10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

x ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Fiscal Year Ended December 31, 2008

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                     .

Commission File No. 1-13652

First West Virginia Bancorp, Inc.

(Exact name of registrant as specified in its charter)

West Virginia	55-6051901
(State or other jurisdiction incorporation or organization)	(I.R.S. Employer Identification No.)

1701 Warwood Avenue

Wheeling, West Virginia 26003

(Address of principal executive offices)

Registrant’s telephone number, including area code: (304) 277-1100

Securities to be registered pursuant to Section 12(b) of the Act:

Title of each class	Name of each exchange on which registered
Common Stock $5.00 Par Value	NYSE AMEX

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

¨  Yes         x  No

Indicate by check mark whether the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. ¨  Yes        x  No

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 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 report(s), and (2) has been subject to such filing requirements for the past 90 days.  x  Yes        ¨  No

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in part III of this Form 10-K or any amendment to this Form 10-K.  ¨

Indicate by check-mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

        Large Accelerated filer    ¨        Accelerated filer    ¨        Non-Accelerated filer    ¨        Smaller Reporting Company    x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  ¨  Yes        x  No

The aggregate market value of the voting stock held by non-affiliates of the registrant, calculated by reference to the closing sale price of First West Virginia Bancorp’s common stock on the NYSE AMEX on March 24, 2009, was $12,214,031. (Registrant has assumed that all of its executive officers and directors are affiliates. Such assumption shall not be deemed to be conclusive for any other purpose):

The number of shares outstanding less treasury shares of the issuer’s common stock as of March 24, 2009:

Common Stock, $5.00 Par Value 1,589,411 shares

        DOCUMENTS INCORPORATED BY REFERENCE

Documents	Part of Form 10-K into which Document is incorporated
Portions of the Annual Report to Shareholders of First West Virginia Bancorp, Inc. for the year ended December 31, 2008.	Part II, Items 5, 6, 7, 7A, 8 and 9A; Part III, Item 13; Part IV, Item 15
Portions of First West Virginia Bancorp, Inc.’s Proxy statement for the 2009 Annual Meeting of Shareholders.	Part III, Items 10, 11, 12, 13 and 14

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    FORM 10-K INDEX

		Page No.
PART I
Item 1	Business	4-10
Item 1A	Risk Factors	10-12
Item 1B	Unresolved Staff Comments	12
Item 2	Properties	12
Item 3	Legal Proceedings	13
Item 4	Submission of Matters to a Vote of Security Holders	13
PART II
Item 5	Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	13-14
Item 6	Selected Financial Data	14
Item 7	Management’s Discussion and Analysis of Financial Condition and Results of Operations	14
Item 7A	Quantitative and Qualitative Disclosures About Market Risk	14
Item 8	Financial Statements and Supplementary Data	14
Item 9	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	15
Item 9A	Controls and Procedures	15
Item 9B	Other Information	15
PART III
Item 10	Directors, Executive Officers and Corporate Governance	16-17
Item 11	Executive Compensation	17
Item 12	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	17
Item 13	Certain Relationships and Related Transactions, and Director Independence	17-18
Item 14	Principal Accountant Fees and Services	18
PART IV
Item 15	Exhibits and Financial Statement Schedules	19
(a)	Financial Statements Filed; Financial Statement Schedules	19
(b)	Reports on Form 8-K	19
(c)	Exhibits	19
	Signatures	20
	Exhibit Index	21

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PART 1

Item 1     Business

General

First West Virginia Bancorp, Inc. (“Holding Company”), was organized as a West Virginia business corporation on July 1, 1973 at the request of the Boards of Directors of the Bank of Warwood, N.A. and Community Savings Bank, N.A. for the purpose of becoming a bank holding company, under the Bank Holding Company Act of 1956, as amended. On December 30, 1974 the shareholders of those banks voted to become constituent banks of the Holding Company, which reorganization was subsequently accomplished in accordance with regulatory procedure, and the Holding Company thus became the first bank holding company in the state of West Virginia. Those banks later merged on June 30, 1984 under the name “First West Virginia Bank, N.A.” In November, 1995, the subsidiary banks of the Holding Company adopted the Common Name of “Progressive Bank, N.A.”

At December 31, 2008, First West Virginia Bancorp, Inc. had one wholly-owned banking subsidiary, Progressive Bank, N.A. in Wheeling, West Virginia.

Progressive Bank, N. A. is a community bank serving all of Ohio, Brooke, Marshall, Upshur, Lewis and Wetzel counties in the state of West Virginia, and a portion of the west bank of the Ohio River, located in the State of Ohio. Progressive Bank, N.A. operates three full-service offices in Ohio county, Wheeling, West Virginia, one full-service office in Brooke county, Wellsburg, West Virginia, one full-service office in Marshall county, Moundsville, West Virginia, one full-service office in Wetzel county, New Martinsville, West Virginia, one full-service office in Upshur county, Buckhannon, West Virginia, one full-service office in Lewis county, Weston, West Virginia, and one full-service office in Bellaire, Ohio. Progressive Bank, N.A. had total assets of approximately $257.8 million as of December 31, 2008.

Total Holding Company assets as of December 31, 2008, which include the assets of its operating subsidiary bank, were $258.2 million. The authorized capital of the Holding Company consists of 2,000,000 shares of capital stock, par value of $5.00 per share, of which 1,599,411 shares less 10,000 treasury shares were issued and outstanding as of December 31, 2008 to 281 registered shareholders. Shareholders’ equity at that date was $28,736,558.

General Description of Business

First West Virginia Bancorp, Inc. is dependent upon its subsidiary for cash necessary to pay expenses, and dividends to its stockholders. The Holding Company functions primarily as the holder of the capital stock of its wholly-owned subsidiary bank.

The subsidiary bank of the Holding company is engaged in the business of banking and provides a broad range of consumer and commercial banking products and services to individuals, businesses, professionals and governments. The services and products have been designed in such a manner as to appeal to area consumers and businesses. The loan portfolio of the bank consists primarily of loans secured by real estate to consumers and businesses. The bank also engages in commercial loans and general consumer loans to individuals. The subsidiary bank offers a wide range of both personal and commercial types of deposit accounts and services as a means of gathering funds. Types of deposit accounts and services available include non-interest bearing demand checking, interest bearing checking (NOW accounts), savings, money market, certificates of deposit, individual retirement accounts, and Christmas Club accounts. The customer base for deposits is primarily retail in nature. The majority of the bank’s lending is concentrated in the upper Ohio Valley of northern West Virginia and adjacent areas of Ohio and Pennsylvania.

First West Virginia Bancorp, Inc.’s business is not seasonal. As of December 31, 2008, the subsidiary bank was not engaged in any operation in foreign countries and transactions with customers in foreign countries is not material.

Competition

Competition involving the Holding Company is generally felt at the subsidiary level. All phases of the banks’ business are highly competitive. The subsidiary bank encounters competition from commercial banks and other financial institutions. The subsidiary bank also competes with other insurance companies, small loan companies, credit unions with respect to lending activities and also in attracting a variety of deposit related instruments.

Supervision and Regulation

The Holding Company is subject to the provisions of the Federal Bank Holding Company Act of 1956, as amended, and to the supervision of the Board of Governors of the Federal Reserve System. The Bank Holding Company Act requires the Holding Company to secure the prior approval of the Federal Reserve Board before it can acquire all or substantially all of the assets of any bank, or acquire ownership or control of any voting shares of any bank, if, after such acquisition, it would own or control 5% or more of the voting shares of such bank. Similarly, a bank holding company is prohibited under the Act from engaging in, or acquiring direct or indirect control of 5% or more of the voting shares of any company engaged in non-banking activities unless the Federal Reserve Board, by order or regulation, has found such activities to be so closely related to banking or managing or controlling banks as to be a proper incident thereto. In making determinations as to permitted non-banking activities, the Federal Reserve Board considers whether the performance of these activities by a bank holding company would offer benefits to the public which outweigh possible adverse effects.

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As a bank holding company, the Holding Company is required to file with the Federal Reserve Board reports and any additional information that the Federal Reserve Board may require pursuant to the Bank Holding Company Act. The Federal Reserve Board also makes examinations of the Holding Company. The Holding Company is also required to register with the Office of the Commissioner of Banking of West Virginia and file reports as requested. The Commissioner has the power to examine the Holding Company and its subsidiary.

The Holding Company is also deemed an “affiliate” of its subsidiary bank under the Federal Reserve Act which imposes certain restrictions on loans between the Holding Company and its subsidiary bank, investments by the subsidiary in the stock of the Holding Company, or the taking of stock of the Holding Company by the subsidiary as collateral for loans to any borrower, or purchases by the subsidiary of certain assets from the Holding Company, and the payment of dividends by the subsidiary to the Holding Company.

Federal Reserve Board approval is required before the Holding Company may begin to engage in any permitted non-banking activity. The Federal Reserve Board is empowered to differentiate between activities which are initiated by a bank holding company or a subsidiary and activities commenced by acquisition of a going concern.

The operations of the Holding Company’s subsidiary bank, being a national bank, is subject to the regulations of a number of regulatory agencies including the regulations of a number of regulatory authorities including the Office of the Comptroller of the Currency, the Board of Governors of the Federal Reserve System and the applicable state Department of Banking. Representatives of the Comptroller of the Currency regulate and conduct examinations of the subsidiary bank. The subsidiary bank is required to furnish regular reports to the Comptroller of the Currency and the Federal Deposit Insurance Corporation. The Comptroller of the Currency has the authority to prevent national banks from engaging in an unsafe or unsound bank practice and may remove officers or directors. It may be noted that the subsidiary bank of a bank holding company is subject to certain restrictions imposed by the banking laws on extensions of credit to the bank holding company or its subsidiary.

In December, 2004 the Company’s subsidiary bank entered into a Formal Agreement with the Office of the Comptroller of the Currency (OCC). The Formal Agreement contained certain required actions and certain restrictions. This agreement was terminated by the OCC on December 13, 2006. The Company also adopted a resolution with the Federal Reserve Bank of Cleveland, under authority given it by the Board of Governors of the Federal Reserve System, the federal regulatory agency for the Company. As with the agreement of the OCC, the Federal Reserve resolution necessitated certain actions and restrictions. Without prior Federal Reserve approval and a 30 day prior notice requirement, the resolution prohibited the Company from paying dividends, incurring debt, or participating in the acquisition of treasury stock. In addition, prior written approval was required before engaging in any non-bank activities. The resolution was terminated by the Federal Reserve Bank of Cleveland effective as of January 30, 2007.

Being a West Virginia corporation, the Holding Company is also subject to the corporate laws of the State of West Virginia as set forth in the West Virginia Corporation Act.

The Financial Institutions Reform, Recovery, and Enforcement Act (“FIRREA”) was enacted in August, 1989. This legislation created a new liability as a depository institution insured by the Federal Deposit Insurance corporation, (“the FDIC”), can be held liable for any loss incurred by, or reasonably expected to be incurred by, the FDIC after August 9, 1989 in connection with (i) the default of a commonly controlled FDIC-insured depository institution or (ii) any assistance provided by the FDIC to a commonly controlled FDIC-insured depository institution in danger of default. Default is defined generally as the appointment of a conservator or receiver and “in danger of default” is defined generally as the existence of certain conditions indicating that default is likely to occur in the absence of regulatory assistance.

FDIC Assessments

The FDIC imposes an assessment against all depository institutions for deposit insurance. This assessment is based on the risk category of the institution and, prior to 2009, ranged from five to 43 basis points of an institution’s deposits. On October 7, 2008, as a result of decreases in the reserve ratio of the DIF, the FDIC issued a proposed rule establishing a Restoration Plan for the DIF. The rulemaking proposed that, effective January 1, 2009, assessment rates would increase uniformly by seven basis for the first quarter 2009 assessment period. The rulemaking proposed to alter the way in which the FDIC’s risk-based assessment system differentiates for risk and set new deposit insurance assessment rates, effective April 1, 2009. Under the proposed rule, the FDIC would first establish an institution’s initial base assessment rate. This initial base assessment rate would range, depending on the risk category of the institution, from 10 to 45 basis points. The FDIC would then adjust the initial base assessment (higher or lower) to obtain the total base assessment rate. The adjustment to the initial base assessment rate would be based upon an institution’s levels of unsecured debt, secured liabilities, and brokered deposits. The total base assessment rate would range from eight to 77.5 basis points of the institution’s deposits. On December 22, 2008, the FDIC published a final rule raising the current deposit insurance assessment rates uniformly for all institutions by seven basis points (to a range from 12 to 50 basis points) for the first quarter of 2009. However, the FDIC approved an extension of the comment period on the parts of the proposed rulemaking that would become effective on April 1, 2009. The FDIC expects to issue a second final rule early in 2009, to be effective April 1, 2009, to change the way that the FDIC’s assessment differentiates for risk and to set new assessment rates beginning with the second quarter of 2009. On February 27, 2009, the FDIC proposed an emergency assessment charged to all financial institutions of 0.20% of insured deposits as of June 30, 2009, payable on September 30, 2009. In March of 2009, the FDIC reduced the amount the proposed assessment to 0.10% of insured deposits as of June 30, 2009.

5

Troubled Asset Relief Program – Capital Purchase Program

On October 3, 2008, the Federal government enacted the Emergency Economic Stabilization Act of 2008 (“EESA”). EESA was enacted to provide liquidity to the U.S. financial system and lessen the impact of looming economic problems. The EESA included broad authority. The centerpiece of the EESA is the Troubled Asset Relief Program (“TARP”). EESA’s broad authority was interpreted to allow the U.S. Treasury to purchase equity interests in both healthy and troubled financial institutions. The equity purchase program is commonly referred to as the Capital Purchase Program (“CPP”). The company elected not to participate in the CPP because we continue to expect capital levels to exceed the requirements to be considered well-capitalized.

American Recovery and Reinvestment Act of 2009

On February 17, 2009, President Obama signed into law the American Recovery and Reinvestment Act of 2009 (“ARRA”), more commonly known as the economic stimulus or economic recovery package. ARRA includes a wide variety of programs intended to stimulate the economy and provide for extensive infrastructure, energy, health, and education needs. In addition, ARRA imposes certain new executive compensation and corporate expenditure limits on all current and future TARP recipients that are in addition to those previously announced by the U.S. Treasury, until the institution has repaid the U.S. Treasury, which is now permitted under ARRA without penalty and without the need to raise new capital, subject to the U.S. Treasury’s consultation with the recipient’s appropriate regulatory agency.

Future Legislation

Various other legislative and regulatory initiatives, including proposals to overhaul the banking regulatory system and to limit the investments that a depository institution may make with insured funds, are from time to time introduced in Congress and state legislatures, as well as regulatory agencies. Such legislation may change banking statutes and the operating environment of the company and the bank in substantial and unpredictable ways, and could increase or decrease the cost of doing business, limit or expand permissible activities or affect the competitive balance depending upon whether any of this potential legislation will be enacted, and if enacted, the effect that it or any implementing regulations, would have on the financial condition or results of operations of the company or the bank. With the recent enactments of EESA and ARRA, the nature and extent of future legislative and regulatory changes affecting financial institutions is very unpredictable at this time. The company cannot determine the ultimate effect that such potential legislation, if enacted, would have upon its financial condition or operations.

Capital Requirements

The Federal Reserve Board and the Office of the Comptroller of the Currency require a minimum “tier 1” capital to be at least 3% of total assets (“Leverage Ratio”). For all but the most highly rated banks, the minimum Leverage Ratio requirement will be 4% to 5% of total assets. Tier 1 capital consists of: (i) common stockholders’ equity, noncumulative perpetual preferred stock and minority interests in consolidated subsidiaries; (ii) minus intangible assets (other than certain purchased mortgage and credit card servicing rights); and (iii) minus certain losses, and minus investments in certain securities of subsidiaries.

In addition, a national bank also must maintain a “tier 1 risk-based capital ratio” of 4%. The “tier 1 risk-based capital ratio” is defined in OCC regulations as the ratio to tier 1 capital to “risk-weighted assets”. A bank’s total risk-weighted assets are determined by: (i) converting each of its off-balance sheet items to an on-balance sheet credit equivalent amount; (ii) assigning each on-balance sheet asset and the credit equivalent amount of each off-balance sheet item to one of the five risk categories established in the OCC regulations; and (iii) multiplying the amounts in each category by the risk factor assigned to that category. The sum of the resulting amounts constitutes total risk-weighted assets.

A national bank is also required to maintain a “total risk-based capital ratio” of at least 8%. The “total risk-based capital ratio” is defined in the OCC regulations as the ratio of total qualifying capital to risk-weighted assets (as defined before). Total capital, for purposes of the risk-based capital requirement, consists of the sum of tier 1 capital (as defined for purposes of the Leverage Ratio) and supplementary capital. Supplementary capital includes such items as cumulative perpetual preferred stock, long-term and intermediate-term preferred stock, term subordinated debt and general valuation loan and lease loss allowances (but only in an amount of up to 1.25% of total risk-weighted assets). The maximum amount of supplementary capital that may be counted towards satisfaction of the total capital requirement is limited to 100% of core capital. Additionally, term subordinated debt and intermediate-term preferred stock may only be included in supplementary capital up to 50% of tier 1 capital.

Capital requirements higher than the generally applicable minimum requirements may be established for a particular national bank if the OCC determines that the bank’s capital is or may become inadequate in view of its particular circumstances. Individual minimum capital requirements may be imposed where a bank is receiving special supervisory attention, has a high degree of exposure to interest rate risk, or poses other safety or soundness concerns. Deficient capital may result in the suspension of an institution’s deposit insurance.

As of December 31, 2008, the most recent notifications from the Office of the Comptroller of the Currency categorized the bank as well capitalized under the regulatory framework for prompt corrective action. There are no conditions or events since that notification that management believes has changed the capital category.

6

Federal Deposit Insurance Corporation Improvement Act of 1991

The Holding Company may also be subject to certain provisions of the Federal Deposit Insurance Corporation Improvements Act of 1991 (“FDICIA”). FDICIA requires the Federal Reserve Board of Governors to adopt certain regulations establishing safety and soundness standards for bank holding companies. Many of the provisions of the regulation became effective in December, 1993. Additional provisions will be implemented through the adoption of regulation by various federal banking agencies.

Under OCC regulations, any national bank that receives notice that it is undercapitalized, significantly undercapitalized or critically undercapitalized must file a capital restoration plan with the OCC addressing, among other things, the manner in which the association will increase its capital to comply with all applicable capital standards. Under the prompt corrective action regulations adopted by the OCC, an institution will be considered: (i) “well capitalized” if the institution has a total risk-based capital ratio of 10% or greater, a tier 1 risk-based capital ratio of 6% or greater, and Leverage Ratio of 5% or greater (provided the institution is not subject to an order, written agreement, capital directive or prompt corrective action to meet and maintain a specified capital level for any capital measure); (ii) “adequately capitalized” if the institution has a total risk-based capital ratio of 8% or greater, a tier 1 risk-based capital ratio of 4% or greater, and a Leverage Ratio of 4% or greater (3% or greater if the institution is rated composite 1 in its most recent report of examination); (iii) “undercapitalized” if the institution has a total risk-based capital ratio of less than 8%, or a tier 1 risk-based capital ratio of less than 4%, or a Leverage Ratio of less than 4% (3% if the institution is rated composite 1 in its most recent report of examination); (iv) “significantly undercapitalized” if the institution has a total risk-based capital ratio of less than 6%, or a tier 1 risk-based capital ratio of less than 3%, or a Leverage Ratio that is less than 3%; and (v) “critically undercapitalized” if the institution has a ratio of tangible equity to total assets that is less than 2%. The regulations also permit the OCC to determine that an institution should be placed in a lower category based on the existence of an unsafe and unsound condition or on other information, such as the institution’s examination report, after written notice.

The degree of regulatory intervention mandated by FDICIA and the prompt corrective action regulations are tied to a national bank’s capital category, with increasing scrutiny and more stringent restrictions being imposed as a bank’s capital declines. The prompt corrective actions specified by FDICIA for undercapitalized banks include increased monitoring and periodic review of capital compliance efforts, a requirement to submit a capital restoration plan, restrictions on dividends and total asset growth, and limitations on certain new activities (such as opening new branches and engaging in acquisitions and new lines of business) without OCC approval. Banks that are significantly undercapitalized or critically undercapitalized may be required to raise additional capital so that the bank will be adequately capitalized or be acquired by, or combined with, another bank if grounds exist for appointing a receiver. Further, the OCC may restrict such banks from (i) entering into any material transaction without prior approval of the OCC; (ii) making payments on subordinated debt; (iii) extending credit for any highly leveraged transaction; (iv) making any material change in accounting methods; (v) engaging in certain affiliate transactions; (vi) paying interest on deposits in excess of the prevailing rates of interest in the region where the institution is located; (vii) paying excess compensation or bonuses; and (viii) accepting deposits from correspondent depository institutions. In addition, the OCC may require that such banks; (a) hold a new election for directors, dismiss any director or senior executive officer who held office for more than 180 days immediately before the institution became undercapitalized, or employ qualified senior executive officers; and (b) divest or liquidate any subsidiary which the OCC determines poses a significant risk to the institution.

Any company which controls a significantly undercapitalized national bank may be required to (i) divest or liquidate any affiliate other than an insured depository institution; or (ii) divest the bank if the OCC determines that divestiture would improve the bank’s financial condition and future prospects. Generally a conservator or receiver must be appointed for a critically undercapitalized bank no later than 90 days after the bank becomes critically undercapitalized, subject to a limited exception for banks which are in compliance with an approved capital restoration plan and which the OCC certifies as not likely to fail. Additionally, the OCC may impose such other restrictions on a capital-deficient bank as the OCC deems necessary or appropriate for the safety and soundness of the bank, its depositors and investors, including limitations on investments and lending activities. The failure by a bank to materially comply with an approved capital plan constitutes an unsafe or unsound practice.

FDICIA and the regulations promulgated by the OCC pursuant thereto also require any company that has control of an “undercapitalized” national bank, in conjunction with the submission of a capital restoration plan by the bank, to guarantee that the bank will comply with the plan and provide appropriate assurances of performance. The aggregate liability of any such controlling company under such guaranty is limited to the lesser of: (i) 5% of the bank’s assets at the time it became undercapitalized; or (ii) the amount necessary to bring the bank into capital compliance at the time the bank fails to comply with the terms of its capital plan.

Monetary Policies

The earnings of the Holding Company are dependent upon the earnings of its wholly-owned subsidiary bank. The earnings of the subsidiary bank is affected by the policies of regulatory authorities, including the Comptroller of the Currency, the Board of Governors of the Federal Reserve System and the Federal Deposit Insurance Corporation. The policies and regulations of the regulatory agencies have had and will continue to have a significant effect on deposits, loans and investment growth, as well as the rate of interest earned and paid, and therefore will affect the earnings of the subsidiary banks and the Holding Company in the future, although the degree of such impact cannot accurately be predicted.

Employees

As of December 31, 2008, the Holding Company had 5 part-time employees. As of December 31, 2008, the subsidiary bank of the Holding Company had a total of 98 full-time employees and 10 part-time employees. No employees are union participants or subject to a collective bargaining agreement.

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Interstate Banking

The Bank Holding Company Act prohibits acquisition by the Holding Company of 5% or more of the voting shares of, or interest in, all or substantially all of the assets of any bank without prior approval of the Federal Reserve Board. Regulations in the state of West Virginia have permitted the reciprocal interstate branching or acquisition of banks and bank holding companies since July 1, 1997. Many other states have adopted legislation which would permit interstate acquisitions by their banks and bank holding companies and also permit entry by West Virginia bank holding companies. Such legislation, however, contains various restrictions and conditions.

Securities Laws and Compliance

As of February 13, 1995, the Holding Company’s common stock was registered with the Securities and Exchange commission (“SEC”) under the Securities Exchange Act of 1934, as amended (“1934 Act”). This registration requires ongoing compliance with the 1934 Act and its periodic filing requirements as well as a wide range of Federal and State securities laws. These requirements include, but are not limited to, the filing of annual, quarterly and other reports with the SEC, certain requirements as to the solicitation of proxies from shareholders as well as other proxy rules, and compliance with the reporting requirements and “short-swing” profit rules imposed by section 16 of the 1934 Act.

Acquisitions of or Affiliations With Other Banks or Bank Holding Companies

The Board of Directors of the Company from time to time has had exploratory discussions with other banks and bank holding companies with which an affiliation might be desirable. While all such discussions have been quite amicable, there are presently no understandings, agreements, or letters of intent to affiliate. Undoubtedly, exploratory discussions with other banks and bank holding companies will continue from time to time. The Board of Directors of the Company remains committed to obtaining a high return on the shareholders’ investment, consistent with sound and prudent banking practices, and believes that the acquisition of or affiliation with selected banks, bank holding companies and permitted non-banking activities is a desirable means to accomplish that objective. The Company has authorized but unissued shares of stock which might be issued from time to time to raise additional capital or for other bank affiliations or other corporate purposes.

Available Information

The Holding Company’s common stock was registered with the Securities and Exchange commission (“SEC”) under the Securities Exchange Act of 1934, as amended (“1934 Act”). This registration requires periodic reporting and includes, but is not limited to, the filing of annual, quarterly and other reports with the SEC.

The public may read and copy any materials that are filed with Securities and Exchange Commission at the SEC’s Public Reference Room at 100 F Street, NE, Washington, D.C. 20549, on official business days during the hours of 10:00 a.m. to 3:00 p.m. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet site, (http://www.sec.gov), that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC.

The Company presently has an internet website, (http://www.firstwvbancorp.com). Copies of the annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished to the Securities and Exchange Commission are available on the internet website and are also available free of charge upon request.

Statistical Information

The statistical information noted below is provided pursuant to Guide 3, Statistical Disclosure by Bank Holding Companies. Page references are to the Annual Report to Shareholders for the year ended December 31, 2008, and such pages are incorporated herein by reference.

		Page
1.	Distribution of Assets, Liabilities and Stockholders’ equity;
	Interest Rates and Interest Differential
	a.        Average Balance Sheets	25
	b.        Analysis of Net Interest Earnings	26
	c.        Rate Volume Analysis of Changes in            Interest Income and Expense	27

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Statistical Information – continued

2.	Investment Portfolio
	a.	Book Value of Investments         Book values of investment securities at December 31, 2008         and 2007 are as follows (in thousands):
			December 31, 2008		December 31, 2007
		Securities held to maturity:
		Obligations of states and political subdivisions	$	320	$	664
		Total held to maturity	$	320	$	664
		Securities available for sale :
		U.S. Treasury securities and     obligations of U.S. Government     corporations and agencies	$	26,888	$	26,477
		Obligations of states and political subdivisions		18,523		22,153
		Corporate debt securities		1,322		—
		Mortgage-backed securities		65,076		57,001
		Equity Securities		237		352
		Total available for sale		112,046		105,983
		Total	$	112,366	$	106,647
	b.	Maturity Schedule of Investments				29
	c.	Securities of Issuers Exceeding 10% of Stockholders’ Equity				N/A
		The Corporation does not have any securities of Issuers, other than U.S. Government and U.S. Government agencies and corporations, which exceed 10% of Stockholders’ Equity.
3.	Loan Portfolio
	a.	Types of Loans				12
	b.	Maturities and Sensitivities of Loans to Changes in
		Interest Rates				30
	c.	Risk Elements				31
		1.        Nonaccrual, Past Due and Restructured Loans				31
		2.        Potential problem loans				31
		3.        Foreign outstandings				N/A
		4.        Loan concentrations				14
	d.	Other Interest Bearing Assets				N/A
4.	Summary of Loan Loss Experience					12, 32, 33
5.	Deposits
	a.	Breakdown of Deposits by Categories,
		Average Balance and Average Rate Paid				25
	b.	Other Deposit categories				N/A
	c.	Foreign depositors with deposits in domestic offices				N/A
	d.	Maturity Schedule of Time Certificates of
		Deposit and Other Time Deposits of $100,000 or more				13

9

Statistical Information – continued

	e.	Maturity Schedule of Foreign Time Certificates of Deposit and Other Time Deposits of $100,000 or more	N/A
6.	Return on Equity and Assets		23
7.	Short-Term Borrowings		14, 33

Item 1A     Risk Factors

You should carefully review and consider the following risk factors, together with the other information provided in this Annual Report on Form 10-K.

Due to Increased Competition, the Bank May Not Be Able to Attract and Retain Banking Customers At Current Levels Adversely affecting Company Profits.

If, due to competition from competitors in the Bank’s market areas, the Bank is unable to attract new and retain current customers, loan and deposit growth could decrease causing the Bank’s results of operations and financial condition to be negatively impacted. The Bank faces competition from the following:

1. local, regional and national banks;

2. savings and loans;

3. internet banks;

4. credit unions;

5. insurance companies;

6. finance companies; and

7. brokerage firms serving the Company’s market areas.

The Bank’s Lending Limit May Prevent It from Making Large Loans.

In the future, the Bank may not be able to attract larger volume customers because the size of loans that the Bank can offer to potential customers is less than the size of the loans that many of the company’s larger competitors can offer. We anticipate that our lending limit will continue to increase proportionately with the Bank’s growth in earnings; however, the Bank may not be able to successfully attract or maintain larger customers.

Certain Loans That the Bank Makes Are Riskier than Loans for Real Estate Lending.

The Bank makes loans that involve a greater degree of risk than loans involving residential real estate lending. Commercial business loans may involve greater risks than other types of lending because they are often made based on varying forms of collateral, and repayment of these loans often depends on the success of the commercial venture. Consumer loans may involve greater risk because adverse changes in borrowers’ incomes and employment after funding of the loans may impact their abilities to repay the loans.

The Bank’s loan portfolio at December 31, 2008, consists of the following:

Type of Loan	Percentage of Portfolio
Residential Real Estate	35.8%
Commercial, Principally Real Estate Secured	43.0%
Consumer	11.3%

The Bank Is Subject to Interest Rate Risk.

Aside from credit risk, the most significant risk resulting from the Bank’s normal course of business, extending loans and accepting deposits, is interest rate risk. If market interest rate fluctuations cause the bank’s cost of funds to increase faster than the yield of its interest-earning assets, then its net interest income will be reduced. The Bank’s results of operations depend to a large extent on the level of net interest income, which is the difference between income from interest-earning assets, such as loans and investment securities, and interest expense on interest-bearing liabilities, such as deposits and borrowings. Interest rates are highly sensitive to many factors that are beyond the company’s control, including general economic conditions and the policies of various governmental and regulatory authorities.

10

Item 1A     Risk Factors – Continued

The Company and the Bank rely heavily on their management team, and the unexpected loss of key management may adversely affect operations.

