Income StatementThree months endedMarch 31,(dollars in thousands, except per share data)20092008% Change Total revenues $8,506 $8,973 -5.2 %Total operating expenses3,8683,446 12.2 %Net income2131,173 -81.8%Diluted net income per share $0.06$0.34-82.4%Total revenues (net interest income plus noninterest income) for the firstquarter decreased $467,000 to $8,506,000, down 5.2% from the first quarter of2008. Net income totaled $213,000 for the first quarter of 2009, a decrease of$960,000, or 81.8%, from net income of $1,173,000 for the first quarter of 2008.Net income per fully diluted share for the quarter was $0.06, an 82.4% decreasefrom the $0.34 recorded for the same period a year ago. Net Interest Income and Net Interest MarginNet interest income for the first quarter of 2009 totaled $3,956,000, a decreaseof $244,000, or 5.8% from the $4,200,000 recorded a year ago. This decrease wasa result of the continued margin compression experienced in the Company`s netinterest margin. The net interest margin on a fully taxable equivalent basis for the firstquarter of 2009 was 3.13%, down 48 basis points from the first quarter of 2008.

Non-interest ExpensesNon-interest expenses for the first quarter of 2009 were $3,868,000, up 12.2%over $3,446,000 one year ago. The Company`s first quarter provision for loan and lease lossestotaled $933,000 as compared to $100,000 recorded in the first quarter of 2008.The increase in the provision for loan and lease losses for the quarter is aresult of the Company`s strong loan growth of approximately $58,000,000 over thepast twelve months, deterioration in the overall economy, and additional problemloans. Total net charge-offs for the first quarter were $174,000 versus $23,000 for thefirst quarter of 2008. CapitalStockholders` equity at March 31, 2009 totaled $50,463,000, an increase of$9,672,000, or 23.7% over December 31, 2008. The increase in stockholder`sequity is the result of the $10,000,000 received under the Treasury Department`sCapital Purchase Program for strong well-capitalized banks. The words "expect," "anticipate," "intend,""plan," "believe," "estimate," and similar expressions are intended to identifysuch forward-looking statements. Laudenslager, 717-692-2133Vice President & Treasurer Copyright Business Wire 2009.

NEW YORK--(Business Wire)--Fitch Ratings has downgraded two and affirmed three classes of notes issued byBlue Heron Funding VI, Ltd. (Blue Heron VI) as follows: --$975,573,547 class A-1 notes downgraded to 'CCC' from 'BBB-'; --$25,000,000 class A-2 notes downgraded to 'CC' from 'B'; --EUR89,936,000 (USD equivalent $105,000,000) class B notes affirmed at 'C'; --EUR89,936,000 (USD equivalent $105,000,000) class B additional interestaffirmed at 'C' (interest only); --$6,250,000 certificates affirmed at 'AAA' (principal only). Additionally, Fitch has removed class A-1 and A-2 notes from Rating WatchNegative. The notes were not assigned Rating Outlooks as Fitch does not assignRating Outlooks to classes rated 'CCC' or below. These rating actions are a result of the continued credit deterioration of theportfolio since the last review in May 2008. Approximately 27.4% of theportfolio is rated below investment grade, of which 16.1% is rated 'CCC' andlower compared to 13.6% rated below investment grade in May 2008. The class A overcollateralization ratio of 93.2% is failing its covenant of 102%and continues to redirect interest proceeds that would otherwise pay interest toclass B to pay down the class A-1 notes.

The class A-1 notes have paid offapproximately 12.4% since closing. Fitch has downgraded this class to 'CCC' asthis is a better reflection of the risk to these notes due to the deteriorationof the portfolio. The downgrade also reflects the notes exposure to interestrate risk, as all notes have a floating-rate coupon while over 40% of assets paya fixed-rate coupon and no interest rate swap exists. The class A-2 notes aredowngraded to 'CC' as they continue to receive interest but Fitch does notanticipate future principal payments. The rating assigned to the certificates is based on the rating of thecertificate protection asset, which is comprised of U.S government-backedResolution Funding Corp zero-coupon bonds. Blue Heron VI is a structured finance CDO, which closed on Dec 21, 2005 Theportfolio is monitored by Brightwater Capital Management The transaction'srevolving period ended in May 2008. The rating actions incorporate Fitch'srecently adjusted default and recovery rate assumptions for analyzing structuredfinance (SF) CDOs, in addition to negative credit migration in the underlyingportfolio.

The portfolio is primarily composed of commercial mortgage-backedsecurities (CMBS) (44.1%), subprime residential mortgage-backed securities(RMBS) (27.7%), SF CDOs (14.3%), prime RMBS (7.5%), other CDOs (5.5%), andcommercial and consumer ABS (0.9%). These rating actions resolve the 'Under Analysis' status issued on Oct. 14, 2008following Fitch's announcement of its proposed criteria revision for analyzingSF CDOs. The revised criteria report, 'Global Rating Criteria for StructuredFinance CDOs', was published in its final form on Dec. 16, 2008 along with anupdated version of the Fitch Portfolio Credit Model that includes additionalfunctionality for analyzing SF CDOs.