; padding-left: 9pt"><FONT STYLE="color: #000000">Time deposits</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">189,538</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">189,900</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">200,841</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">203,453</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 16.2pt"><FONT STYLE="color: #000000">Federal funds purchased
    and securities sold under agreements to repurchase</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">23,299</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">23,299</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">29,391</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">29,391</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 16.2pt"><FONT STYLE="color: #000000">Federal Home Loan Bank
    advances and other borrowings</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">37,610</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">37,610</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">43,045</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">43,045</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: 0in; padding-left: 9pt"><FONT STYLE="color: #000000">Accrued interest payable</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">115</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">115</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">111</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">111</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: 0in"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 16.2pt"><FONT STYLE="color: #000000">Unrecognized financial
    instruments (net of contract amount):</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: center"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: center"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: center"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: center"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: center"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: center"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: center"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: center"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: center"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: center"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: center"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: center"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: center"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: center"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: 0in; padding-left: 27pt"><FONT STYLE="color: #000000">Commitments to extend credit</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">-</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">-</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">-</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">-</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: 0in; padding-left: 27pt"><FONT STYLE="color: #000000">Letters of credit</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">-</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">-</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">-</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">-</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: 0in; padding-left: 27pt"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: 0in; padding-left: 27pt"><FONT STYLE="color: #000000">Lines of credit</FONT></TD><TD><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">-</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">-</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">-</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">-</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: #000000">&nbsp;</FONT></TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1pt; text-align: justify; text-indent: -1pt"><FONT STYLE="color: #000000"><B>&nbsp;</B></FONT></P>

<!-- Field: Page; Sequence: 26; Value: 2 -->
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    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif"><TR><TD STYLE="text-align: center; width: 100%">&nbsp;</TD></TR></TABLE></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1pt; text-align: justify; text-indent: -1pt"><FONT STYLE="color: #000000"><B>&nbsp;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1pt; text-align: justify; text-indent: -1pt"><FONT STYLE="color: #000000"><B></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Cornerstone Bancshares, Inc. and Subsidiary</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Net Interest Margin Analysis&#9;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Taxable Equivalent Basis&#9;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="22" NOWRAP STYLE="font-weight: bold; text-align: center">Three months ended</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="padding-bottom: 1pt"><I>(Amounts in thousands)&nbsp;</I></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="22" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">June 30</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="10" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><B>2012</B></TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="10" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><B>2011</B></TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD NOWRAP>&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center">Average</TD><TD NOWRAP>&nbsp;</TD><TD NOWRAP>&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center">Income/</TD><TD NOWRAP>&nbsp;</TD><TD NOWRAP>&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center">Yield/</TD><TD NOWRAP>&nbsp;</TD><TD NOWRAP>&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center">Average</TD><TD NOWRAP>&nbsp;</TD><TD NOWRAP>&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center">Income/</TD><TD NOWRAP>&nbsp;</TD><TD NOWRAP>&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center">Yield/</TD><TD NOWRAP>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="padding-bottom: 1pt"></TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid">Balance</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid">Expense</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid">Rate</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid">Balance</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid">Expense</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid">Rate</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>Assets</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Earning assets:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 34%; text-align: left">Loans, net of unearned income</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 8%; text-align: right">262,598</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 8%; text-align: right">4,186</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 8%; text-align: right">6.39</TD><TD STYLE="width: 1%; text-align: left">%</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 8%; text-align: right">271,952</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 8%; text-align: right">4,521</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 8%; text-align: right">6.67</TD><TD STYLE="width: 1%; text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Investment securities</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">94,949</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">618</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2.91</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">119,751</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">621</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2.36</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Other earning assets</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">23,084</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">13</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: right">0.23</TD><TD STYLE="padding-bottom: 1pt; text-align: left">%</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">24,902</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">17</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: right">0.28</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: 2.5pt; padding-left: 0.12in">Total earning assets</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">380,631</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">4,817</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">5.15</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">%</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">416,605</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">5,159</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">5.05</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Allowance for loan losses</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(6,028</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(7,285</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Cash and other assets</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">37,702</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">36,152</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt; padding-left: 27pt">TOTAL ASSETS</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">412,305</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">445,472</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Liabilities and Shareholders' Equity</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>Interest-bearing liabilities:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Interest-bearing demand deposits</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">28,332</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">23</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.33</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">28,402</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">23</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.33</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Savings deposits</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">10,387</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">9</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.36</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">9,938</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">13</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.51</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>MMDA's</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">46,639</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">101</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.87</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">25,927</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">64</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.99</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Time deposits</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">189,169</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">635</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1.35</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">236,873</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,012</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1.71</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Federal funds purchased and securities sold under agreements to repurchase</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">21,198</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">23</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.44</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">24,288</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">34</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.56</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Federal Home Loan Bank and other borrowings</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">40,028</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">426</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: right">4.27</TD><TD STYLE="padding-bottom: 1pt; text-align: left">%</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">50,678</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">545</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: right">4.32</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; padding-left: 9pt">Total interest-bearing liabilities</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: right">335,751</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">1,217</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: right">1.45</TD><TD STYLE="padding-bottom: 1pt; text-align: left">%</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: right">376,107</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">1,691</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: right">1.80</TD><TD STYLE="padding-bottom: 1pt; text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt">Net interest spread</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">3,600</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">3.70</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">%</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">3,468</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">3.25</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">Noninterest-bearing demand deposits</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">40,829</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">41,486</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Accrued expenses and other liabilities</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(698</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">167</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Shareholders' equity</TD><TD>&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: right">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">36,423</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: right">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">27,712</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt; text-indent: -0.1in; padding-left: 0.1in">TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">412,305</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">445,472</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt">Net yield on earning assets</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">3.87</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">%</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">3.42</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Taxable equivalent adjustment:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="padding-left: 9pt">Loans</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 9pt">Investment securities</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">71</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">85</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt; padding-left: 0.25in">Total adjustment</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">71</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">85</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<!-- Field: Page; Sequence: 27; Value: 2 -->
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    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif"><TR><TD STYLE="text-align: center; width: 100%">&nbsp;</TD></TR></TABLE></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Cornerstone Bancshares, Inc. and Subsidiary</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Net Interest Margin Analysis&#9;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Taxable Equivalent Basis&#9;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="22" NOWRAP STYLE="font-weight: bold; text-align: center">Six months ended</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="padding-bottom: 1pt"><I>(Amounts in thousands)</I>&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="22" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">June 30</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="10" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><B>2012</B></TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="10" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><B>2011</B></TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD NOWRAP>&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center">Average</TD><TD NOWRAP>&nbsp;</TD><TD NOWRAP>&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center">Income/</TD><TD NOWRAP>&nbsp;</TD><TD NOWRAP>&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center">Yield/</TD><TD NOWRAP>&nbsp;</TD><TD NOWRAP>&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center">Average</TD><TD NOWRAP>&nbsp;</TD><TD NOWRAP>&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center">Income/</TD><TD NOWRAP>&nbsp;</TD><TD NOWRAP>&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center">Yield/</TD><TD NOWRAP>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="padding-bottom: 1pt"></TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid">Balance</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid">Expense</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid">Rate</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid">Balance</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid">Expense</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid">Rate</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>Assets</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Earning assets:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 34%; text-align: left">Loans, net of unearned income</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 8%; text-align: right">264,205</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 8%; text-align: right">8,330</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 8%; text-align: right">6.36</TD><TD STYLE="width: 1%; text-align: left">%</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 8%; text-align: right">278,090</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 8%; text-align: right">9,160</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 8%; text-align: right">6.64</TD><TD STYLE="width: 1%; text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Investment securities</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">91,795</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,085</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2.70</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">114,825</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,190</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2.39</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Other earning assets</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">24,913</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">28</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: right">0.23</TD><TD STYLE="padding-bottom: 1pt; text-align: left">%</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">23,959</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">28</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: right">0.24</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: 2.5pt; padding-left: 0.12in">Total earning assets</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">380,913</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">9,443</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">5.07</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">%</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">416,874</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">10,378</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">5.10</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Allowance for loan losses</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(6,574</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(8,173</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Cash and other assets</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">36,169</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">32,967</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt; padding-left: 27pt">TOTAL ASSETS</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">410,508</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">441,668</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Liabilities and Shareholders' Equity</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>Interest-bearing liabilities:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Interest-bearing demand deposits</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">26,611</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">44</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.33</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">27,998</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">45</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.32</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Savings deposits</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">10,123</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">19</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.38</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">9,720</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">25</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.51</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>MMDA's</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">43,006</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">192</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.90</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">25,186</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">123</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.99</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Time deposits</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">192,139</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,334</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1.40</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">240,427</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,064</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1.73</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Federal funds purchased and securities sold under agreements to repurchase</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">23,744</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">55</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.47</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">23,461</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">65</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.56</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Federal Home Loan Bank and other borrowings</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">41,331</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">887</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: right">4.33</TD><TD STYLE="padding-bottom: 1pt; text-align: left">%</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">52,507</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">1,125</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: right">4.32</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; padding-left: 9pt">Total interest-bearing liabilities</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: right">336,954</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">2,532</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: right">1.52</TD><TD STYLE="padding-bottom: 1pt; text-align: left">%</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: right">379,299</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">3,447</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: right">1.83</TD><TD STYLE="padding-bottom: 1pt; text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt">Net interest spread</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">6,912</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">3.56</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">%</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">6,931</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">3.27</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">Noninterest-bearing demand deposits</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">37,654</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">35,259</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Accrued expenses and other liabilities</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(105</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(91</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Shareholders' equity</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">36,005</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="text-align: right; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="text-align: right; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">27,200</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="text-align: right; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="text-align: right; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt; text-indent: -0.1in; padding-left: 0.1in">TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">410,508</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">441,668</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt">Net yield on earning assets</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: right">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">3.73</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">%</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">3.44</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Taxable equivalent adjustment:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="padding-left: 9pt">Loans</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 9pt">Investment securities</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">142</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">170</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt; padding-left: 0.25in">Total adjustment</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">142</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">170</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="margin: 0"></P>

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<P STYLE="margin: 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1pt; text-align: justify; text-indent: -1pt"><FONT STYLE="color: #000000"><B>&nbsp;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1pt; text-align: justify; text-indent: -1pt"><FONT STYLE="color: #000000"><B>ITEM
2. MANAGEMENT&rsquo;S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: #000000"><B>&nbsp;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">Cornerstone
is a bank holding company and the parent company of the Bank, a Tennessee banking corporation which operates primarily in and
around Chattanooga, Tennessee. The Bank has five full-service banking offices located in Hamilton County, Tennessee, and one loan
production office located in Dalton, Georgia. The Bank&rsquo;s business consists primarily of attracting deposits from the general
public and, with these and other funds, originating real estate loans, consumer loans, business loans, and residential and commercial
construction loans. The principal sources of income for the Bank are interest and fees collected on loans, fees collected on deposit
accounts, and interest and dividends collected on other investments. The principal expenses of the Bank are interest paid on deposits,
employee compensation and benefits, office expenses, and other overhead expenses.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">The following
is a discussion of Cornerstone&rsquo;s financial condition at June 30, 2012 and December&nbsp;31, 2011 and our results of operations
for the three and six months ended June 30, 2012 and 2011. The purpose of this discussion is to focus on information about Cornerstone&rsquo;s
financial condition and results of operations which is not otherwise apparent from the consolidated financial statements. The
following discussion and analysis should be read along with Cornerstone&rsquo;s consolidated financial statements and the related
notes included elsewhere herein.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">Critical
Accounting<I> </I>Policies</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">Cornerstone&rsquo;s
accounting and reporting policies are in accordance with accounting principles generally accepted in the United States of America
and conform to general practices within the banking industry. Our significant accounting policies are described in Note 1, &ldquo;Summary
of Significant Accounting Policies,&rdquo; to the consolidated financial statements and are integral to understanding the MD&amp;A.