The success of the Company and the Bank to date has been influenced strongly by their ability to attract and to retain senior management experienced in banking and financial services. The ability to retain executive officers and the current management teams will continue to be important to the successful implementation of their strategies. Neither the Company nor the Bank have employment or non-compete agreements with any of these key employees. The unexpected loss of services of any key management personnel, or the inability to recruit and retain qualified personnel in the future, could have an adverse effect on business and financial results.

An Economic Slowdown in the Bank’s Market Area Could Hurt Our Business.

An economic slowdown in the Bank’s market areas could hurt our business. An economic slowdown could have the following consequences:

• Loan delinquencies may increase;

• Problem assets and foreclosures may increase;

• Demand for the products and services of the company may decline; and

• Collateral (including real estate) for loans made by the company may decline in value, in turn reducing customers’ borrowing power and making existing loans less secure.

The Company and the Bank are Extensively Regulated.

The operations of the Company are subject to extensive regulation by federal, state and local governmental authorities and are subject to various laws and judicial and administrative decisions imposing requirements and restrictions on them. Policies adopted or required by these governmental authorities can affect the company’s business operations and the availability, growth and distribution of the company’s investments, borrowings and deposits. Proposals to change the laws governing financial institutions are frequently raised in Congress and before bank regulatory authorities. Changes in applicable laws or policies could materially affect the Company’s business, and the likelihood of any major changes in the future and their effects are impossible to determine.

The Bank’s Allowance for Loan Losses May Not Be Sufficient.

In the future, the Bank could experience negative credit quality trends that could head to a deterioration of asset quality. Such deterioration could require the Bank to incur loan charge-offs in the future and incur additional loan loss provision, both of which would have the effect of decreasing earnings. The Bank maintains an allowance for possible loan losses, which is a reserve established through a provision for possible loan losses charged to expense that represents management’s best estimate of probable losses that have been incurred within the existing portfolio of loans. Any increases in the allowance for possible loan losses will result in a decrease in net income and, possibly, capital, and may have a material adverse effect on the Company’s financial condition and results of operation.

Shares of the Company’s Common Stock Are Not Insured.

Neither the Federal Deposit Insurance Corporation nor any other governmental agency insures the shares of the Company’s common stock. Therefore, the value of your shares in the Company is based on their market value and may decline.

The Company’s Ability to Pay Dividends Depends Primarily on Dividends Received from the Bank, which is Subject to Regulatory Limits.

The ability of the Company, being a bank holding company, to pay dividends depends on its receipt of dividends from the Bank. Dividend payments from the Bank are subject to legal and regulatory limitations, generally based on net profits and retained earnings, imposed by the various banking regulatory agencies. The ability of the Bank to pay dividends is also subject to its profitability, financial condition, capital expenditures and other cash flow requirements. The payment of dividends is permitted but temporarily subject to the prior approval of the OCC and there is no assurance that the Bank will be permitted to pay dividends in the future. The Corporation’s failure to pay dividends on its common stock could have a material adverse effect on the market price of its common stock.

Customers May Default on the Repayment of Loans.

The Bank’s customers may default on the repayment of loans, which may negatively impact the Company’s earnings due to loss of principal and interest income. Increased operating expenses may result from the allocation of management time and resources to the collection and work-out of the loan. Collection efforts may or may not be successful causing the Bank to write off the loan or repossess the collateral securing the loan which may or may not exceed the balance of the loan.

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Item 1A     Risk Factors – Continued

The Company’s Controls and Procedures May Fail or Be Circumvented.

Management regularly reviews and updates the Company’s internal controls, disclosure controls and procedures, and corporate governance policies and procedures. Any system of controls, no matter how well designed and operated, is based in part on certain assumptions and can provide only reasonable, not absolute, assurances that the objectives of the system are met. Any failure or circumvention of the Company’s controls and procedures or failure to comply with regulations related to controls and procedures could have a material adverse effect on the Company’s business, results of operations and financial conditions.

Item 1B     Unresolved Staff Comments

Not Applicable

Item 2     Properties

The Holding Company and its subsidiary bank owned and/or leased property as of December 31, 2008 as described below.

Progressive Bank, N.A. presently owns the land and building at 1701 Warwood Avenue, Wheeling, West Virginia where the bank’s Warwood offices are located. The two-story building has been totally renovated and has approximately 15,500 square feet in total area. The office has three drive-in facilities adjacent to the rear of the building and customer parking to the north side of the building. A lot on North Seventeenth Street, southwest of the building, is used for employee parking. A two-story home located at 1709 Warwood Avenue was purchased in 1985 for the purpose of providing rental income and additional employee parking. Progressive Bank, N.A. also owns a lot adjacent to the bank for future expansion.

Progressive Bank, N.A. also owns the building and approximately 50% of the land at 875 National Road, Wheeling, West Virginia at which the Woodsdale branch is located. The Woodsdale branch has expanded its one-story building to a total of approximately 6,050 square feet in area in 1994. This expansion was accomplished by the purchase of approximately 6,600 square feet of land located immediately west of the existing bank office property in 1993. The office has a four lane drive-in facility at the rear of the building and one drive-in automatic teller machine in the front of the building. The remaining portion of the land is leased to the bank until 2013 with 1 ten-year option to renew.

Progressive Bank, N.A. has a lease agreement to rent property for use as a banking premises known as the “Bethlehem branch office.” The Bethlehem branch office is located at 1090 East Bethlehem Boulevard, Wheeling, West Virginia. The office is a one story building with approximately 3400 square feet of area and has four drive-in lanes. The lease is for a five year term commencing February 1, 2002, with eight successive five year options to renew.

Progressive Bank, N.A. also owns the Wellsburg branch office located at 744 Charles Street, Wellsburg, West Virginia. This office is a 3 story building with over 8,400 square feet of total area. This office includes an on-premises drive-in facility.

Progressive Bank, N.A. owns the building and land located at 809 Lafayette Avenue, Moundsville, West Virginia. The office is a two-story building with approximately 7,430 square feet of total area. This office also has a three lane drive in facility.

Progressive Bank, N.A. owns the New Martinsville branch office located at 425 Third Street, New Martinsville, West Virginia. The office is a single story brick branch bank facility with approximately 3,642 square foot of area. This office also has a two lane drive-in at the rear of the facility.

Progressive Bank, N.A. owns the building and land for the Bellaire branch office located at 426 34th Street, Bellaire, Ohio, including its drive-in facilities at the rear of the building. The bank office is housed in a one-story building, which includes office space in its basement for a total of 4,500 square feet of office area. The bank also owns a lot adjacent to the parking lot.

Progressive Bank, N.A. owns the building and the land for its full-service banking facility in Buckhannon, West Virginia. The Buckhannon office is a one story building with approximately 1,760 square feet of office area. The office has a three lane drive-in facility located at the rear of the building.

Progressive Bank, N.A. has a lease agreement for the building for its Weston branch office. The Weston branch office is located at #10 Market Square Shopping Center, Weston, West Virginia. This lease is for a period of two years commencing April 1, 2006, with two successive two year options to renew followed by two successive five year renewal options.

Progressive Bank, N.A. has a lease agreement for the building used for executive office space. The office space is located at 2B Elm Grove Crossing, Wheeling, West Virginia. This lease is for a period of one year commencing January 1, 2007, with two successive one year options to renew.

Progressive Bank, N.A. owns a tract of real estate of approximately 1.64 acres situated on the waters of Finks run and West Virginia State Route 20, in Buckhannon, West Virginia. The property was purchased and is being held for future banking office expansion.

Progressive Bank, N.A. also owns a tract of land with a building thereon fronting on South Locust Street in the City of Buckhannon, WV. The property was purchased and is being held for future banking office expansion.

The Holding Company does not have any encumbrances or capital leases on its personal property.

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Item 3     Legal Proceedings

The nature of the business of the Holding Company’s subsidiary generates a certain amount of litigation involving matters arising in the ordinary course of business. The Company is unaware of any litigation other than ordinary routine litigation incidental to the business of the Company, to which it or its subsidiary is a party or of which any of their property is subject.

Item 4     Submission of Matters to Vote of Security Holders

No matters were submitted to a vote of security holders during the fourth quarter of the fiscal year covered by this report.

PART II

Item 5     Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

On February 13, 1995, the Holding Company’s common stock was filed and became effective under section 12(g) of the Securities and Exchange Act of 1934. On February 21, 1995, the Holding Company was approved for listing its securities on the American Stock Exchange’s Emerging Company Marketplace and began trading under the symbol FWV.EC on March 8, 1995. The Holding Company subsequently filed Form 8A to register its common stock under Section 12(b) of the Securities and Exchange Act of 1934 which became effective on March 1, 1995. On June 16, 1995, the Holding Company was approved for listing its securities on the American Stock Exchange primary list and began trading under the symbol FWV on June 20, 1995.

As of December 31, 2008, the Holding Company had 281 registered shareholders of record who collectively held 1,589,411 of the 2,000,000 authorized shares of the Holding Company, par value $5.00 per share. The Holding Company held 10,000 treasury shares.

The following table sets forth the high and low sales prices of the common stock of the Holding Company for each quarter in 2008 and 2007.

		First Quarter		Second Quarter		Third Quarter		Fourth Quarter
2008	High	$	17.90	$	15.90	$	15.96	$	15.30
	Low	$	14.20	$	14.50	$	13.45	$	12.80
2007	High	$	20.90	$	20.30	$	19.50	$	17.55
	Low	$	19.50	$	19.15	$	17.25	$	13.70

Dividends

The ability of the Holding Company to pay dividends will depend on the earnings of its subsidiary bank and its financial condition, as well as other factors such as market conditions, interest rates and regulatory requirements. Therefore, no assurances may be given as to the continuation of the Holding Company’s ability to pay dividends or maintain its present level of earnings. See Note 18 of the Notes to Consolidated Financial Statements appearing at Page 17 of the Annual Report to Shareholders for the year ended December 31, 2008, included in this report as Exhibit 13.1, and incorporated herein by reference, for a discussion on subsidiary dividends.

The Holding Company has paid regular quarterly cash dividends since it became a bank holding company in 1975. Total dividends declared and paid by the Holding Company in 2008, 2007 and 2006 were $.74, $.73, and $.73, respectively, per share each year.

The following table sets forth annual dividend, net income and ratio of dividends to net income of the Holding Company for 2008, 2007 and 2006.

	DIVIDEND HISTORY OF HOLDING COMPANY (per share)
	Dividend	Net Income	Ratio – Dividends to Net Income
2008	$        .74	$        1.39	53.2%
2007	$        .73	$        1.28	57.0%
2006	$        .73	$        1.35	54.1%

The common stock of the Holding Company is not subject to any redemption provisions or restrictions on alienability. The common stock is entitled to share pro rata in dividends and in distributions in the event of dissolution or liquidation. There are no options, warrants, privileges or other rights with respect to Holding Company stock at the present time, nor are any such rights proposed to be issued.

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Performance Graph

Period Ending

Index	12/31/03	12/31/04	12/31/05	12/31/06	12/31/07	12/31/08
First West Virginia Bancorp, Inc.	100.00	101.18	84.81	90.00	70.30	68.12
Russell 2000 Index	100.00	118.33	123.72	146.44	144.15	95.44
SNL < $500M	100.00	115.43	122.21	128.39	104.24	60.51

Set forth above is a line graph prepared by SNL Securities L.C. (“SNL”), which compares the percentage change in the cumulative total shareholder return on the Company’s common stock against the cumulative total shareholder return on stocks included on the SNL Index for banks with assets under $500 million and the Russell 2000 Index for the period December 31, 2003 through December 31, 2008. An initial investment of $100.00 (Index value equals $100.00) and ongoing dividend reinvestment is assumed throughout.

Item 6     Selected Financial Data

Selected Financial Data on page 23 of the Annual Report to Shareholders of First West Virginia Bancorp, Inc. for the year ended December 31, 2008, included in this report as Exhibit 13.1, is incorporated herein by reference.

Item 7     Management’s Discussion and Analysis of Financial Condition and Results of Operations

Management’s Discussion and Analysis of Financial Condition and Results of Operations on Pages 24 through 36 of the Annual Report to Shareholders of First West Virginia Bancorp, Inc. for the year ended December 31, 2008, included in this report as Exhibit 13.1, is incorporated herein by reference.

Item 7A    Quantitative and Qualitative Disclosures About Market Risk

The information required by Item 7A is noted in part in Management’s Discussion and Analysis of Financial Condition and Results of Operations – Interest Rate Risk on pages 34 through 35 of the Annual Report to Shareholders of First West Virginia Bancorp, Inc. for the year ended December 31, 2008, included in this report as Exhibit 13.1, is incorporated herein by reference.

Item 8    Financial Statements and Supplementary Data

The report of independent registered public accounting firm and consolidated financial statements, included on pages 2 through 22 of the Annual Report to Shareholders of First West Virginia Bancorp, Inc. for the year ended December 31, 2008, included in this report as Exhibit 13.1, are incorporated herein by reference.

Selected quarterly financial data included on page 36 of the Annual Report to Shareholders of First West Virginia Bancorp, Inc. for the year ended December 31, 2008, included in this report as Exhibit 13.1, is incorporated herein by reference.

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Item 9     Changes In and Disagreements with Accountants on Accounting and Financial Disclosure

Not Applicable

Item 9A     Controls and Procedures

Evaluation of Disclosure Controls and Procedures

The Company’s management has performed its evaluation of the effectiveness of the design and operation of the Company’s disclosure controls and procedures pursuant to Exchange Act Rule 13a-15. Based upon that evaluation, the Chief Executive Officer and the Chief Financial Officer have concluded that the Company’s disclosure controls and procedures are effective, as of the end of the period covered by this report, in timely alerting them to material information as required to be included in the Company’s periodic Securities Exchange Commission filings.

This annual report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the Company to provide only management’s report in this annual report.

There were no changes in the Company’s internal control over financial reporting that occurred during the Company’s fiscal quarter ended December 31, 2008 that has materially affected, or is reasonably likely to materially affect the Company’s internal control over financial reporting.

Management’s Report on Internal Control Over Financial Reporting

The Company’s management is responsible for the preparation and fair presentation of the consolidated financial statements and the related financial information included in this annual report. The financial statements and the information related to those statements have been prepared in conformity with accounting principles generally accepted in the United States of America and reflect management’s judgments and estimates concerning effects of events and transactions that are accounted for or disclosed.

The Company’s management is also responsible for establishing and maintaining adequate internal control over financial reporting. The Company’s internal control over financial reporting includes those policies and procedures that pertain to the Company’s ability to record, process, summarize and report reliable financial data. Management recognizes that there are inherent limitations in the effectiveness of any internal control over financial reporting, including the possibility of human error and the circumvention or overriding of internal control. Accordingly, even effective internal control over financial reporting can provide only reasonable assurance with respect to financial statement preparation. Further, because of changes in conditions, the effectiveness of internal control over financial reporting may vary over time.

In order to ensure that the Company’s internal control over financial reporting is effective, management is required to evaluate, with the participation of the Company’s principal executive and principal financial officers, the effectiveness of the Company’s internal control over financial reporting as of the end of each fiscal year and did so most recently for its financial reporting as of December 31, 2008. Management’s assessment of the effectiveness of the Company’s internal control over financial reporting was based on criteria for effective internal control over financial reporting described in Internal Control Integrated Framework issued by the Committee of Sponsoring Organizations (COSO) of the Treadway Commission. Based on this assessment, management has concluded theat the internal control over financial reporting was effective as of December 31, 2008. This annual report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the Company to provide only management’s report in this annual report.

The Board of Directors, acting through its Audit Committee, is responsible for the oversight of the Company’s accounting policies, financial reporting and internal control. The Audit Committee of the Board of Directors is comprised entirely of outside directors who are independent of management. The Audit Committee is responsible for the appointment and compensation of the independent auditor and approves decisions regarding the appointment or removal of the Company’s Internal Auditor. It meets periodically with management, the independent auditors and the internal auditors to ensure that they are carrying out their responsibilities. The Audit Committee is also responsible for performing an oversight role by reviewing and monitoring the financial, accounting and auditing procedures of the Company in addition to reviewing the Company’s financial reports. The independent auditors and the internal auditor have full and unlimited access to the Audit Committee, with or without management, to discuss the adequacy of internal control over financial reporting, and any other matter which they believe should be brought to the attention of the Audit Committee.

Item 9B     Other Information

Not Applicable

15

PART III

Item 10 Directors, Executive Officers and Corporate Governance

(a) Directors of the Registrant

The information required by Item 10 of FORM 10-K related to Directors of the Registrant appears in the First West Virginia Bancorp, Inc.’s 2009 Proxy Statement dated March 17, 2009 for Annual Meeting of Stockholders to be held April 14, 2009, included in this report as Exhibit 99, is incorporated herein by reference.

(b) Executive Officers of the Registrant

The following table sets forth selected information about the principal officers of the Holding Company.

TABLE

Name	Age	All Positions with Holding Company and Subsidiary(1) (2)
Sylvan J. Dlesk	70	Chairman of the Board of the Holding Company since 2004; President & CEO of the Company since June 2006; Interim President and Chief Executive Officer of the Company from April 2005 to June 2006; Vice Chairman of the Board of the Holding Company 2000-2004; President and CEO since June 2006; Interim President and Chief Executive Officer of Progressive Bank, N.A. from April 2005 to February 2006; Director of Holding Company and Director of Progressive Bank N.A. since 1988.
Laura G. Inman	67	Vice Chairman of the Board of the Holding Company since 2004; Chairman of the Board of the Holding Company 1998-2004; Vice Chairman of the Board of the Holding Company 1995-1998; Senior Vice President of the Holding Company 1993-1995; Senior Vice President of Progressive Bank, N.A. from 1993-2001; Director of the Holding Company and Director of Progressive Bank,N.A. from 1993.
Francie P. Reppy	48	Executive Vice President, Chief Administrative Officer, Chief Financial Officer and Treasurer of the Holding Company since 2005; Senior Vice President, Chief Financial Officer and Treasurer of the Holding Company 2004-2005; Senior Vice President and Chief Financial Officer of the Holding Company 2000-2004; Controller of the Holding Company 1992-2000; Executive Vice President, Chief Administrative Officer, and Chief Financial Officer since 2005; Senior Vice President, Chief Financial Officer and Cashier of Progressive Bank, N.A. 2004- 2005; Senior Vice President and Chief Financial Officer of Progressive Bank, N.A. 2000-2004; Controller of Progressive Bank, N.A. 1992-2000.
Brad D. Winwood	52	Vice President of the Holding Company since 2008; Senior Vice President, Senior Accounting, Operations Officer and Investment Officer of Progressive Bank, N.A. since 2007; Senior Vice President, Senior Accounting and Investment Officer of Progressive Bank, N.A. from 2005 to 2007; Vice President, Senior Accounting Officer of Progressive Bank, N.A. from 2003 to 2005; Vice President, of Progressive Bank, N.A. from 1993 to 2003.

16

PART III

(b) Executive Officers of the Registrant- continued

Connie R. Tenney 54 Vice President of the Holding Company since 1996; Senior Vice President of Progressive Bank, N.A. 2003; President, Chief Executive Officer, Cashier and Secretary of Progressive Bank, N.A.- Buckhannon 1995-2003; Director of Progressive Bank, N.A. - Buckhannon 1990-2003; Executive Vice President, Cashier and Secretary of Progressive Bank, N.A.- Buckhannon 1990-1995; Cashier and Secretary 1986-1990  

Notes:

⁽¹⁾ With the exception of Sylvan J. Dlesk, each of the executive officers has been employed as an officer or an employee for the Company for more than 5 years. Mr. Dlesk serves as President and Chief Executive Officer of the Company; Chairman of the Board of the Company and as a Director of the Bank, having been affiliated with the Company since 1988.

⁽²⁾ With the exception of Connie R. Tenney, all the principal officers of the Holding Company reside in or near Wheeling, West Virginia. Connie R. Tenney resides near Buckhannon, West Virginia.

Item 11     Executive Compensation

The information required by Item 11 of FORM 10-K related to Executive Compensation appears in the First West Virginia Bancorp, Inc.’s 2009 Proxy Statement dated March 17, 2009 for Annual Meeting of Stockholders to be held April 14, 2009, included in this report as Exhibit 99, is incorporated herein by reference.

Item 12     Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The information required by Item 12 of FORM 10-K appears in the First West Virginia Bancorp, Inc.’s 2009 Proxy Statement dated March 17, 2009 for Annual Meeting of Stockholders to be held April 14, 2009, included in this report as Exhibit 99, is incorporated herein by reference.

Item 13     Certain Relationships and Related Transactions, and Director Independence

The information required by Item 13 of FORM 10-K appears in the First West Virginia Bancorp, Inc.’s 2009 Proxy Statement dated March 17, 2009 for Annual Meeting of Stockholders to be held April 14, 2009, included in this report as Exhibit 99, is incorporated herein by reference and in Note 12 of the Notes to Consolidated Financial Statements appearing at Page 15 of the Annual Report to Shareholders for the year ended December 31, 2008, included in this report as Exhibit 13.1, and incorporated herein by reference.

The Company follows a written policy for the granting of loans to directors and executive officers. This policy is as follows: With the exception of the items specifically identified below, all loans to Board of Directors and Executive Officers will be reported to the subsidiary bank board in a timely manner. Credit extensions and terms for any of the above will be: (1) made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions by the bank for those who are not recognized as any of the above mentioned individuals and (2) does not involve more than the normal risk of repayment of present other unfavorable features:

1. Any executive officer, director, or principal shareholder requesting a loan is to submit a written application containing the purpose of the credit, and/or a financial statement depending upon the nature of the credit to the bank.

2. Loans to an Executive Officer are permitted in an aggregate amount that equals the higher of $25,000 or 2.5% of the bank’s capital. However, in no event shall the aggregate outstanding amount of these loans exceed $100,000.00.

17

Executive Officers have been defined by the Board of Directors to include Chairman, President & CEO, Executive Vice President and COO, Senior V.P. & CFO.

3. Extensions of credit shall not be made to any of the bank’s Directors, or principal shareholders or to any related interest of that person in an amount that when aggregated with the amount of all other extensions of credit to that person and all related interests of that person exceeds the higher of $25,000 or 5% of the bank’s capital, and unimpaired surplus unless:

(1) The extension of credit or line of credit has been approved in advance by a majority of the entire Board of Directors, and

(2) The interested party has abstained from participating directly or indirectly in the vote.

(3) All loans exceeding the aggregate of $500,000 must be approved according to steps 1 and 2. Payment of an overdraft of an executive officer or director is not permitted unless the funds are made in accordance with 1) a written, preauthorized, interest bearing extension of credit plan that specifies a method of repayment or, 2) a written preauthorized transfer of funds from another account of the account holder at the bank. This prohibition does not apply to payment of inadvertent overdrafts on an account in an aggregate amount of $1,000 or less provided 1) the account is not overdrawn for more than 5 business days, and 2) the bank assess the usual fee charged any other customer of the bank in similar circumstances.

4. There are no limits on loans to Executive Officers of the Bank when the loan is for the purpose of educating dependent children or to purchase, refinance (or improve) that Officer’s principal residence. These loans, of course, must comply with all other bank policy, may not be at preferential rates and must be approved by the Board of Directors if they exceed the limits outlined in item (3) above. Loans to executive officers will be made subject to the condition that the loan will, at the option of the bank, become due and payable at any time that the officer is indebted to this and other financial institutions in an aggregate amount greater than the amount specified in the preceding paragraph.

5. Any borrowing from a financial institution (this bank, other banks, savings and loans, etc.) by an executive officer of this bank, that is in excess of the established limits, shall be immediately reported to the President, who will then report these loans to the Board of Directors. This report to the President will be in writing and will include the lender’s name, the date and amount of each loan, the security (if any), and the purpose for which the proceeds have been or will be used.

6. In compliance with Regulation O, the total of all loans to Executive Officers, Directors, Principal Shareholders and their related interest of the bank, holding companies and subsidiaries of the holding company, cannot exceed the amount of the bank’s unimpaired capital and unimpaired surplus. This limit will be established by adding the total equity capital shown on the bank’s most recently filed consolidated report of condition and authorized subordinated notes and debentures, and the valuation reserve.

The Company also requires all directors to report related interests and to abstain prior to approval of any extensions of credit which are subject to board approval. Board approval is required for loans secured by real estate in excess of $300,000, non-real estate secured loans in excess of $150,000 and unsecured loans in excess of $25,000 to any related borrower. This is evidenced by the director signing a form prior to the approval of such loans. This reporting requirement was at the direction of the Corporate Governance, Human Resource and Compensation Committee.

Fees for services to the Company that are provided by any Director are subject to approval by the Board of Directors of the Company or its subsidiary.

Item 14     Principal Accountant Fees and Services

The information required by Item 14 of FORM 10-K appears in the First West Virginia Bancorp, Inc.’s 2009 Proxy Statement dated March 17, 2009 for Annual Meeting of Stockholders to be held April 14, 2009, included in this report as Exhibit 99, is incorporated herein by reference.

18

Item 15    Exhibits and Financial Statement Schedules

(a)     Financial Statements Filed; Financial Statement Schedules

The following consolidated financial statements of First West Virginia Bancorp, Inc. and its subsidiary, included in the Annual Report to Shareholders for the year ended December 31, 2008, are incorporated by reference in Item 8:

	Exhibit 13.1 Page Number
Report of Independent Registered Public Accounting Firm	22
Consolidated Balance Sheet (December 31, 2008 and December 31, 2007)	2
Consolidated Statements of Income (Years ended December 31, 2008, 2007 and 2006)	3
Consolidated Statements of Changes in Stockholders’ Equity (Years ended December 31, 2008, 2007 and 2006)	4
Consolidated Statements of Cash Flows (Years ended December 31, 2008, 2007 and 2006)	5
Notes to Consolidated Financial Statements (Years ended December 31, 2008, 2007 and 2006)	6-21

(b)    Reports on Form 8-K

On November 12, 2008 a report on Form 8-K was filed which contained a press release dated November 10, 2008 that reported the earnings of First West Virginia Bancorp, Inc. for the third quarter ended September 30, 2008.

(c)    Exhibits

The exhibits listed in the Exhibit Index on page 21 of this FORM 10-K are filed herewith or incorporated by reference.

19

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

First West Virginia Bancorp, Inc.   (Registrant)
By:	/s/    Sylvan J. Dlesk
	Sylvan J. Dlesk Chairman/President and Chief Executive Officer/Director
Date:	March 24, 2009

Pursuant to the requirements of the Securities Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

Signatures	Title	Date
/s/    Sylvan J. Dlesk         Sylvan J. Dlesk	Chairman, President and Chief Executive Officer, Director	March 24, 2009
/s/    Francie P. Reppy         Francie P. Reppy	Executive Vice President, Chief Administrative Officer Chief Financial Officer, Treasurer	March 24, 2009
/s/    Nada E. Beneke         Nada E. Beneke	Director	March 24, 2009
/s/    Gary W. Glessner         Gary W. Glessner	Director	March 24, 2009
/s/    R. Clark Morton         R. Clark Morton	Director	March 24, 2009
/s/    William G. Petroplus         William G. Petroplus	Director	March 24, 2009
/s/    Thomas L. Sable         Thomas L. Sable	Director	March 24, 2009

20

EXHIBIT INDEX

The following exhibits are filed herewith and/or are incorporated herein by reference.

Exhibit Number	Description
3.1	Certificate and Articles of Incorporation of First West Virginia Bancorp, Inc. Incorporated herein by reference.
3.2	Bylaws of First West Virginia Bancorp, Inc. Incorporated herein by reference.
10.3	Lease dated July 20, 1993 between Progressive Bank, N.A., formerly known as “First West Virginia Bank, N.A.”, and Angela I. Stauver. Incorporated herein by reference.
10.4	Lease dated November 14, 1995 between Progressive Bank, N.A. - Buckhannon and First West Virginia Bancorp, Inc. and O. V. Smith & Sons of Big Chimney, Inc. Incorporated herein by reference.
10.5	Lease dated May 12, 2001 between Progressive Bank, N.A. and Sylvan J. Dlesk and Rosalie J. Dlesk doing business as Dlesk Realty & Investment Company. Incorporated herein by reference.
10.6	Lease dated January 1, 2005 between Progressive Bank, N.A. and Elm Grove Properties LLC. Incorporated herein by reference.
11.1	Statement regarding computation of per share earnings. Filed herewith and incorporated herein by reference.
12.1	Statement regarding computation of ratios. Filed herewith and incorporated herein by reference.
13.1	Annual Report to Shareholders, as listed in Part II, Item 8. Filed herewith and incorporated herein by reference.
13.2	Management’s Report on Financial Statements. Filed herewith and incorporated herein by reference.
14.1	Code of Ethics. Filed herewith and incorporated herein by reference.
21.1	Subsidiaries of the Holding Company. Filed herewith and incorporated herein by reference.
23	Consent of S.R. Snodgrass, A.C. Filed herewith and incorporated herein by reference.
31	Rule 13a-14(a) / 15d/14(a) Certifications - Certification of Chief Executive Officer pursuant to section 302 of the Securities and Exchange Act of 1934. Filed herewith and incorporated herein by reference.
31.1	Rule 13a-14(a) / 15d/14(a) Certifications - Certification of Chief Financial Officer pursuant to section 302 of the Securities and Exchange Act of 1934. Filed herewith and incorporated herein by reference.
32	Certification pursuant to 18 U.S.C. §1350,as adopted pursuant to section 906 of the SARBANES-OXLEY ACT of 2002. Filed herewith and incorporated herein by reference.
99	Proxy statement for the Annual Shareholders meeting to be held April 14, 2009. Filed herewith and incorporated herein by reference.

21

EX-11.1

EXHIBIT 11.1

Statement Regarding Computation of Per Share Earnings

Computation of Earnings Per Share

The following formula was used to calculate the earnings per share, page 3, Consolidated Statements of Income for the year ended December 31, 2008, 2007 and 2006, included in this report as Exhibit 13.1.

(Calculation)

Net Income / Weighted average shares of common stock outstanding for the period =    Earnings Per Share

	December 31,
	2008	2007	2006
Weighted Average
Shares Outstanding	1,589,411	1,589,411	1,589,411
Net Income	$2,205,511	$2,035,962	$2,143,824
Per Share Amount	$1.39	$1.28	$1.35

EX-12.1

EXHIBIT 12.1

Statement Regarding Computation of Ratios

Computation of Ratios

The following formulas were used to calculate the ratios in Financial Information and Supplementary Data, page 23, Selected Financial Data for the years ended December 31, 2008, 2007, 2006, 2005 and 2004, included in this report as Exhibit 13.1.

