Bank of Lancaster has been a leader among financial institutions in the communities we serve since 1930. Bank of Lancaster is the only community bank with all of its 9 offices located in the Northern Neck. We offer a full range of banking, mortgage, investment, insurance and trust services. As we continue to grow, we will continue our commitment to provide service excellence to families and businesses in the communities we serve.

We are committed to being a sound, trusted provider of financial services to our communities for decades to come. As our area’s economy rebounds, we will continue to build on our capital base to meet the needs of our customers. And, by staying true to the principles of community banking, we will grow along with our communities.

      * Bank of Lancaster’s asset quality compared to peers in our industry is above average.

      * A key measure of whether a bank has what it needs to remain strong is its “Total Risk-
        Based Capital Ratio.” The minimum to be considered “well capitalized,” which is the
        highest standard, is 10%. Bank of Lancaster’s total risk-based capital ratio is 12.19%,
        well above the minimum for the highest standard.

      * As part of the Company’s plans for maintaining the strong capital position, Bank of
        Lancaster recently offered an early retirement package to those employees who are 55
        years and older with a minimum of 10 years of service. Combined with restructuring
        several areas of the Bank, our workforce has been reduced by 15%.

Moving forward in a positive direction, Bank of Lancaster expects to increase its revenue by introducing new products and services that will benefit our customers and enhance profitability in the upcoming year.

As President & CEO of Bank of Lancaster, it is my job to lead our experienced management team and staff to increased profitability, growth and continue with a solid foundation for our future. On behalf of everyone at the Company, I want to personally thank all of our customers and shareholders for your support. We are committed to earning your business every day with the best products and the highest quality personal service you expect and deserve. If you’re not banking with us, I hope you will tell us what we can do to earn your business. Please feel free to call me directly at (804) 435-1171 or 800-435-1140.

Sincerely,

Randal R. Greene
President & CEO