Critical accounting policies include the initial adoption of an accounting policy that has a material impact on our financial
presentation as well as accounting estimates reflected in our financial statements that require us to make estimates and assumptions
about matters that were highly uncertain at the time. Disclosure about critical estimates is required if different estimates that
Cornerstone reasonably could have used in the current period would have a material impact on the presentation of our financial
condition, changes in financial condition or results of operations. The following is a description of our critical accounting
policies.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000"><I>&nbsp;</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000"><I>Allowance
for Loan Losses</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000"><I>&nbsp;</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">The allowance
for loan losses is established and maintained at levels management deems adequate to absorb credit losses inherent in the portfolio
as of the balance sheet date. The allowance is increased through the provision for loan losses and reduced through loan charge-offs,
net of recoveries. The level of the allowance is based on known and inherent risks in the portfolio, past loan loss experience,
underlying estimated values of collateral securing loans, current economic conditions and other factors as well as the level of
specific impairments associated with impaired loans. This process involves our analysis of complex internal and external variables
and it requires that management exercise judgment to estimate an appropriate allowance.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">Changes in
the financial condition of individual borrowers, economic conditions or changes to our estimated risks could require us to significantly
decrease or increase the level of the allowance. Such a change could materially impact Cornerstone&rsquo;s net income as a result
of the change in the provision for loan losses. Refer to Note 1 and 4 in the notes to Cornerstone&rsquo;s consolidated financial
statements for a discussion of Cornerstone&rsquo;s methodology of establishing the allowance.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000"><I>&nbsp;</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000"><I>Estimates
of Fair Value </I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">Fair value
is used on a recurring basis for certain assets and liabilities in which fair value is the primary basis of accounting. Cornerstone&rsquo;s
available for sale securities and cash surrender value of life insurance are measured at fair value on a recurring basis. Additionally,
fair value is used to measure certain assets and liabilities on a nonrecurring basis. Cornerstone uses fair value on a nonrecurring
basis for foreclosed assets and collateral associated with impaired collateral-dependent loans. Fair value is also used in certain
impairment valuations, including assessments of goodwill, other intangible assets and long-lived assets.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">Fair value
is the price that could be received to sell an asset or paid to transfer a liability in an orderly transaction between market
participants. Estimating fair value in accordance with applicable accounting guidance requires that Cornerstone make a number
of significant judgments. Accounting guidance provides three levels of fair value. Level 1 fair value refers to observable market
prices for identical assets or liabilities. Level 2 fair value refers to similar assets or liabilities with observable market
data. Level 3 fair value refers to assets and liabilities where market prices are unavailable or impracticable to obtain for similar
assets or liabilities. Level 3 valuations require modeling techniques, such as discounted cash flow analyses. These modeling techniques
incorporate Cornerstone&rsquo;s assessments regarding assumptions that market participants would use in pricing the asset or the
liability.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">Changes in
fair value could materially impact our financial results. Refer to Note 6, &ldquo;Fair Value Disclosures,&rdquo; in the notes
to Cornerstone&rsquo;s consolidated financial statements for a discussion of the methodology in calculating fair value.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000"><I>&nbsp;</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000"><I>Income
Taxes </I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">Cornerstone
is subject to various taxing jurisdictions where Cornerstone conducts business. Cornerstone estimates income tax expense based
on amounts expected to be owed to these jurisdictions. Cornerstone evaluates the reasonableness of our effective tax rate based
on a current estimate of annual net income, tax credits, non-taxable income, non-deductible expenses and the applicable statutory
tax rates. The estimated income tax expense or benefit is reported in the consolidated statements of income.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">The accrued
tax liability or receivable represents the net estimated amount due or to be received from tax jurisdictions either currently
or in the future and are reported in other liabilities or other assets, respectively, in Cornerstone&rsquo;s consolidated balance
sheets. Cornerstone assesses the appropriate tax treatment of transactions and filing positions after considering statutes, regulations,
judicial precedent and other pertinent information and maintains tax accruals consistent with management&rsquo;s evaluation. Changes
in the estimate of accrued taxes occur periodically due to changes in tax rates, interpretations of tax laws, the status of examinations
by tax authorities and newly enacted statutory, judicial and regulatory guidance that could impact the relative merits of tax
positions. These changes, if or when they occur, could impact accrued taxes and future tax expense and could materially affect
our financial results.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">Cornerstone
periodically evaluates uncertain tax positions and estimates the appropriate level of tax reserves related to each of these positions.
Additionally, Cornerstone evaluates its deferred tax assets for possible valuation allowances based on the amounts expected to
be realized. The evaluation of uncertain tax positions and deferred tax assets involves a high degree of judgment and subjectivity.
Changes in the results of these evaluations could have a material impact on our financial results. Refer to Note 9, &ldquo;Income
Taxes,&rdquo; in the notes to Cornerstone&rsquo;s consolidated financial statements set forth in its Annual Report on Form 10-K
for the year ended December 31, 2011 for more information.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">Consent Order
and Written Agreement</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">On April
2, 2010, Cornerstone Community Bank (the &quot;Bank&quot;), the wholly owned subsidiary bank of Cornerstone, entered into a Stipulation
to the Issuance of a Consent Order (the &quot;Stipulation&quot;) with the Federal Deposit Insurance Corporation (the &quot;FDIC&quot;).
Pursuant to the Stipulation, the Bank has consented, without admitting or denying any charges of unsafe or unsound banking practices
or violations of law or regulations, to the issuance of a Consent Order (the &quot;Order&quot;) by the FDIC, also effective as
of April 2, 2010. On April 8, 2010, the Bank also executed a written agreement (the &quot;Agreement&quot;) with the Tennessee
Department of Financial Institutions (&quot;TDFI&quot;).</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">&nbsp;&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">The Order
and the Agreement (collectively, the &quot;Action Plans&quot;) contain substantially similar terms and are based on the findings
of the FDIC and TDFI during their joint examination of the Bank commenced on October 8, 2009 (the &quot;Examination&quot;), as
disclosed in the Joint Report of Examination (the &quot;Report&quot;). The Order and the Agreement represent agreements between
the Bank, on the one hand, and the FDIC and the TDFI, respectively, on the other hand, as to areas of the Bank's operations that
warrant improvement and present plans for making those improvements. The Action Plans impose no fines or penalties on the Bank.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">Under the
terms of each Action Plan, the Bank cannot declare or pay cash dividends without the prior written consent of certain officials
of the FDIC and the TDFI (the &quot;Joint Officials&quot;). In addition, the Bank is restricted from extending additional credit
to certain borrowers whose existing credit has been classified as &quot;loss,&quot; &quot;doubtful&quot; or &quot;substandard&quot;
or has been charged off the books of the Bank and, in each case, is uncollected. The Action Plans further require, at varying
times following their respective effective dates, the Bank (or its board of directors, as appropriate) to (i) establish a committee
comprised of a majority of non-employee directors to oversee the Bank's compliance with the Action Plans; (ii) prepare and implement
a written capital plan to increase the Bank's Tier&nbsp;I Capital and achieve and maintain specified capital ratios, containing
a contingency plan (including a plan to sell or merge the Bank) for implementation upon written notice from the Joint Officials
in certain events; (iii)&nbsp;retain a bank consultant to develop a written management and staffing plan for implementation by
the Bank; (iv) develop and implement specified policies and/or procedures addressing interest rate risk, appraisal weaknesses
and credit underwriting and loan administration deficiencies; (v) develop and implement a written plan addressing liquidity and
related measures and objectives; (vi) eliminate certain assets classified as &quot;loss&quot; by the FDIC or the TDFI; (vii) formulate
and implement certain written plans, including an annual profit plan and budget, a comprehensive strategic plan, a plan to reduce
certain impaired assets identified during the Examination, and a plan for the reduction and collection of delinquent loans; (viii)
implement a system of monitoring loan documentation exceptions on an ongoing basis and implement procedures designed to reduce
their future occurrence; and (ix) eliminate and/or correct the deficiencies and technical exceptions, violations of law and regulation
and contraventions of policy noted in the Report. The Agreement would further require the Bank to develop and implement a written
plan for the continued administration of its IT risk management practices and controls.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">The Bank
is required to provide written progress reports to the Joint Officials on a quarterly basis until such time as the requirements
of the Action Plans have been accomplished and the FDIC has released the Bank in writing from such obligation. The Order and the
Agreement will remain in effect until modified or terminated by the FDIC or the TDFI, respectively.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">The Bank
is in substantial compliance with the terms of the Action Plans. The Bank has provided quarterly written progress reports to the
Joint Officials. The status of the Bank's compliance with the specific actions required by the Action Plans is discussed in further
detail below.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">The Bank's
board of directors established a Consent Order Compliance Committee (the &quot;Committee&quot;) comprised of a majority of non-employee
directors to oversee the Bank's compliance with the Action Plans. The Committee's first meeting was held in May 2010. The Committee
has met monthly since that time and intends to meet monthly until the Bank's responsibilities and obligations under the Action
Plans have been fulfilled.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">The Bank
has prepared and is implementing a capital plan. In furtherance of such capital plan, Cornerstone commenced a public offering
in June, 2010 of Cornerstone&rsquo;s Series A Convertible Preferred Stock (the &quot;Preferred Shares&quot;). Pursuant to the
offering, Cornerstone is selling up to 600,000 Preferred Shares at a price of $25.00 per share.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">Cornerstone&rsquo;s
offering will continue to be effective until December 31, 2012. To date, Cornerstone has raised approximately $11 million.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">The Bank
engaged an outside consultant to perform a management and staffing plan. The consultant submitted its findings and recommendations
to the Bank's board of directors, the FDIC and the TDFI. The Bank's board of directors submitted its management plan to the Joint
Officials in April 2011. After discussing the management plan with the Joint Officials the Bank began implementing its new management
plan. Highlights of the management plan include a reorganization of the Bank&rsquo;s internal loan review and credit departments.
The Bank&rsquo;s loan review department was assigned to the Bank&rsquo;s risk management department to achieve greater independence.
The Bank also assigned additional responsibilities to the Bank&rsquo;s new Chief Credit Officer with respect to the credit department
and the organization&rsquo;s underwriting process. Next, the human resources assigned to the Bank&rsquo;s collection department
were reviewed. After the review, management concluded that additional personnel were needed to assist the Bank in collecting and
resolving problem loans.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">The Bank
enhanced its liquidity policy to include additional liquidity measurements and a revised liquidity contingency funding plan. In
addition to the policy updates, the Bank engaged an outside consultant to perform quarterly liquidity analysis for the Bank's
Asset&ndash;Liability Committee's (&quot;ALCO&quot;) review. The Bank's board of directors has established liquidity goals and
monitors these levels on a quarterly basis. The December 31, 2011 report was received and reviewed during the March, 2012 ALCO
meeting.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">The Bank
engaged an outside consultant to perform quarterly interest rate risk modeling for the Bank's ALCO Committee's review. The Bank's
board of directors has established interest rate sensitivity goals and is monitoring these levels on a quarterly basis. The December
31, 2011 report was received and reviewed during the March, 2012 ALCO meeting.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">The Bank
prepared budgets for its 2012 and 2013 fiscal years and submitted the budgets to the FDIC for review.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">The Bank
has prepared a strategic plan and submitted such strategic plan to the FDIC for review. One of the primary components of the strategic
plan was to reduce the Bank&rsquo;s average assets. By the fourth quarter of 2011, the Bank had lowered its average assets to
approximately $417 million. During the first six months of 2012, the Bank&rsquo;s average assets were approximately $411 million.