(Calculation)

Net Income / Weighted average shares of common stock outstanding for the period

=    Earnings Per Share

	December 31,
	2008	2007	2006	2005	2004
Net Income	$2,205,511	$2,035,962	$2,143,824	$2,262,265	$2,637,325
Weighted Average
Shares Outstanding	1,589,411	1,589,411	1,589,411	1,589,411	1,589,411
Per Share Amount	$1.39	$1.28	$1.35	$1.42	$1.66

(Calculation)

Cash dividends/ Shares issued

=    Cash dividends declared per share

	December 31,
	2008	2007	2006	2005	2004
Cash dividends	$1,173,201	$1,161,616	$1,161,616	$1,161,616	$1,161,616
Shares issued	1,589,411	1,589,411	1,589,411	1,589,411	1,589,411
Per Share Amount	$.74	$.73	$.73	$.73	$.73

(Calculation)

Stockholders’ Equity/ Shares issued

=    Book Value per share

	December 31,
	2008	2007	2006	2005	2004
Stockholders’ Equity	$28,736,558	$25,214,599	$25,276,954	$23,958,629	$23,953,036
Shares issued	1,589,411	1,589,411	1,589,411	1,589,411	1,589,411
Per Share Amount	$18.08	$17.12	$15.90	$15.07	$15.07

(Calculation)

Net Income / Total average assets

=    Return on Average Assets

	(In thousands)
	December 31,
	2008			2007			2006			2005			2004
Net Income	$	2,206		$	2,036		$	2,144		$	2,262		$	2,637
Total Average Assets	$	258,275		$	253,930		$	262,946		$	270,500		$	284,930
Return on Average Assets		.85	%		.80	%		.82	%		.84	%		.93	%

(Calculation)

Net Income / Average stockholders’ equity

=    Return on Average Equity

	(In thousands)
	December 31,
	2008			2007			2006			2005			2004
Net Income	$	2,206		$	2,036		$	2,144		$	2,262		$	2,637
Total Average Stockholders’ Equity	$	27,295		$	26,223		$	25,416		$	24,409		$	23,092
Return on Average Equity		8.08	%		7.76	%		8.44	%		9.27	%		11.42	%

(Calculation)

Average Equity / Average stockholders’ equity

=    Average Equity to Average Assets

	(In thousands)
	December 31,
	2008			2007			2006			2005			2004
Total Average Stockholders’ Equity	$	27,295		$	26,223		$	25,416		$	24,409		$	23,092
Total Average Assets	$	258,275		$	253,930		$	262,946		$	270,500		$	284,930
Average Equity to Average Assets		10.57	%		10.33	%		9.67	%		9.02	%		8.10	%

(Calculation)

Cash dividends per share / Net income per share

=    Dividend Payout Ratio

	December 31,
	2008			2007			2006			2005			2004
Cash dividends
per share	$	.74		$	.73		$	.73		$	.73		$	.73
Net income per share	$	1.39		$	1.28		$	1.35		$	1.42		$	1.66
Dividend Payout Ratio		53.24	%		57.03	%		54.07	%		51.41	%		43.98	%

(Calculation)

Loans/ Total deposits

=    Loan to Deposit Ratio

	December 31,
	2008			2007			2006			2005			2004
Loans	$	124,634,785		$	121,739,193		$	120,709,320		$	135,214,258		$	154,331,037
Total deposits	$	206,385,267		$	203,126,831		$	210,408,415		$	218,817,301		$	236,171,007
Loan to Deposit Ratio		60.39	%		59.93	%		57.37	%		61.79	%		65.35	%

EX-13.1

EXHIBIT 13.1

P.O. Box 6671

Wheeling, WV 26003

TO OUR SHAREHOLDERS:

I am pleased for the opportunity to present you with the financial performance contained in the 2008 Annual Report of First West Virginia Bancorp, Inc. Consolidated net income for 2008 was $2,205,511 or $1.39 per share, an increase of $169,549 or 8.3% as compared to $2,035,962 or $1.28 per share a year earlier. Total assets for the Holding Company increased 2.0% over the prior year to $258,163,637 at December 31, 2008 as compared to $253,186,790 at December 31, 2007. Total stockholders’ equity increased 5.6% to $28,736,558 as compared to $27,214,599 reported in 2007. The book value per share was $18.08 at December 31, 2008 as compared to $17.12 a year earlier.

The Board of Directors declared and paid cash dividends of $.74 and $.73 per share during 2008 and 2007, respectively. Additionally, on May 13, 2008 the Board of Directors declared a 4% common stock dividend payable to shareholders of record as of October 1, 2008.

This year it is with deep sorrow that I report the passing of Thomas A. Noice, director of First West Virginia Bancorp, Inc. since 1988. Mr. Noice also served as a member of the Board of Directors of the Company’s subsidiary bank, Progressive Bank, N.A. Mr. Noice made a significant contribution to the progress of our Company and his experience, support, and dedication will certainly be missed.

The year 2008 challenged our resolve and abilities to navigate through the eye of this economic storm. In times like these we are fortunate to have a strong anchor. While our Company operates with safety, stability and simplicity, we are continuing to improve our subsidiary bank’s leadership, impress our customers with efficient personal service and our shareholders with consistent dividends while insuring our credit quality.

Our Board of Directors continues to make substantial progress in guiding our financial institution while staying on course to fulfill its mission statement with a clear focus on our subsidiary bank’s vision.

The Board of Directors recognizes the value of our customers, shareholders, and employees, each of which demonstrate loyalty, dedication, and support.

Our Board of Directors anticipates a very challenging year, however feels it has strategies in place to capitalize on new opportunities.

Sincerely,

/s/ Sylvan J. Dlesk

Sylvan J. Dlesk

Chairman of the Board

President and Chief Executive Officer

First West Virginia Bancorp, Inc. and Subsidiary

CONSOLIDATED BALANCE SHEETS

	December 31,
	2008			2007
ASSETS
Cash and due from banks	$	5,992,400		$	5,533,577
Due from banks - interest bearing		360,334			639,603
Federal funds sold		2,748,000			6,752,000
Total cash and cash equivalents		9,100,734			12,925,180
Investment securities:
Available-for-sale (at fair value)		112,046,054			105,983,126
Held-to-maturity (fair value of $323,716 and $675,604, respectively)		320,256			663,936
Loans		124,634,785			121,739,193
Less allowance for loan losses		(1,923,455	)		(2,042,997	)
Net loans		122,711,330			119,696,196
Premises and equipment, net		4,713,897			4,789,947
Accrued income receivable		1,252,753			1,236,153
Other intangible assets		-			14,792
Goodwill		1,644,119			1,644,119
Bank owned life insurance		3,553,984			3,429,560
Other assets		2,820,510			2,803,781
Total assets	$	258,163,637		$	253,186,790
LIABILITIES
Noninterest bearing deposits:
Demand	$	24,108,459		$	24,437,272
Interest bearing deposits:
Demand		33,782,737			33,232,800
Savings		55,716,792			50,969,862
Time		92,777,279			94,486,897
Total deposits		206,385,267			203,126,831
Federal funds purchased and securities sold under agreements to repurchase		11,013,195			12,196,144
Federal Home Loan Bank borrowings		10,929,369			9,298,492
Accrued interest payable		566,590			598,054
Other liabilities		532,658			752,670
Total liabilities		229,427,079			225,972,191
STOCKHOLDERS’ EQUITY
Common stock - 2,000,000 shares authorized at $5 par value:
1,599,411 shares issued at December 31, 2008 and 1,538,443 shares issued at December 31, 2007		7,997,055			7,692,215
Treasury stock - 10,000 shares at cost:		(228,100	)		(228,100	)
Surplus		5,609,357			4,982,606
Retained earnings		14,492,736			14,394,610
Accumulated other comprehensive income		865,510			373,268
Total stockholders’ equity		28,736,558			27,214,599
Total liabilities and stockholders’ equity	$	258,163,637		$	253,186,790

The accompanying notes are an integral part of the consolidated financial statements.

2

First West Virginia Bancorp, Inc. and Subsidiary

CONSOLIDATED STATEMENTS OF INCOME

	Year Ended December 31,
	2008		2007			2006
INTEREST AND DIVIDEND INCOME
Loans, including fees:
Taxable	$	7,359,632	$	7,686,362		$	8,125,629
Tax-exempt		557,718		586,511			576,861
Debt securities:
Taxable		4,593,200		4,179,638			3,876,233
Tax-exempt		741,684		839,066			780,952
Dividends		37,238		43,511			34,489
Other interest income		83,895		99,192			97,705
Federal funds sold		140,714		274,216			279,904
Total interest and dividend income		13,514,081		13,708,496			13,771,773
INTEREST EXPENSE
Deposits		4,587,865		4,680,090			4,144,645
Federal funds purchased and repurchase agreements		172,899		485,978			656,063
FHLB and other long-term borrowings		514,452		265,432			141,754
Total interest expense		5,275,216		5,431,500			4,942,462
Net interest income		8,238,865		8,276,996			8,829,311
PROVISION FOR LOAN LOSSES		-		(100,000	)		-
Net interest income after provision for loan losses		8,238,865		8,376,996			8,829,311
NONINTEREST INCOME
Service charges and other fees		812,516		930,563			914,891
Net gains (losses) on available for sale securities		109,909		(22,255	)		45,668
Other operating income		565,483		502,170			472,580
Total noninterest income		1,487,908		1,410,478			1,433,139
NONINTEREST EXPENSE
Salary and employee benefits		3,668,387		3,833,170			4,051,274
Net occupancy expense of premises		1,235,117		1,105,406			1,133,895
Other operating expenses		2,105,266		2,333,668			2,428,858
Total noninterest expense		7,008,770		7,272,244			7,614,027
Income before income taxes		2,718,003		2,515,230			2,648,423
INCOME TAXES		512,492		479,268			504,599
Net income	$	2,205,511	$	2,035,962		$	2,143,824
WEIGHTED AVERAGE SHARES OUTSTANDING		1,589,411		1,589,411			1,589,411
EARNINGS PER COMMON SHARE	$	1.39	$	1.28		$	1.35
DIVIDENDS PER COMMON SHARE	$	0.74	$	0.73		$	0.73

The accompanying notes are an integral part of the consolidated financial statements.

3

First West Virginia Bancorp, Inc. and Subsidiary

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

	Common Stock					Retained			Treasury			Accumulated Other Comprehensive			Comprehensive		Total
	Shares	Amount		Surplus		Earnings			Stock			Income (loss)			Income
BALANCE, DECEMBER 31, 2005	1,538,443	$	7,692,215	$	4,982,606	$	12,538,056		$	(228,100	)	$	(1,026,148	)			$	23,958,629
Comprehensive income:
Net income	-		-		-		2,143,824			-			-		$	2,143,824		2,143,824
Other comprehensive income, net of tax
Unrealized gain on securities net of reclassification adjustment (see disclosure)	-		-		-		-			-			336,117			336,117		336,117
Comprehensive income															$	2,479,941
Cash dividend ($.73 per share)	-		-		-		(1,161,616	)		-			-					(1,161,616	)
BALANCE, DECEMBER 31, 2006	1,538,443		7,692,215		4,982,606		13,520,264			(228,100	)		(690,031	)				25,276,954
Comprehensive income:
Net income	-		-		-		2,035,962			-			-		$	2,035,962		2,035,962
Other comprehensive income, net of tax
Unrealized gain on securities net of reclassification adjustment (see disclosure)	-		-		-		-			-			1,063,299			1,063,299		1,063,299
Comprehensive income															$	3,099,261
Cash dividend ($.73 per share)	-		-		-		(1,161,616	)		-			-					(1,161,616	)
BALANCE, DECEMBER 31, 2007	1,538,443		7,692,215		4,982,606		14,394,610			(228,100	)		373,268					27,214,599
Comprehensive income:
Net income	-		-		-		2,205,511			-			-		$	2,205,511		2,205,511
Other comprehensive income, net of tax
Unrealized gain on securities net of reclassification adjustment (see disclosure)	-		-		-		-			-			492,242			492,242		492,242
Comprehensive income															$	2,697,753
Cash dividend ($.74 per share)	-		-		-		(1,173,201	)		-			-					(1,173,201	)
Cash Paid in Lieu of fractional shares on stock dividend	-		-		-		(2,593	)		-			-					(2,593	)
4% Common Stock Dividend at Par Value	60,968		304,840		626,751		(931,591	)		-			-					-
BALANCE, DECEMBER 31, 2008	1,599,411	$	7,997,055	$	5,609,357	$	14,492,736		$	(228,100	)	$	865,510				$	28,736,558

	2008		2007			2006
Disclosure of reclassification amount:
Unrealized holding gains arising during the period	$	560,792	$	1,049,418		$	364,600
Less reclassification adjustment for gains (losses) included in net income		68,550		(13,881	)		28,483
Net unrealized gains on securities	$	492,242	$	1,063,299		$	336,117

The accompanying notes are an integral part of the consolidated financial statements.

4

First West Virginia Bancorp, Inc. and Subsidiary

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Year Ended December 31,
	2008			2007			2006
OPERATING ACTIVITIES
Net income	$	2,205,511		$	2,035,962		$	2,143,824
Adjustments to reconcile net income to net cash provided by operating activities:
Decrease in Provision for loan losses		-			(100,000	)		-
Depreciation and amortization		443,270			408,215			435,235
Accretion of investment securities, net		(231,842	)		(230,694	)		(124,624	)
Investment security (gains) losses		(109,909	)		22,255			(45,668	)
Loss on disposal of assets		3,257			14,836			-
Increase in cash surrender value of bank-owned life insurance		(124,424	)		(121,849	)		(113,734	)
Decrease (increase) in interest receivable		(16,600	)		27,182			(8,007	)
Decrease (increase) in interest payable		(31,464	)		597			193,085
Other, net		(533,727	)		(158,011	)		(182,018	)
Net cash provided by operating activities		1,604,072			1,898,493			2,298,093
INVESTING ACTIVITIES
Net (increase) decrease in loans, net of charge-offs		(3,089,128	)		(1,195,854	)		14,430,462
Proceeds from sales of securities available-for-sale		7,068,208			9,427,941			385,888
Proceeds from maturities of securities available-for-sale		169,987,509			226,195,913			93,984,071
Proceeds from maturities of securities held-to-maturity		345,000			310,000			805,000
Principal collected on mortgage-backed securities		9,971,164			8,787,745			9,884,629
Purchases of securities available-for-sale		(191,960,149	)		(238,561,158	)		(107,246,196	)
Recoveries on loans previously charged-off		73,993			12,020			51,563
Purchases of premises and equipment		(355,685	)		(790,116	)		(513,686	)
Net cash provided by (used in) investing activities		(7,959,088	)		4,186,491			11,781,731
FINANCING ACTIVITIES
Net increase (decrease) in deposits		3,258,436			(7,281,584	)		(8,408,886	)
Dividends paid		(1,175,794	)		(1,161,616	)		(1,161,616	)
Repayment of long term debt		-			-			(1,000,000	)
Decrease in short-term borrowings		(1,182,949	)		(3,044,014	)		(3,844,166	)
Proceeds from FHLB borrowings		1,690,000			7,000,000			-
Repayment of FHLB borrowings		(59,123	)		(44,226	)		(42,175	)
Net cash provided by (used in) financing activities		2,530,570			(4,531,440	)		(14,456,843	)
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		(3,824,446	)		1,553,544			(377,019	)
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR		12,925,180			11,371,636			11,748,655
CASH AND CASH EQUIVALENTS, END OF YEAR	$	9,100,734		$	12,925,180		$	11,371,636
Supplemental Disclosures:
Cash Paid for Interest	$	5,306,680		$	5,430,903		$	4,749,377
Cash Paid for Income Taxes		886,000			370,000			612,000

The accompanying notes are an integral part of the consolidated financial statements.

5

First West Virginia Bancorp, Inc. and Subsidiary

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2008, 2007, AND 2006

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A summary of the significant accounting and reporting policies applied in the presentation of the accompanying financial statements follows.

Nature of Operations and Basis of Presentation: First West Virginia Bancorp, Inc. (the “Company”) is a West Virginia Company. The Company provides a variety of banking services to individuals and businesses through the branch network of its affiliate bank (the “Bank”). The Bank operates nine full service branches located in Wheeling (3), Wellsburg, Moundsville, New Martinsville, Buckhannon, and Weston, West Virginia and Bellaire, Ohio. Primary deposit products consist of checking accounts, savings accounts, and certificates of deposit. Primary lending products consist of commercial and residential real estate loans, consumer loans, and business loans.

Principles of Consolidation: The consolidated financial statements of the Company include the financial statements of the parent and its wholly-owned subsidiary, Progressive Bank, N.A. All significant intercompany transactions and accounts have been eliminated in consolidation.

Use of Estimates: The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, 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 material change in the near term relate to the determination of the allowance for loan losses and the valuation of deferred tax assets.

Income Taxes: The Company and its subsidiary file a consolidated federal income tax return. Deferred tax assets and liabilities are reflected at currently enacted income tax rates applicable to the period in which the deferred tax assets and liabilities are expected to be realized or settled. As changes in tax laws or rates are enacted, deferred tax assets and liabilities are adjusted through the provision for income taxes. Deferred income tax expenses or benefits are based on the changes in the deferred tax asset or liability from period to period.

Cash and cash equivalents: Cash and cash equivalents consist of cash on hand and amounts due from banks and federal funds sold.

Investment Securities: Investment securities are classified at the time of purchase, based on management’s intention and ability, as securities available for sale or held to maturity. Debt securities classified as held to maturity are stated at cost adjusted for amortization of premium and accretion of discount which are computed using the interest method and recognized as adjustments of interest income. Certain other debt and equity securities have been classified as available for sale to serve principally as a source of liquidity. Unrealized holding gains and losses for available-for-sale securities are reported as a separate component of stockholders’ equity, net of tax, until realized. Realized securities gains and losses are computed using the specific identification method. Interest and dividends on investment securities are recognized as income when earned.

Securities are periodically reviewed for other-than-temporary impairment based upon a number of factors, including, but not limited to, the length of time and extent to which the market value has been less than cost, the financial condition of the underlying issuer, the ability of the issuer to meet contractual obligations, the likelihood of the security’s ability to recover any decline in its market value, and management’s intent and ability to hold the security for a period of time sufficient to allow for a recovery in market value. Among the factors that are considered in determining management’s intent and ability is a review of the Company’s capital adequacy, interest rate risk position and liquidity. The assessment of a security’s ability to recover any decline in market value, the ability of the issuer to meet contractual obligations and management’s intent and ability requires considerable judgment. A decline in value that is considered to be other-than-temporary is recorded as a loss within noninterest income in the Consolidated Statement of Income. At December 31, 2008, there were no investment securities identified by management to be other-than-temporarily impaired. If investments decline in fair value due to adverse changes in the financial markets, charges to income could occur in future periods.

Common stock of the Federal Home Loan Bank (“FHLB”) and Federal Reserve Bank represents ownership interest in institutions that are wholly owned by other financial institutions. These equity securities are accounted for at cost and are classified with other assets.

Loans and Loans Held for Sale: Loans are generally reported at the principal balance outstanding, net of unearned income. Interest income on loans is accrued based on the principal outstanding. It is the Company’s policy to discontinue the accrual of interest when either the principal or interest is past due 90 days or more, unless the loan is both well secured and in the process of collection. The Company accounts for impaired loans in accordance with the provisions of Statement of Financial Accounting Standards (“SFAS”) No. 114 and No. 118, “Accounting for Creditors for Impairment of a Loan.” It is the Company’s policy not to recognize interest income on specific impaired loans unless the likelihood of future loss is remote. Interest payments received on such loans are applied as a reduction of the loan principal balance. Loan origination and commitment fees and certain direct loan origination costs are deferred and the net amount amortized over the contractual life of the related loans or commitments as an adjustment of the related loan’s yield. Loans held for sale are carried at the lower of cost or estimated market value in the aggregate. There were no loans held for sale as of December 31, 2008 and 2007, respectively.

The Company has entered into an agreement with the Federal Home Loan Bank of Pittsburgh (“FHLB”) under which the bank may sell conforming one-to-four family residential mortgage loans to the FHLB. The agreement provides for a maximum commitment of $5,000,000. Loans sold to the FHLB are sold with limited recourse or credit risk up to a maximum amount of $125,000 based upon utilization of the original commitment. The bank also maintains the servicing of these loans, for which it is paid a servicing fee. The total amount of loans sold under this agreement were $1,817,036 and $1,981,231 as of December 31, 2008 and 2007, respectively. These loans were also subject to recourse obligation or credit risk in the amount of $43,043. The amount of income recognized as of a result of this agreement was $7,821, $8,848 and $10,317 for the years ending December 31, 2008, 2007 and 2006, respectively.

6

First West Virginia Bancorp, Inc. and Subsidiary

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2008, 2007, AND 2006

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Allowance for Loan Losses: The allowance for loan losses represents the amount which management estimates is adequate to provide for probable losses inherent in its loan portfolio. The allowance method is used in providing for loan losses. Accordingly, all loan losses are charged to the allowance, and all recoveries are credited to it. The allowance for loan losses is established through a provision for loan losses that is charged to operations. The provision is based on management’s evaluation of the adequacy of the allowance for loan losses which encompasses the overall risk characteristics of the various portfolio segments, past experience with losses, the impact of economic conditions on borrowers, and other relevant factors. The estimates used in determining the adequacy of the allowance for loan losses, including the amounts and timing of future cash flows expected on impaired loans, are particularly susceptible to significant changes in the near term.

Mortgage loans secured by one-to-four family properties and all consumer loans are large groups of smaller-balance homogeneous loans and are measured for impairment collectively. Loans that experience insignificant payment delays, which are defined as 90 days or less, generally are not classified as impaired. Management determines the significance of payment delays on a case-by-case basis taking into consideration all circumstances concerning the loan, the credit worthiness and payment history of the borrower, the length of the payment delay, and the amount of shortfall in relation to the principal and interest owed.

Impaired loans are loans for which it is probable the Company will not be able to collect all amounts due according to the contractual terms of the loan agreement. The Company individually evaluates such loans for impairment and does not aggregate loans by major risk classifications. The definition of “impaired loans” is not the same as the definition of “nonaccrual loans,” although the two categories overlap. The Company may choose to place a loan on nonaccrual status due to payment delinquency or uncertain collectibility while not classifying the loan as impaired, provided the loan is not a commercial or commercial real estate classification. Factors considered by management in determining impairment include payment status and collateral value. The amount of impairment for these types of loans is determined by the difference between the present value of the expected cash flows related to the loan, using the original interest rate, and its recorded value, or as a practical expedient in the case of collateralized loans, the difference between the fair value of the collateral and the recorded amount of the loans. When foreclosure is probable, impairment is measured based on the fair value of the collateral.

Individual loan reviews are based upon specific quantitative and qualitative criteria, including the size of the loan, loan quality ratings, value of collateral, repayment ability of borrowers, and historical experience factors. The historical experience factors utilized for individual loan reviews are based upon past loss experience, known trends in losses and delinquencies, the growth of loans in particular markets and industries, and known changes in economic conditions in the particular lending markets. Allowances for homogeneous loans (such as residential mortgage loans, personal loans, etc.) are evaluated based upon historical loss experience, trends in losses and delinquencies, growth of loans in particular markets, and known changes in economic conditions in each lending market. There can be no assurance the allowance for loan losses will be adequate to cover all losses, but management believes the allowance for loan losses in the amount of $1,923,455 at December 31, 2008, was adequate to provide for probable losses from existing loans based on information currently available. While management uses available information to provide for loan losses, the ultimate collectibility of a substantial portion of the loan portfolio, and the need for future additions to the allowance, will be based on changes in economic conditions and other relevant factors. As such, an adverse change in economic activity could reduce cash flows for both commercial and individual borrowers, which would likely cause the Company to experience increases in problem assets, delinquencies and losses on loans.

Goodwill and Other Intangible Assets Goodwill resulted from the Company’s purchase of a less-than-whole financial institution (the “branch”). The goodwill value of $1.6 million is supported ultimately by revenue that is driven by the volume of business transacted. A decline in earnings as a result of a lack of growth or the inability to deliver cost effective services over sustained periods can lead to impairment of goodwill that could adversely impact earnings in future periods.

An identifiable intangible asset resulted from the purchase of the core deposits of another financial institution in 2001 and, as such, are amortized into noninterest expense on the straight-line basis over the period the Company expects to benefit from such assets (7 years). The Company recognized amortization expense of $14,792, $88,751 and $88,751 in the periods ending December 31, 2008, 2007 and 2006. The unamortized balance from the purchase of these core deposit intangible assets is $-0- and $14,792 at December 31, 2008 and 2007, respectively. While management feels the assumptions and variables used to value the acquisition were reasonable, the use of different, but still reasonable, assumptions could produce different results.

Goodwill and other intangibles are periodically reviewed for impairment. No impairment losses were recognized. Additionally, future events could cause management to conclude that impairment indicators exist and that the goodwill is impaired, which would result in the Company recording an impairment loss. Any resulting impairment loss could have a material, adverse impact on the Company’s financial condition and results of operations.

Bank-owned Life Insurance: Bank owned life insurance consists of investments in life insurance policies on executive officers and other members of the bank’s management. The policies are carried at their net cash surrender value. Changes in the policy value are recorded as an adjustment to the carrying value with the corresponding amount recognized as non-interest income or expense. Earnings on these policies are based on the net earnings on the cash surrender value of the policies. The net cash surrender value of bank-owned life insurance was $3,553,984 and $3,429,560 at December 31, 2008 and 2007, respectively. The face value of the bank-owned life insurance at December 31, 2008 was $9.4 million. An agreement has been executed with all officers whereby a $40,000 death benefit is payable upon the participant’s death while employed by the Company to their designated beneficiary

Premises and Equipment: Premises and equipment are stated at cost, less accumulated depreciation and amortization. Provisions for depreciation and amortization are computed generally using the straight-line method over the estimated useful lives of the assets. When units of property are disposed of, the premises and equipment accounts are relieved of the cost and the accumulated depreciation related to such units. Any resulting gains or losses are credited to or charged against income. Cost of repairs and maintenance is charged to expense as incurred. Additions and improvements are capitalized at cost.

7

First West Virginia Bancorp, Inc. and Subsidiary

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2008, 2007, AND 2006

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Other Real Estate Owned: Other real estate owned are carried at the lower of cost or their estimated current fair value, less estimated costs to sell and are included in other assets. Other real estate owned consist primarily of properties acquired through, or in lieu of foreclosures. Any subsequent declines in fair value, and gains or losses on the disposition of these assets are credited to or charged against income.

Advertising Costs: Advertising costs are expensed as the costs are incurred. Advertising expenses amounted to $92,709, $258,861 and $165,706 for 2008, 2007, and 2006, respectively.

Earnings Per Common Share: Earnings per common share are calculated by dividing net income by the weighted-average number of shares of common stock outstanding during the year. The Company has no securities which would be considered potential common stock.

Stock Dividend: On May 13, 2008, the Company declared a 4% stock dividend to stockholders of record on October 1, 2008. All common share data includes the effect of the stock dividend.

Comprehensive Income: The Company is required to present comprehensive income in a full set of general-purpose financial statements for all periods presented. Other comprehensive income comprises unrealized holding gains (losses) on the available-for-sale securities portfolio. The Company has elected to report the effects of other comprehensive income as part of the Consolidated Statement of Changes in Stockholders’ Equity. The following table represents other comprehensive income before tax and net of tax:

	2008			2007			2006
Before-tax amount	$	789,228		$	1,704,824		$	538,908
Tax effect		(296,986	)		(641,525	)		(202,791	)
Net of tax effect		492,242			1,063,299			336,117
Net income as reported		2,205,511			2,035,962			2,143,824
Total comprehensive income	$	2,697,753		$	3,099,261		$	2,479,941

Recent Accounting Pronouncements: In December 2007, the FASB issued FAS No. 141 (revised 2007), Business Combinations (“FAS 141(R)), which establishes principles and requirements for how an acquirer recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in an acquiree, including the recognition and measurement of goodwill acquired in a business combination. FAS No. 141^®) is effective for fiscal years beginning on or after December 15, 2008. Earlier adoption is prohibited. The adoption of this standard is not expected to have a material effect on the Company’s results of operations or financial position.

In February 2008, the FASB issued Staff Position No. 157-1, Application of FASB Statement No. 157 to FASB Statement No. 13 and Other Accounting Pronouncements That Address Fair Value Measurements for Purposes of Lease Classification or Measurement under Statement 13, which removed leasing transactions accounted for under FAS No. 13 and related guidance from the scope of FAS No. 157. Also in February 2008, the FASB issued Staff Position No.157-2, Partial Deferral of the Effective Date of Statement 157, which deferred the effective date of FAS No. 157 for all nonfinancial assets and nonfinancial liabilities to fiscal years beginning after November 15, 2008. The adoption of this standard is not expected to have a material effect on the Company’s results of operations or financial position.

In December 2007, the FASB issued FAS No. 160, Noncontrolling Interests in Consolidated Financial Statements — an amendment of ARB No. 51. FAS No. 160 amends ARB No. 51 to establish accounting and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. It clarifies that a noncontrolling interest in a subsidiary, which is sometimes referred to as minority interest, is an ownership interest in the consolidated entity that should be reported as equity in the consolidated financial statements. Among other requirements, this statement requires consolidated net income to be reported at amounts that include the amounts attributable to both the parent and the noncontrolling interest. It also requires disclosure, on the face of the consolidated income statement, of the amounts of consolidated net income attributable to the parent and to the noncontrolling interest. FAS No. 160 is effective for fiscal years beginning on or after December 15, 2008. Earlier adoption is prohibited. The adoption of this standard is not expected to have a material effect on the Company’s results of operations or financial position.

In March 2008, the FASB issued FAS No. 161, Disclosures about Derivative Instruments and Hedging Activities, to require enhanced disclosures about derivative instruments and hedging activities. The new standard has revised financial reporting for derivative instruments and hedging activities by requiring more transparency about how and why an entity uses derivative instruments, how derivative instruments and related hedged items are accounted for under FAS No. 133, Accounting for Derivative Instruments and Hedging Activities; and how derivative instruments and related hedged items affect an entity’s financial position, financial performance, and cash flows. FAS No. 161 requires disclosure of the fair values of derivative instruments and their gains and losses in a tabular format. It also requires entities to provide more information about their liquidity by requiring disclosure of derivative features that are credit risk-related. Further, it requires cross-referencing within footnotes to enable financial statement users to locate important information about derivative instruments. FAS No. 161 is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008, with early application encourage. The adoption of this standard is not expected to have a material effect on the Company’s results of operations or financial position.

8

First West Virginia Bancorp, Inc. and Subsidiary

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2008, 2007, AND 2006

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Recent Accounting Pronouncements (Continued)

In June 2008, the FASB ratified EITF Issue No. 08-4, Accounting for Convertible Securities with Beneficial Conversion Features or Contingently Adjusted Conversion Ratios. This Issue provides transition guidance for conforming changes made to EITF Issue No. 98-5, Accounting for Convertible Securities with Beneficial Conversion Features or Contingently Adjusted Conversion Ratios, that resulted from EITF Issue No. 00-27, Application of Issue No. 98-5 to Certain Convertible Instruments, and FAS No. 150, Accounting for Certain Financial Instruments with Characteristics of both Liability and Equity. The conforming changes are effective for financial statements issued for fiscal years ending after December 15, 2008, with earlier application permitted. The adoption of this FSP is not expected to have a material effect on the Company’s results of operations or financial position.

In February 2007, the FASB issued FSP No. FAS 158-1, Conforming Amendments to the Illustrations in FASB Statements No. 87, No. 88, and No. 106 and to the Related Staff Implementation Guides. This FSP provides conforming amendments to the illustrations in FAS Statements No. 87, 88, and 106 and to related staff implementation guides as a result of the issuance of FAS Statement No. 158. The conforming amendments made by this FSP are effective as of the effective dates of Statement No. 158. The unaffected guidance that this FSP codifies into Statements No. 87, 88, and 106 does not contain new requirements and therefore does not require a separate effective date or transition method. The adoption of this FSP is not expected to have a material effect on the Company’s results of operations or financial position.

In February 2008, the FASB issued FSP No. FAS 140-3, Accounting for Transfers of Financial Assets and Repurchase Financing Transactions. This FSP concludes that a transferor and transferee should not separately account for a transfer of a financial asset and a related repurchase financing unless (a) the two transactions have a valid and distinct business or economic purpose for being entered into separately and (b) the repurchase financing does not result in the initial transferor regaining control over the financial asset. The FSP is effective for financial statements issued for fiscal years beginning on or after November 15, 2008, and interim periods within those fiscal years. The adoption of this FSP is not expected to have a material effect on the Company’s results of operations or financial position.

In April 2008, the FASB issued FASB Staff Position No. 142-3, Determination of the Useful Life of Intangible Assets (“FSP 142-3”). FSP 142-3 amends the factors that should be considered in developing assumptions about renewal or extension used in estimating the useful life of a recognized intangible asset under FAS No. 142, Goodwill and Other Intangible Assets. This standard is intended to improve the consistency between the useful life of a recognized intangible asset under FAS No. 142 and the period of expected cash flows used to measure the fair value of the asset under FAS No. 141R and other GAAP. FSP 142-3 is effective for financial statements issued for fiscal years beginning after December 15, 2008. The measurement provisions of this standard will apply only to intangible assets of the Company acquired after the effective date.

In May 2008, the FASB issued FSP No. APB 14-1, Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement. This FSP provides guidance on the accounting for certain types of convertible debt instruments that may be settled in cash upon conversion. Additionally, this FSP specifies that issuers of such instruments should separately account for the liability and equity components in a manner that will reflect the entity’s nonconvertible debt borrowing rate when interest cost is recognized in subsequent periods. The FSP is effective for financial statements issued for fiscal years beginning after December 15, 2008, and interim periods within those fiscal years. The adoption of this FSP is not expected to have a material effect on the Company’s results of operations or financial position.

In June 2008, the FASB issued FASB Staff Position (FSP) No. EITF 03-6-1, Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities, to clarify that instruments granted in share-based payment transactions can be participating securities prior to the requisite service having been rendered. A basic principle of the FSP is that unvested share-based payment awards that contain nonforfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are participating securities and are to be included in the computation of EPS pursuant to the two-class method. The provisions of this FSP are effective for financial statements issued for fiscal years beginning after December 15, 2008, and interim periods within those years. All prior-period EPS data presented (including interim financial statements, summaries of earnings, and selected financial data) are required to be adjusted retrospectively to conform with the provisions of the FSP. The adoption of this FSP is not expected to have a material effect on the Company’s results of operations or financial position.

In December 2008, the FASB issued FASB Staff Position (FSP) No. FAS 132(R)-1, Employers’ Disclosures about Postretirement Benefit Plan Assets. This FSP amends FASB Statement No. 132 (revised 2003), Employers’ Disclosures about Pensions and Other Postretirement Benefits, to improve an employer’s disclosures about plan assets of a defined benefit pension or other postretirement plan. The disclosures about plan assets required by the FSP are to be provided for fiscal years ending after December 15, 2009. The Company is currently evaluating the impact the adoption of the FSP will have on the Company’s results of operations.

9

First West Virginia Bancorp, Inc. and Subsidiary

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2008, 2007, AND 2006

NOTE 2 - INVESTMENT SECURITIES

The amortized cost and estimated fair values of investment securities are as follows at December 31, 2008 and 2007:

	(Expressed in thousands) December 31, 2008
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Securities held-to-maturity:
Obligations of states and political subdivisions	$	320	$	4	$	-	$	324
Total held-to-maturity		320		4		-		324
Securities available-for-sale:
U.S. Treasury securities and obligations of U.S. Government corporations and agencies		26,760		174		(46)		26,888
Obligations of states and political subdivisions		18,798		72		(347)		18,523
Corporate debt securities		1,504		-		(182)		1,322
Mortgage-backed securities		63,300		1,816		(40)		65,076
Equity securities		296		2		(61)		237
Total available-for-sale		110,658		2,064		(676)		112,046
Total	$	110,978	$	2,068	$	(676)	$	112,370
	(Expressed in thousands) December 31, 2007
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Securities held-to-maturity:
Obligations of states and political subdivisions	$	664	$	12	$	-	$	676
Total held-to-maturity		664		12		-		676
Securities available-for-sale:
U.S. Treasury securities and obligations of U.S. Government corporations and agencies		26,330		177		(30)		26,477
Obligations of states and political subdivisions		22,024		170		(41)		22,153
Mortgage-backed securities		56,691		463		(153)		57,001
Equity securities		340		13		(1)		352
Total available-for-sale		105,385		823		(225)		105,983
Total	$	106,049	$	835	$	(225)	$	106,659

The Company’s investment securities portfolio contains unrealized losses of direct obligations of the U.S. Treasury and U.S. Government agency securities, including mortgage-related instruments issued or backed by the full faith and credit of the United States government or are generally viewed as having the implied guarantee of the U.S. government, and debt obligations of a U.S. state or political subdivision.

On a monthly basis, the Company evaluates the severity and duration of impairment for its investment securities portfolio unless the company has the ability to hold the security to maturity without incurring a loss. Generally, impairment is considered other than temporary when an investment security has sustained a decline in market value of ten percent or more for a period of six months. The Company has concluded that any impairment of its investment securities portfolio is not other than temporary but is the result of interest rate changes that are not expected to result in the noncollection of principal and interest during the period. There are 58 positions that are temporarily impaired at December 31, 2008.

The amortized cost and estimated fair value of investment securities at December 31, 2008, 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.

10

First West Virginia Bancorp, Inc. and Subsidiary

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2008, 2007, AND 2006

NOTE 2 - INVESTMENT SECURITIES (CONTINUED)

The following tables show the Company’s gross unrealized losses and fair value, aggregated by investment category and length of time, that the individual securities have been in a continuous unrealized loss position, at December 31, 2008 and 2007:

	(Expressed in thousands) 2008
	Less than Twelve Months				Twelve Months or Greater				Total
	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
U.S. Treasury securities and U.S. Government corporations and agencies	$	3,471	$	(46)	$	-	$	-	$	3,471	$	(46)
Obligations of states and political subdivisions		11,730		(347)		-		-		11,730		(347)
Corporate debt securities		1,322		(182)		-		-		1,322		(182)
Mortgage-backed securities		2,638		(17)		490		(23)		3,128		(40)
Total debt securities		19,161		(592)		490		(23)		19,651		(615)
Equity securities		104		(28)		52		(33)		156		(61)
Total	$	19,265	$	(620)	$	542	$	(56)	$	19,807	$	(676)
	(Expressed in thousands) 2007
	Less than Twelve Months				Twelve Months or Greater				Total
	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
U.S. Treasury securities and U.S. Government corporations and agencies	$	-	$	-	$	10,967	$	(30)	$	10,967	$	(30)
Obligations of states and political subdivisions		1,618		(2)		5,228		(39)		6,846		(41)
Mortgage-backed securities		1,323		(6)		14,386		(147)		15,709		(153)
Total debt securities		2,941		(8)		30,581		(216)		33,522		(224)
Equity securities		44		(1)		-		-		44		(1)
Total	$	2,985	$	(9)	$	30,581	$	(216)	$	33,566	$	(225)

The amortized cost and fair value of investment securities at December 31, 2008, 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.

	(Expressed in thousands)
	Securities Held-to-Maturity				Securities Available-for-Sale
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Due in one year or less	$	320	$	324	$	3,471	$	3,522
Due after one year through five years		-		-		9,147		9,003
Due after five years through ten years		-		-		26,763		26,819
Due after ten years		-		-		7,681		7,389
		320		324		47,062		46,733
Mortgage-backed securities		-		-		63,300		65,076
Equity securities		-		-		296		237
Total	$	320	$	324	$	110,658	$	112,046

Proceeds from sales of securities available-for-sale during the years ended December 31, 2008, 2007, and 2006, were $7,068,208, $9,427,941, and $385,888 respectively. Gross gains of $114,687 and gross losses of $4,778 in 2008; gross gains of $39,762 and gross losses of $62,017 in 2007; and gross gains of $67,074 and gross losses of $21,406 in 2006, were realized on those sales. Assets carried at $34,199,000 and $37,878,000 at December 31, 2008 and 2007, respectively, were pledged to secure United States Government and other public funds and for other purposes as required or permitted by law.

11

First West Virginia Bancorp, Inc. and Subsidiary

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2008, 2007, AND 2006

NOTE 3 - LOANS AND LEASES

Loans outstanding at December 31, 2008 and 2007, are as follows:

	(Expressed in Thousands)
	2008		2007
Real estate - construction	$	711	$	927
Real estate - farmland		295		318
Real estate - residential		43,792		45,449
Real estate-secured by non-farm, non-residential		43,914		42,350
Commercial and industrial loans		9,649		7,879
Installment and other loans to individuals		14,086		12,861
Non-rated industrial development obligations		12,342		12,045
Other loans		42		109
Total	$	124,831	$	121,938
Less unearned interest and deferred fees		196		199
Net loans	$	124,635	$	121,739

Non-accrual loans amounted to $3,275,190 and $2,436,690 at December 31, 2008 and 2007, respectively. The amount of interest income that would have been recognized had the loans performed in accordance with their original terms was $214,000 and $156,500 for 2008 and 2007, respectively.

NOTE 4 - ALLOWANCE FOR LOAN LOSSES

Activity in the allowance for loan losses is summarized as follows:

	December 31,
	2008		2007			2006
Balance at beginning of year	$	2,042,997	$	2,296,958		$	2,319,871
Additions (deletions) charged to operating expense		-		(100,000	)		-
Recoveries		73,993		12,020			51,563
Total		2,116,990		2,208,978			2,371,434
Less loans charged-off		193,535		165,981			74,476
Balance at end of year	$	1,923,455	$	2,042,997		$	2,296,958

The following is a summary of information pertaining to impaired and non-accrual loans:

	(Expressed in Thousands)
	December 31,
	2008		2007		2006
Impaired loans without a valuation allowance	$	2,121	$	1,143	$	1,200
Impaired loans with a valuation allowance		1,154		1,294		2,180
Total impaired loans	$	3,275	$	2,437	$	3,380
Valuation allowance related to impaired loans	$	349	$	270	$	314

	(Expressed in Thousands)
	December 31,
	2008		2007		2006
Total non-accrual loans	$	3,275	$	2,437	$	3,380
Total loans past-due 90 days or more and still accruing	$	-	$	26	$	3

	(Expressed in Thousands)
	December 31,
	2008		2007		2006
Average investment in impaired loans	$	2,796	$	3,173	$	1,691
Interest income recognized on impaired loans		-		-		-
Interest income recognized on a cash basis on impaired loans		-		-		-

No additional funds are committed to be advanced in connection with impaired loans.

12

First West Virginia Bancorp, Inc. and Subsidiary

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2008, 2007, AND 2006

NOTE 5 - PREMISES AND EQUIPMENT

Premises and equipment are stated at cost, less accumulated depreciation, as follows:

	December 31,				Original Useful Life Years
	2008		2007
Land	$	1,983,014	$	1,983,014
Land improvements		218,005		218,005	20
Leasehold improvements		404,598		404,598	25
Buildings		4,483,963		4,363,266	20-50
Furniture, fixtures & equipment		4,039,959		3,816,470	3 - 8
Total		11,129,539		10,785,353
Less accumulated depreciation		6,415,642		5,995,406
Premises and equipment, net	$	4,713,897	$	4,789,947

Charges to operations for depreciation approximated $428,478, $319,464, and $346,485 for 2008, 2007, and 2006, respectively.

NOTE 6 - DEPOSITS

The composition of the Bank’s deposits at December 31 follows:

	(Expressed in Thousands)
	2008
	Demand
	Noninterest Bearing		Interest Bearing		Savings		Time
Individuals, partnerships and corporations (includes certified and official checks)	$	23,132	$	28,534	$	54,897	$	89,682
United States Government		42		-		-		-
States and political subdivisions		932		5,249		820		2,945
Commercial banks and other depository institutions		2		-		-		150
Total	$	24,108	$	33,783	$	55,717	$	92,777
	(Expressed in Thousands)
	2007
	Demand
	Noninterest Bearing		Interest Bearing		Savings		Time
Individuals, partnerships and corporations (includes certified and official checks)	$	24,014	$	28,596	$	50,106	$	92,090
United States Government		68		-		-		-
States and political subdivisions		352		4,637		864		2,247
Commercial banks and other depository institutions		3		-		-		150
Total	$	24,437	$	33,233	$	50,970	$	94,487

Time deposits include certificates of deposit issued in denominations of $100,000 or more which amounted to $25,790,000 and $26,532,000 at December 31, 2008 and 2007, respectively. Interest expense on certificates of deposit of $100,000 or more was $1,119,000, $1,178,000 and $952,000 at December 31, 2008, 2007, and 2006, respectively.

A maturity distribution of time certificates of deposit at December 31, 2008, follows:

Due in 2009	$	58,109,000
Due in 2010		16,985,000
Due in 2011		7,722,000
Due in 2012		6,580,000
Due in 2013		3,364,000
Due in 2014 and thereafter		17,000
Total	$	92,777,000

13

First West Virginia Bancorp, Inc. and Subsidiary

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2008, 2007, AND 2006

NOTE 7 - FEDERAL FUNDS PURCHASED AND REPURCHASE AGREEMENTS

Federal funds purchased and repurchase agreements represent borrowings of a short duration, usually less than 30 days. For repurchase agreements, the securities underlying the agreements remained under the Bank’s control. Information related to repurchase agreements and federal funds purchased are summarized below:

	Repurchase Agreements						Federal Funds Purchased
	2008			2007			2008		2007
Balance at end of year	$	11,013,195		$	12,196,144		$	-	$	-
Average balance during the year		12,090,079			13,915,670			-		169,863
Maximum month-end balance		12,858,391			15,140,173			-		-
Weighted-average rate during the year		1.43	%		3.42	%		-		5.58%
Rate at December 31		1.14	%		1.86	%		-		-

NOTE 8 - FEDERAL HOME LOAN BANK BORROWINGS

The subsidiary Bank is a member of the Federal Home Loan Bank of Pittsburgh (“FHLB”). The FHLB borrowings are secured by a blanket lien by the FHLB on certain residential real estate loans or securities with a market value at least equal to the outstanding balances. The remaining maximum borrowing capacity with the FHLB at December 31, 2008 was approximately $84.1 million subject to the purchase of additional FHLB stock. The subsidiary bank had FHLB borrowings of $10,929,369 and $9,298,492 at December 31, 2008 and 2007, respectively. The increase in FHLB borrowings was due to the addition of one fixed rate amortizing advances which totaled $1,690,000 during the second quarter of 2008. At December 31, 2008 the subsidiary bank had three fixed rate amortizing advances which totaled $3,929,369 with a weighted average interest rate of 4.78% of which $2,252,114 will mature in 2018 and $1,677,255 will mature in 2023. The subsidiary bank also had two fixed rate bullet advances which totaled $7,000,000. These advances carry an average interest rate of 5.08% and will mature in 2009 and 2010.

The subsidiary bank also has a one year line of credit agreement with the Federal Home Loan Bank (“FHLB”). The maximum credit available under this agreement is $7.0 million and expires December 2011. There were no borrowings outstanding under this agreement at December 31, 2008 and 2007, respectively.

Contractual maturities of FHLB borrowings as of December 31, 2008 were as follows:

December 31, 2009	$	3,575,060
December 31, 2010		3,578,725
December 31, 2011		82,570
December 31, 2012		86,602
December 31, 2013		90,832
Thereafter		3,515,580
	$	10,929,369

NOTE 9 - OTHER BORROWINGS

The Company has a non-revolving line of credit of $3.0 million from a financial institution. The line of credit is secured by 126,200 shares of Progressive Bank, N.A. stock. The note bears an interest rate of prime and is adjustable quarterly. The note matures in May 2015. The Company’s initial borrowing under the loan amounted to $2.0 million. There were no outstanding borrowings as of December 31, 2008 and as of December 31, 2007.

NOTE 10 - CONCENTRATIONS OF CREDIT RISK

Most of the affiliate Bank’s loans and commitments have been granted to customers in the Bank’s primary market area of Northern and Central West Virginia, Eastern Ohio, and Southwestern Pennsylvania. In the normal course of business, however, the Bank has purchased participations and originated loans outside of its primary market area. The aggregate loan balances outstanding in any one geographic area, other than the Bank’s primary lending areas, do not exceed 10 percent of total loans. Concentrations of credit are measured by categorizing loans by the North American Industry Classification codes. Loans equal to or exceeding 25% of Tier I Capital are considered concentrations of credit. At December 31, 2008 concentrations of credit were as follows:

	Amount		Percent of Tier 1 Capital
Lessors of Nonresidential Buildings	$	13,565,260	52.3%
Lessors of Residential Buildings and Dwellings	$	11,779,716	45.4%

14

First West Virginia Bancorp, Inc. and Subsidiary

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2008, 2007, AND 2006

NOTE 11 - EMPLOYEE BENEFIT PLANS

The Company has a non-contributory profit sharing plan for employees meeting certain service requirements. The Company makes annual contributions to the profit sharing plan based on income of the Company as defined. Total expenses for the plan were $100,000, $92,700, and $102,500 for the years ended December 31, 2008, 2007, and 2006, respectively.

The Company also offers a 401(k) plan in which it matches a portion of the employee’s contribution up to 4 percent of their salary. The expense related to the 401(k) plan was $22,508, $22,365, and $22,494 in 2008, 2007, and 2006, respectively.

NOTE 12 - RELATED PARTY TRANSACTIONS

Directors and officers of the Company and its subsidiary, and their associates, were customers of, and had other transactions with the subsidiary bank in the normal course of business. All loans and commitments included in such transactions were made on substantially the same terms, including interest and collateral, as those prevailing at the time for comparable transactions with other persons and do not involve more than the normal risk of collectibility. Such loans totaled $3,142,008 at December 31, 2008, and $2,745,649 at December 31, 2007.

The following is an analysis of loan activity to directors, executive officers, and associates of the Company and its subsidiary:

	December 31,
	2008			2007
Balance, January 1	$	2,745,649		$	1,592,083
New loans during the period		1,389,588			2,124,903
Repayments during the period		(993,229	)		(971,337	)
Ending balance	$	3,142,008		$	2,745,649

The Company’s subsidiary bank entered into a lease agreement to rent property for use as banking premises from a company owned by Mr. Dlesk, the Company’s executive officer. The lease was for an initial 5 year term at an annual rental fee of $57,600, This lease was renewed in 2007 for an additional 5-year term at an annual rental fee of $60,480 and has options to renew for seven 5-year terms.

NOTE 13 - COMMITMENTS AND CONTINGENCIES

The subsidiary Bank is a party to financial instruments with off-balance-sheet risk in the normal course of business to meet the financing needs of their customers. These financial instruments include commitments to extend credit and standby letters of credit. These instruments involve, to varying degrees, elements of credit risk in excess of the amount recognized in the balance sheet. The contract amounts of these instruments reflect the extent of involvement the Company has in particular classes of financial instruments.

The Company’s exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit and standby letters of credit is represented by the contractual amount of those instruments. The Company uses the same credit policies in making commitments and conditional obligations as it does for on-balance-sheet instruments.

The following represents financial instruments whose contract amounts represent credit risk:

	2008		2007
Commitments to extend credit	$	18,831,000	$	14,219,000
Standby letters of credit		142,000		116,000

As of December 31, 2008, approximately $8,578,000 are fixed interest rate commitments and $10,395,000 are variable interest rate commitments.

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The Company evaluates each customer’s creditworthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by the Company upon extension of credit, is based on management’s credit evaluation of the counterparty. Collateral held varies, but may include accounts receivable, inventory, property, plant and equipment, and income-producing commercial properties.

Standby letters of credit are conditional commitments issued by the Company to guarantee the performance of a customer to a third party. These guarantees are primarily issued to support public and private borrowing arrangements. The standby letters of credit in the amount of $57,000 expire in 2009, $15,000 in 2012 and $70,000 in 2015. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers.

The Company and its subsidiary are parties to various legal and administrative proceedings and claims. Although any litigation contains an element of uncertainty, management believes that the outcome of these events will not have a material effect on the financial position of the Company.

15

First West Virginia Bancorp, Inc. and Subsidiary

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2008, 2007, AND 2006

NOTE 14 - RESTRICTION ON CASH

The subsidiary bank is required to maintain an average reserve balance with the Federal Reserve Bank or in cash on hand. The average required reserve balances for the years ended December 31, 2008 and 2007, were $2,494,000 and $2,264,000, respectively.

NOTE 15 - INCOME TAX

The provisions for income taxes at December 31 consist of:

	2008			2007			2006
Currently payable:
Federal	$	452,088		$	368,217		$	434,266
State		95,453			105,452			128,803
Deferred:
Federal		(52,362	)		(1,516	)		(47,501	)
State		17,313			7,115			(10,969	)
Income tax expense	$	512,492		$	479,268		$	504,599

The following temporary differences gave rise to the deferred tax asset at December 31:

	2008			2007
Allowance for loan losses	$	684,031		$	742,055
Deferred loan fees		66,623			67,699
Accrued interest on nonperforming loans		304,640			239,887
Deferred compensation		106,490			118,009
Depreciation		18,551			73,393
Amortization		100,920			109,973
Goodwill		(74,534	)		(37,267	)
AMT		222,513			56,089
Deferred state income tax		(66,370	)		(72,256	)
Total deferred tax asset - federal		1,362,864			1,297,582
Total deferred tax asset - state		195,205			212,518
		1,558,069			1,510,100
Deferred tax assets arising from market adjustments of securities available for sale:
Federal		(445,868	)		(192,289	)
State		(76,324	)		(32,916	)
Net deferred tax assets	$	1,035,877		$	1,284,895

A reconciliation between the amount of reported income tax expense and the amount computed by applying the statutory federal income tax rate to income before income taxes for the year ended December 31 is as follows:

	2008			2007			2006
	Amount		Percent	Amount		Percent	Amount		Percent
Computed tax at statutory federal rate	$	924,121	34.0%	$	855,179	34.0%	$	900,464	34.0%
Plus state income taxes net of federal tax benefits		84,135	3.1%		67,538	2.7%		77,817	2.9%
		1,008,256	37.1%		922,717	36.7%		978,281	36.9%
Increase (decrease) in taxes resulting from:
Tax exempt income		(441,202)	(16.2)%		(483,880)	(19.2)%		(461,564)	(17.4)%
Nontaxable goodwill		-	-		-	-		(37,267)	(1.4)%
Nondeductible interest expense		43,622	1.6%		50,946	2.0%		43,079	1.6%
Bank-owned life insurance		(42,304)	(1.6)%		(41,429)	(1.7)%		(38,670)	(1.5)%
Other - net		(55,880)	(2.0)%		30,914	1.2%		20,740	0.9%
Actual tax expense	$	512,492	18.9%	$	479,268	19.0%	$	504,599	19.1%

16

First West Virginia Bancorp, Inc. and Subsidiary

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2008, 2007, AND 2006

NOTE 16 - LEASES

The Company’s Bank affiliates leased certain land used for banking purposes under long-term leases, expiring at various dates. These leases contain renewal options and generally provide that the Company will pay for insurance, taxes, and maintenance.

As of December 31, 2008, the future minimum rental payments required under noncancelable operating leases with initial terms in excess of one year are as follows:

December 31, 2009	$	184,108
December 31, 2010		130,825
December 31, 2011		109,225
December 31, 2012		53,785
December 31, 2013		24,372
Thereafter		-

Rental expense under operating leases approximated $180,665 in 2008; $190,509 in 2007; and $212,711 in 2006.

NOTE 17 - OTHER OPERATING EXPENSES

Other operating expenses at December 31 included the following:

	2008		2007		2006
Directors’ fees	$	126,250	$	132,350	$	148,525
Stationery and supplies		215,249		135,929		172,268
Regulatory assessment and deposit insurance		108,253		106,421		212,922
Advertising		92,709		258,861		165,706
Postage and transportation		169,669		187,289		205,600
Other taxes		183,117		187,693		207,878
Service Expense		416,890		434,452		448,450
Other		793,129		890,673		867,509
Total	$	2,105,266	$	2,333,668	$	2,428,858

NOTE 18 - LIMITATIONS ON DIVIDENDS

The approval of the Comptroller of the Currency is required to pay dividends if the total of all dividends declared by a national bank in any calendar year exceeds the total of its net profits (as defined) for the year, combined with its retained net profits of the preceding two years. Under this formula, the Company’s subsidiary bank can declare dividends in 2009, without approval of the Comptroller of the Currency, of approximately $1,981,000, plus an additional amount equal to the bank’s net profit for 2009 up to the date of any such dividend declaration. The subsidiary bank is the primary source of funds to pay dividends to the stockholders of First West Virginia Bancorp, Inc.

NOTE 19 - REGULATORY MATTERS

The Company’s subsidiary bank entered into a Formal Agreement with the Office of the Comptroller of the Currency (OCC) in December 2004. The Formal Agreement contained certain required actions and certain restrictions. This agreement was terminated by the OCC on December 13, 2006. The Company also adopted a resolution with the Federal Reserve Bank of Cleveland, under authority given it by the Board of Governors of the Federal Reserve System, the federal regulatory agency for the Company. As with the agreement of the OCC, the Federal Reserve resolution necessitated certain actions and restrictions. Without prior Federal Reserve approval and a 30 day prior notice requirement, the resolution prohibited the Company from paying dividends, incurring debt, or participating in the acquisition of treasury stock. In addition, prior written approval is required before engaging in any non-bank activities. The resolution was terminated by the Federal Reserve Bank of Cleveland effective as of January 30, 2007.

The Company and its subsidiary bank are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory, and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company and Bank must meet specific capital guidelines that involve quantitative measures of the Company’s and bank’s assets, liabilities, and certain off-balance-sheet items as calculated under regulatory accounting practices. The Company’s and bank’s capital amounts and classifications are also subject to qualitative judgments by the regulators about components, risk, weighting, and other factors. Quantitative measures established by regulation to ensure capital adequacy require the Company and bank to maintain minimum amounts and ratios (set forth in the table below) of total and Tier I capital (as defined in the regulations) to risk-weighted assets (as defined), and of Tier I capital (as defined) to adjusted total assets (as defined).

As of December 31, 2008, the most recent notifications from the Office of the Comptroller of the Currency categorized the bank as well capitalized under the regulatory framework for prompt corrective action. There are no conditions or events since that notification that management believes has changed the capital category. The capital ratios of the Company and its subsidiary bank, along with the regulatory framework for adequately capitalized and well capitalized institutions are depicted as set forth in the following table:

17

First West Virginia Bancorp, Inc. and Subsidiary

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2008, 2007, AND 2006

NOTE 19 - REGULATORY MATTERS (CONTINUED)

(Amounts Expressed in Thousands)	Actual			For Capital Adequacy Purposes			To be Well Capitalized Under Prompt Corrective Action Provisions
First West Virginia Bancorp, Inc.	Amount		Ratio	Amount		Ratio	Amount		Ratio
As of December 31, 2008
Total Capital (to Risk Weighted Assets)	$	28,045	18.86%	$	11,897	8.0%	$	14,871	10.0%
Tier I Capital (to Risk Weighted Assets)		26,191	17.61%		5,949	4.0%		8,923	6.0%
Tier I Capital (to Adjusted Total Assets)		26,191	10.14%		10,334	4.0%		12,917	5.0%
As of December 31, 2007
Total Capital (to Risk Weighted Assets)	$	26,956	18.98%	$	11,362	8.0%	$	14,203	10.0%
Tier I Capital (to Risk Weighted Assets)		25,183	17.73%		5,681	4.0%		8,522	6.0%
Tier I Capital (to Adjusted Total Assets)		25,183	9.91%		10,170	4.0%		12,712	5.0%
Progressive Bank, N.A.
As of December 31, 2008
Total Capital (to Risk Weighted Assets)	$	27,788	18.74%	$	11,861	8.0%	$	14,826	10.0%
Tier I Capital (to Risk Weighted Assets)		25,934	17.49%		5,930	4.0%		8,895	6.0%
Tier I Capital (to Adjusted Total Assets)		25,934	10.06%		10,316	4.0%		12,895	5.0%
As of December 31, 2007
Total Capital (to Risk Weighted Assets)	$	26,620	18.80%	$	11,325	8.0%	$	14,156	10.0%
Tier I Capital (to Risk Weighted Assets)		24,847	17.55%		5,662	4.0%		8,494	6.0%
Tier I Capital (to Adjusted Total Assets)		24,847	9.80%		10,141	4.0%		12,676	5.0%

NOTE 20 - FAIR VALUE MEASUREMENTS

In September 2006, the FASB issued FASB No. 157, Fair Value Measurements, to provide consistency and comparability in determining fair value measurements and to provide for expanded disclosures about fair value measurements. The definition of fair value maintains the exchange price notion in earlier definitions of fair value but focuses on the exit price of the asset or liability. The exit price is the price that would be received to sell the asset or paid to transfer the liability adjusted for certain inherent risks and restrictions. Expanded disclosures are also required about the use of fair value to measure assets and liabilities.