A bank&rsquo;s average assets are included in the calculation of its regulatory capital ratios.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">The Bank
has prepared a reduction of delinquencies action plan. The Bank has submitted this plan to the Joint Officials. Important aspects
of the delinquency action plan include a prohibition against an extension of credit for the payment of interest on delinquent
loans, a requirement to establish specific collection procedures to be instituted at various stages of a borrower&rsquo;s delinquency
and specific reporting requirements informing members of management and the board of directors about existing past due levels.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">In addition,
the Bank has charged off all loans classified by the Joint Officials as &quot;loss.&quot; The Bank maintains a tracking report
that it submits to the Joint Officials periodically. Finally, the Bank's board of directors has created a Loan Review Committee
to review the asset quality, concentrations and problem credits within the Bank's loan portfolio.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">The Bank
has addressed all violations and contraventions of policy and has either corrected or is in the process of correcting each such
violation or contravention.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">The Bank
has implemented a technical exception tracking system in order to monitor technical exceptions. In addition, the Bank has drafted
and implemented new procedures aimed at reducing technical exceptions noted by regulators during their examinations of the Bank.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">The Bank
has not paid dividends since the inception of the Action Plans. Cornerstone declared a dividend of $0.625 per share with respect
to the Preferred Shares. This dividend was approved by the Federal Reserve Bank of Atlanta (the &ldquo;FRBA&rdquo;). The dividend
record date was December 31, 2011 and a payment date of May 30, 2012. Cornerstone is in the process of obtaining approval from
the FRBA to declare a Preferred Share dividend for shareholders on record as of March 31, 2012.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">The Bank
is actively monitoring and is not aware of any new extensions of credit to prohibited classified borrowers as of June 30, 2012.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">Management
and the Board have carefully considered the impact of the Action Plans on the Bank&rsquo;s current and future operations. Areas
that have received additional attention as a result of the Action Plans include the Bank&rsquo;s liquidity position, overall balance
sheet structure, capital and earnings. The Bank has considered the impact of deposit interest rate restrictions that may impair
the Bank&rsquo;s ability to raise local certificates of deposit. Management has placed an emphasis on increasing local deposits,
reducing its non-core liabilities and establishing a liquidity contingency plan to address potential problems. The Bank&rsquo;s
overall balance sheet structure has also been considered. The reduction in assets has impacted the Bank&rsquo;s earning assets
and therefore the Bank&rsquo;s net interest income. To offset this reduction the Bank has reduced its cost of funds as well as
its non-interest expense over the last two years. One of the primary impacts of the Order and the Agreement is the need for additional
capital. Cornerstone has incurred additional time and expense to generate its Preferred Stock offering. The Preferred Stock has
an annual ten percent return which will require additional earnings from the Bank to meet the annual dividend requirement. The
Bank&rsquo;s earnings have been impacted negatively due to the recent regulatory criticism. One example of the negative impact
on earnings is increased FDIC insurance premiums which will continue to be at an elevated level until the Bank&rsquo;s overall
condition improves.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">Noncompliance
with the Action Plans could subject the Bank to an array of penalties, ranging from civil money penalties to a termination of
the Bank's deposit insurance for more egregious violations of applicable bank rules and regulations.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">Federal Reserve
Bank of Atlanta (FRBA) Letter</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">Cornerstone
received a letter dated March 30, 2010 from its primary banking regulator, the FRBA. The letter directs Cornerstone to obtain
the FRBA's written approval before Cornerstone (i) incurs any indebtedness; (ii)&nbsp;declares or pays any dividends; (iii) redeems
any corporate stock; or (iv) makes any other payment representing a reduction in its capital, except for the payment of normal
and routine operating expenses. As noted above, Cornerstone has received FRBA's approval for dividends with respect to the Preferred
Shares. The letter notes that the condition of the Bank has caused Cornerstone to be in &quot;troubled condition&quot; under Regulation
Y. As a result, notice to the FRBA is required before Cornerstone undertakes any changes in senior executive management or directorships,
and approval of the FRBA (with the written concurrence of the FDIC) must be obtained before Cornerstone grants or enters into
any agreement to provide a golden parachute or severance payment. To date, Cornerstone is in compliance with the requirements
of the FRBA letter.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">To date the
most significant impact of the FRBA&rsquo;s letter relates to the payment of dividends on the Preferred Shares. However, Cornerstone
has been able to consistently raise additional capital and the company has generated positive earnings during 2011. These two
elements coupled with the Bank&rsquo;s stabilization of asset quality have, in Cornerstone&rsquo;s estimation, led to the approval
of the Preferred Shares dividend payments.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1pt"><FONT STYLE="color: #000000"><B>Review of Financial
Performance</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1pt"><FONT STYLE="color: #000000"><B>&nbsp;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.7pt; text-align: justify; text-indent: -0.7pt"><FONT STYLE="color: #000000">As
of June 30, 2012, Cornerstone had total consolidated assets of approximately $421 million, total loans of approximately $264 million,
total securities of approximately $87 million, total deposits of approximately $322 million and stockholders&rsquo; equity of
approximately $37 million. Net income for the three and six month period ended June 30, 2012 totaled $310,585 and $667,102, respectively.</FONT></P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1pt; text-align: justify; text-indent: -1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1pt; text-align: justify; text-indent: -1pt"><FONT STYLE="color: #000000">Results
of Operations</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1pt; text-align: justify; text-indent: 0.75in"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #000000">Net income
for the three months ended June 30, 2012 was $310,585 or $0.00 basic earnings per common share, compared to a net income of $141,287
or $0.00 basic earnings per common share, for the same period in 2011. Net income for the six months ended June 30, 2012 was $667,102
or $0.01 basic earnings per common share, compared to a net income of $393,562 or $0.02 basic earnings per common share, for the
same period in 2011.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1pt; text-align: justify; text-indent: -1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1pt; text-align: justify; text-indent: -1pt"><FONT STYLE="color: #000000">The
following table presents our results for the three and six months ended June 30, 2012 compared to the three and six months ended
June 30, 2011 (amounts in thousands).</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1pt; text-align: justify; text-indent: -1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="6" NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 8pt; color: #000000">2012-2011</FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="6" NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 8pt; color: #000000">2012-2011</FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="6" NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 8pt; color: #000000">Three months</FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 8pt; color: #000000">Percent</FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 8pt; color: #000000">Dollar</FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="6" NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 8pt; color: #000000">Six months</FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 8pt; color: #000000">Percent</FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 8pt; color: #000000">Dollar</FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="6" NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 8pt; color: #000000">ended June 30,</FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 8pt; color: #000000">Increase</FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 8pt; color: #000000">Amount</FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="6" NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 8pt; color: #000000">ended June 30,</FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 8pt; color: #000000">Increase</FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 8pt; color: #000000">Amount</FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: center; padding-bottom: 1pt; padding-left: 0.24in"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt; color: #000000">2012</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt; color: #000000">2011</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt; color: #000000">(Decrease)</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt; color: #000000">Change</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt; color: #000000">2012</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt; color: #000000">2011</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt; color: #000000">(Decrease)</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt; color: #000000">Change</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 28%; text-align: justify"><FONT STYLE="font-size: 8pt; color: #000000">Interest income</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">$</FONT></TD><TD STYLE="width: 6%; text-align: right"><FONT STYLE="font-size: 8pt; color: #000000">4,817</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">$</FONT></TD><TD STYLE="width: 6%; text-align: right"><FONT STYLE="font-size: 8pt; color: #000000">5,160</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="width: 6%; text-align: right"><FONT STYLE="font-size: 8pt; color: #000000">(6.65</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">)%</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">$</FONT></TD><TD STYLE="width: 6%; text-align: right"><FONT STYLE="font-size: 8pt; color: #000000">(343</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">)</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">$</FONT></TD><TD STYLE="width: 6%; text-align: right"><FONT STYLE="font-size: 8pt; color: #000000">9,443</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">$</FONT></TD><TD STYLE="width: 6%; text-align: right"><FONT STYLE="font-size: 8pt; color: #000000">10,378</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="width: 6%; text-align: right"><FONT STYLE="font-size: 8pt; color: #000000">(9.01</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">)%</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">$</FONT></TD><TD STYLE="width: 6%; text-align: right"><FONT STYLE="font-size: 8pt; color: #000000">(935</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">)</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: justify; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt; color: #000000">Interest expense</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt; color: #000000">1,217</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt; color: #000000">1,691</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: right"><FONT STYLE="font-size: 8pt; color: #000000">(28.03</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">)%</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: right"><FONT STYLE="font-size: 8pt; color: #000000">(474</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">)</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt; color: #000000">2,531</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt; color: #000000">3,446</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: right"><FONT STYLE="font-size: 8pt; color: #000000">(26.55</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">)%</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: right"><FONT STYLE="font-size: 8pt; color: #000000">(915</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">)</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: justify"><FONT STYLE="font-size: 8pt; color: #000000">Net interest income</FONT></TD><TD><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: justify"><FONT STYLE="font-size: 8pt; color: #000000">before provision for loan loss</FONT></TD><TD><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt; color: #000000">3,600</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt; color: #000000">3,469</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt; color: #000000">3.78</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">%</FONT></TD><TD><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt; color: #000000">131</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt; color: #000000">6,912</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt; color: #000000">6,932</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt; color: #000000">(0.29</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">)%</FONT></TD><TD><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt; color: #000000">(20</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">)</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: justify"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: justify; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt; color: #000000">Provision for loan loss</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt; color: #000000">15</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: right"><FONT STYLE="font-size: 8pt; color: #000000">(100.00</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">)%</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: right"><FONT STYLE="font-size: 8pt; color: #000000">(15</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">)</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt; color: #000000">30</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: right"><FONT STYLE="font-size: 8pt; color: #000000">(100.00</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">)%</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: right"><FONT STYLE="font-size: 8pt; color: #000000">(30</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">)</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: justify"><FONT STYLE="font-size: 8pt; color: #000000">Net interest income after</FONT></TD><TD><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: justify"><FONT STYLE="font-size: 8pt; color: #000000">provision for loan loss</FONT></TD><TD><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt; color: #000000">3,600</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt; color: #000000">3,454</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt; color: #000000">4.23</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">%</FONT></TD><TD><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt; color: #000000">146</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt; color: #000000">6,912</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt; color: #000000">6,902</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt; color: #000000">0.14</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">%</FONT></TD><TD><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt; color: #000000">10</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: justify"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: justify"><FONT STYLE="font-size: 8pt; color: #000000">Total noninterest income</FONT></TD><TD><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt; color: #000000">252</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt; color: #000000">316</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt; color: #000000">(20.25</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">)%</FONT></TD><TD><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt; color: #000000">(64</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">)</FONT></TD><TD><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt; color: #000000">519</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt; color: #000000">586</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt; color: #000000">(11.43</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">)%</FONT></TD><TD><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt; color: #000000">(67</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">)</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: justify; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt; color: #000000">Total noninterest expense</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt; color: #000000">3,423</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt; color: #000000">3,657</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: right"><FONT STYLE="font-size: 8pt; color: #000000">(6.40</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">)%</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: right"><FONT STYLE="font-size: 8pt; color: #000000">(234</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">)</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt; color: #000000">6,497</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt; color: #000000">7,074</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: right"><FONT STYLE="font-size: 8pt; color: #000000">(8.16</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">)%</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: right"><FONT STYLE="font-size: 8pt; color: #000000">(577</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">)</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: justify"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: justify"><FONT STYLE="font-size: 8pt; color: #000000">Income before income taxes</FONT></TD><TD><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt; color: #000000">429</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt; color: #000000">113</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt; color: #000000">279.65</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">%</FONT></TD><TD><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt; color: #000000">316</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt; color: #000000">934</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt; color: #000000">414</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt; color: #000000">125.60</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">%</FONT></TD><TD><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt; color: #000000">520</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: justify"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: justify; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt; color: #000000">Provision for income taxes</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt; color: #000000">118</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt; color: #000000">(28</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">)</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: right"><FONT STYLE="font-size: 8pt; color: #000000">521.43</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">%</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: right"><FONT STYLE="font-size: 8pt; color: #000000">146</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt; color: #000000">267</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt; color: #000000">20</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: right"><FONT STYLE="font-size: 8pt; color: #000000">1,235.00</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">%</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: right"><FONT STYLE="font-size: 8pt; color: #000000">247</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: justify"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: justify; padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt; color: #000000">Net income</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 8pt; color: #000000">311</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 8pt; color: #000000">141</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: right"><FONT STYLE="font-size: 8pt; color: #000000">120.57</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">%</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">$</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: right"><FONT STYLE="font-size: 8pt; color: #000000">170</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 8pt; color: #000000">667</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 8pt; color: #000000">394</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: right"><FONT STYLE="font-size: 8pt; color: #000000">69.29</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">%</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">$</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: right"><FONT STYLE="font-size: 8pt; color: #000000">273</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1pt; text-align: justify; text-indent: -1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1pt; text-align: justify; text-indent: -1pt">&nbsp;&nbsp;&nbsp;<FONT STYLE="color: #000000"><I>Net
Interest Income</I>-Net interest income represents the amount by which interest earned on various earning assets exceeds interest
paid on deposits and other interest-bearing liabilities. Net interest income is also the most significant component of our earnings.