As required by FASB No. 157, each financial asset and liability must be identified as having been valued according to specified level of input, 1, 2 or 3. Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date. Fair values determined by Level 2 inputs utilize inputs other than quoted prices included in Level 1 that are observable for the asset, either directly or indirectly. Level 2 inputs include quoted prices for similar assets in active markets, and inputs other than quoted prices that are observable for the asset or liability. Level 3 inputs are unobservable inputs for the asset, and include situations where there is little, if any, market activity for the asset or liability. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the level in the fair value hierarchy, within which the fair value measurement in its entirety falls, has been determined based on the lowest level input that is significant to the fair value measurement in its entirety. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the asset.

As of December 31, 2008, the Company did not have any assets measured at fair value on a nonrecurring basis. The measurement of fair value should be consistent with one of the following valuation techniques: market approach, income approach, and/or cost approach. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities (including a business). For example, valuation techniques consistent with the market approach often use market multiples derived from a set of comparables. Multiples might lie in ranges with a different multiple for each comparable. The selection of where within the range the appropriate multiple falls requires judgment, considering factors specific to the measurement (qualitative and quantitative). Valuation techniques consistent with the market approach include matrix pricing. Matrix pricing is a mathematical technique used principally to value debt securities without relying exclusively on quoted prices for the specific securities, but rather by relying on the securities’ relationship to other benchmark quoted securities. As of December 31, 2008, all of the financial assets measured at fair value utilized the market approach.

The following table presents the assets and liabilities reported on the consolidated statements of financial condition at their fair value as of December 31, 2008 by level within the fair value hierarchy. As required by SFAS No. 157, financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.

	December 31, 2008
	Level I		Level II		Level III		Total
	(In thousands)
Assets:
Securities available for sale	$	254	$	111,792	$	—	$	112,046
Impaired loans	$	—	$	3,275	$	—	$	3,275

18

First West Virginia Bancorp, Inc. and Subsidiary

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2008, 2007, AND 2006

NOTE 21 - DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS

The reported fair values of financial instruments are based on a variety of factors. Where possible, fair values represent quoted market prices for identical or comparable instruments. In other cases, fair values have been estimated based on assumptions concerning the amount and timing of estimated future cash flows and assumed discount rates reflecting varying degrees of risk. Intangible values assigned to customer relationships are not reflected in the reported fair values. Accordingly, the fair values may not represent actual values of the financial instruments that could have been realized as of year end or that will be realized in the future.

The following methods and assumptions were used by the Company in estimating the fair value disclosures for financial instruments:

Cash and Cash Equivalents: The carrying amount for cash and cash equivalents is a reasonable estimate of fair value.

Investment Securities: Fair values for investment securities are based on quoted market prices, where available. If quoted market prices are not available, fair values are based on quoted market prices of comparable instruments.

Loans: The fair value for net loans is estimated by discounting future cash flows using current market inputs at which loans with similar terms and qualities would be made to borrowers of similar credit quality. Where quoted market prices were available, primarily for certain residential mortgage loans, such market rates were utilized as estimates for fair value.

Bank Owned Life Insurance: The carrying amount of bank owned life insurance represents the cash surrender value of the underlying insurance policies, if such policies were terminated. Management believes that the carrying amount approximates the fair value.

Accrued interest receivable: The carrying amount of accrued interest receivable approximates its fair value.

Deposits: Noninterest bearing and interest bearing demand deposits and savings deposits are valued at the amount payable on demand as of year end. The fair values for time deposits are based on discounted value of cash flows. The discount rates are estimated using rates currently offered for similar instruments with similar remaining maturities.

Federal Funds Purchased and Repurchase Agreements: The carrying amount for federal funds purchased and repurchase agreements are considered to be a reasonable estimate of fair value.

Federal Home Loan Bank and other long term borrowings: The fair value of FHLB and other long term borrowings is based on the interest rates currently charged for borrowings with similar terms and maturities.

Accrued Interest Payable: The carrying amount of accrued interest payable approximates it fair value.

Off-Balance-Sheet Instruments: 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. The amount of fees currently charged on commitments is determined to be insignificant and, therefore, the carrying value and fair value of off-balance-sheet instruments are not shown.

The estimates of fair values of financial instruments are summarized as follows at December 31:

	2008				2007
(Amounts Expressed in Thousands)	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Financial assets:
Cash and cash equivalents	$	9,101	$	9,101	$	12,925	$	12,925
Investment securities		112,366		112,370		106,647		106,659
Loans		122,712		124,208		119,696		120,877
Bank owned life insurance		3,554		3,554		3,430		3,430
Accrued interest receivable		1,253		1,253		1,236		1,236
Financial liabilities:
Deposits		206,385		208,345		203,127		203,671
Federal funds purchased and repurchase agreements		11,013		11,013		12,196		12,205
FHLB and other long term borrowings		10,930		10,930		9,298		9,279
Accrued interest payable		566		566		598		598

19

First West Virginia Bancorp, Inc. and Subsidiary

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2008, 2007, AND 2006

NOTE 22 - CONDENSED PARENT COMPANY ONLY FINANCIAL STATEMENTS

Presented below are the condensed statements of financial condition, statements of income, and statements of cash flows for First West Virginia Bancorp, Inc.

BALANCE SHEETS

	December 31,
	2008		2007
ASSETS
Cash	$	118,794	$	177,304
Investment securities available-for-sale (at fair value)		254,180		358,784
Investment in subsidiary bank		28,479,818		26,871,259
Other assets		204,171		154,339
Total assets	$	29,056,963	$	27,561,686
LIABILITIES
Deferred compensation	$	313,205	$	347,087
Accrued expenses		7,200		—
Total liabilities		320,405		347,087
STOCKHOLDERS’ EQUITY		28,736,558		27,214,599
Total liabilities and stockholders’ equity	$	29,056,963	$	27,561,686

STATEMENTS OF INCOME

	Year Ended December 31,
	2008		2007		2006
INCOME
Dividends from subsidiary bank	$	1,173,660	$	1,161,040	$	2,185,784
Gains (losses) on sales of investment securities		(2,803)		939		45,668
Other income		131,278		137,517		155,071
Total income		1,302,135		1,299,496		2,386,523
EXPENSES
Salary and employee benefits		14,797		24,809		88,638
Interest expense		159		-		29,194
Other expenses		168,790		165,355		164,224
Total expenses		183,746		190,164		282,056
Income before income taxes and undistributed net income of subsidiary		1,118,389		1,109,332		2,104,467
Income tax benefit		15,098		17,864		30,622
Equity in undistributed net income of subsidiary		1,072,024		908,766		8,735
NET INCOME	$	2,205,511	$	2,035,962	$	2,143,824

20

First West Virginia Bancorp, Inc. and Subsidiary

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2008, 2007, AND 2006

NOTE 22 - CONDENSED PARENT COMPANY ONLY FINANCIAL STATEMENTS (CONTINUED)

STATEMENTS OF CASH FLOWS

	Year Ended December 31,
	2008			2007			2006
OPERATING ACTIVITIES
Net income	$	2,205,511		$	2,035,962		$	2,143,824
Adjustments to reconcile net income to net cash provided by operating activities:
Change in deferred tax benefit		12,750			8,070			(13,192	)
Undistributed earnings of affiliate		(1,072,024	)		(908,766	)		(8,735	)
Changes in operating assets and liabilities:
Other assets		(32,257	)		(7,958	)		134,243
Deferred compensation		(33,882	)		(22,475	)		36,085
Other liabilities		3,600			-			-
Net gains (losses) on sales of investment securities		2,803			(939	)		(45,668	)
Net cash provided by operating activities		1,086,501			1,103,894			2,246,557
INVESTING ACTIVITIES
Proceeds from sales of securities		147,060			118,743			447,067
Purchases of investment securities		(116,277	)		(96,061	)		(436,456	)
Net cash provided by investing activities		30,783			22,682			10,611
FINANCING ACTIVITIES
Repayment of borrowings		-			-			(1,000,000	)
Dividends paid		(1,175,794	)		(1,161,616	)		(1,161,616	)
Net cash used in financing activities		(1,175,794	)		(1,161,616	)		(2,161,616	)
Net increase (decrease) in cash and cash equivalents		(58,510	)		(35,040	)		95,552
Cash and cash equivalents at beginning of year		177,304			212,344			116,792
Cash and cash equivalents at end of year	$	118,794		$	177,304		$	212,344
Supplemental disclosures:
Cash paid for interest	$	159		$	-		$	32,111
Cash paid for income taxes		-			-			-

21

Management’s Responsibility For Financial Statements

The Company’s consolidated financial statements and the related information appearing in this Annual Report were prepared by management in accordance with generally accepted accounting principles and where appropriate reflect management’s best estimates and judgment. The financial statements and the information related to those statements contained in the Annual Report are the responsibility of management.

The accounting systems of the Company include internal accounting controls which safeguard the Company’s assets from material loss or misuse and ensure that transactions are properly authorized and recorded in its financial records, and designed to provide reasonable assurance as to the integrity and reliability of the financial records. There are inherent limitations in all systems of internal control based on the recognition that the cost of such systems should not exceed the benefits to be derived. The accounting system and related controls are reviewed by a program of internal audits performed by the internal auditor and independent auditors.

Our independent auditors are responsible for auditing the Company’s financial statements in accordance with generally accepted auditing standards and to provide an objective, independent review of the fairness of reported operating results and financial position of the Company.

The Company’s internal auditor and independent auditors have direct access to the Audit committee of the Board of Directors. This committee meets periodically with the internal auditor, the independent auditors, and management to ensure the financial accounting and audit process is properly conducted.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors

First West Virginia Bancorp, Inc.

Wheeling, West Virginia

We have audited the accompanying consolidated balance sheets of First West Virginia Bancorp, Inc. and subsidiary as of December 31, 2008 and 2007, and the related consolidated statements of income, changes in stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2008. These consolidated financial statements are the responsibility of the Corporation’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of First West Virginia Bancorp, Inc. and subsidiary as of December 31, 2008 and 2007, and the results of its operations, and its cash flows for each of the three years in the period ended December 31, 2008, in conformity with accounting principles generally accepted in the United States of America.

We were not engaged to examine management’s assertion about the effectiveness of First West Virginia Bancorp, Inc’s internal control over financial reporting as of December 31, 2008, which is included in Form 10-K and, accordingly, we do not express an opinion thereon.

As discussed in the notes to the consolidated financial statements, effective January 1, 2008, the Company adopted Statement of financial Accounting Standards No. 157, Fair Value Measurements.

/s/ S.R. Snodgrass, A.C.

Wheeling, West Virginia

February 26, 2009

S.R. Snodgrass, A.C.

980 National Road Wheeling, WV 26003-6400  Phone: 304-233-5030 Facsimile: 304-233-3062

22

Table One

SELECTED FINANCIAL DATA

(Dollars in thousands, except per share data)

	December 31,
	2008			2007			2006			2005			2004
SUMMARY OF OPERATIONS
Total interest income	$	13,514		$	13,708		$	13,772		$	13,128		$	13,406
Total interest expense		5,275			5,431			4,943			4,070			4,195
Net interest income		8,239			8,277			8,829			9,058			9,211
Provision for loan losses		-			(100	)		-			180			300
Total other income		1,488			1,410			1,433			1,378			1,284
Total other expenses		7,009			7,272			7,614			7,451			6,747
Income before income taxes		2,718			2,515			2,648			2,804			3,448
Net income		2,206			2,036			2,144			2,262			2,637
PER SHARE DATA
Net income	$	1.39		$	1.28		$	1.35		$	1.42		$	1.66
Cash dividends declared		0.74			0.73			0.73			0.73			0.73
Book value per share		18.08			17.12			15.90			15.07			15.07
AVERAGE BALANCE SHEET SUMMARY
Total loans, net	$	120,722		$	120,409		$	129,997		$	144,528		$	151,562
Investment securities		108,114			109,278			109,533			102,882			110,528
Deposits - interest bearing		182,450			182,682			190,160			200,902			215,937
Stockholders’ equity		27,295			26,223			25,416			24,409			23,092
Total assets		258,275			253,930			262,946			270,500			284,930
BALANCE SHEET
Investments	$	112,366		$	106,647		$	110,894		$	107,998		$	106,561
Loans		124,635			121,739			120,709			135,214			154,331
Allowance for loan losses		(1,923	)		(2,043	)		(2,297	)		(2,320	)		(2,356	)
Other assets		23,086			26,844			25,132			25,321			21,266
Total Assets	$	258,164		$	253,187		$	254,438		$	266,213		$	279,802
Deposits	$	206,385		$	203,127		$	210,409		$	218,817		$	236,171
Federal funds purchased and repurchase agreements		11,013			12,196			15,240			19,084			15,759
FHLB borrowings		10,929			9,298			2,343			2,385			2,425
Other long-term borrowings		-			-			-			1,000			-
Other liabilities		1,100			1,351			1,169			968			1,494
Stockholders’ equity		28,737			27,215			25,277			23,959			23,953
Total Liabilities and Stockholders’ equity	$	258,164		$	253,187		$	254,438		$	266,213		$	279,802
SELECTED RATIOS
Return on average assets		0.85	%		0.80	%		0.82	%		0.84	%		0.93	%
Return on average equity		8.08	%		7.76	%		8.44	%		9.27	%		11.42	%
Average equity to average assets		10.57	%		10.33	%		9.67	%		9.02	%		8.10	%
Dividend payout ratio		53.24	%		57.03	%		54.07	%		51.41	%		43.98	%
Loan to Deposit ratio		60.39	%		59.93	%		57.37	%		61.79	%		65.35	%

23

EX-13.2

Exhibit 13.2

First West Virginia Bancorp, Inc.

Management’s Discussion and Analysis of the Financial Condition and Results of Holding Company Operations

Forward-Looking Information: Certain information contained in this report, which are not historical facts, may be forward-looking statements that involve risks and uncertainties. These statements are subject to important factors that could cause actual results to differ materially from those contemplated by such statements, including without limitation, the effect of changing economic conditions, changes in interest rates, changes in lending activities, changes in state and federal regulations, and other external factors which may materially impact the Company’s operational and financial performance.

Critical Accounting Policies: The Company’s accounting policies are integral to understanding the results reported. The accounting policies are described in detail in Note 1 of the Consolidated Financial Statements. Our most complex accounting policies require management’s judgment to ascertain the valuation of assets, liabilities, commitments and contingencies. Detailed policies and control procedures have been established and are intended to ensure valuation methods are well controlled and applied consistently from period to period. In addition, the policies and procedures are intended to ensure that the process for changing methodologies occurs in an appropriate manner. The following is a brief description of our current accounting policies involving significant management valuation judgments.

Other Than Temporary Impairment of Equity Securities: Equity securities are evaluated periodically to determine whether a decline in their value is other than temporary. Management utilizes criteria such as the magnitude and duration of the decline, in addition to the reasons underlying the decline, to determine whether the loss in value is other than temporary. The term “other than temporary” is not intended to indicate that the decline is permanent. It indicates that the prospects for a near term recovery of value are not necessarily favorable, or that there is a lack of evidence to support fair values equal to, or greater than, the carrying value of the investment. Once a decline in value is determined to be other than temporary, the value of the security is reduced and a corresponding charge to earnings is recognized.

Allowance for Loan Losses: Arriving at an appropriate level of allowance for loan losses involves a high degree of judgment. The Company’s allowance for loan losses provides for probable losses based upon evaluations of known, and inherent risks in the loan portfolio. Management uses historical information to assess the adequacy of the allowance for loan losses as well as the prevailing business environment; as it is affected by changing economic conditions and various external factors, which may impact the portfolio in ways currently unforeseen. The allowance is increased by provisions for loan losses and by recoveries of loans previously charged-off and reduced by loans charged-off. For a full discussion of the Company’s methodology of assessing the adequacy of the reserve for loan losses, refer to Note 1 of the Consolidated Financial Statements.

Goodwill and Other Intangible Assets: As discussed in Note 1 of the notes to the Consolidated Financial Statements, the Company must assess goodwill and other intangible assets each year for impairment. This assessment involves estimating cash flows for future periods. If the future cash flows were less than the recorded goodwill and other intangible assets balances, we would be required to take a charge against earnings to write down the assets to the lower value.

Deferred Tax Assets: The Company uses an estimate of future earnings to support its position that the benefit of the deferred tax assets will be realized. If future income should prove non-existent or less than the amount of the deferred tax assets within the tax years to which they may be applied, the asset may not be realized and our net income will be reduced. The deferred tax assets are described further in Note 1 of the Consolidated Financial Statements.

OVERVIEW

Following is a discussion and analysis of the significant changes in the financial condition and results of operations of First West Virginia Bancorp, Inc., (the Company), and its subsidiary for the years ended December 31, 2008, 2007 and 2006. This discussion and analysis should be read in conjunction with the Consolidated Financial Statements and the Notes, thereto.

The Company reported net income of $2,205,511 or $1.39 per share for the year ended December 31, 2008 as compared to $2,035,962 or $1.28 per share for the year ended December 31, 2007. The increase in net income during 2008 over 2007 of $169,549 or 8.3% was primarily the result of the increase in noninterest income combined with the decrease in noninterest expenses, offset in part by the decrease in net interest income and the decrease in the negative provision for loan losses. Noninterest income increased $77,430 or 5.5% and was primarily attributable to the increase in the gains on sales of investment securities combined with the increase in other operating income, offset in part by a decrease in service charges and other fee income. Noninterest expenses fell $263,474 or 3.6% in 2008 over 2007 and was primarily due to a decrease in salary and employee benefit costs which were combined with declines in other operating expenses, offset in part by an increase in occupancy expenses. Net interest income fell in 2008 as compared to 2007 primarily due to the decline in the interest earned on loans, offset in part by an increase in the interest earned on investment securities and the decrease in the interest paid on interest bearing liabilities. A negative provision for loan losses in the amount of $100,000 was recorded during 2007 to reduce the allowance for loan losses based upon the decline in specific reserves required on nonperforming assets and the overall improvement in the performance of the loan portfolio. There was no provision made to the allowance for loan losses during 2008. The return on average assets was .85% and .80% as of December 31, 2008 and 2007, respectively. The return on average equity was 8.08% and 7.76% at December 31, 2008 and 2007, respectively. The Board of Directors declared and paid cash dividends of $.74 per share during 2008.

Table One is a summary of Selected Financial Data of the Company. The sections that follow discuss in more detail the information summarized in Table One.

24

Management’s Discussion and Analysis of the Financial Condition and Results of Holding Company Operations

Table Two - Average Balance Sheets and Interest Rate Analysis

The following table presents an average balance sheet, interest earned on interest bearing assets, interest paid on interest bearing liabilities, average interest rates and interest differentials for the years ended December 31, 2008, 2007, and 2006. Average balance sheet information as of December 31, 2008, 2007, and 2006 was compiled using the daily average balance sheet. Total loans are gross of the allowance for loan losses, net of unearned income and include loans held for sale. Non-accrual loans were included in the average balance computations; however, no interest was included in income subsequent to the non-accrual status classification. Loan fees and unearned discounts were included in income for average rate calculation purposes. Average yields on investment securities available for sale have been calculated based on amortized cost.

(dollars in thousands)	December 31, 2008						December 31, 2007						December 31, 2006
	Average Volume		Interest		Average Rate		Average Volume		Interest		Average Rate		Average Volume		Interest		Average Rate
ASSETS:
Investment securities:
U.S. Treasury and U. S. Government agencies	$	23,179	$	1,169	5.04	%	$	31,375	$	1,333	4.25	%	$	40,506	$	1,577	3.89	%
Mortgage backed securities		63,200		3,296	5.22	%		54,359		2,776	5.11	%		46,682		2,228	4.77	%
States and political subdivisions		20,412		797	3.90	%		23,196		887	3.82	%		22,003		812	3.69	%
Other securities		1,323		73	5.52	%		348		23	6.61	%		342		40	11.70	%
Total Investment securities:		108,114		5,335	4.93	%		109,278		5,019	4.59	%		109,533		4,657	4.25	%
Interest bearing deposits		3,631		69	1.90	%		1,779		84	4.72	%		1,623		83	5.11	%
Federal funds sold		8,566		141	1.65	%		5,582		274	4.91	%		5,701		280	4.91	%
Loans, net of unearned income		120,722		7,917	6.56	%		120,409		8,273	6.87	%		129,997		8,703	6.69	%
Other earning assets		1,349		52	3.85	%		1,051		58	5.52	%		887		49	5.52	%
Total earning assets		242,382		13,514	5.58	%		238,099		13,708	5.76	%		247,741		13,772	5.56	%
Other assets		15,893						15,831						15,205
Total Assets	$	258,275					$	253,930					$	262,946
LIABILITIES
Time deposits	$	94,845	$	3,979	4.20	%	$	95,603	$	4,130	4.32	%	$	92,141	$	3,495	3.79	%
Savings deposits		52,738		458	0.87	%		52,513		415	0.79	%		61,757		522	0.85	%
Interest bearing demand deposits		34,867		151	0.43	%		34,566		135	0.39	%		36,262		128	0.35	%
Federal funds purchased and repurchase agreements		12,090		173	1.43	%		14,086		486	3.45	%		18,891		656	3.47	%
FHLB and other long-term borrowings		10,209		514	5.03	%		5,351		265	4.95	%		2,753		142	5.16	%
Total interest bearing liabilities		204,749		5,275	2.58	%		202,119		5,431	2.69	%		211,804		4,943	2.33	%
Noninterest bearing demand deposits		24,839						24,321						24,537
Other liabilities		1,392						1,267						1,189
Total Liabilities		230,980						227,707						237,530
STOCKHOLDERS’ EQUITY		27,295						26,223						25,416
Total Liabilities and Stockholders’ Equity	$	258,275					$	253,930					$	262,946
Net yield on earning assets			$	8,239	3.40	%			$	8,277	3.48	%			$	8,829	3.56	%
The fully taxable equivalent basis of interest income from obligations of states and political subdivisions has been determined using a combined Federal and State corporate income tax rate of 40% for 2008, 2007, and 2006, respectively. The effect of this adjustment is presented below.
Investment securities	$	108,114	$	5,829	5.39	%	$	109,278	$	5,578	5.10	%	$	109,533	$	5,178	4.73	%
Loans		120,722		8,289	6.87	%		120,409		8,664	7.20	%		129,997		9,087	6.99	%
Total earning assets	$	242,382	$	14,380	5.93	%	$	238,099	$	14,658	6.16	%	$	247,741	$	14,677	5.92	%
Taxable equivalent net yield on earning assets			$	9,105	3.76	%			$	9,227	3.88	%			$	9,734	3.93	%

25

Management’s Discussion and Analysis of the Financial Condition and Results of Holding Company Operations

EARNINGS ANALYSIS

Net Interest Income

Net interest income, which is the difference between interest earned on loans and investments and interest paid on deposits and other liabilities, is the primary source of earnings for the Company. Changes in the volume and mix of earning assets and interest bearing liabilities combined with changes in market rates of interest greatly effect net interest income. Tables Two and Three analyze the changes in net interest income for the three years ended December 31, 2008, 2007, and 2006.

Net interest income decreased $38,131 or .5% in 2008 compared to 2007, and follows a decrease in 2007 of $552,315 or 6.3% from 2006. During 2008, the decrease in net interest income was primarily due to a decline in the interest earned on loans combined with the increase in the interest paid on other borrowings, offset in part by an increase in the interest earned on investment securities and the decrease in interest paid on deposits and repurchase agreements. The decrease in net interest income in 2007 was primarily due to the the decrease in net interest income was primarily due to a decline in the interest earned on loans combined with the increase in the interest paid on interest bearing liabilities, offset in part by an increase in the interest earned on investment securities. The changes in the volume and mix of earning assets and interest bearing liabilities combined with the changes in the market rates of interest resulted in taxable equivalent net interest yields on average earning assets of 3.76% for 2008, as compared to 3.88% and 3.93% earned during 2007 and 2006, respectively.

Interest and fees on loans decreased $355,523 or 4.3% from 2007 to 2008, after decreasing $429,617 or 4.9% from 2006 to 2007. Interest and fees on loans declined in 2008 as compared to 2007 primarily due to the decline in the yield earned on loans which was partially offset by an increase in the average volume of loans. The taxable equivalent yield on loans declined 33 basis points in 2008, from 7.20% in 2007 to 6.87% in 2008, and follows a increase of 21 basis points in 2007, from 6.99% in 2006 to 7.20% in 2007. The average loan volume increased $.3 million or .3% in 2008 as compared to 2007 after declining $9.6 million or 7.4% in 2007 as compared to 2006. During 2007, the decline in loan volume was primarily due to loan payoffs and the decreased demand for quality loans combined with the increased competition from other financial institutions and lending companies.

Interest income on investment securities in 2008 increased $316,180 or 6.3% over 2007, and follows an increase of $361,519 or 7.8% over 2006. The increase in the yield earned on investment securities which was partially offset by a decrease in the average volume of investment securities contributed to the increase in interest income on investment securities. The taxable equivalent yield on investment securities rose 29 basis points in 2008, from 5.10% in 2007 to 5.39% in 2008, and follows an increase in 2007 of 37 basis points, from 4.73% in 2006 to 5.10% in 2007. The activity of the investment securities portfolio decreased with the average volume decreasing $1.2 million or 1.1% in 2008 as compared to 2007, and follows a decrease of $.3 million or .2% in 2007 as compared to 2006. In 2007, the increase in the interest rates earned on investment securities which was partially offset by a decrease in the average volume of investment securities contributed to the increase in interest income on investment securities.

Interest expense in 2008 decreased $156,284 or 2.9% from 2007, compared to an increase of $489,038 or 9.9% from 2006. In 2008, the decline in interest expense was primarily due to the decrease in the yield on repurchase agreements and time deposits, offset in part by the increase in the average volume of Federal Home Loan Bank and other long term borrowings, offset in part by increases in the average volume and average yield of savings deposits, and decreases in the average volume of federal funds purchased and repurchase agreements and the increase in the average yield on Federal Home Loan Bank and other long term borrowings. In 2007, the increase in interest expense was primarily due to an increases in the average volume and the average yield on time deposits combined with the increase in the average yield on interest bearing demand deposits and the increases in the average volume of Federal Home Loan Bank and other long term borrowings, offset in part by decreases in the average volume and average yield of savings deposits, and decreases in the average volume of federal funds purchased and repurchase agreements and the decrease in the average yield on Federal Home Loan Bank and other long term borrowings. The average yield paid on interest bearing liabilities during 2008 fell 11 basis points, from 2.69% in 2007 to 2.58% in 2008, and follows an increase in 2007 of 36 basis points, from 2.33% in 2006 to 2.69% in 2007. The average volume of interest bearing liabilities increased $2.6 million or 1.3% in 2008 compared to 2007, after decreasing $9.7 million or 4.6% in 2007 as compared to 2006.

Noninterest Income

Noninterest income is comprised of service charges, investment securities gains and losses, and other operating income. Noninterest income increased $77,430 or 5.5%, in 2008 as compared to an decrease of $22,661 or 1.6% in 2007. The increase in noninterest income in 2008 as compared to 2007 was primarily due to increases in the gains (losses) on sales of investment securities and in other operating income, which was offset in part by a decrease in service charges and other fee income. In 2007, noninterest income primarily decreased due to the decrease in gains (losses) on sales of investment securities which was offset in part by increases in service charges and other fee income and other operating income.

Service charges and other fees represent the major component of noninterest income. These charges are earned from assessments made on checking and savings accounts. Service charges and other fee income fell $118,047 in 2008, down 12.7%, from 2007, as compared to the increase of 1.7% from 2006 to 2007. The decrease in 2008 was primarily due to a decline in overdraft charges of approximately $99,200. Also in 2008 service charges on deposit accounts declined. In addition, during 2008 the company terminated the bill pay service charges for its internet banking customers. In 2007 the increase in service charges was primarily the result of an increase in overdraft fees assessed on deposit accounts.

26

Management’s Discussion and Analysis of the Financial Condition and Results of Holding Company Operations

Table Three - Rate Volume Analysis of Changes in Interest Income and Expense

The effect on interest income and interest expense for the years ended December 31, 2008 and 2007 due to changes in average volume and rate from the prior year, is presented below. The effect of a change in average volume has been determined by applying the average rate to the change in volume. The change in rate has been determined by applying the average volume in the earlier year by the change in rate. The change in interest due to both rate and volume has been allocated to volume and rate changes in proportion to the relationship of the absolute dollar amounts of change in each.

(in thousands)	2008 Compared to 2007									2007 Compared to 2006
	Increase (Decrease) Due to Change in:									Increase (Decrease) Due to Change in:
	Average Volume			Rate			Net increase (decrease)			Average Volume			Rate			Net increase (decrease)
INTEREST INCOME FROM:
U.S. Treasury and other U. S. Government agencies	$	(348	)	$	184		$	(164	)	$	(355	)	$	111		$	(244	)
Mortgage backed securities		451			69			520			366			182			548
Obligations of states and political subdivisions		(106	)		16			(90	)		44			31			75
Other securities		64			(14	)		50			1			(18	)		(17	)
Total investment securities		61			255			316			56			306			362
Interest bearing deposits		87			(102	)		(15	)		8			(7	)		1
Federal funds sold		147			(280	)		(133	)		(6	)		-			(6	)
Loans, net of unearned income		22			(378	)		(356	)		(642	)		212			(430	)
Other earning assets		16			(22	)		(6	)		9			-			9
Total interest earned		333			(527	)		(194	)		(575	)		511			(64	)
INTEREST EXPENSE ON:
Time deposits		(33	)		(118	)		(151	)		131			504			635
Savings deposits		2			41			43			(78	)		(29	)		(107	)
Interest bearing demand deposits		1			15			16			(6	)		13			7
Federal funds purchased and repurchase agreements		(69	)		(244	)		(313	)		(167	)		(3	)		(170	)
FHLB and other long-term borrowings		241			8			249			134			(11	)		123
Total interest paid		142			(298	)		(156	)		14			474			488
Net interest differential	$	191		$	(229	)	$	(38	)	$	(589	)	$	37		$	(552	)
Presented below is the effect on volume and rate variances of the adjustment of interest income on obligations of states and political subdivisions to the fully taxable equivalent basis using a combined Federal and State corporate income tax rate of 40% for the years ended 2008, 2007, and 2006, respectively.
Investment securities	$	(59	)	$	310		$	251		$	(12	)	$	412		$	400
Loans		22			(397	)		(375	)		(670	)		247			(423	)
Total interest earned	$	213		$	(491	)	$	(278	)	$	(671	)	$	652		$	(19	)
Net interest differential	$	71		$	(193	)	$	(122	)	$	(685	)	$	178		$	(507	)

27

Management’s Discussion and Analysis of the Financial Condition and Results of Holding Company Operations

Sales of investment securities by the subsidiary bank are generally limited to the needs established under the liquidity policies. Net gains (losses) on sales of investment securities increased $132,164 in 2008 as compared to 2007. The increase in net gains (losses) on sales of investment securities was primarily attributable to sales of securities available for sale recorded by the Company and its subsidiary bank. During 2008, the Company accounted for securities gains of $114,687 and securities losses of $4,778 which were attributable to sales of securities available for sale. In 2007, the Company accounted for securities gains of $39,762 and securities losses of $62,017 which were attributable to sales of securities available for sale. During 2006, the Company and its subsidiary bank accounted for securities gains of $67,074 and securities losses of $21,406 which were attributable to sales of securities available for sale.