For the three months ended June 30, 2012, net interest income before the provision for loan loss, increased approximately $131
thousand or 3.78 percent over the same period of 2011. For the six months ended June 30, 2012, net interest income before the
provision for loan loss decreased $20 thousand or 0.29 percent.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1pt; text-align: justify; text-indent: -1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1pt; text-align: justify; text-indent: -1pt"><FONT STYLE="color: #000000">Cornerstone&rsquo;s
interest rate spread on a tax equivalent basis (which is the difference between the average yield on earning assets and the average
rate paid on interest-bearing liabilities) was 3.70 percent compared to 3.25 percent for the three month periods ended June 30,
2012 and 2011, respectively. The interest rate spread on a tax equivalent basis was 3.56 percent compared to 3.27 percent for
the six month periods ended June 30, 2012 and 2011, respectively.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1pt; text-align: justify; text-indent: -1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1pt; text-align: justify; text-indent: -1pt"><FONT STYLE="color: #000000">The
net interest margin on a tax equivalent basis was 3.87 percent and 3.42 percent for the three months ending, June 30, 2012 and
2011, respectively. The net interest margin on a tax equivalent basis was 3.73 percent and 3.44 percent for the six months ending,
June 30, 2012 and 2011, respectively.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1pt; text-align: justify; text-indent: -1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1pt; text-align: justify; text-indent: -1pt"><FONT STYLE="color: #000000">&nbsp;</FONT></P>
<P STYLE="margin: 0">Significant items related to the changes in net interest income, net interest yields and rates, and net interest
margin are presented below:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1pt; text-align: justify; text-indent: -1pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><img src="logo1.jpg"></TD><TD STYLE="text-align: justify"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">The
                                                                Bank&rsquo;s net interest income as of June 30, 2012 has been
                                                                positively impacted by a reduction in cost of funds. The cost
                                                                of funds reduction was the result of a decrease in interest rates
                                                                paid by the Bank and a change in the deposit mix with customers
                                                                choosing to place deposits in transactional accounts rather than
                                                                certificates of deposit. The Bank&rsquo;s cost of funds were approximately
                                                                $1.2 million for the three months ended June 30, 2012 compared
                                                                to $1.7 million during the same time period in 2011. </FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><img src="logo1.jpg"></TD><TD STYLE="text-align: justify"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">The
                                                                Bank&rsquo;s loan portfolio yield decreased to 6.39 percent for
                                                                the three months ended June 30, 2012 compared to 6.67 percent
                                                                for the three months ended June 30, 2011. Management believes
                                                                the interest rates on loans will continue to decrease as the Bank
                                                                attempts to increase its outstanding loan balances in a very competitive
                                                                market. If management is successful in increasing the amount of
                                                                outstanding loans the resulting change in asset mix would increase
                                                                the Bank&rsquo;s total interest income. </FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1pt; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><img src="logo1.jpg"></TD><TD STYLE="text-align: justify"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">For
                                                                           the three month period ended June 30, 2012, the Bank&rsquo;s
                                                                           investment portfolio yielded 2.91 percent compared
                                                                           to 2.36 percent for the same time period in 2011. This
                                                                           increase in the investment portfolio yield is expected
                                                                           to be temporary as an investment accounted for under
                                                                           the equity method of accounting experienced an increase
                                                                           in earnings. Management estimates that the normal investment
                                                                           yield is approximately 2.50 percent. The Bank decreased
                                                                           the amount of its investment portfolio from a six months
                                                                           ended average balance of approximately $115 million
                                                                           as of June 30, 2011 to approximately $92 million as
                                                                           of June 30, 2012. The reduction in investments is due,
                                                                           in part, to a decrease in pledging requirements as
                                                                           the Bank has repaid $32 million in Federal Home Loan
                                                                           Bank advances since March 31, 2010. Management believes
                                                                           the present level of investment securities is sufficient
                                                                           to provide for all pledging needs and represents an
                                                                           appropriate amount of the balance sheet to provide
                                                                           liquidity and interest rate protection.</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font: 9pt Arial"><B><img src="logo1.jpg"></B></FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">The
                                                                                                            Bank&rsquo;s net interest
                                                                                                            margin for the three
                                                                                                            month period ending
                                                                                                            June 30, 2011 compared
                                                                                                            to June 30, 2012 increased
                                                                                                            by 45 basis points.
                                                                                                            The primary reason
                                                                                                            for the improvement
                                                                                                            resulted from a reduction
                                                                                                            in cost of funds.
                                                                                                            The Bank expects the
                                                                                                            net interest margin
                                                                                                            to continue to increase
                                                                                                            over the next four
                                                                                                            quarters as the Bank
                                                                                                            converts cash and
                                                                                                            foreclosed assets
                                                                                                            into earning assets
                                                                                                            such as loans.</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 9pt"><I>Provision for Loan
Losses</I>-The provision for loan losses represents a charge to earnings necessary to establish an allowance for loan losses that,
in management&rsquo;s evaluation, should be adequate to provide coverage for the inherent losses on outstanding loans. Cornerstone
did not record any provision for loan losses for the three months ended June 30, 2012. The provision for loan losses amounted
to approximately $15 thousand for the three months ended June 30, 2011.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 9pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 9pt"><I>Noninterest
Income-</I>Items reported as noninterest income include service charges on checking accounts, insufficient funds charges, automated
clearing house (&ldquo;ACH&rdquo;) processing fees and the Bank&rsquo;s secondary mortgage department earnings. Increases in income
derived from service charges and ACH fees are primarily a function of the Bank&rsquo;s growth while fees from the origination
of mortgage loans will often reflect market conditions and fluctuate from period to period.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1pt; text-align: justify; text-indent: -1pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1pt; text-align: justify; text-indent: -1pt">The following
table presents the components of noninterest income for the three and six months ended June 30, 2012 and 2011 (dollars in thousands):</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1pt; text-align: justify; text-indent: -1pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: justify">&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="6" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">2012-2011</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="6" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">2012-2011</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: justify">&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="6" STYLE="text-align: center">Three months ended</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">Percent</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="6" STYLE="text-align: center">Six months ended</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">Percent</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: justify">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="6" STYLE="text-align: center; border-bottom: Black 1pt solid">June 30,</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; padding-bottom: 1pt">Increase</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="6" STYLE="text-align: center; border-bottom: Black 1pt solid">June 30,</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; padding-bottom: 1pt">Increase</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: justify">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid">2012</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid">2011</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid">(Decrease)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid">2012</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid">2011</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid">(Decrease)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 34%; text-align: justify">Service charges on deposit accounts</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 8%; text-align: right">207</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 8%; text-align: right">225</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 8%; text-align: right">(8.00</TD><TD STYLE="width: 1%; text-align: left">)%</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 8%; text-align: right">405</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 8%; text-align: right">441</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 8%; text-align: right">(8.25</TD><TD STYLE="width: 1%; text-align: left">)%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: justify">Realized gains on sale of securities</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">48</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(100.00</TD><TD STYLE="text-align: left">)%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">48</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(100.00</TD><TD STYLE="text-align: left">)%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: justify">Net gains / (losses) on sale of loans and other assets</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">26</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">21</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">23.81</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">76</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">55</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">38.02</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: justify; padding-bottom: 1pt">Other noninterest income</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">19</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">22</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(11.76</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)%</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">39</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">42</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(6.96</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: justify; padding-bottom: 2.5pt">Total noninterest income</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">252</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">316</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(20.13</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)%</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">519</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">586</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(11.34</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)%</TD></TR>
</TABLE>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1pt; text-align: justify; text-indent: -1pt">&nbsp;</P>

<!-- Field: Page; Sequence: 34; Value: 2 -->
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    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif"><TR><TD STYLE="text-align: center; width: 100%">&nbsp;</TD></TR></TABLE></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1pt; text-align: justify; text-indent: -1pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1pt; text-align: justify; text-indent: -1pt">Significant
matters relating to the changes in noninterest income are presented below:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1pt; text-align: justify; text-indent: -1pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><img src="logo1.jpg"></TD><TD STYLE="text-align: justify"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">The
                                                                                                                  Bank has experienced
                                                                                                                  a decrease in
                                                                                                                  its service
                                                                                                                  charges on deposit
                                                                                                                  accounts during
                                                                                                                  2012 due to
                                                                                                                  a continued
                                                                                                                  reduction in
                                                                                                                  customer overdraft
                                                                                                                  charges. </FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 22.5pt; text-align: justify; text-indent: -22.5pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><img src="logo1.jpg"></TD><TD STYLE="text-align: justify"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">The
                                                                                                                  Bank continued
                                                                                                                  to exit the
                                                                                                                  ACH payroll
                                                                                                                  processing business
                                                                                                                  during 2011
                                                                                                                  due to increased
                                                                                                                  regulatory requirements.
                                                                                                                  The decrease
                                                                                                                  in service charges
                                                                                                                  on deposit accounts
                                                                                                                  associated with
                                                                                                                  exiting this
                                                                                                                  line of business
                                                                                                                  was approximately
                                                                                                                  $20 thousand
                                                                                                                  a month. </FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 9pt"><FONT STYLE="font-weight: normal"><I>Noninterest Expense</I>-Items
reported as noninterest expense include salaries and employee benefits, occupancy and equipment expense, depository insurance,
net foreclosed assets expense and other operating expense.</FONT></P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1pt"><FONT STYLE="font: normal 10pt Times New Roman, Times, Serif">The
following table presents the components of noninterest expense for the three and six months ended June 30, 2012 and 2011 (dollars
in thousands</FONT>).</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: justify">&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="6" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">2012-2011</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="6" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">2012-2011</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: justify">&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="6" STYLE="text-align: center">Three months ended</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">Percent</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="6" STYLE="text-align: center">Six months ended</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">Percent</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: justify">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="6" STYLE="text-align: center; border-bottom: Black 1pt solid">June 30,</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; padding-bottom: 1pt">Increase /</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="6" STYLE="text-align: center; border-bottom: Black 1pt solid">June 30,</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; padding-bottom: 1pt">Increase /</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: justify">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid">2012</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid">2011</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid">(Decrease)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid">2012</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid">2011</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid">(Decrease)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 34%; text-align: justify">Salaries and employee benefits</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 8%; text-align: right">1,570</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 8%; text-align: right">1,502</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 8%; text-align: right">4.53</TD><TD STYLE="width: 1%; text-align: left">%</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 8%; text-align: right">3,161</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 8%; text-align: right">3,045</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 8%; text-align: right">3.80</TD><TD STYLE="width: 1%; text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: justify">Occupancy and equipment expense</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">348</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">350</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(0.57</TD><TD STYLE="text-align: left">)%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">684</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">756</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(9.56</TD><TD STYLE="text-align: left">)%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: justify">Foreclosed asset expense, net</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">481</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">717</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(32.91</TD><TD STYLE="text-align: left">)%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">631</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,078</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(41.46</TD><TD STYLE="text-align: left">)%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: justify">FDIC depository insurance</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">207</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">241</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(14.11</TD><TD STYLE="text-align: left">)%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">410</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">564</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(27.39</TD><TD STYLE="text-align: left">)%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: justify; padding-bottom: 1pt">Other operating expense</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">818</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">847</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(3.42</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)%</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">1,612</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">1,631</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(1.14</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: justify; padding-bottom: 2.5pt">Total noninterest expense</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">3,424</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">3,657</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(6.37</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)%</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">6,497</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">7,074</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(8.15</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)%</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1pt"><FONT STYLE="font-weight: normal"><I>&nbsp;</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1pt; text-align: justify; text-indent: -1pt">Significant
matters relating to the changes to noninterest expense are presented below:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><img src="logo1.jpg"></TD><TD STYLE="text-align: justify"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Cornerstone&rsquo;s
                                                                                                                  employee expense
                                                                                                                  increased slightly
                                                                                                                  when comparing
                                                                                                                  June 30, 2011
                                                                                                                  to June 30,
                                                                                                                  2012. The increase
                                                                                                                  is primarily
                                                                                                                  attributable
                                                                                                                  to an increase
                                                                                                                  in the number
                                                                                                                  of commercial
                                                                                                                  relationship
                                                                                                                  managers. These
                                                                                                                  employees will
                                                                                                                  assist the Bank
                                                                                                                  in obtaining
                                                                                                                  its future loan
                                                                                                                  growth. Management
                                                                                                                  expects employee
                                                                                                                  expense to continue
                                                                                                                  to increase
                                                                                                                  slightly during
                                                                                                                  2012-2013 as
                                                                                                                  employee benefits
                                                                                                                  are increased
                                                                                                                  as the Bank&rsquo;s
                                                                                                                  performance
                                                                                                                  improves. </FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-indent: -0.25in; color: red">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><img src="logo1.jpg"></TD><TD STYLE="text-align: justify"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">As
                                                                                                                  of June 30,
                                                                                                                  2012, the Bank
                                                                                                                  had incurred
                                                                                                                  approximately
                                                                                                                  $590 thousand
                                                                                                                  pertaining to
                                                                                                                  write-downs
                                                                                                                  and losses on
                                                                                                                  the sale of
                                                                                                                  foreclosed assets.
                                                                                                                  Management,
                                                                                                                  in its financial
                                                                                                                  reporting, nets
                                                                                                                  the foreclosed
                                                                                                                  assets expense
                                                                                                                  and write-downs
                                                                                                                  against the
                                                                                                                  revenue generated
                                                                                                                  from income
                                                                                                                  producing real
                                                                                                                  estate. Management
                                                                                                                  anticipates
                                                                                                                  elevated foreclosed
                                                                                                                  asset expense
                                                                                                                  for the remainder
                                                                                                                  of 2012 and
                                                                                                                  2013. </FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: -0.25in; color: red">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><img src="logo1.jpg"></TD><TD STYLE="text-align: justify"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Depository
                                                                                                                  insurance during
                                                                                                                  the second quarter
                                                                                                                  decreased from
                                                                                                                  approximately
                                                                                                                  $241 thousand
                                                                                                                  as of June 30,
                                                                                                                  2011 to approximately
                                                                                                                  $207 thousand
                                                                                                                  as of June 30,
                                                                                                                  2012. Management
                                                                                                                  anticipates
                                                                                                                  the FDIC expense
                                                                                                                  to reduce further
                                                                                                                  as the Bank&rsquo;s
                                                                                                                  regulatory status
                                                                                                                  improves. </FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1pt">Financial Condition</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 9pt"><I>Overview-</I>Cornerstone&rsquo;s
consolidated assets totaled approximately $423 million as of December 31, 2011. As of June 30, 2012, total consolidated assets
had decreased approximately $1.8 million or 0.4 percent to approximately $421 million.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1pt; text-align: justify; text-indent: -1pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1pt; text-align: justify; text-indent: -1pt">Liabilities
as of June 30, 2012 and December 31, 2011 totaled approximately $384 million and $387 million, respectively.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1pt; text-align: justify; text-indent: -1pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1pt; text-align: justify; text-indent: -1pt">Stockholders&rsquo;
equity as of June 30, 2012 and December 31, 2011 totaled approximately $37 million and $35 million, respectively.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1pt; text-align: justify; text-indent: -1pt">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1pt; text-align: justify; text-indent: -1pt"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 9pt"><I>Securities-</I>The
Bank&rsquo;s investment portfolio, primarily consisting of Ginnie Mae Agency, mortgage-backed securities and municipal securities,
amounted to approximately $87 million as of June 30, 2012 compared to approximately $86 million as of December 31, 2011. The primary
purposes of the Bank&rsquo;s investment portfolio are to provide liquidity, satisfy pledging requirements, collateralize the Bank&rsquo;s
repurchase accounts and secure the Bank&rsquo;s FHLB borrowings.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1pt; text-align: justify; text-indent: -1pt"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 9pt"><I>Loans</I>-The
composition of loans at June 30, 2012 and at December 31, 2011 and the percentage (%) of each classification to total loans are
summarized in the following table (dollars in thousands):</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1pt; text-align: justify; text-indent: -1pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 90%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="6" STYLE="text-align: center">June 30, 2012</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="6" STYLE="text-align: center">December 31, 2011</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid">Amount</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid">Percent</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid">Amount</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid">Percent</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: 0in">Commercial real estate-mortgage</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 48%; text-align: left; text-indent: 0in; padding-left: 9pt">Owner-occupied</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">60,068</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">22.77</TD><TD STYLE="width: 1%; text-align: left">%</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">62,999</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">23.53</TD><TD STYLE="width: 1%; text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: 0in; padding-left: 9pt">All other</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">61,671</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">23.38</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">63,058</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">23.55</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: 0in">Consumer real estate-mortgage</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">72,044</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">27.32</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">70,543</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">26.35</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: 0in">Construction and land development</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">29,310</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">11.11</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">31,031</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">11.59</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: 0in">Commercial and industrial</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">38,644</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">14.65</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">37,458</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">13.98</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: 0in">Consumer and other</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">2,012</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">0.76</TD><TD STYLE="padding-bottom: 1pt; text-align: left">%</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">2,676</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">1.00</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: 0in">Total loans</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">263,749</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">100.00</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">267,765</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">100.00</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: 0in">Less:&nbsp; Allowance for loan losses</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(6,029</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(7,400</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: 0in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt; text-indent: 0in">Loans, net</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">257,720</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">260,365</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1pt; text-align: justify; text-indent: -1pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 9pt"><I>Allowance
for Loan Losses-</I>The allowance for loan losses represents Cornerstone&rsquo;s assessment of the risks associated with extending
credit and its evaluation of the quality of the loan portfolio. Management analyzes the loan portfolio to determine the adequacy
of the allowance for loan losses and the appropriate provisions required to maintain a level considered adequate to absorb anticipated
loan losses. The Bank uses a risk based approach to calculate the appropriate loan loss allowance in accordance with guidance
issued by the Federal Financial Institutions Examination Council. Although the Bank performs prudent credit underwriting, no assurances
can be given that adverse economic circumstances will not result in increased losses in the loan portfolio and require greater
provisions for possible loan losses in the future.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1pt; text-align: justify; text-indent: -1pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><img src="logo1.jpg"></TD><TD STYLE="text-align: justify"><FONT STYLE="font-size: 10pt">During
                                                                                                                  the second quarter
                                                                                                                  of 2012, the
                                                                                                                  Bank did not
                                                                                                                  record a provision
                                                                                                                  expense to the
                                                                                                                  loan loss allowance.
                                                                                                                  Management believes
                                                                                                                  that it has
                                                                                                                  established
                                                                                                                  an allowance
                                                                                                                  for loan losses
                                                                                                                  that adequately
                                                                                                                  accounts for
                                                                                                                  the Bank&rsquo;s
                                                                                                                  identified loan
                                                                                                                  impairment.