Other operating income represents fees from safe deposit box rentals, sales of checkbooks, sales of cashiers’ checks and money orders, utility collections, ATM charges and card fees, credit life commissions, credit card fees and commissions, income earned on bank owned life insurance and various other charges and fees related to normal customer banking relationships. Other operating income increased $63,313 or 12.6% in 2008 as compared to 2007. During 2008, the increase in other operating income was primarily due to an increase in ATM fees, nonrecurring gains on sales of assets, credit card fees, an increase in the earnings related to the cash surrender value of the bank owned life insurance on its key officers, offset in part by declines in credit life commissions, other miscellaneous income, checkbook sales, and in the income earned on loans sold to the FHLB. Other operating income increased $29,590 or 6.3% in 2007 as compared to 2006. During 2007, the increase in other operating income was primarily due to an increase in ATM fees, nonrecurring gains on sales of assets, an increase in the earnings related to the cash surrender value of the bank owned life insurance on its key officers, and increased credit life commissions and other miscellaneous income, offset in part by declines in checkbook sales, credit card fees and in the income earned on loans sold to the FHLB.

Noninterest Expense

Noninterest expenses are comprised of salaries and employee benefits, net occupancy of premises and other operating expenses. In 2008, noninterest expenses decreased $263,474 or 3.6% over 2007, and follows an decrease of $341,783 or 4.5% in 2007 over 2006. The decrease in noninterest expense in 2008 as compared to 2007 was primarily due to decreases in salary and employee benefits combined with the decrease in other operating expenses which were offset in part by an increase in occupancy expenses. The decrease in noninterest expenses in 2007 over 2006 was primarily due to declines in salary and employee benefits, other operating expenses and in net occupancy expenses.

Salary and employee benefits represent the largest component of noninterest expense. Salary and employee benefits decreased $164,783 or 4.3% in 2008 over 2007. The decrease in salary and employee benefits expense in 2008 was primarily attributable to the reduction in personnel expenses due to a decrease in the number of full-time equivalent employees combined with the decline in payroll taxes and employee benefit costs, partially offset by an normal annual merit adjustments. During 2007, salary and employee benefits decreased $218,104 or 5.4% as compared to the same period in 2006. The decrease in salary and employee benefits expense in 2007 was primarily attributable to the decline in deferred compensation expenses, the decrease in uniform costs for bank personnel, the decrease in the annual contribution to the profit sharing plan combined with a reduction in personnel expenses due to a decrease in the number of full-time equivalent employees, partially offset by an normal annual merit adjustments.

The major components of other operating expenses include: stationery and supplies, directors’ fees, service expense, postage and transportation, other taxes, advertising, and regulatory assessments and deposit insurance. Other operating expense decreased $228,402 or 9.8%, compared to the same period of the prior year. The decrease in other operating expense was primarily due a reduction in advertising expenses combined with decreases in directors fees, postage and transportation expense, and in other taxes, offset in part by increases in stationary and supplies expense, regulatory assessments, service expenses and other expenses. During 2007, other operating expense decreased $95,190, or 3.9%, over 2006 and was primarily due to a reduction in service expenses, directors fees, postage and transportation expense, other taxes, regulatory assessments, and stationary and supplies expense, offset in part by an increase in advertising and other expenses.

Occupancy expenses increased $129,711 or 11.7% in 2008 over 2007, and follows a decrease of $28,489 or 2.5% in 2007 over 2006. Occupancy expenses increased in 2008 primarily due to the increased furniture and fixtures depreciation expenses, furniture and fixture expenses and other real estate owned expenses. Occupancy expenses decreased in 2007 primarily due to the closure of the supermarket branch office located in Moundsville, West Virginia.

Income Taxes

Income tax expense for the period ended December 31, 2008 was $512,492, an increase of $33,224 or 6.9% over 2007 as compared to the decrease of $25,331 or 5.0% from 2006 to 2007. The increase in pre-taxable income offset in part by the decrease in tax exempt income primarily contributed to the increase in income tax expense in 2008. Components of the income tax expense for December 31, 2008 were $385,015 for federal taxes and $127,477 for West Virginia corporate net income taxes. Federal income tax rates and West Virginia corporate net income tax rates were consistent at 34% and 9%, respectively, for the years ended December 31, 2008, 2007 and 2006. Additional information regarding income taxes is contained in Note 15 to the Consolidated financial statements.

For federal income tax purposes, tax-exempt income is based on qualified state, county, and municipal bonds and loans. Tax-exempt income was $1,299,402 in 2008; $1,425,577 in 2007; and $1,357,813 in 2006. The state of West Virginia recognizes tax-exempt income based on the average of certain investments and loans held during the tax reporting period. Nontaxable items included are federal obligations and securities, obligations of West Virginia and West Virginia political subdivisions, investments of loans primarily secured by liens or security agreements on residential property and other real estate in the form of a mobile home, modular home or double-wide located in West Virginia. Nontaxable West Virginia income attributable to the foregoing items was approximately $1,375,000 in 2008; $1,231,000 in 2007; and $1,113,000 in 2006.

28

Management’s Discussion and Analysis of the Financial Condition and Results of Holding Company Operations

BALANCE SHEET ANALYSIS

Investments

Investment securities increased $5,719,248 or 5.4% from 2007, and followed a decrease in 2007 of $4,247,180 or 3.8% from 2006. The investment portfolio is managed to attempt to achieve an optimum mix of asset quality, liquidity and maximum yield on investment. The investment portfolio consists of U.S. Treasury securities, U.S. Government agency and corporation securities, obligations of states and political subdivisions, mortgage-backed securities and equity securities. Taxable securities comprised 84.1% of total securities at December 31, 2008, as compared to 79.5% at December 31, 2007. Other than the normal risks inherent in purchasing U.S. Treasury securities, U.S. Government agency and corporation securities, and obligations of states and political subdivisions, i.e., interest rate risk, management has no knowledge of other market or credit risk involved in these investments. The Company does not have any high risk hybrid/derivative instruments.

Investment securities that are classified available for sale are available for sale at any time based upon management’s assessment of changes in economic or financial market conditions. These securities are carried at fair value and the unrealized holding gains and losses, net of taxes, are reflected as a separate component of stockholders’ equity until realized. Available for sale securities, at fair value increased $6,062,928 or 5.7% from 2007, and represented 99.7% of the investment portfolio at December 31, 2008. The increase in the available for sale securities was primarily due to the purchase of mortgage backed and corporate debt securities. Investment securities held to maturity are securities purchased with the intent and ability to hold until their maturity. Securities classified as held to maturity are carried at cost, adjusted for amortization of premiums and accretion of discounts. The held to maturity securities decreased $343,680 or 51.8% from 2007 and represented .3% of the investment portfolio as of December 31, 2008. The decrease in the held to maturity securities was primarily the result of maturities and calls of tax exempt municipal securities. As the investment portfolio consists primarily of fixed rate debt securities, changes in the market rates of interest will affect the carrying value of securities available for sale, adjusted upward or downward under the requirements of FAS 115 and represent temporary adjustments in value. The carrying values of securities available for sale was above book value by $1,387,702 and $598,473 at December 31, 2008 and 2007, respectively. The fair value of securities classified as held to maturity was above book value by $3,460 and $11,668 at December 31, 2008 and 2007, respectively.

Table Four - Investment Portfolio

The maturity distribution using book value including accretion of discounts and amortization of premiums and approximate yield of investment securities at December 31, 2008 and December 31, 2007 are presented in the following table. Tax equivalent yield basis was used on tax exempt obligations. Approximate yield was calculated using a weighted average of yield to maturities.

(dollars in thousands)	December 31, 2008								December 31, 2007
	Securities Held to Maturity				Securities Available for Sale				Securities Held to Maturity				Securities Available for Sale
	Amount		Yield		Amount		Yield		Amount		Yield		Amount		Yield
U. S. Treasury and other U.S. Government Agencies
Within One Year	$	-	-	%	$	2,066	4.35	%	$	-	-	%	$	10,228	3.96	%
After One But Within Five Years		-	-			1,591	4.42			-	-			16,245	4.25
After Five But Within Ten Years		-	-			23,228	5.14			-	-			-	-
After Ten Years		-	-			3	2.69			-	-			4	5.48
		-	-			26,888	5.04			-	-			26,477	4.14
States & Political Subdivisions
Within One Year		320	7.85			1,456	3.86			165	7.44			1,820	3.96
After One But Within Five Years		-	-			6,090	5.18			499	7.15			5,347	5.05
After Five But Within Ten Years		-	-			3,591	5.89			-	-			5,963	5.53
After Ten Years		-	-			7,386	6.12			-	-			9,023	5.85
		320	7.85			18,523	5.59			664	7.22			22,153	5.42
Corporate Debt Securities
Within One Year		-	-			-	-			-	-			-	-
After One But Within Five Years		-	-			1,322	6.74			-	-			-	-
After Five But Within Ten Years		-	-			-	-			-	-			-	-
After Ten Years		-	-			-	-			-	-			-	-
		-	-			1,322	6.74			-	-			-	-
Mortgage-Backed Securities		-	-			65,076	5.35			-	-			57,001	5.13
Equity Securities		-	-			237	5.22			-	-			352	6.66
Total	$	320	7.85	%	$	112,046	5.33	%	$	664	7.22	%	$	105,983	4.95	%

29

Management’s Discussion and Analysis of the Financial Condition and Results of Holding Company Operations

Loans

Loans represent the largest asset on the Company’s balance sheet. Total loans, net of unearned income, increased $2,895,592 or 2.4% from 2007 to 2008. The increase in total loans in 2008 was primarily due to increases in commercial loans and installment loans and other loans which increased approximately $3,334,000, $1,225,000 and $230,000, respectively, offset by a decrease in residential real estate loans of approximately $1,896,000. The increase in commercial loans was primarily in commercial real estate loans and commercial loans. The decrease in residential real estate loans during 2008 was primarily in loans secured by multi-family residential properties. From 2006 to 2007, total loans increased $1,029,873 or .9%. The increase in loan volume in 2007 was primarily due to increases in residential real estate loans and other loans which increased approximately $3,352,000 and $411,000, respectively, offset by decreases in commercial loans and installment loans which decreased approximately $2,100,000 and $612,000, respectively. The increase in residential real estate loans during 2007 was primarily in loans secured by multi-family residential properties and the increased demand for closed end loans secured by one to four family residential properties. The decline in commercial loans was primarily in commercial real estate loans due to increased competition from other lending companies and financial institutions, as well as the local economic slow-down for new financing due to the increased prime lending rate.

Real estate residential loans which include real estate construction, real estate farmland, real estate residential loans and multi-family residential properties comprised thirty-six percent (36%) of the loan portfolio. Commercial loans which include real estate secured by non-farm, non-residential properties and commercial and industrial loans comprised forty-three percent (43%) of the loan portfolio. Installment loans comprised eleven percent (11%) of the loan portfolio. Other loans which include non-rated industrial development obligations, direct financing leases and other loans comprised ten percent (10%) of the loan portfolio. The changes in the composition of the loan portfolio from 2007 to 2008 were a 2% increase in commercial loans and a 2% decrease in real estate residential loans. From 2006 to 2007, the changes in the composition of the loan portfolio were a 2% increase in real estate residential loans and a 2% decrease in commercial loans.

Table Five

Loan Portfolio - Maturities and sensitivities of Loans to Changes in Interest Rates

The following table presents the contractual maturities of loans other than installment loans and residential mortgages as of December 31, 2008 and 2007:

(dollars in thousands)	December 31, 2008						December 31, 2007
	In one Year or Less		After one Year Through Five Years		After Five Years		In one Year or Less		After one Year Through Five Years		After Five Years
Real estate construction	$	63	$	400	$	248	$	518	$	199	$	210
Commercial real estate - secured by nonfarm, nonresidential property		332		4,782		38,800		1,913		2,139		38,298
Commercial and industrial		2,305		2,696		4,648		1,526		2,850		3,503
Nonrated industrial development obligations		1,324		2,585		8,433		1,206		2,593		8,246
Total	$	4,024	$	10,463	$	52,129	$	5,163	$	7,781	$	50,257

The following table presents an analysis of fixed and variable rate loans as of December 31, 2008 and 2007 along with the contractual maturities of loans other than installment loans and residential mortgages:

(dollars in thousands)	December 31, 2008						December 31, 2007
	In one Year or Less		After one Year Through Five Years		After Five Years		In one Year or Less		After one Year Through Five Years		After Five Years
Fixed Rates	$	2,535	$	8,884	$	6,791	$	2,724	$	6,479	$	6,819
Variable Rates		1,489		1,579		45,338		2,439		1,302		43,438
Total	$	4,024	$	10,463	$	52,129	$	5,163	$	7,781	$	50,257

30

Management’s Discussion and Analysis of the Financial Condition and Results of Holding Company Operations

Loans Held for Sale

The Company has entered into an agreement with the Federal Home Loan Bank of Pittsburgh (“FHLB”) under which the bank may sell conforming one-to-four family residential mortgage loans to the FHLB. The agreement provides for a maximum commitment of $5,000,000. Loans sold to the FHLB are sold with limited recourse or credit risk up to a maximum amount of $125,000 based upon utilization of the original commitment. The bank also maintains the servicing of these loans, for which it is paid a servicing fee. The total amount of loans sold under this agreement is $1,817,036 and $1,981,231 as of December 31, 2008 and 2007, respectively. The loans which were sold were also subject to a recourse obligation or credit risk in the amount of $43,043 and $41,635 at December 31, 2008 and 2007, respectively.

Non-performing Loans

Non-performing assets include non-accrual loans on which the collectibility of the full amount of interest is uncertain; loans which have been renegotiated to provide for a reduction or deferral of interest on principal because of a deterioration in the financial position of the borrower; loans past due ninety days or more as to principal or interest; and other real estate owned. A five-year summary of nonperforming assets is presented in Table Six.

Total non-performing loans were $3,283,000 at December 31, 2008 as compared to $2,463,000 at December 31, 2007. Non-performing loans increased $820,000 in 2008, after declining $920,000 in 2007. The increase in non-performing loans in 2008 as compared to 2007 was primarily due to the increase in non-accrual loans and in other real estate loans, offset by a decrease in loans past due 90 days or more.

Table Six - Risk Elements

Loans which are in the process of collection, but are contractually past due 90 days or more as to interest or principal, renegotiated, non-accrual loans and other real estate are as follows:

(dollars in thousands)	December 31,
	2008			2007		2006		2005		2004
Past Due 90 Days or More:
Real Estate - residential	$	-		-		-		85		-
Commercial		-		14		-		-		6
Installment		-		12		3		5		11
		-		26		3		90		17
Non-accrual:
Real Estate - residential	$	939		850		958		64		74
Commercial		2,320		1,586		2,409		1,262		1,357
Installment		16		1		13		41		10
	$	3,275		2,437		3,380		1,367		1,441
Other Real Estate	$	8		-		-		53		184
Total non-performing assets	$	3,283		2,463		3,383		1,510		1,642
Total non-performing assets to total loans and other real estate		2.63	%	2.02	%	2.80	%	1.12	%	1.06	%

Loans are placed in non-accrual when the principal or interest is past due 90 days or more, unless the loan is both well secured and in the process of collection. Non-accrual loans were $3,275,000 or 2.6% of total loans outstanding as of December 31, 2008, as compared to $2,437,000 or 2.0% of total loans outstanding as of December 31, 2007. Non-accrual loans increased in 2008 over 2007 primarily due to the addition of one commercial loan customer into non-accrual status by the subsidiary bank. Non-accrual loans decreased in 2007 over 2006 primarily due to the pay-off of approximately $1,100,000 which consisted of two commercial real estate loans to one borrower. Loans past due 90 days or more and still accruing interest were $-0- at December 31, 2008, as compared to $26,000 at December 31, 2007. Other real estate owned totaled $8,000 at December 31, 2008. Management continues to monitor the nonperforming assets to ensure against deterioration in collateral values.

Generally, all banks recognize interest income on the accrual basis, except for certain loans which are placed on a non-accrual status. Loans are placed on a non-accrual status, when in the opinion of management doubt exists as to its collectibility. In accordance with the Office of the Comptroller of the Currency Policy, banks may not accrue interest on any loan which either the principal or interest is past due 90 days or more unless the loan is both well secured and in the process of collection. The amount of interest income that would have been recognized on nonaccrual loans had the loans performed in accordance with their original terms was $214,000 and $156,500 for the periods ended December 31, 2008 and 2007, respectively.

31

Management’s Discussion and Analysis of the Financial Condition and Results of Holding Company Operations

Allowance for Loan Losses

In all lending activities there is an inherent risk that borrowers will be unable to repay their obligations. The Company maintains an allowance for loan losses to absorb probable loan losses. Table Seven presents a five-year summary of the Allowance for Loan Losses. The Company has historically maintained the allowance for loan losses at a level greater than actual charge-offs. Although a subjective evaluation is determined by management, the Company believes it has appropriately assessed the risk of loans in the loan portfolio and has provided for an allowance which is adequate based on that assessment. Because the allowance is an estimate, any change in the economic conditions of the Company's market area could result in new estimates which could affect the Company's earnings. Management monitors the quality of the loan portfolio through reviews of past due loans and all significant loans which are considered to be potential problem loans on a monthly basis. The internal loan review function provides for an independent review of commercial, real estate, and installment loans in order to measure the asset quality of the portfolio. Management's review of the loan portfolio has not indicated any material loans, not disclosed in the accompanying tables and discussions which are known to have possible credit problems that cause management to have serious doubts as to the ability of each borrower to comply with their present loan repayment terms.

The allowance for loan losses decreased $119,542 or 5.9%, between December 31, 2008 and December 31, 2007. The allowance for loan losses represented 1.5% and 1.7% of outstanding loans as of December 31, 2008 and 2007, respectively. Net loan charge-offs were $119,542 in 2008, compared to $153,961 in 2007 and $22,913 in 2006. The net loan charge-offs remain within historical ranges. The net loan charge-offs in 2008, 2007 and 2006 were primarily commercial and consumer loans. In 2007, a negative provision in the amount of $100,000 was taken primarily as a result of the payoff of two commercial impaired loans. The credit quality of the loan portfolio combined with the recent level of net charge-offs and nonperforming assets continue to be considered in the calculation of the provision for loan losses.

The additions to the allowance for loan losses are based on management's evaluation of characteristics of the loan portfolio, current and anticipated economic conditions, past loan experiences, net loans charged-off, specific problem loans and delinquencies, and other factors. The Company has allocated the allowance for possible loan losses to specific portfolio segments based upon historical net charge-off experience, changes in the level of nonperforming assets, local economic conditions and management’s experience as presented in Table Eight.

Table Seven - Analysis of Allowance for Possible Loan Losses

The following table presents a summary of loans charged off and recoveries of loans previously charged off by type of loan.

(dollars in thousands)	December 31,
	2008			2007			2006			2005			2004
Allowance for loan losses:
Balance at beginning of period:	$	2,043		$	2,297		$	2,320		$	2,356		$	2,305
Loans Charged Off:
Real Estate - residential		-			29			-			12			3
Commercial		165			111			18			183			229
Installment		29			26			56			71			70
		194			166			74			266			302
Recoveries:
Real Estate - residential		-			-			-			-			17
Commercial		72			5			36			29			20
Installment		2			7			15			21			16
		74			12			51			50			53
Net Charge-offs		120			154			23			216			249
Additions Charged to Operations		-			(100	)		-			180			300
Balance at end of period:	$	1,923		$	2,043		$	2,297		$	2,320		$	2,356
Average Loans Outstanding	$	120,722		$	120,409		$	129,997		$	144,528		$	151,562
Ratio of net charge-offs to Average loans outstanding for the period		0.10	%		0.13	%		0.02	%		0.15	%		0.16	%
Ratio of the Allowance for Loan Losses to Loans Outstanding for the period		1.54	%		1.68	%		1.90	%		1.72	%		1.53	%

32

Management’s Discussion and Analysis of the Financial Condition and Results of Holding Company Operations

Table Eight

Loan Portfolio - Allocation of allowance for possible loan losses

The following table presents an allocation of the allowance for possible loan losses at each of the five year periods ended December 31, 2008. The allocation presented below is based on the historical average of net charge offs per category combined with the change in loan growth and management's review of the loan portfolio.

(dollars in thousands)	December 31,
	2008				2007				2006				2005				2004
	Amount		Percent of loans in each category to total loans		Amount		Percent of loans in each category to total loans		Amount		Percent of loans in each category to total loans		Amount		Percent of loans in each category to total loans		Amount		Percent of loans in each category to total loans
Real estate - residential	$	298	35.8	%	$	298	38.3	%	$	327	35.8	%	$	327	33.4	%	$	325	33.5	%
Commercial		1,184	43.0	%		1,277	41.2	%		1,483	43.3	%		1,465	44.5	%		1,520	45.2	%
Installment		420	11.3	%		447	10.5	%		466	11.2	%		507	12.3	%		490	11.9	%
Others		21	9.9	%		21	10.0	%		21	9.7	%		21	9.8	%		21	9.4	%
Total	$	1,923	100.0	%	$	2,043	100.0	%	$	2,297	100.0	%	$	2,320	100.0	%	$	2,356	100.0	%

Deposits

A stable core deposit base is the major source of funds for the Holding Company’s subsidiary bank. The deposit mix depends upon many factors including competition from other financial institutions, depositor interest in certain types of deposits, changes in the interest rate and the Company's need for certain types of deposit growth. Total deposits increased approximately $3.3 million or 1.6% in 2008. The increase in total deposits was primarily due to the increase in interest bearing demand deposits and savings deposits, offset by the decreases in noninterest bearing demand deposits and time deposits. Savings deposits increased approximately $4.7 million, or 9.3%, during 2008 while time deposits decreased approximately $1.7 million, or 1.8%. The decline in time deposits is primarily a result of deposit customers seeking higher yielding deposit products.

At December 31, 2008, noninterest bearing deposits comprised 12% of total deposits and interest bearing deposits which include NOW, money market, savings and time deposits comprised 88% of total deposits. There were no changes in the deposit mix from December 31, 2007 to December 31, 2008 and from December 31, 2006 to December 31, 2007.

Federal Funds Purchased and Repurchase Agreements

Federal funds purchased and repurchase agreements are short-term borrowings. There were no Federal funds purchased as of December 31, 2008 and 2007. Repurchase agreements decreased $1,182,949 or 9.7%, from $12,196,144 at December 31, 2007 to $11,013,195 at December 31, 2008. The decrease in repurchase agreements in 2008 was primarily due to the reduction in the balances maintained by commercial customers.

Federal Home Loan Bank and Other Long-term Borrowings

Federal Home Loan Bank (“FHLB”) borrowings were $10,929,369 and $9,298,492 at December 31, 2008 and 2007, respectively, with an interest rate of 4.97% and 5.00%, respectively. The FHLB borrowings are collateralized by a blanket collateral agreement which assigns a security interest in capital stock, deposits, mortgage loans, securities and FHLB stock of the subsidiary bank.

The Company maintains a $3 million non-revolving line of credit from a financial institution. The purpose of the line of credit was to provide for the capitalization of the subsidiary Bank as required under the terms of the Formal Agreement. The line of credit is secured by 126,200 shares of Progressive Bank, N.A. stock. The note bears an interest rate of prime and is adjusted on a quarterly basis. The line of credit expires in May 2015 and is to be repaid in quarterly interest only payments for the first three years and quarterly principal and interest payments thereafter. The Company’s initial borrowing on the note amounted to $2 million. There were no outstanding borrowings under the line of credit at December 31, 2008 and 2007.

33

Management’s Discussion and Analysis of the Financial Condition and Results of Holding Company Operations

Table Nine Contractual Maturities of Long term Obligations and Operating Leases

The following table presents the contractual maturities of long term obligations and operating leases:

(dollars in thousands)	Payments due by period
Contractual Obligations:	< 1 year		1-3 years		3-5 years		> 5 years		Total
Federal Home Loan Bank and other long term borrowings	$	3,575	$	3,661	$	177	$	3,516	$	10,929
Operating Leases		184		240		78		-		502
	$	3,759	$	3,901	$	255	$	3,516	$	11,431

Table Ten Contractual Maturities of Commitments and Contingencies

The following table presents the maturities of commitments and contingencies:

(dollars in thousands)	Amount of Commitment Expiration Per Period
Off-Balance Sheet arrangements:	< 1 year		1-3 years		3-5 years		> 5 years		Total
Commitments to extend credit	$	4,636	$	3,362	$	964	$	9,869	$	18,831
Standby letters of credit		57		-		15		70		142
	$	4,693	$	3,362	$	979	$	9,939	$	18,973

Liquidity

Liquidity management ensures that funds are available to meet loan commitments, deposit withdrawals, and operating expenses. Funds are provided by loan repayments, investment securities maturities, or deposits, and can be raised by liquidating assets or through additional borrowings. The Company had investment securities with an estimated fair value of $112,046,054 classified as available for sale at December 31, 2008. These securities are available for sale at any time based upon management's assessment in order to provide necessary liquidity should the need arise. The fair value of temporarily impaired investment securities that the company has the intent and ability to hold until the anticipated recovery in market value is $19,807,000. In addition, the Company’s subsidiary bank, Progressive Bank, N.A., is a member of the Federal Home Loan Bank of Pittsburgh (“FHLB”) which provides an additional source of funding in the form of collateralized advances. At December 31, 2008, the subsidiary bank had a short term line of credit in the aggregate amount of approximately $7 million available with the FHLB. There were no short term borrowings outstanding pursuant to this agreement as of December 31, 2008. At December 31, 2008 and 2007, the Company had outstanding loan commitments and unused lines of credit totaling $18,973,000 and $14,335,000, respectively. Management placed a high probability for required funding within one year of approximately $12.3 million as of December 31, 2008. Approximately $6.6 million is principally unused overdraft, home equity and credit card lines on which management places a low probability for required funding.

Capital Resources

Stockholders’ equity increased 3.8% in 2008 entirely from current year earnings after quarterly dividends, and a 1.8% increase in accumulated other comprehensive income. The increase in accumulated other comprehensive income is primarily attributable to the effect of the change in the net unrealized gains on available for sale investment securities. The increase in stockholders’ equity in 2008 follows an increase of 3.5% in 2007 entirely from current earnings after quarterly dividends and an increase of 4.2% resulting from the effect of the change in the net unrealized gains (losses) on available for sale investment securities. Stockholders’ equity amounted to 11.1% and 10.8% of total assets at December 31, 2008 and 2007, respectively. The Company paid dividends of $.74 per share and $.73 per share in 2008 and 2007, respectively.

The Holding Company’s primary source of funds for payment of dividends to shareholders is from the dividends from its subsidiary bank. As previously discussed in Note 18 of the Consolidated Financial Statements, the Board of Directors adopted a resolution with the Federal Reserve Bank of Cleveland which prohibited the Company from paying dividends or participating in the acquisition of treasury stock without prior Federal Reserve approval and a 30 day prior notice requirement. This resolution was terminated by the Federal Reserve Bank of Cleveland on January 30, 2007.

The Holding Company and its subsidiary bank are subject to regulatory risk-based capital guidelines administered by the Federal Reserve Board and the Office of the Comptroller of the Currency. These risk-based capital guidelines establish minimum capital ratios of Total capital, Tier 1 Capital, and Leverage to assess the capital adequacy of bank holding companies. Additional information on capital amounts, ratios and minimum regulatory requirements for the Company and its subsidiary bank can be found in Note 19 of the Consolidated Financial Statements.

Interest Rate Risk

Changes in interest rates can affect the level of income of a financial institution depending on the repricing characteristics of its assets and liabilities. This is termed interest rate risk. If a financial institution is asset sensitive, more of its assets will reprice in a given time frame than liabilities. This is a favorable position in a rising rate environment and would enhance income. If an institution is liability sensitive, more of its liabilities will reprice in a given time frame than assets. This is a favorable position in a falling rate environment. Financial institutions allocate significant time and resources to managing interest rate risk because of the impact that changes in interest rates can have to earnings. The initial step in the process of maintaining a Company’s interest rate sensitivity involves the preparation of a basic “gap” analysis of earning assets and interest bearing liabilities as reflected in the following table. The analysis measures the difference or the “gap” between the amount of assets and liabilities repricing within a given time period.

34

Management’s Discussion and Analysis of the Financial Condition and Results of Holding Company Operations

This information is used to manage a Company's asset and liability positions. Management uses this information as a factor in decisions made about maturities of investment of cash flows, classification of investment securities purchases as available-for-sale or held-to-maturity, emphasis of variable rate or fixed rate loans and short or longer term deposit products in marketing campaigns, and deposit account pricing to alter asset and liability repricing characteristics. The overall objective is to minimize the impact to the margin of any significant change in interest rates.

The information presented in the following Interest Rate Risk table contains assumptions and estimates used by management in determining repricing characteristics and maturity distributions. As noted in the following table, the cumulative gap at one year is positive at approximately $34,737,000, which indicates the Company’s earning assets reprice sooner than interest bearing liabilities at December 31, 2008. As the table presented is as of a point in time and conditions change on a daily basis, any conclusions made may not be indicative of future results.