                                                                                                                  However, additional
                                                                                                                  provision to
                                                                                                                  the loan loss
                                                                                                                  allowance may
                                                                                                                  be needed in
                                                                                                                  future quarters
                                                                                                                  as the Bank
                                                                                                                  works its problem
                                                                                                                  assets through
                                                                                                                  the collection
                                                                                                                  cycle. </FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1pt; text-align: justify; text-indent: -1pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1pt; text-align: justify; text-indent: -1pt">The following
is a summary of changes in the allowance for loan losses for the six months ended June 30, 2012 and for the year ended December
31, 2011 and the ratio of the allowance for loan losses to total loans as of the end of each period (dollars in thousands):</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1pt; text-align: justify; text-indent: -1pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 75%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">June 30,</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">December 31,</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid">2012</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid">2011</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 64%">Balance, beginning of period</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 15%; text-align: right">7,400</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 15%; text-align: right">9,132</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-left: 9pt">Loans charged-off</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(1,582</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(3,148</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-left: 9pt">Recoveries of loans previously charged-off</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">211</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">971</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 9pt">Provision for loan losses</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">445</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="padding-bottom: 2.5pt">Balance, end of period</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">6,029</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">7,400</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Total loans</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">263,749</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">267,765</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Ratio of allowance for loan losses to loans outstanding at the end of the period</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2.29</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2.76</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Ratio of net charge-offs to total loans outstanding for the period</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.52</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.81</TD><TD STYLE="text-align: left">%</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1pt; text-align: justify; text-indent: -1pt"><I>&nbsp;</I></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1pt; text-align: justify; text-indent: -1pt"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 9pt"><I>Non-Performing
Assets</I>-The specific economic and credit risks associated with the Bank&rsquo;s loan portfolio include, but are not limited
to, a general downturn in the economy which could affect employment rates in our market area, general real estate market deterioration,
interest rate fluctuations, deteriorated or non-existent collateral, title defects, inaccurate appraisals, financial deterioration
of borrowers, fraud, and violation of laws and regulations.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1pt; text-align: justify; text-indent: -1pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1pt; text-align: justify; text-indent: -1pt">The Bank attempts
to reduce these economic and credit risks by adherence to a lending policy approved by the Bank&rsquo;s board of directors. The
Bank&rsquo;s lending policy establishes loan to value limits, collateral perfection, credit underwriting criteria and other acceptable
lending standards. The Bank classifies loans that are ninety (90) days past due and still accruing interest, renegotiated loans,
non-accrual loans, foreclosures and repossessed property as non-performing assets. The Bank&rsquo;s policy is to categorize a
loan on non-accrual status when payment of principal or interest is contractually ninety (90) or more days past due. At the time
the loan is categorized as non-accrual the interest previously accrued but not collected may be reversed and charged against current
earnings.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1pt; text-align: justify; text-indent: -1pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><img src="logo1.jpg"></TD><TD STYLE="text-align: justify"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">The
                                                                                                                  Bank has experienced
                                                                                                                  a stabilization
                                                                                                                  in its loan
                                                                                                                  quality as the
                                                                                                                  Chattanooga,
                                                                                                                  Tennessee Metropolitan
                                                                                                                  Statistical
                                                                                                                  Area begins
                                                                                                                  to recover from
                                                                                                                  a long economic
                                                                                                                  downturn. The
                                                                                                                  number and dollar
                                                                                                                  amount of impaired
                                                                                                                  loans remained
                                                                                                                  consistent during
                                                                                                                  the second quarter
                                                                                                                  of 2012. Management
                                                                                                                  anticipates
                                                                                                                  that its loan
                                                                                                                  asset quality
                                                                                                                  will improve
                                                                                                                  as the economy
                                                                                                                  recovers.</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1pt; text-align: justify; text-indent: -1pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1pt; text-align: justify; text-indent: -1pt">The following
table summarizes Cornerstone&rsquo;s non-performing assets at each quarter end from September 30, 2011 to June 30, 2012 (amounts
in thousands):</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1pt; text-align: justify; text-indent: -1pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD NOWRAP>&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center">June 30,</TD><TD NOWRAP>&nbsp;</TD><TD NOWRAP>&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center">March 31,</TD><TD NOWRAP>&nbsp;</TD><TD NOWRAP>&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center">December 31,</TD><TD NOWRAP>&nbsp;</TD><TD NOWRAP>&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center">September 30,</TD><TD NOWRAP>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid">2012</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid">2012</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid">2011</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid">2011</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 44%; padding-left: 9pt">Non-accrual loans</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">7,124</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">10,767</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">7,882</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">8,560</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 9pt">Foreclosed assets</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">22,144</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">18,957</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">18,524</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">18,255</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt">Total non-performing assets</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">29,268</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">29,724</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">26,406</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">26,815</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">30-89 days past due loans</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">2,495</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">5,040</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">8,158</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">2,088</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Total loans outstanding</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">263,749</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">262,788</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">267,765</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">270,401</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Allowance for loan losses</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">6,029</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">6,024</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">7,400</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">6,864</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt">Ratio of non-performing loans to total loans outstanding at the end of the period</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">2.70</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">%</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">4.10</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">%</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">2.94</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">%</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">3.17</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt">Ratio of non-performing assets to total allowance for loan losses at the end of the period</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">485.45</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">%</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">493.43</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">%</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">356.84</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">%</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">390.66</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">%</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><img src="logo1.jpg"></TD><TD STYLE="text-align: justify"><FONT STYLE="font-size: 10pt">The
                                                                                                                  Bank&rsquo;s
                                                                                                                  non-accrual
                                                                                                                  balances decreased
                                                                                                                  during the second
                                                                                                                  quarter of 2012
                                                                                                                  as problem credits
                                                                                                                  moved through
                                                                                                                  the collection
                                                                                                                  cycle. A similar
                                                                                                                  reduction in
                                                                                                                  30-89 days past
                                                                                                                  due loans was
                                                                                                                  also recorded.
                                                                                                                  Management has
                                                                                                                  seen a decrease
                                                                                                                  in the number
                                                                                                                  of downgraded
                                                                                                                  loans, which
                                                                                                                  have in the
                                                                                                                  past led to
                                                                                                                  past due and
                                                                                                                  non-accrual
                                                                                                                  problem assets.
                                                                                                                  </FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><img src="logo1.jpg"></TD><TD STYLE="text-align: justify"><FONT STYLE="font-size: 10pt">Non-accrual
                                                                                                                  loans decreased
                                                                                                                  to approximately
                                                                                                                  $7.1 million
                                                                                                                  as of June 30,
                                                                                                                  2012 from approximately
                                                                                                                  $10.8 million
                                                                                                                  as of March
                                                                                                                  31, 2012. The
                                                                                                                  majority of
                                                                                                                  non-accrual
                                                                                                                  loans are concentrated
                                                                                                                  in three loan
                                                                                                                  relationships.
                                                                                                                  The Bank anticipates
                                                                                                                  non-accrual
                                                                                                                  loans to decrease
                                                                                                                  during 2012
                                                                                                                  as the Bank
                                                                                                                  forecloses on
                                                                                                                  these delinquent
                                                                                                                  relationships
                                                                                                                  or as the credits
                                                                                                                  are able to
                                                                                                                  be upgraded
                                                                                                                  to an accruing
                                                                                                                  status. </FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><img src="logo1.jpg"></TD><TD STYLE="text-align: justify"><FONT STYLE="font-size: 10pt">The
                                                                                                                  Bank&rsquo;s
                                                                                                                  foreclosed assets
                                                                                                                  increased to
                                                                                                                  approximately
                                                                                                                  $22 million
                                                                                                                  as of June 30,
                                                                                                                  2012. The Bank
                                                                                                                  has seen an
                                                                                                                  increase in
                                                                                                                  the level of
                                                                                                                  interest in
                                                                                                                  its properties
                                                                                                                  by potential
                                                                                                                  buyers. However,
                                                                                                                  management does
                                                                                                                  not anticipate
                                                                                                                  a decrease in
                                                                                                                  the amount of
                                                                                                                  foreclosed assets
                                                                                                                  as the Bank
                                                                                                                  is presently
                                                                                                                  foreclosing
                                                                                                                  on delinquent
                                                                                                                  assets as quickly
                                                                                                                  as existing
                                                                                                                  foreclosed assets
                                                                                                                  are liquidated.
                                                                                                                  </FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 9pt"><I>Deposits and Other
Borrowings-</I>The Bank&rsquo;s deposits consist of non-interest bearing demand deposits, interest- bearing demand accounts, savings
and money market accounts, and time deposits. The Bank has agreements with some customers to sell certain of its securities under
agreements to repurchase the security the following day. The Bank has also obtained advances from the FHLB.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1pt; text-align: justify; text-indent: 17pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1pt; text-align: justify; text-indent: -1pt">The following
table presents the Bank&rsquo;s deposits and other borrowings as either core funding or non-core funding. Core funding consists
of all deposits except for time deposits issued in denominations of $100,000 or greater. All other funding is classified as non-core
(amounts in thousands).</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1pt; text-align: justify; text-indent: -1pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 85%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="6" STYLE="text-align: center; border-bottom: Black 1pt solid">June 30, 2012</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="6" STYLE="text-align: center; border-bottom: Black 1pt solid">December 31, 2011</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="padding-bottom: 1pt">Core funding:</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid">Amount</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid">Percent</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid">Amount</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid">Percent</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 48%; text-align: left; padding-left: 9pt">Noninterest-bearing demand deposits</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">43,007</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">11.32</TD><TD STYLE="width: 1%; text-align: left">%</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">43,990</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">11.47</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: 9pt">Interest-bearing demand deposits</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">28,502</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">7.50</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">22,353</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">5.83</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-left: 9pt">Savings &amp; money market accounts</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">60,693</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">15.97</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">46,857</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">12.22</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: 9pt">Time deposits under $100,000</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">91,645</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">24.11</TD><TD STYLE="padding-bottom: 1pt; text-align: left">%</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">98,734</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">25.75</TD><TD STYLE="padding-bottom: 1pt; text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Total core funding</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">223,847</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">58.90</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">211,934</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">55.27</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>Non-core funding:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt">Time deposit of $100,000 or more</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">97,893</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">25.76</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">102,107</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">26.63</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 16.2pt">Fed funds purchased and securities sold under agreements to repurchase</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">23,299</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">6.13</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">29,391</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">7.67</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: 9pt">Federal Home Loan Bank advances</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">35,000</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">9.21</TD><TD STYLE="padding-bottom: 1pt; text-align: left">%</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">40,000</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">10.43</TD><TD STYLE="padding-bottom: 1pt; text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Total non-core funding</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">156,192</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">41.10</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">171,498</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">44.73</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="padding-bottom: 2.5pt">Total</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">380,039</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">100.00</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">%</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">383,432</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">100.00</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">%</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1pt; text-align: justify; text-indent: -1pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><img src="logo1.jpg"></TD><TD STYLE="text-align: justify"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">The
                                                                                                                  Bank has seen
                                                                                                                  a significant
                                                                                                                  improvement
                                                                                                                  in its liability
                                                                                                                  structure since
                                                                                                                  the beginning
                                                                                                                  of 2011 as the
                                                                                                                  percentage of
                                                                                                                  core non-term
                                                                                                                  deposits increased
                                                                                                                  greatly year
                                                                                                                  over year. The
                                                                                                                  Bank will continue
                                                                                                                  to see a reduction
                                                                                                                  in its Federal
                                                                                                                  Home Loan Bank
                                                                                                                  advances during
                                                                                                                  2012 and 2013.
                                                                                                                  </FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><img src="logo1.jpg"></TD><TD STYLE="text-align: justify"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Management
                                                                                                                  does not expect
                                                                                                                  significant
                                                                                                                  deposit growth
                                                                                                                  for 2012. In
                                                                                                                  2013, management
                                                                                                                  expects deposit
                                                                                                                  growth to be
                                                                                                                  in term deposits
                                                                                                                  with extended
                                                                                                                  maturities to
                                                                                                                  protect against
                                                                                                                  unfavorable
                                                                                                                  interest rate
                                                                                                                  movements. </FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 9pt"><I>Capital Resources-</I>At
June 30, 2012 and December 31, 2011, Cornerstone&rsquo;s stockholders&rsquo; equity amounted to approximately $36.8 million and
approximately $35.2 million, respectively.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><img src="logo1.jpg"></TD><TD STYLE="text-align: justify"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Cornerstone&rsquo;s
                                                                                                                  stockholders&rsquo;
                                                                                                                  equity increased
                                                                                                                  approximately
                                                                                                                  $1.6 million
                                                                                                                  during the first
                                                                                                                  six months of
                                                                                                                  2012. Significant
                                                                                                                  increases in
                                                                                                                  equity can be
                                                                                                                  attributed to
                                                                                                                  Cornerstone&rsquo;s
                                                                                                                  year to date
                                                                                                                  2012 earnings
                                                                                                                  of approximately
                                                                                                                  $667 thousand
                                                                                                                  and additional
                                                                                                                  capital from
                                                                                                                  Cornerstone&rsquo;s
                                                                                                                  preferred stock
                                                                                                                  offering of
                                                                                                                  approximately
                                                                                                                  $1.1 million.
                                                                                                                  The most significant
                                                                                                                  transaction
                                                                                                                  that decreased
                                                                                                                  Cornerstone&rsquo;s
                                                                                                                  equity during
                                                                                                                  the second quarter
                                                                                                                  of 2012 was
                                                                                                                  the payment
                                                                                                                  of a preferred
                                                                                                                  stock dividend
                                                                                                                  which totaled
                                                                                                                  approximately
                                                                                                                  $252 thousand.
                                                                                                                  The dividend
                                                                                                                  was payable
                                                                                                                  to record holders
                                                                                                                  as of December
                                                                                                                  31, 2011 with
                                                                                                                  a payment date
                                                                                                                  of May 30, 2012.
                                                                                                                  </FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">The following is a summary
of the Bank&rsquo;s capital ratios as of June 30, 2012:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: -0.25in"><I>&nbsp;</I></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 42%; font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in">
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 77%; text-align: justify">Tier 1 leverage ratio</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 20%; text-align: right">8.24</TD><TD STYLE="width: 1%; text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: justify">Tier 1 risk-based capital ratio</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">11.85</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: justify">Total risk-based capital ratio</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">13.11</TD><TD STYLE="text-align: left">%</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><img src="logo1.jpg"></TD><TD STYLE="text-align: justify"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Cornerstone
                                                                                                                  had total outstanding
                                                                                                                  borrowings of
                                                                                                                  approximately
                                                                                                                  $2.6 million
                                                                                                                  as of June 30,
                                                                                                                  2012 with the
                                                                                                                  Federal Deposit
                                                                                                                  Insurance Corporation
                                                                                                                  as Receiver
                                                                                                                  for Silverton
                                                                                                                  Bank, N.A.</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1pt; text-indent: -1pt"><B>Market and Liquidity Risk Management</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1pt; text-align: justify; text-indent: 0.75in"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1pt; text-align: justify; text-indent: -1pt"><I>Interest
Rate Sensitivity</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1pt; text-align: justify; text-indent: -1pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1pt; text-align: justify; text-indent: -1pt">The Bank&rsquo;s
Asset Liability Management Committee (&ldquo;ALCO&rdquo;) is responsible for making decisions regarding liquidity and funding
solutions based upon approved liquidity, loan, capital and investment policies. The ALCO must consider interest rate sensitivity
and liquidity risk management when rendering a decision on funding solutions and loan pricing. To assist in this process the Bank
has contracted with an independent third party to prepare quarterly reports that summarize several key asset-liability measurements.
In addition, the third party will also provide recommendations to the Bank&rsquo;s ALCO regarding future balance sheet structure,
earnings and liquidity strategies. The following is a brief discussion of the primary tools used by the ALCO to perform its responsibilities:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1pt; text-align: justify; text-indent: -1pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="font: 9pt Arial"><img src="logo1.jpg"></FONT><FONT STYLE="font: 10pt Times New Roman, Times, Serif">
Earnings at Risk Model</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Bank uses an earnings at risk model
to analyze interest rate risk. Forecasted levels of earning assets, interest-bearing liabilities, and off-balance sheet financial
instruments are combined with ALCO forecasts of interest rates for the next 12&nbsp;months and are combined with other factors
in order to produce various earnings simulations.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: -24.5pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><img src="logo1.jpg"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">
Economic Value of Equity</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Bank&rsquo;s economic value of equity
model measures the extent that estimated economic values of the Bank&rsquo;s assets and liabilities will change as a result of
interest rate changes. Economic values are determined by discounting expected cash flows from assets and liabilities, which establishes
a base case economic value of equity.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><img src="logo1.jpg"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">
Liquidity Analysis</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Bank uses a liquidity analysis model
to examine the current liquidity position and analyze the potential sources of coverage in the event of a liquidity crisis. The
following is a brief description of the key measurements contained in the analysis:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Regular Liquidity Position</I>-This
is a measurement used to capture the ability of an institution to cover its current debt obligations.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Basic Surplus</I>-The basic surplus
ratio is used to determine the number of times non-obligated assets could be used to meet immediate liquidity needs.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Dependency Ratio</I>-The dependency
ratio determines the reliance on short-term liabilities.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="font: 9pt Arial"><B><img src="logo1.jpg"></B></FONT><FONT STYLE="font: 10pt Times New Roman, Times, Serif">
Leverage Analysis</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The leverage analysis examines the potential of the institution
to absorb additional debt. The key measurements included in this analysis are the Bank&rsquo;s tier 1 capital, leverage and total
capital ratios.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="font: 9pt Arial"><B><img src="logo1.jpg"></B></FONT><FONT STYLE="font: 10pt Times New Roman, Times, Serif">
Balance Sheet Analytics</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Balance sheet analytics involve an in
depth examination of the balance sheet structure, including diversification of structure and most recent pricing practices. This
review uses trend analysis to compare previous balance sheet positions. The analysis enables the ALCO to review significant changes
in the Bank&rsquo;s loan and security portfolios as well as the Bank&rsquo;s deposit composition.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1pt; text-align: justify; text-indent: 0.75in"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1pt; text-align: justify; text-indent: -1pt"><I>Liquidity
Risk Management</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1pt; text-align: justify; text-indent: -1pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1pt; text-align: justify; text-indent: -1pt">Liquidity is
measured by the Bank's ability to raise cash at a reasonable cost or with a minimum of loss. These funds are used primarily to
fund loans and satisfy deposit withdrawals. Several factors must be considered by management when attempting to minimize liquidity
risk. Examples include changes in interest rates, competition, loan demand, and general economic conditions. Minimizing liquidity
risk is a responsibility of the ALCO and is reviewed by the Bank&rsquo;s regulatory agencies on a regular basis.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1pt; text-align: justify; text-indent: -1pt">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1pt; text-align: justify; text-indent: -1pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Item 3.&nbsp;&nbsp;&nbsp;Quantitative and Qualitative Disclosures
About Market Risk</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">A comprehensive qualitative and quantitative
analysis regarding market risk was disclosed in Cornerstone&rsquo;s Annual Report on Form 10-K for the year ended December 31,
2011. No material changes in the assumptions used in preparing, or results obtained from, the model have occurred since December
31, 2011.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Item 4. Controls and Procedures</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Under the supervision and with the participation
of management, including Cornerstone&rsquo;s Chief Executive Officer and Chief Financial Officer, Cornerstone has evaluated the
effectiveness of its disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities
Exchange Act of 1934, as amended (the &ldquo;Exchange Act&rdquo;), as of June 30, 2012 (the &ldquo;Evaluation Date&rdquo;). Based
on such evaluation, such officers have concluded that, as of the Evaluation Date, Cornerstone&rsquo;s disclosure controls and
procedures were effective in alerting them on a timely basis to material information relating to Cornerstone (including its consolidated
subsidiary) required to be included in Cornerstone&rsquo;s periodic filings under the Exchange Act.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">There were no changes in Cornerstone&rsquo;s
internal control over financial reporting during Cornerstone&rsquo;s fiscal quarter ended June 30, 2012 that have materially affected,
or are reasonably likely to materially affect, Cornerstone&rsquo;s internal control over financial reporting.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1pt; text-align: center; text-indent: 55pt"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1pt; text-align: center"><B>PART II. OTHER INFORMATION</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1pt; text-align: center; text-indent: 0.75in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Item 1. Legal Proceedings</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">There are various claims and lawsuits
in which the Bank is periodically involved incidental to the Bank&rsquo;s business. In the opinion of management, no material
loss is expected from any of such pending claims or lawsuits.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Item 1A. Risk Factors</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Cornerstone, as a smaller reporting company, is not required
to provide the information required by this Item.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Item 2. Unregistered Sales of Equity Securities and Use
of Proceeds</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">None</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Item 3. Defaults Upon Senior Securities</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">None</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Item 4. Mine Safety Disclosures &ndash; Not Applicable</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Item 5. Other Information </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">None</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Item 6. Exhibits</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 15%; border-bottom: windowtext 1pt solid; layout-grid-mode: line; text-align: center">Exhibit Number</TD>
    <TD STYLE="width: 6%; layout-grid-mode: line">&nbsp;</TD>
    <TD STYLE="width: 79%; border-bottom: windowtext 1pt solid; layout-grid-mode: line">Description</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="layout-grid-mode: line; text-align: center">31</TD>
    <TD STYLE="layout-grid-mode: line">&nbsp;</TD>
    <TD STYLE="layout-grid-mode: line">Certifications under Section 302 of the Sarbanes-Oxley Act of 2002.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="layout-grid-mode: line; text-align: center">32</TD>
    <TD STYLE="layout-grid-mode: line">&nbsp;</TD>
    <TD STYLE="layout-grid-mode: line">Certifications under Section 906 of the Sarbanes-Oxley Act of 2002.</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 9pt">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>SIGNATURES</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">In accordance with the requirements of the Exchange Act, the
registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 50%; layout-grid-mode: line">&nbsp;</TD>
    <TD STYLE="width: 50%; layout-grid-mode: line; font-weight: bold">Cornerstone Bancshares, Inc.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="layout-grid-mode: line">&nbsp;</TD>
    <TD STYLE="layout-grid-mode: line">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="layout-grid-mode: line">Date: &nbsp;&nbsp;&nbsp;&nbsp;August 13, 2012</TD>
    <TD STYLE="border-bottom: windowtext 1pt solid; layout-grid-mode: line">&nbsp;/s/ Nathaniel F. Hughes</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="layout-grid-mode: line">&nbsp;</TD>
    <TD STYLE="layout-grid-mode: line">Nathaniel F. Hughes,</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="layout-grid-mode: line">&nbsp;</TD>
    <TD STYLE="layout-grid-mode: line">President and Chief Executive Officer</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="layout-grid-mode: line">&nbsp;</TD>
    <TD STYLE="layout-grid-mode: line">(principal executive officer)</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 50%; layout-grid-mode: line">Date: &nbsp;&nbsp;&nbsp;&nbsp;August 13, 2012</TD>
    <TD STYLE="width: 50%; border-bottom: windowtext 1pt solid; layout-grid-mode: line">&nbsp;&nbsp;/s/ Gary W. Petty, Jr.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="layout-grid-mode: line">&nbsp;</TD>
    <TD STYLE="layout-grid-mode: line">Gary W. Petty, Jr.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="layout-grid-mode: line">&nbsp;</TD>
    <TD STYLE="layout-grid-mode: line">Senior Vice President and Chief Financial Officer</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="layout-grid-mode: line">&nbsp;</TD>
    <TD STYLE="layout-grid-mode: line">(principal financial officer and accounting officer)</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><FONT STYLE="font-weight: normal">EXHIBIT
INDEX</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-weight: normal">&nbsp;</FONT></P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 15%; border-bottom: windowtext 1pt solid; layout-grid-mode: line; text-align: center">Exhibit Number</TD>
    <TD STYLE="width: 2%; layout-grid-mode: line">&nbsp;</TD>
    <TD STYLE="width: 83%; border-bottom: windowtext 1pt solid; layout-grid-mode: line">Description</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="layout-grid-mode: line; text-align: center">31</TD>
    <TD STYLE="layout-grid-mode: line">&nbsp;</TD>
    <TD STYLE="layout-grid-mode: line">Certifications under Section 302 of the Sarbanes-Oxley Act of 2002.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="layout-grid-mode: line; text-align: center">32</TD>
    <TD STYLE="layout-grid-mode: line">&nbsp;</TD>
    <TD STYLE="layout-grid-mode: line">Certifications under Section 906 of the Sarbanes-Oxley Act of 2002.</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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    <DIV STYLE="page-break-before: always; margin-top: 6pt"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%"><TR><TD STYLE="text-align: center; width: 100%">&nbsp;</TD></TR></TABLE></DIV>
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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="margin: 0"></P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>