The Company’s subsidiary bank uses an asset/liability model to measure the impact of changes in interest rates on net interest income on a periodic basis. Assumptions are made to simulate the impact of future changes in interest rates and/or changes in balance sheet composition. The effect of changes in future interest rates on the mix of assets and liabilities may cause actual results to differ from simulated results. Guidelines established by the Company’s subsidiary bank provides that the estimated net interest income may not change by more than 10% in a one year period given a +/- 200 basis point parallel shift in interest rates. Excluding the potential effect of interest rate changes on assets and liabilities of the Holding Company which are not deemed material, the anticipated impact on net interest income of the subsidiary bank at December 31, 2008 was as follows: given a 200 basis point increase scenario net interest income would be reduced by approximately 2.6%, and given a 200 basis point decrease scenario net interest income would be increased by approximately 4.6%. The projections provided by the model are not intended as an actual forecast of the bank’s performance in a particular rate environment, and should not be relied upon. Actual changes in the interest rate environment normally do not take place instantaneously, but over a period of time, and do not occur in a parallel fashion. Additionally, the balance sheet composition, spread relationships for new dollars invested, non interest income and expenses, investment practices, and deposit practices all change as a result of changes in interest rates and would need to be considered by the Asset Liability committee.

Interest Rate Risk Table - December 31, 2008

(dollars in thousands)
	Less than Three Months			Four to Twelve Months			One to Three Years			Greater than Three Years			Non- Interest Bearing			Total
ASSETS:
Cash and cash equivalents	$	3,108		$	-		$	-		$	-		$	5,993		$	9,101
Investment securities		27,151			37,143			16,754			29,930			1,388			112,366
Loans		25,016			37,933			39,161			19,446			3,079			124,635
Other assets		5,004			-			-			-			8,981			13,985
Allowance for loan losses		-			-			-			-			(1,923	)		(1,923	)
Total assets	$	60,279		$	75,076		$	55,915		$	49,376		$	17,518		$	258,164
LIABILITIES AND CAPITAL
NOW and savings accounts	$	14,169		$	6,432		$	10,254		$	47,208		$	-		$	78,063
Money Market Accounts (MMDA’s)		7,320			-			4,117			-			-			11,437
Certificates of deposit < $100,000		16,950			23,613			18,358			8,066			-			66,987
Certificates of deposit > $100,000		8,393			9,153			6,349			1,895			-			25,790
Noninterest bearing demand deposits		-			-			-			-			24,108			24,108
Federal funds purchased and repurchase agreements		11,013			-			-			-			-			11,013
FHLB borrowings		18			3,557			3,662			3,693			-			10,930
Other liabilities		-			-			-			-			1,099			1,099
Stockholders’ equity		-			-			-			-			28,737			28,737
Total liabilities and capital	$	57,863		$	42,755		$	42,740		$	60,862		$	53,944		$	258,164
GAP		2,416			32,321			13,175			(11,486	)		(36,426	)
GAP/ Total Assets		0.94	%		12.52	%		5.10	%		(4.45	)%		(14.11	)%
Cumulative GAP		2,416			34,737			47,912			36,426			0
Cumulative GAP/Total Assets		0.94	%		13.46	%		18.56	%		14.11	%		0.00	%

The above analysis contains repricing and maturity assumptions and estimates used by management.

35

Management’s Discussion and Analysis of the Financial Condition and Results of Holding Company Operations

Market Information of Common Stock

First West Virginia Bancorp, Inc’s common stock is traded on the New York Stock Exchange Alternext US list under the symbol of FWV. The following table sets forth the high and low sales prices of the common stock during the respective quarters.

		First Quarter		Second Quarter		Third Quarter		Fourth Quarter
2008	High	$	17.90	$	15.90	$	15.96	$	15.30
	Low	$	14.20	$	14.50	$	13.45	$	12.80
2007	High	$	20.90	$	20.30	$	19.50	$	17.55
	Low	$	19.50	$	19.15	$	17.25	$	13.70

Summarized Quarterly Financial Information

A summary of selected quarterly financial information follows:

2008	First Quarter			Second Quarter			Third Quarter			Fourth Quarter
Total interest income	$	3,482,786		$	3,329,189		$	3,366,841		$	3,335,265
Total interest expense		1,352,940			1,297,528			1,329,848			1,294,900
Net interest income		2,129,846			2,031,661			2,036,993			2,040,365
Provision for loan losses		-			-			-			-
Investment securities gain (loss)		112,501			(511	)		(2,081	)		-
Total other income		347,984			334,061			355,438			340,516
Total other expenses		1,762,484			1,723,293			1,734,713			1,788,280
Income before income taxes		827,847			641,918			655,637			592,601
Net income		636,341			511,217			521,905			536,048
Net income per share		0.40			0.32			0.33			0.34
2007	First Quarter			Second Quarter			Third Quarter			Fourth Quarter
Total interest income	$	3,379,956		$	3,381,757		$	3,454,255		$	3,492,528
Total interest expense		1,321,508			1,313,361			1,397,738			1,398,893
Net interest income		2,058,448			2,068,396			2,056,517			2,093,635
Provision for loan losses		-			-			(100,000	)		-
Investment securities gain (loss)		(54,193	)		2,837			(605	)		29,706
Total other income		330,850			355,763			370,086			376,034
Total other expenses		1,864,452			1,787,705			1,787,298			1,832,789
Income before income taxes		470,653			639,291			738,700			666,586
Net income		415,396			506,022			579,613			534,931
Net income per share		0.26			0.32			0.36			0.34
2006	First Quarter			Second Quarter			Third Quarter			Fourth Quarter
Total interest income	$	3,361,053		$	3,441,719		$	3,518,234		$	3,450,767
Total interest expense		1,122,867			1,147,188			1,288,661			1,383,746
Net interest income		2,238,186			2,294,531			2,229,573			2,067,021
Provision for loan losses		-			-			-			-
Investment securities gain (loss)		(106	)		44,215			778			781
Total other income		327,055			338,524			368,824			353,068
Total other expenses		1,813,711			2,003,925			1,834,969			1,961,422
Income before income taxes		751,424			673,345			764,206			459,448
Net income		600,043			549,433			591,693			402,655
Net income per share		0.38			0.35			0.37			0.25

36

FIRST WEST VIRGINIA BANCORP, INC. DIRECTORS
Nada E. Beneke Assistant Secretary, First West Virginia Bancorp, Inc. Assistant Secretary, Progressive Bank, N.A. Registered Sanitarian, Ohio County Health Department President, Beneke Corporation	Gary W. Glessner Certified Public Accountant President/Owner, Glessner & Associates, PLLC	R. Clark Morton Chairman of the Board, Progressive Bank, N.A. Attorney at Law Retired Partner, Herndon, Morton, Herndon & Yaeger
Sylvan J. Dlesk Chairman of the Board, First West Virginia Bancorp, Inc. President and Chief Executive Officer, First West Virginia Bancorp, Inc. President and Chief Executive Officer, Progressive Bank, N.A Owner, Dlesk Realty and Investments President, Dlesk, Inc. President, Ohio Valley Carpeting, Inc.	Laura G. Inman Vice Chairman of the Board, First West Virginia Bancorp, Inc. James C. Inman, Jr. Retired Bank Executive	William G. Petroplus Attorney at Law Member/Partner Petroplus & Gaudino Thomas L. Sable Managing Partner, The Summit Atlantic Group, LLC Clerk/Treasurer, Village of Bellaire
FIRST WEST VIRGINIA BANCORP, INC. OFFICERS
Sylvan J. Dlesk Chairman, President and Chief Executive Officer Laura G. Inman Vice Chairman	Francie P. Reppy Executive Vice President and Chief Financial Officer Chief Administrative Officer Treasurer Brad D. Winwood Vice President and Senior Operations Officer	Connie R. Tenney Vice President Deborah A. Kloeppner Secretary Nada E. Beneke Assistant Secretary

PROGRESSIVE BANK, N.A. DIRECTORS
Nada E. Beneke Dr. Clyde D. Campbell Robert R. Cicogna Sylvan J. Dlesk		Gary W. Glessner Elizabeth H. Hestick Robert B. Hunnell, Jr.	James C. Inman, Jr. Laura G. Inman Tulane B. Mensore	R. Clark Morton William G. Petroplus Thomas L. Sable
DIRECTOR EMERITUS	David R. Rexroad

PROGRESSIVE BANK, N.A. OFFICERS

R. Clark Morton Chairman of the Board   Sylvan J. Dlesk President Chief Executive Officer   Francie P. Reppy Executive Vice President Chief Administrative Officer Chief Financial Officer   Connie R. Tenney Senior Vice President Brad D. Winwood Senior Vice President Senior Accounting, Operations & Investment Officer   Michael J. Taylor Vice President Credit Administration   Marc A. DeSantis Vice President Retail Banking Officer/Marketing Coordinator   Gary S. Martin Vice President - Retail Lending David E. Wharton Vice President Information Technology Officer Data Security Officer   Deborah A. Kloeppner Vice President Compliance and CRA Officer Secretary   Susan E. Reinbeau Vice President Branch Administrator Office Manager Woodsdale   Michele L. Stanley Vice President Operations Officer Ron E. Michaux Assistant Vice President Business Development Officer   Matej Kret Assistant Vice President Business Development Officer   Janey S. Longwell Assistant Vice President Office Manager New Martinsville   Laura A. Schmidt Assistant Vice President Accounting Officer Debra M. Tomlin Assistant Vice President Loan Officer   Rebecca A. Palmer Assistant Vice President Manager Data Processing   Kimberly A. Hughes Assistant Vice President Credit Analyst   James J. Warman Assistant Vice President Credit Analyst   Harold O. Thomas Sr. Business Development Officer Susan M. Scotka Bank Secrecy & OFAC Officer   Beth A. Heyman Office Manager Bethlehem   Johanna Sanders Office Manager Wellsburg   Vickie D. Poling Loan Officer   Nada E. Beneke Assistant Secretary

STOCKHOLDER INFORMATION
Corporate Office: First West Virginia Bancorp, Inc. 1701 Warwood Avenue Wheeling, WV 26003 Phone: (304) 277-1100 Fax: (304) 242-9628 www.progbank.com Stock Trading Information: First West Virginia Bancorp, Inc.'s common stock is traded on the New York Stock Exchange Alternext US list under the symbol FWV.	Stock Registrar and Transfer Agent: Any inquiries related to stockholder records, stock transfers, changes of ownership, and changes of address should be sent to the transfer agent at the following address: Investor Relations Department Registrar and Transfer Company 10 Commerce Drive Cranford, New Jersey 07016-9982 (800) 368-5948 www.rtco.com	Annual Meeting The Annual Meeting of Stockholders will be held at 4:00 p.m, on Tuesday, April 14, 2009, at the Warwood Office of Progressive Bank, N.A., 1701 Warwood Avenue, Wheeling, WV 26003.	Upon written request any shareholder of record on December 31, 2008, may obtain a copy of the Corporation's 2008 Form 10-K Report (to be filed with the Securities and Exchange Commission before March 31, 2009) by writing to the Secretary, First West Virginia Bancorp, Inc., 1701 Warwood Avenue, Wheeling, WV 26003. An electronic version of Form 10-K may also be obtained by visiting the Progressive Bank, N.A. website at www.progbank.com in the section entitled “Investor Relations” or at the Securities and Exchange’s website at www.sec.gov.

EX-14.1

EXHIBIT 14.1

FIRST WEST VIRGINIA BANCORP, INC.

CODE OF CONDUCT & ETHICS

Policy Statement

It is the Policy of First West Virginia Bancorp, Inc. to comply fully with all laws, rules and regulations that apply to our business activities. Strict adherence to these laws, rules and regulations is an essential requirement for each director, officer and employee of the Corporation (hereinafter “Personnel”). Each director, officer and employee must adhere to this Code of Conduct & Ethics and be aware of the applicable laws that are important to our business.

It is the policy of First West Virginia Bancorp, Inc. that its employees and representatives shall not participate in or condone criminal activity directly or indirectly, in any form. All employees shall report promptly any suspected illegal activity. In addition, employees who break the law will be subject to reprimand, including termination.

First West Virginia Bancorp, Inc. does not tolerate retribution against employees who, in good faith, report suspected violations of law. Employees who retaliate against others who report suspected criminal activity or violations will themselves be subject to immediate discipline.

Please discuss any questions you may have regarding this Code of Conduct & Ethics with your supervisor or any member of the Audit Committee. The Audit Committee is responsible for overseeing the implementation of the Code of Conduct & Ethics and to report improper conduct, as provided in the Code of Conduct & Ethics.

General Guidelines for Corporate Conduct

The following general principles and rules broadly apply to all Personnel regardless of the position he or she holds with First West Virginia Bancorp, Inc.

1. Personnel should always conduct all aspects of the Corporation’s business in an ethical manner.

2. Any Personnel in a supervisory role is responsible for the conduct of employees reporting to him or her.

3. The conduct of all Personnel with customers, the general public, the media and other Personnel must reflect the highest standards of honesty, integrity and fairness.

4. Personnel must always cooperate fully in any investigation of misconduct.

The following rules and guidelines for business conduct address specific activities that our Personnel may be called upon to undertake from time to time on behalf of First West Virginia Bancorp, Inc. However, because no code could cover every possible question of business activity you should raise any questions or doubts about specific instances or aspects of business conduct with your supervisor or the Chairman of the Audit Committee.

In addition, the Chief Executive Officer, Chief Financial Officer and other senior officer(s) will:

• Act with honesty and integrity, avoiding actual or apparent conflicts of interest in personal and professional relationships.

• Provide information that is accurate, complete, objective, relevant, timely and understandable.

• Comply with rules and regulations of federal, state, provincial and local governments, and other appropriate private and public regulatory agencies.

• Act in good faith, responsibly, with due care, competence and diligence, without misrepresenting material facts or allowing one’s independent judgment to be subordinated.

• Respect the confidentiality of information acquired in the course of one’s work except when authorized or otherwise legally obligated to disclose.

• Confidential information acquired in the course of one’s work will not be used for personal advantage.

• Share knowledge and maintains skills important and relevant to business needs.

• Proactively promote and be an example of ethical behavior as a responsible person among peers, in the work environment and the community.

• Achieve responsible use of and control over all assets and resources employed or entrusted.

Business Information and Records

Personnel shall always record information accurately, honestly and in accordance with all relevant accounting, recordkeeping and document retention standards. No Personnel is ever authorized to enter or maintain false or misleading information in corporate books, records or reports. No circumstances justify the keeping of “off-the-books” accounts in any form, particularly accounts established to facilitate or disguise questionable or illegal payments.

Personnel in possession of corporate records are responsible for the use and safekeeping of them and shall take all reasonable and prudent measures to safeguard the privacy of employees, customers, and individuals with respect to information contained in such records.

Personnel shall safeguard all confidential or proprietary interests of the Corporation in its business and financial information.

Conflicts of Interest

Personnel shall avoid any situation in which their personal interests conflict with those First West Virginia Bancorp, Inc. Employees shall take every reasonable step to promptly disclose to his or her supervisor or the Chairman of the Audit Committee, any business or financial interest or relationship of the employee (including his or her immediate family or household), which might interfere with the best interests of the Corporation.

Trading in Company Stock by Employees

A. General Restrictions Against Insider Trading. No employee, officer or director shall purchase any First West Virginia Bancorp, Inc. stock or exercise company options while in the possession of material non-public information (MNPI) concerning the company. In general, information will be considered material if a reasonable investor would consider it important in making his or her investment decision. Such would include, for example, earnings results, acquisitions, divestitures, or pending changes in corporate control.

B. Blackout Periods. In addition to the general prohibition against trading in company stock and while in the possession of MNPI, the company has a policy prohibiting all employees, officers and certain third parties from buying or selling stock or exercising company options, during company “black-out” periods.

The company plans to release its financial results, including its earnings, to the public about four weeks after the end of each quarter. Since this is particularly sensitive information, it is the policy of the company that an employee may buy or sell stock on the first day of the last month of a quarter and ending 72 hours after the earnings release is disseminated. Thus, for example, no employee should buy or sell stock in the open market from December 1 through three days after the December 31 results have been released in late January. The same restrictions will apply with respect to each of the other fiscal quarters.

Reporting Requirements and Hotline

It is the responsibility of every director, officer, and employee of First West Virginia Bancorp, Inc. to immediately report to their supervisor or to the Chairman of the Audit Committee, illegal, unethical or other improper conduct that he or she has knowledge, including any violation of this Code of Conduct & Ethics whether the improper conduct was committed by an employee of the Corporation, or any other individual or business entity.

Disciplinary Action

Appropriate disciplinary action will be taken promptly against any director, officer or employee, who has violated any applicable federal, state or local law or regulation, or any violation of this Code of Conduct & Ethics or any future version of this Code. Among other things, directors, officers and employees of the Corporation may be disciplined for:

• Committing, authorizing, or directing an illegal act.

• Failing to exercise proper compliance oversight or tolerating illegal conduct, if acting as of another employee of the Corporation.

• Failing to report illegal business conduct of which he or she directly knows or observes.

• Discouraging another director, officer, or employee from reporting a violation of law or the Company’s Code of Conduct & Ethics.

• Improperly disclosing the identity of a person who reports a violation of this Code of Conduct & Ethics.

• Retaliating or condoning retaliation against any director, officer, or employee of First West Virginia Bancorp, Inc. who reports such a violation.

As examples, the following are not valid excuses for failing to comply with the law and/or the Code of Conduct & Ethics and, as such, will not avoid disciplinary measures:

• “A supervisor demanded that I do the illegal, unethical or improper act.”

• “I thought the conduct was standard practice in our business.”

• “It was a business necessity because it would have cost more to act properly.”

• “I misinterpreted the law or this Code and did not seek the advice of the Audit Committee.”

Other Laws

This Code of Conduct & Ethics does not attempt to summarize all of your responsibilities. Questions about your responsibilities not specifically addressed by this Code of Conduct & Ethics should be directed to the Chairman of the Audit Committee or your supervisor.

EX-21.1

EXHIBIT 21.1

Subsidiaries of the Holding Company

1. Progressive Bank, N.A. of Wheeling, West Virginia, a national banking association with offices in Wheeling, Wellsburg, Moundsville, New Martinsville, Buckhannon and Weston, West Virginia and Bellaire, Ohio.

EX-23

EXHIBIT 23

S.R. SNODGRASS

Certified Public Accountants and Consultants

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We hereby consent to the inclusion in this Annual Report on Form 10-K of our report dated February 26, 2009 on the consolidated balance sheets of First West Virginia Bancorp, Inc. as of December 31, 2008 and 2007 and the related consolidated statements of income, changes in stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2008. Said report appears in this Form 10-K under Part II, Item 8.

/s/ S. R. Snodgrass

Wheeling, West Virginia

March 27, 2009

S.R. Snodgrass, A.C.

980 National Road Wheeling, WV 26003-6400 Phone: 304-233-5030 Facsimile: 304-233-3062

EX-31

EXHIBIT 31

Certification

I, Sylvan J. Dlesk, certify that:

1. I have reviewed this annual report on Form 10-K of First West Virginia Bancorp, Inc.;

2. Based on my knowledge, this 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 report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) 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:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) 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;

(c) Evaluated the effectiveness of the registrant’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

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors:

(a) 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’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.

Date: March 24, 2009

/s/ Sylvan J. Dlesk

Sylvan J. Dlesk

Chairman, Interim President and Chief Executive Officer/Director

(Principal Executive Officer)

EX-31.1

EXHIBIT 31.1

Certification

I, Francie P. Reppy, certify that:

1. I have reviewed this annual report on Form 10-K of First West Virginia Bancorp, Inc.;

2. Based on my knowledge, this 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 report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) 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:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) 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;

(c) Evaluated the effectiveness of the registrant’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

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors:

(a) 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’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.

Date: March 24, 2009

/s/ Francie P. Reppy

Francie P. Reppy

Executive Vice President, Chief Administrative Officer and Chief Financial Officer

(Principal Financial Officer)

EX-32

EXHIBIT 32

CERTIFICATION PURSUANT TO 18 U.S.C. §1350,

AS ADOPTED PURSUANT TO SECTION 906 OF THE

SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report on Form 10-K for the year ended December 31, 2008, (the “Report”) of First West Virginia Bancorp, Inc., the (“Company”) as filed with the Securities and Exchange Commission on the date hereof, each of the undersigned, in the capacities and on the dates indicated below certify pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) and 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: March 24, 2009	/s/ Sylvan J. Dlesk
	Sylvan J. Dlesk
	Chairman, President and Chief Executive Officer/Director
	(Principal Executive Officer)
Date: March 24, 2009	/s/ Francie P. Reppy
	Francie P. Reppy
	Executive Vice President, Chief Administrative Officer and Chief Financial Officer
	(Chief Financial Officer)

The forgoing certifications are being furnished solely pursuant to Subsections (a) and (b) of Section 1350, of Title 18, United States Code in accordance with Section 906 of the Sarbanes-Oxley Act of 2002 and shall not be deemed “filed’ for purposes of Section 18 of the Securities Exchange Act of 1034, or otherwise subject to the liability of that section, and shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934.

A signed original of this written statement required by Section 906 of the Sarbanes-Oxley Act of 2002, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

EX-99

EXHIBIT 99

P.O. Box 6671

Wheeling, WV 26003

NOTICE OF ANNUAL MEETING OF THE

SHAREHOLDERS OF

FIRST WEST VIRGINIA BANCORP, INC.

Wheeling, West Virginia

March 17, 2009

TO OUR SHAREHOLDERS:

Please take notice that the Annual Meeting of Shareholders of First West Virginia Bancorp, Inc., a West Virginia corporation, will be held at the Warwood Office of Progressive Bank, N.A., 1701 Warwood Avenue, Wheeling, West Virginia, at 4:00 p.m., on April 14, 2009. Shareholders of record at the close of business on March 11, 2009 will be entitled to vote.

While the Board of Directors sincerely hopes that all of you will attend the meeting, we nevertheless urge you to COMPLETE, DATE, SIGN AND RETURN THE PROXY FORM, ENCLOSED, AS SOON AS POSSIBLE. A self-addressed stamped envelope is provided for that purpose. You should return the proxy whether or not you plan to attend the meeting in person. If you do attend the meeting, you may revoke the proxy and vote in person if you so desire.

The purposes of the Annual Meeting are as follows:

1.  To elect one director for a term of three (3) years;

2.  To transact such other business as may lawfully be brought before the meeting.

By order of the Board of Directors.

/s/ Deborah A. Kloeppner

DEBORAH A. KLOEPPNER

Secretary

FIRST WEST VIRGINIA BANCORP, INC.

1701 Warwood Avenue, Wheeling, West Virginia 26003

PROXY STATEMENT

For Annual Meeting of Shareholders to be Held April 14, 2009

This proxy statement is furnished to the shareholders of First West Virginia Bancorp, Inc., (the “Company”), in connection with the solicitation of proxies for use at the Annual Meeting of Shareholders to be held April 14, 2009, and at all adjournments thereof, for the purposes set forth in the accompanying Notice of Annual Meeting of Shareholders. This proxy statement and the enclosed form of proxy are first being mailed to shareholders on or about March 17, 2009.

Whether or not you expect to be personally present at the meeting, you are requested to fill in, sign, date and return the enclosed form of proxy. A proxy may be revoked at any time before it is voted at the meeting by executing a later dated proxy or by voting in person at the meeting, or by filing a written revocation with the judges of election. All shares represented by duly executed proxies in the accompanying form will be voted unless revoked prior to the voting thereof. The presence, in person or by proxy, of a majority of the outstanding shares of common stock is required to constitute a quorum.

The close of business on March 11, 2009 has been fixed as the record date for the determination of shareholders entitled to vote at the Annual Meeting of Shareholders. As of the record date, there were outstanding and entitled to be voted at such meeting 1,599,411 shares of common stock less 10,000 shares held in treasury. The holders of the common stock will be entitled to one vote for each share of common stock held of record on the record date. In the election for directors votes may be cumulated if a shareholder requests cumulative voting for directors at least 48 hours before the meeting. Please see Election of Directors and Voting, below.

A copy of the Company’s Annual Report to Shareholders for the fiscal year ended December 31, 2008 accompanies this proxy statement.

The solicitation of this proxy is made by the Board of Directors of the Company. The solicitation will be by mail and the expense thereof will be paid by the Company. In addition, solicitation of proxies may be made by telephone or other means by directors, officers or regular employees of the Company.

I.  Election of Directors

Nominee and Continuing Directors

The Board of Directors is divided into three classes, with the terms of office of each class ending in successive years. One director of the Company is to be elected to Class II, for a term expiring at the Annual Meeting in 2012 or until his respective successors have been elected and have qualified. Certain information with respect to the nominee for election as director proposed by the Company and the other directors whose terms of office as directors will continue after the Annual Meeting is set forth below. Should any one or more of the nominees be unable or unwilling to serve (which is not expected), the proxies (except proxies marked to the contrary) will be voted for such other person or persons as the Board of Directors of the Company may recommend.

Directors are elected by majority of the votes voted. As required by West Virginia law, each share is entitled to one vote per nominee, unless a shareholder requests cumulative voting for directors at least 48 hours before the meeting. If a shareholder properly requests cumulative voting for directors, then each shareholder will have the right to vote the number of shares owned by that shareholder for as many persons as there are directors to be elected, or to cumulate such shares and give one candidate as many votes as the number of directors multiplied by the number of shares owned shall equal, or to distribute them on the same principle among as many candidates as the shareholder sees fit. If any shares are voted cumulatively for the election of directors, the proxies, unless otherwise directed, shall have full discretion and authority to cumulate their votes and vote for less than all such nominees. For all other purposes, each share is entitled to one vote.

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THIS BOARD OF DIRECTORS RECOMMENDS THAT
SHAREHOLDERS VOTE FOR THE NOMINEE FOR DIRECTOR
NOMINEE FOR CLASS II DIRECTOR TERM TO EXPIRE AT THE 2012 ANNUAL MEETING	INITIAL ELECTION TO BOARD(1)
SYLVAN J. DLESK (70) - Chairman of the Board, President and Chief Executive Officer of	1988
the Company; President and Chief Executive Officer of Progressive Bank, N.A.; Owner of
Dlesk Realty and Investment Company; President of Dlesk, Inc.; President of Ohio Valley
Carpeting, Inc.; Director of Progressive Bank, N.A.
CLASS III DIRECTORS TERMS TO EXPIRE AT THE 2010 ANNUAL MEETING	INITIAL ELECTION TO BOARD(1)
R. CLARK MORTON (80) - Attorney-at-Law, Retired Partner, Herndon, Morton,	1965*
Herndon & Yaeger; Chairman of the Board and Director of Progressive Bank, N.A.
WILLIAM G. PETROPLUS (61) - Attorney-at-Law, Member/Partner, Petroplus &	1998*
Gaudino; Director of Progressive Bank, N.A.
NADA E. BENEKE (53) - Sanitarian, Ohio County Health Department; President of the	2001*
Beneke Corporation; and Director of Progressive Bank, N.A.
CLASS I DIRECTORS TERMS TO EXPIRE AT THE 2011 ANNUAL MEETING	INITIAL ELECTION TO BOARD(1)
LAURA G. INMAN (67) - Vice Chairman of the Board of the Company; Retired Bank	1993
Executive; Director of Progressive Bank, N.A.
GARY W. GLESSNER (42) - Certified Public Accountant; President of Glessner &	2005*
Associates, PLLC; Owner of GW Rentals, LLC; Owner of GIO, Inc.; Owner of Market
House Bar & Grill; Director of Progressive Bank, N.A.
THOMAS L. SABLE (51) - Managing Partner, Summit Atlantic Group, LLC; Village	2005*
Clerk/Treasurer, Village of Bellaire; Director of Progressive Bank, N.A.

*Denotes independent director, See Amex Company Guide, Sec 121 A. Independent Directors, attached as an appendix to this proxy statement.

Note: (1) Includes service with the Company’s predecessors.

Certain Business Relationships

Mr. Petroplus is an attorney with Petroplus & Gaudino, attorneys-at-law, of Wheeling, WV, which firm serves as general counsel to the Company. Attorney fees and costs paid for services rendered in 2008 were $8,310.50.

Mr. Morton is a retired attorney with Herndon, Morton, Herndon & Yaeger, attorneys-at-law, of Wheeling, West Virginia, which firm serves as special counsel to the Company. Attorney fees and costs paid for services rendered in 2008 were $100.00.

Dlesk Realty and Investment Company which is owned by Mr. Dlesk and his wife Rosalie J. Dlesk serves as a landlord to the Company’s subsidiary bank, Progressive Bank, N.A., under a lease agreement to rent property for use as a banking premises. Payments made in 2008 amounted to $64,280.04. Dlesk Realty and Investment Company also provides certain maintenance services to the banking premises. Payments made in 2008 amounted to $18,565.06. The Company also purchased six season tickets, suite access, parking permit and food service to West Virginia University football games from Dlesk Inc. The cost of such items in 2008 was $11,080.00.

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Management believes that these payments were made on no more favorable terms or greater rates than would have been extended for third parties not otherwise affiliated with the Company or its subsidiary bank.

Board of Directors and Committees

There were 12 regular meetings of the Board of Directors of the Company during 2008. All directors attended at least 75 percent of such meetings. There were no special meetings in 2008. The standing committees of the Board include: Audit Committee, Nominating Committee and Corporate Governance/Human Resource and Compensation Committee.

Policy On Director Attendance At Shareholder Meetings

In order to fulfill their primary responsibilities, directors of the Company are expected to attend the annual meeting of shareholders and all board meetings, as well as all meetings on committees on which they serve. All of the directors of the Company attended the 2008 annual meeting of shareholders, except for Mr. Glessner and Ms. Beneke.

Compensation Committee Interlocks and Insider Participation

No family relationships exist between members of the Corporate Governance/Human Resource and Compensation Committee and the Company’s executive officers, nor do any of the directors of the Company serve on personnel committees of any other corporation.

Audit Committee

The primary function of the Audit Committee is to assist the Board of Directors in fulfilling its oversight responsibilities by reviewing: the financial reports and other financial information provided by the Company to the shareholders, any governmental body, and others; the Company’s systems of internal control regarding finance, accounting, legal compliance and ethics that management and the Board have established; and the Company’s auditing, accounting and financial reporting processes. The Audit Committee operates pursuant to a written charter, and the charter is attached as an appendix to this proxy statement. The committee met seven times during 2008. The independent members of the committee consist of non-salaried directors and presently include Gary W. Glessner, chairman, Nada E. Beneke, Laura G. Inman, R. Clark Morton, and Thomas L. Sable.