<P STYLE="margin: 0"></P>



<P STYLE="margin: 0">&nbsp;</P>

<P STYLE="margin: 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 3.5in; text-align: right; text-indent: 0.5in">EXHIBIT 31</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>CERTIFICATION</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">I, Nathaniel F. Hughes, certify that:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in">1.</TD><TD STYLE="text-align: justify">I have reviewed this quarterly report on Form 10-Q of Cornerstone Bancshares, Inc (the &ldquo;Registrant&rdquo;);</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in">2.</TD><TD STYLE="text-align: justify">Based on my knowledge, this quarterly report does not contain any untrue statement of a material
fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly report;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in">3.</TD><TD STYLE="text-align: justify">Based on my knowledge, the financial statements, and other financial information included in this
quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the
Registrant as, and for, the periods presented in this quarterly report;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in">4.</TD><TD STYLE="text-align: justify">The Registrant&rsquo;s other certifying officers and I are responsible for establishing and maintaining
disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial
reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in">(a)</TD><TD STYLE="text-align: justify">Designed such disclosure controls and procedures, or caused such disclosure controls and procedures
to be designed under our supervisions, to ensure that material information relating to the Registrant, including its consolidated
subsidiary, is made known to us by others within those entities, particularly during the period in which this quarterly report
is being prepared;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in">(b)</TD><TD STYLE="text-align: justify">Designed such internal control over financial reporting, or caused such internal control over financial
reporting to be designed under our supervision to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in">(c)</TD><TD STYLE="text-align: justify">Evaluated the effectiveness of the Registrant&rsquo;s disclosure controls and procedures and presented
in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered
by this report based on such evaluation; and</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in">(d)</TD><TD STYLE="text-align: justify">Disclosed in this report any change in the Registrant&rsquo;s internal control over financial reporting
that occurred during the most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect,
the Registrant&rsquo;s internal control over financial reporting; and</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in">5.</TD><TD STYLE="text-align: justify">The Registrant&rsquo;s other certifying officers and I have disclosed, based on our most recent
evaluation of internal control over financial reporting, to the Registrant&rsquo;s auditors and the audit committee of Registrant&rsquo;s
board of directors (or persons performing the equivalent functions):</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in">(a)</TD><TD STYLE="text-align: justify">All significant deficiencies and material weaknesses in the design or operation of internal control
over financial reporting which are reasonably likely to adversely affect the Registrant&rsquo;s ability to record, process, summarize
and report financial information; and</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in">(b)</TD><TD STYLE="text-align: justify">Any fraud, whether or not material, that involves management or other employees who have a significant
role in the Registrant&rsquo;s internal control over financial reporting.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 50%; layout-grid-mode: line; padding-bottom: 1pt">Date: August 13, 2012</TD>
    <TD STYLE="width: 2%; layout-grid-mode: line; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="width: 39%; padding-left: 9pt; layout-grid-mode: line; border-bottom: Black 1pt solid">/s/ Nathaniel F. Hughes</TD>
    <TD STYLE="width: 9%; padding-left: 9pt; layout-grid-mode: line; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="layout-grid-mode: line">&nbsp;</TD>
    <TD STYLE="layout-grid-mode: line">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="layout-grid-mode: line">Nathaniel F. Hughes</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="layout-grid-mode: line">&nbsp;</TD>
    <TD STYLE="layout-grid-mode: line">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="layout-grid-mode: line">President and Chief Executive Officer</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="layout-grid-mode: line">&nbsp;</TD>
    <TD STYLE="layout-grid-mode: line">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="layout-grid-mode: line">(principal executive officer)</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif"><TR><TD STYLE="text-align: center; width: 100%">&nbsp;</TD></TR></TABLE></DIV>
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<P STYLE="margin: 0">&nbsp;</P>

<P STYLE="margin: 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 4in; text-align: right; text-indent: 0.5in">EXHIBIT 31</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 4in; text-align: center; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>CERTIFICATION</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">I, Gary W. Petty, Jr., certify that:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.3in">1.</TD><TD STYLE="text-align: justify">I have reviewed this quarterly report on Form 10-Q of Cornerstone Bancshares, Inc (the &ldquo;Registrant&rdquo;);</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.3in; text-align: justify; text-indent: -0.3in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.3in">2.</TD><TD STYLE="text-align: justify">Based on my knowledge, this quarterly report does not contain any untrue statement of a material
fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly report;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.3in; text-align: justify; text-indent: -0.3in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.3in">3.</TD><TD STYLE="text-align: justify">Based on my knowledge, the financial statements, and other financial information included in this
quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the
Registrant as, and for, the periods presented in this quarterly report;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.3in; text-align: justify; text-indent: -0.3in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.3in">4.</TD><TD STYLE="text-align: justify">The Registrant&rsquo;s other certifying officers and I are responsible for establishing and maintaining
disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial
reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.3in; text-align: justify; text-indent: -0.3in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.3in">(a)</TD><TD STYLE="text-align: justify">Designed such disclosure controls and procedures, or caused such disclosure controls and procedures
to be designed under our supervisions, to ensure that material information relating to the Registrant, including its consolidated
subsidiary, is made known to us by others within those entities, particularly during the period in which this quarterly report
is being prepared;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.3in; text-align: justify; text-indent: -0.3in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.3in">(b)</TD><TD STYLE="text-align: justify">Designed such internal control over financial reporting, or caused such internal control over financial
reporting to be designed under our supervision to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.3in; text-align: justify; text-indent: -0.3in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.3in">(c)</TD><TD STYLE="text-align: justify">Evaluated the effectiveness of the Registrant&rsquo;s disclosure controls and procedures and presented
in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered
by this report based on such evaluation; and</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.3in; text-align: justify; text-indent: -0.3in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.3in">(d)</TD><TD STYLE="text-align: justify">Disclosed in this report any change in the Registrant&rsquo;s internal control over financial reporting
that occurred during the most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect,
the Registrant&rsquo;s internal control over financial reporting; and</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.3in; text-align: justify; text-indent: -0.3in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.3in">5.</TD><TD STYLE="text-align: justify">The Registrant&rsquo;s other certifying officers and I have disclosed, based on our most recent
evaluation of internal control over financial reporting, to the Registrant&rsquo;s auditors and the audit committee of Registrant&rsquo;s
board of directors (or persons performing the equivalent functions):</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.3in; text-align: justify; text-indent: -0.3in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.3in">(a)</TD><TD STYLE="text-align: justify">All significant deficiencies and material weaknesses in the design or operation of internal control
over financial reporting which are reasonably likely to adversely affect the Registrant&rsquo;s ability to record, process, summarize
and report financial information; and</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.3in; text-align: justify; text-indent: -0.3in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.3in">(b)</TD><TD STYLE="text-align: justify">Any fraud, whether or not material, that involves management or other employees who have a significant
role in the Registrant&rsquo;s internal control over financial reporting.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 50%; layout-grid-mode: line; padding-bottom: 1pt">Date: August 13, 2012</TD>
    <TD STYLE="width: 2%; layout-grid-mode: line; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="width: 39%; layout-grid-mode: line; border-bottom: Black 1pt solid">/s/ Gary W. Petty, Jr</TD>
    <TD STYLE="width: 9%; layout-grid-mode: line; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="layout-grid-mode: line">&nbsp;</TD>
    <TD STYLE="layout-grid-mode: line">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="layout-grid-mode: line">Gary W. Petty, Jr.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="layout-grid-mode: line">&nbsp;</TD>
    <TD STYLE="layout-grid-mode: line">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="layout-grid-mode: line">Senior Vice President and Chief Financial Officer</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="layout-grid-mode: line">&nbsp;</TD>
    <TD STYLE="layout-grid-mode: line">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="layout-grid-mode: line">(principal financial and accounting officer)</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 2.5in; text-indent: 0.5in">&nbsp;</P>

<!-- Field: Page; Sequence: 44 -->
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    <DIV STYLE="page-break-before: always; margin-top: 6pt"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%"><TR><TD STYLE="text-align: center; width: 100%">&nbsp;</TD></TR></TABLE></DIV>
    <!-- Field: /Page -->



<P STYLE="margin: 0"></P>

<P STYLE="margin: 0"></P>
<P STYLE="margin: 0"></P>



<P STYLE="margin: 0">&nbsp;</P>

<P STYLE="margin: 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 5.5in; text-align: right">Exhibit 32</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>CERTIFICATIONS PURSUANT TO </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>SECTION 906 OF THE SARBANES-OXLEY ACT
OF 2002 </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>(18 U.S.C. SECTION 1350) </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In connection with the Quarterly Report
of Cornerstone Bancshares, Inc., a Tennessee corporation (&ldquo;Cornerstone&rdquo;), on Form 10-Q for the quarter ended June 30,
2012, as filed with the Securities and Exchange Commission (the &ldquo;Report&rdquo;), Nathaniel F. Hughes, President and Chief
Executive Officer of Cornerstone, and Gary W. Petty, Jr., Senior Vice President and Chief Financial Officer of Cornerstone, respectively,
do each hereby certify, pursuant to &sect; 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. &sect; 1350), that to his knowledge:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 24.5pt">(1) The Report fully complies with the
requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 24.5pt">(2) The information contained in the Report
fairly presents, in all material respects, the financial condition and result of operations of Cornerstone.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 50%; layout-grid-mode: line; border-bottom: Black 1pt solid">/s/ Nathaniel F. Hughes</TD>
    <TD STYLE="width: 50%; layout-grid-mode: line; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="layout-grid-mode: line">&nbsp;</TD>
    <TD STYLE="layout-grid-mode: line">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-left: 12pt; text-indent: -12pt">Nathaniel F. Hughes</TD>
    <TD STYLE="padding-left: 12pt; text-indent: -12pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-left: 12pt; text-indent: -12pt">&nbsp;</TD>
    <TD STYLE="padding-left: 12pt; text-indent: -12pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-left: 12pt; text-indent: -12pt">President and Chief Executive Officer</TD>
    <TD STYLE="padding-left: 12pt; text-indent: -12pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-left: 12pt; text-indent: -12pt">&nbsp;</TD>
    <TD STYLE="padding-left: 12pt; text-indent: -12pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-left: 12pt; text-indent: -12pt">(principal executive officer)</TD>
    <TD STYLE="padding-left: 12pt; text-indent: -12pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-left: 12pt; text-indent: -12pt">&nbsp;</TD>
    <TD STYLE="padding-left: 12pt; text-indent: -12pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-left: 12pt; text-indent: -12pt">August 13, 2012</TD>
    <TD STYLE="padding-left: 12pt; text-indent: -12pt">&nbsp;</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 50%; layout-grid-mode: line; border-bottom: Black 1pt solid">&nbsp;/s/ Gary W. Petty, Jr.</TD>
    <TD STYLE="width: 50%; layout-grid-mode: line; padding-bottom: 1pt"></TD></TR>
<TR STYLE="vertical-align: top">
    <TD COLSPAN="2" STYLE="layout-grid-mode: line">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD COLSPAN="2" STYLE="padding-left: 12pt; text-indent: -12pt">Gary W. Petty, Jr.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD COLSPAN="2" STYLE="padding-left: 12pt; text-indent: -12pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD COLSPAN="2" STYLE="padding-left: 12pt; text-indent: -12pt">Senior Vice President and Chief Financial Officer</TD></TR>
<TR STYLE="vertical-align: top">
    <TD COLSPAN="2" STYLE="padding-left: 12pt; text-indent: -12pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD COLSPAN="2" STYLE="padding-left: 12pt; text-indent: -12pt">&nbsp;(principal financial officer and accounting officer)</TD></TR>
<TR STYLE="vertical-align: top">
    <TD COLSPAN="2" STYLE="padding-left: 12pt; text-indent: -12pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD COLSPAN="2">August 13, 2012</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">[A signed original of this written statement required by Section
906 has been provided to Cornerstone Bancshares, Inc. and will be retained by Cornerstone Bancshares, Inc. and furnished to the
Securities and Exchange Commission or its staff upon request.]</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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