The Company’s Board of Directors has determined that Gary W. Glessner meets the requirement of an “audit committee financial expert” as defined by the Securities and Exchange Commission. The Board of Directors believes that Mr. Glessner has the following five attributes to qualify as an “audit committee financial expert.” Mr. Glessner is a licensed Certified Public Accountant. This director, through education and experience, has: an understanding of financial statements and generally accepted accounting principles; an ability to assess the general application of generally accepted accounting principles in connection with accounting for estimates, accruals and reserves; some experience in preparing, auditing, analyzing and evaluating financial statements that present a level of complexity of accounting issues comparable to the breadth of issues that could reasonably be expected to be presented by the Company’s financial statements; an understanding of internal controls; and, an understanding of audit committee functions. The Company believes that each member of the audit committee has sufficient knowledge in financial and auditing matters to serve on the committee. The committee has authority to engage legal counsel, other experts or consultants as it deems appropriate to carry out its responsibilities.

Report of the Audit Committee

The Audit Committee’s primary duties and responsibilities are to serve as an independent and objective monitor of the Company’s financial reporting process and internal control system; review and appraise the audit efforts of the Company’s independent accountants and internal auditing department; and to provide an open avenue of communication among the independent accountants, financial and senior management, the internal auditing department, and the Board of Directors.

The charter for the Audit Committee is reviewed annually. The committee met seven times during 2008. The Audit Committee reviewed and discussed the Company’s annual audited financial report with management. The Committee discussed with independent auditors, S. R. Snodgrass A.C., who are responsible for expressing an opinion on the conformity of those audited financial statements with accounting principles generally accepted in the United States, the matters required to be discussed by SAS 61, as amended (AICPA Professional Standards, Vol. 1 AU Section 380), as adopted by the Public Company Accounting Oversight Board. The Committee also received and reviewed the written disclosures and the letter from independent accountants required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent accountant’s communications with the audit committee concerning independence, and has discussed with the independent accountant the independent accountant’s independence. Additionally, the Audit Committee reviewed reports of the internal audit director concerning the results of the examinations of the accounting controls and

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procedures reviewed. The committee also reviewed various other matters pertaining to the business and operations of the Corporation during the year, including the scope and planning of the audits and the internal control procedures. Based on the review and discussions referred to above, the Audit Committee recommended to the Board of Directors that the audited financial statements be included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2008. The Audit Committee also recommended to the Board of Directors the appointment of S. R. Snodgrass, A.C. as the independent auditors for the Company for 2009.

March 10, 2009	Audit Committee:
	Gary W. Glessner, Chairman
	Nada E. Beneke
	Laura G. Inman
	R. Clark Morton
	Thomas L. Sable

This report shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, unless the Company specifically incorporates this report by reference. It will not otherwise be filed under such Acts.

Nominating Committee

The Board of Directors has established a formal nominating committee for the selection of directors of the Company, consisting of non-salaried directors and presently includes William G. Petroplus, chairman and Nada E. Beneke. The committee met one time during 2008. The nominating committee presently has a member vacancy and an independent director will be recommended at the Company’s reorganization meeting. Each of the nominating committee’s members is independent as that term is defined by the NYSE Alternext US, formerly the American Stock Exchange. The nominating committee does have a charter. The Nominating committee charter requires that candidates for director should have certain minimum qualifications, including:

• Directors should be of the highest ethical character;

• Directors should have excellent personal and professional reputations in the Company’s market area;

• Directors should be accomplished in their professions or careers;

• Directors should be able to read and understand financial statements and either have knowledge of, or the ability and willingness to learn, financial institution law;

• Directors should have relevant experience and expertise to evaluate financial data and provide direction and advice to the chief executive officer and the ability to exercise sound business judgment;

• Directors must be willing and able to expend the time to attend meetings of the board of directors of the Company and the bank and to serve on board committees;

• The board of directors will consider whether a nominee is independent, as legally defined. In addition, directors should avoid the appearance of any conflict and should be independent of any particular constituency and be able to serve all shareholders of the Company;

• Because the directors of the Company also serve as directors of the bank, a majority of directors must be residents of West Virginia, as required by state banking law;

• Directors must be acceptable to the Company’s and the bank’s regulatory agencies, including the Comptroller of the Currency, Federal Reserve Board, Federal Deposit Insurance Corporation and West Virginia Division of Banking and must not be under any legal disability which prevents them from serving on the board of directors or participating in the affairs of a financial institution;

• Directors must own or acquire sufficient capital stock to satisfy the requirements of law and the bylaws of the bank; and,

• Directors must be at least 21 years of age.

The board of directors of the Company reserves the right to modify these minimum qualifications from time to time, except where the qualifications are required by the laws relating to financial institutions.

The process of the nominating committee for identifying and evaluating nominees is as follows: In the case of incumbent directors whose terms are set to expire, the nominating committee considers the directors’ overall service to the Company during their term, including such factors as the number of meetings attended, the level of participation, quality of performance and any transactions between such directors of the Company and the bank. The nominating committee also reviews the payment history of loans, if any, made to such directors of the bank to ensure that the directors are not chronically delinquent and in default. The nominating committee considers whether any transactions between the directors and the bank have been criticized by any banking regulatory agency or the bank’s external auditors and whether corrective action, if required, has been taken and was sufficient. The nominating committee also confirms that such directors remain eligible to serve on the board of directors of a financial institution under federal and state law. For new director candidates,

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the nominating committee uses its network of contacts in the Company’s market area to compile a list of potential candidates. The nominating committee then meets to discuss each candidate and whether he or she meets the criteria set forth above. The nominating committee then discusses each candidate’s qualifications and chooses a candidate by majority vote.

The nominating committee will consider director candidates recommended by stockholders, provided that the recommendations are received at least 120 days before the next annual meeting of shareholders. In addition, the procedures set forth below are followed by stockholders for submitting nominations. The nominating committee does not intend to alter the manner in which it evaluates candidates, regardless of whether or not the candidate was recommended or nominated by a shareholder.

The Company’s bylaws provide that nominations for election to the board of directors, other than those made by or on behalf of the Company’s existing management, must be made by a shareholder in writing delivered or mailed to the President not less than 14 days nor more than 50 days prior to the meeting called for the election of directors; provided, however, that if less than 21 days’ notice of the meeting is given to shareholders, the nominations must be mailed or delivered to the president not later than the close of business on the seventh day following the day on which the notice of meeting was mailed. The notice of nomination must contain the following information, to the extent known:

• Name and address of proposed nominee(s);

• Principal occupation of nominee(s);

• Total shares to be voted for each nominee;

• Name and address of notifying shareholder; and

• Number of shares owned by notifying shareholder.

Nominations not made in accordance with these requirements may be disregarded by the chairman of the meeting and in such case the votes cast for each such nominee will likewise be disregarded. The nominee for election at this year’s meeting is one incumbent director for Class II. No shareholder recommendations or nominations have been made.

Corporate Governance/Human Resource and Compensation Committee

The functions of the Corporate Governance, Human Resource and Compensation Committee are to review and recommend the annual salaries and bonuses of all executive officers; recommend the annual contribution to the employees’ profit sharing plan; and monitor the senior management and succession plans. The Committee reviews profitability of the Company and makes recommendations to the Board of Directors with regard to annual dividends to shareholders. The Committee also reviews director fees paid for attendance at board and committee meetings. The Board of Directors reviews the Committee recommendations for final action thereon. Company performance is considered in establishing the annual budget for salary increases and is the initial part of the review process. Company performance factors, including net income and return on equity, and individual performance are considered in setting annual bonuses. The Committee does have a charter. The Committee has authority to retain consultants and delegate authority if deemed necessary. The Committee met five times during 2008. The members of the Committee consist of non-salaried directors. The Committee members presently include Laura G. Inman, chairman, R. Clark Morton and William G. Petroplus.

The Corporate Governance, Human Resource and Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis found in this proxy statement with management. Based upon such review, the related discussions and such other matters deemed relevant and appropriate by the Committee, the Committee has recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this proxy statement to be delivered to shareholders. This report shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, unless the Company specifically incorporates this report by reference. It will not otherwise be filed under such Acts. Based on the review and discussions referred to above, the Corporate Governance/Human Resource and Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2008.

March 11, 2009	Laura G. Inman, Chairman
	R. Clark Morton
	William G. Petroplus

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II.  Executive Officer and Director Compensation

Compensation Discussion and Analysis

Overview of Compensation Program

The Corporate Governance, Human Resource and Compensation Committee (the “Committee”) of the Board is responsible for the establishment and review of the Company’s executive compensation program. The Committee endeavors to determine executive compensation in a manner designed to provide a competitive compensation package that will be attractive to potential new executives and which will also provide incentives for existing executive to stay with the Company and contribute toward the success of the Company. Ultimately, compensation is based on the overall performance of the Company.

The Committee conducts an annual base salary and bonus review of its executive officers and develops incentive compensation programs where appropriate. The Committee also reviews and develops recommendations for director compensation, including committee fees.

You will find a series of tables to follow under the heading Executive Compensation that contain specific information about compensation earned or paid in 2008, 2007 and 2006 to the Company’s Chief Executive Officer and Chief Financial Officer serving as of December 31, 2008, 2007 and 2006, who are sometimes referred to as “named executive officers” or “NEO’s”. The Company or its subsidiary did not have any other executive officers whose compensation was in excess of $100,000. The Committee strives to ensure that the total compensation paid to the NEO’s is fair, reasonable and competitive.

Compensation Philosophy and Objectives

The Company’s executive compensation program is designed to reward the achievement of annual, long-term, and strategic performance goals of the Company. This philosophy aligns the interests of its NEO’s with those of its shareholders, thereby improving shareholder value. The Committee evaluates both performance and compensation to ensure that the Company maintains its ability to attract and retain quality officers in key positions and that compensation provided to key officers remains competitive relative to the compensation paid to similarly positioned executives in other similarly configured financial institutions.

Role of Executive Officers in Compensation Decisions

While the Committee makes all decisions related to executive compensation, the Chief Executive Officer will provide input regarding the annual performance of each executive officer of the Company and will make recommendations for proposed salary adjustments. The Chief Executive Officer is not involved in determining his own compensation. The Committee then is responsible for recommending to the Board of Directors of the Company, and subject to final approval of such recommendations by the Board of Directors of the Company, the annual salary, raise and bonus determinations for the executive officers of the Company.

Establishing Executive Compensation

Based upon the compensation philosophy and objectives noted above, the Committee believes that the executive compensation package is competitive with other similar financial institutions and is designed to motivate and reward the executive officers for their performance. The Committee may at its discretion consider salary surveys or as needed may obtain a report from an outside consultant to compare the Company’s compensation package with other similarly configured companies. The Committee reviewed and considered salary survey reports provided by the West Virginia Bankers Association. Based on the salary survey, salary ranges, from low, to median to high, were utilized by the Committee in determining appropriate levels of compensation.

The Company does not have a pre-established policy or target for the allocation between cash and non-cash compensation nor does it have a pre-established policy or target for the allocation of short or long term compensation. Annually, the Committee will review executive compensation and will determine the appropriate level and mix of compensation.

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Executive Compensation Components

The Company’s compensation package as of December 31, 2008, 2007 and 2006 consisted of the following components: base salary, bonus, and retirement benefits. Each element is described below.

Base Salary

The NEO’s and other employees are provided with a base salary to compensate them for services rendered during the year. Base salary ranges were established for NEO’s and were determined based on their position and responsibility within the organization by using available market data for similarly configured positions which may be adjusted to reflect other duties and responsibilities. In determining the base salaries of the NEO’s, the Committee primarily gave consideration to the West Virginia Bankers Association salary survey described above, the NEO’s base salary on an individual basis and in relation to the other officers in the Company and the NEO’s performance of his/her duties and responsibilities.

Annually, the Committee reviews the base salary levels as part of the Company’s performance review process. Base salary levels for NEO’s may also be adjusted for promotions or upon a change in their duties and responsibilities. In 2006, the Committee increased Mr. Dlesk’s base salary as a result of his promotion from interim to permanent President and Chief Executive Officer of the Company and its subsidiary bank. The Committee also adjusted the salary level of other NEO’s based on the review of the individual’s performance of his/her duties and responsibilities and salary survey information.

Bonus

The determination of bonuses, as detailed below, is predicated on the Company’s earnings in the previous year, the increase in corporate net worth and individual executive officer performance. The Committee also is acutely aware that the purpose of our NEO’s is to generate earnings for the shareholders of the Company. Therefore, the Committee’s philosophy for its Executive Compensation Incentive Plan does not deviate from that avowed purpose. The plan consists of two basic steps. The first step is an earnings plateau which establishes the annual percentage return to the Company (based on corporate net worth) which was expected to be reached. The amount of return in excess of that expected percentage forms the basis for the bonus pool. The philosophy underlying this first earnings plateau is as follows.

Earnings to the extent of the determined percentage of corporate net worth are intended to provide for the following purposes:

(a) Payment of income taxes thereon;

(b) Payment of regularly established quarterly dividends;

(c) Provide for increases in subsequent executive salaries attributable to inflation;

(d) Provide for an increase to the regularly established quarterly dividend for the next year in the same percentage as the percentage of salary raises granted executives to compensate for inflation; and,

(e) Provide for growth of corporate net worth.

Earnings in excess of that percentage of corporate net worth are available for distributions for bonuses to NEO’s excepting any extraordinary profits received from the sale of assets owned by the Company and its subsidiary, with the exception of the subsidiary’s ordinary investment portfolio. The second basic step of the plan apportions earnings in excess of the first plateau. The Committee has divided those excess earnings into five incremental categories. Beginning with the first $400,000.00 of such excess and for each increment thereafter, the Committee has determined what percentage will be paid as executive bonuses. In addition to bonus payments, from each such increment comes a percentage for payment of income taxes thereon, and a payment for dividends to shareholders and to provide for growth of corporate net worth. After the first $400,000.00 increment has been exhausted, the second category consists of the next $300,000.00 of such excess earnings. After that has been exhausted, the third category consists of the next $200,000.00 of such excess earnings. After that has been exhausted, the fourth category consists of the next $100,000.00 of such excess earnings. Finally, after that has been exhausted, the fifth category consists of all excess earnings over $1,000,000.00.

The underlying goal of the Committee’s determinations is to provide a strong incentive for all NEO’s to strive to increase the annual earnings of the Company for the benefit of its shareholders.

Bonuses are paid to NEO’s by the Company’s subsidiary bank, Progressive Bank, N.A. Decisions as to the issuance of a bonus and the amount paid in each year is determined by the Committee and is recommended to the Company’s Board of Directors. The Committee determined that bonuses would not be calculated under the Plan in 2008, however that a merit increase would be accrued in 2008 and paid in 2009 to its NEO’s. The merit increases accrued to its NEO’s in 2008 amounted to $14,000.00. The Committee determined that no bonuses were to be accrued or paid to its NEO’s under the Plan in 2007 and 2006.

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Retirement Benefits

Retirement benefits represent an important component of the Company’s compensation package as it provides financial security which promotes retention for its NEO’s. The Committee believes that its retirement program is comparable to other similarly situated banking institutions.

The Company maintains a noncontributory profit-sharing plan for all employees of its existing subsidiary bank who are 21 years of age or older, have worked for the bank in excess of one year, are not parties to a collective bargaining agreement and have completed a minimum of 1000 hours of service. This plan has received a favorable determination letter from the Internal Revenue Service. The Company makes contributions to this profit-sharing plan based upon a discretionary contribution ranging from zero percent to 15 percent of total compensation as fixed by appropriate action of the bank before the close of the year. Once determined, this discretionary contribution is distributed according to a four-tiered integrated allocation formula. In the first tier, the allocation is made by taking three percent of each participant’s compensation. This amount is then distributed to the employee’s separate retirement accounts. In the second tier, any amount of the total contribution remaining undistributed by the first tier is then allocated and distributed by taking each participant’s compensation in excess of $22,500.00 and multiplying that amount by three percent. If Company contributions are insufficient to fund to this level, the Company will determine the uniform allocation percentage to allocate to those participants who have compensation in excess of the integration level of $22,500.00. The uniform allocation percentage is determined by taking the remaining contribution and dividing this amount by the total excess compensation of participants. In the third tier, any amount of the total contribution remaining undistributed by the first and second tier is allocated and distributed by taking each participant’s compensation plus the excess compensation and multiplying that amount by 1.3%. If Company contributions are insufficient to fund to this level, the Company will determine the uniform allocation percentage to allocate to those participants who have compensation in excess of the integration level and excess compensation. The uniform allocation percentage is determined by taking the remaining contribution and dividing this amount by the total compensation including excess compensation of participants. Any amount of the total contribution remaining undistributed by the first, second and third tier is then allocated and distributed to the employee’s retirement accounts on a pro rata basis based upon the percentage of each employee’s compensation compared to total compensation. Employees are entitled to the balances in their separate retirement accounts at either normal retirement age, disability or death, but the amount of such benefits cannot accurately be predicted due to the discretionary nature of the contributions. During 2008, contributions amounted to $100,000.00, of which $16,162.87 accrued to the benefit of the NEO’s. In 2007, contributions amounted to $92,700.00, of which $15,386.70 accrued to the benefit of the NEO’s. Contributions in 2006 amounted to $102,500.00, of which $24,218.67 accrued to the benefit of the NEO’s.

The Company’s profit sharing plan also includes a 401(k) feature. That feature qualifies as a tax-deferred savings plan under Section 401(k) of the Internal Revenue Code (The “401(k) Plan”) for all Company employees who are at least 21 years old, have completed a minimum of 1000 hours of service, and who have completed one year of service with the bank. Under the 401(k) Plan, eligible employees may contribute up to 50% of their gross salary to the 401(k) Plan or $15,500.00, whichever is less ($16,500.00 as of January 1, 2009). If an employee is age 50 or older and makes the maximum allowable deferral to the Plan, they are entitled to contribute an additional “catch-up contribution.” The catch-up contribution is intended to help eligible employees make up for smaller contributions made earlier in their careers. The maximum catch-up contribution for 2008 was $5,000.00 ($5,500.00 as of January 1, 2009). Each participating employee is fully vested in contributions made by such employee. The bank has elected to provide a matching contribution for participants which elect to make employee 401(k) contributions. The matching contribution is 50% of the participant’s contribution up to 2% of the participant’s covered compensation and 25% of the participant’s contribution up to the next 2% of the participant’s covered compensation. The Company’s share of the contribution during 2008 was $22,508.00 of which $1,950.00 was for the benefit of the NEO’s. During 2007 the Company’s share of the contribution was $22,365.00 of which $1,912.43 was for the benefit of the NEO’s. In 2006 the contribution was $22,494.00 of which $3,530.33 was for the benefit of the NEO’s.

Effective December 31, 2004, the Company froze its non-qualified deferred compensation plan arrangement with its executive officers and no further contributions are permitted to the plan. This plan was frozen as a result of tax law changes by the Internal Revenue Service and limited usage by its executive officers. Under the original plan arrangement, each executive officer was permitted to elect to defer up to 50 percent of their bonus. The executive officers in the plan are generally entitled to the balances in their separate deferred compensation accounts at either normal retirement age, disability or death, or other termination of employment.

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Executive Compensation

The following table shows all compensation awarded to, earned by or paid to the Company’s President and Chief Executive Officer, Sylvan J. Dlesk, and to its Executive Vice President, Chief Administrative Officer, Chief Financial Officer and Treasurer, Francie P. Reppy, for all services rendered by them in all capacities to the Company and/or its subsidiary bank as of December 31, 2008, 2007 and 2006. No other NEO’s had compensation in excess of $100,000 as of December 31, 2008, 2007 and 2006.

SUMMARY COMPENSATION TABLE
Name and Principal Position	Annual Compensation
	Year	Salary			Bonus		All     Other     Compensation			Total
Sylvan J. Dlesk, (70) Chairman of the Board and President and Chief Executive Officer of the Company; President and Chief Executive Officer of Progressive Bank, N.A.	2008	$	150,000.24		$	7,500.00	$	8,709.13	(2)	$	166,209.37
	2007	$	150,000.24		$	–	$	8,372.18	(2)	$	158,372.42
	2006	$	138,000.20		$	–	$	9,383.06	(2)(3)	$	147,383.26
Francie P. Reppy, (48) Executive Vice President, Chief Administrative Officer, Chief Financial Officer and Treasurer of the Company, Executive Vice President, Chief Administrative Officer and Chief Financial Officer of Progressive Bank, N.A.	2008	$	130,000.00		$	6,500.00	$	9,403.74	(2)	$	145,903.74
	2007	$	127,500.10		$	–	$	8,926.95	(2)	$	136,427.05
	2006	$	119,297.56	(1)	$	–	$	9,279.21	(2)	$	128,576.77

Notes:	(1)	Includes amounts deferred at the officer’s election pursuant to the Company’s 401(k) Plan.
	(2)	Includes contributions to the Profit Sharing and 401(k) Plan.
	(3)	Includes director fees received in 2006 of $3,875.00.

The following table reflects information for the executive officers related to the Company’s Profit Sharing contributions, vesting percentage and balance as of December 31, 2008.

Profit Sharing Plan Table
Name	Amount                 Earned in 2008 ($)		Vesting                 Percent (%)	Balance ($)             (1)(2)
Sylvan J. Dlesk	$	8,709.13	100%	$	14,454.00
Francie P. Reppy	$	9,403.74	100%	$	162,286.84

Notes	(1)	The balance in the Profit Sharing plan does not include the contribution earned in 2008 as it is paid in 2009.
	(2)	The balance in the Profit Sharing plan reflects contributions paid by the Company and the earnings on such contributions.

The following table reflects information for each of the executive officers related to the Company’s non-qualified deferred compensation plan as of December 31, 2008.

Non-Qualified Deferred Compensation Table
Name	Aggregate                 Earnings                 ($) (1)		Aggregate                 Withdrawals/                 Distributions  ($)		Aggregate             Balance             ($)(2)
Sylvan J. Dlesk	$	-	$	-	$	-
Francie P. Reppy	$	(21,724.10)	$	-	$	102,684.97

Notes:	(1)	The aggregate earnings represent the change in market value between 2007 to 2008.
	(2)	The aggregate balance represents the market value as of December 31, 2008.

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Director Compensation

Each director of the Company is compensated at the rate of $700.00 per regular meeting and at the rate of $225.00 for each special meeting. The Company had no special meetings in 2008. Audit Committee members are compensated at the rate of $450.00 for five regular meetings and at the rate of $225.00 for any additional meetings. The Chairman of the Audit Committee receives additional compensation of $100.00 per quarter for services in that capacity. The Corporate Governance/Human Resource and Compensation and Nominating Committee members are compensated at the rate of $225.00 for attendance at each committee meeting, unless a special meeting is held following a regular meeting in which event there is no additional compensation at the special meeting.

The Company’s directors, who are also directors of its subsidiary bank, Progressive Bank, N.A., are paid $225.00 for attendance at each regular bank board or committee meeting.

The following table shows all compensation paid by the Company to directors for the year ended December 31, 2008.

Director Compensation Disclosure
Name	Fees Earned or Paid in Cash ($)		All Other Compensation ($)		Total
Nada E. Beneke(1)	$	12,450.00	$	—	$	12,450.00
Sylvan J. Dlesk (2)	$	—	$	—	$	—
Gary W. Glessner(3)	$	14,750.00	$	—	$	14,750.00
James C. Inman, Jr. (4)	$	12,900.00	$	—	$	12,900.00
Laura G. Inman(5)	$	14,700.00	$	—	$	14,700.00
R. Clark Morton(6)	$	15,825.00	$	—	$	15,825.00
Thomas A. Noice(7)	$	8,050.00	$	—	$	8,050.00
William G. Petroplus (8)	$	12,450.00	$	—	$	12,450.00
Thomas L. Sable(9)	$	14,475.00	$	—	$	14,475.00

Notes:	(1)	Nada E. Beneke was compensated $9,750.00 and $2,700.00 for serving as director of the Company and Progressive Bank, N.A., respectively.
	(2)	Sylvan J. Dlesk was not compensated for serving as director of the Company and Progressive Bank, N.A., respectively, in 2008.
	(3)	Gary W. Glessner was compensated $11,600.00 and $3,150.00 for serving as director of the Company and Progressive Bank, N.A., respectively.
	(4)	James C. Inman, Jr. was compensated $8,400.00 and $4,500.00 for serving as director of the Company and Progressive Bank, N.A., respectively.
	(5)	Laura G. Inman was compensated $10,650.00 and $4,050.00 for serving as director of the Company and Progressive Bank, N.A., respectively.
	(6)	R. Clark Morton was compensated $12,000.00 and $3,825.00 for serving as director of the Company and Progressive Bank, N.A., respectively.
	(7)	Thomas A. Noice was compensated $6,700.00 and $1,350.00 for serving as director of the Company and Progressive Bank, N.A., respectively, from January 1, 2008 to July 31, 2008.
	(8)	William G. Petroplus was compensated $9,750.00 and $2,700.00 for serving as director of the Company and Progressive Bank, N.A., respectively.
	(9)	Thomas L. Sable was compensated $11,100.00 and $3,375.00 for serving as director of the Company and Progressive Bank, N.A., respectively.

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III.  Compliance with Section 16(a) of the Securities Exchange Act of 1934

Section 16(a) of the Securities Exchange Act of 1934 requires the Company’s directors, executive officers, and beneficial owners of more than 10 percent of the common stock to file reports of ownership and changes in ownership with the Securities and Exchange Commission (SEC). Reporting persons are required by SEC regulations to furnish the Company with copies of all Section 16(a) forms filed by them. Based on a review of the copies of Section 16(a) forms received by the Company, and on written representations from reporting persons concerning the necessity of filing a Form 5 - Annual Statement of Changes in Beneficial Ownership, the Company believes that all filing requirements applicable to reporting persons were met for the fiscal year ending December 31, 2008.

IV.  Security Ownership of Management and Certain Beneficial Owners

Security Ownership of Management

The following table sets forth, as of February 8, 2009, the name and address of each director, nominee, principal Executive Officer and principal Financial Officer, the number of shares of Company stock beneficially owned, the percentage of stock so owned, and the percent of stock beneficially owned by all directors, nominee’s and NEO’s as a group. The “beneficial ownership” of a security by an individual is determined in accordance with the rules of the Securities and Exchange Commission. Unless otherwise noted, sole voting power and sole investment power with respect to the shares shown in the table below are held either by each individual listed or by such individual together with their spouse.

Name & Address	Shares of Stock Beneficially Owned(1)	Percent of Total(2)
Sylvan J. Dlesk Highland Park Wheeling, WV 26003	176,545(8)	11.11%
James C. Inman, Jr. R.D. 1 Wellsburg, WV 26070	125,000(9)	7.86%
Laura G. Inman R.D. 1 Wellsburg, WV 26070	125,000(6)	7.86%
R. Clark Morton 129 Elm Street Wheeling, WV 26003	51,444(3)	3.24%
Nada E. Beneke P.O. Box 4075 Wheeling, WV 26003	44,480(5)	2.80%
William G. Petroplus 69-15th Street Wheeling, WV 26003	7,716(4)	*
Thomas L. Sable 1333 Elm Street Bellaire, OH 43906	10,401(7)	*
Gary W. Glessner 2084 National Road Wheeling, WV 26003	10,400	*
Francie P. Reppy 1701 Warwood Avenue Wheeling, WV 26003	184	*
Officers and Directors as a Group (9 persons)	426,170	26.81%

* Beneficial ownership does not exceed 1%.

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Notes:
	(1)	Includes service with the Company’s predecessors.
	(2)	Beneficial ownership of First West Virginia common stock is stated as of February 8, 2009. Under rules of the Securities and Exchange Commission, persons who have power to vote or dispose of securities, either alone or jointly with others, are deemed to be the beneficial owners of such securities. Shares owned separately by spouses are included in the column totals but are identified in the footnotes which follow. Each person reflected in the table has both sole voting power and sole investment power with respect to the shares included in the table, except as described in the footnotes.
	(3)	Includes 25,048 shares owned by Patricia H. Morton, his wife, and 12,529 shares owned jointly by R. Clark Morton and Patricia H. Morton.
	(4)	Includes 840 shares owned jointly by William G. Petroplus and Sheree A. Petroplus; 419 shares owned by Sheree A. Petroplus, his wife; 419 shares owned by Kristen G. Petroplus, his daughter, for which William G. Petroplus acts as custodian; and 419 shares owned jointly by Alyssa R. Petroplus, his daughter, for which William G. Petroplus acts as custodian.
	(5)	873 shares have been pledged as collateral on an obligation of Ms. Beneke. Includes 14,714 shares owned by the Beneke Corporation, of which Ms. Beneke serves as President.
	(6)	Includes 21,000 shares owned by James C. Inman, Jr., her husband.
	(7)	Includes 6,222 shares owned jointly by Thomas L. Sable and Janice M. Sable, his wife.
	(8)	Includes 1,889 shares owned by Rosalie J. Dlesk, his wife, and 161,893 shares owned jointly by Sylvan J. Dlesk and Rosalie J. Dlesk.
	(9)	Includes 104,000 shares owned by Laura G. Inman, his wife.
	(10)	The subsidiary of the Company is: Progressive Bank, N.A., Wheeling, WV.
	(11)	The nominees and continuing directors have had the same position or other executive positions with the same employer during the past five years.

The following table sets forth, as of February 8, 2009, the name and address of each person or entity that owns of record or is the beneficial owner of more than 5 percent of the Company’s stock.

Name & Address	Shares of Stock Beneficially Owned	Percent of Total
Cede & Co. P.O. Box 20 Bowling Green Station New York, NY 10274	1,000,059(1)	62.92%
Sylvan J. Dlesk Highland Park Wheeling, WV 26003	176,545(2)	11.11%
James C. Inman, Jr. R.D. 1 Wellsburg, WV 26070	125,000(3)	7.86%
Laura G. Inman R.D. 1 Wellsburg, WV 26070	125,000(4)	7.86%
Wellington Management Company, LLP(5) 75 State Street Boston, MA 02109	157,367	9.90%
Officers and Directors as a Group (9 persons)	426,170	26.81%

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Notes:	(1)	Depository trust company that holds company shares in street name for brokerage firms and other financial institutions.
	(2)	Includes 1,889 shares owned by Rosalie J. Dlesk, his wife, and 161,893 shares owned jointly by Sylvan J. Dlesk and Rosalie J. Dlesk.
	(3)	Includes 104,000 shares owned by Laura G. Inman, his wife.
	(4)	Includes 21,000 shares owned by James C. Inman, Jr., her husband.
	(5)	Includes all shares held for clients in capacity as Investment Adviser.

Other than those individuals and entities listed above, as of February 8, 2009, no person was known by the Company to be the beneficial owner of more than 5 percent of the Company’s stock.

V.  Transactions with Management and Others

Management personnel of the Company and its subsidiary bank have had and expect to continue to have banking transactions with the bank in the ordinary course of business. Extensions of credit to such persons are made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with other persons. Management believes that these transactions do not involve more than a normal risk of collectibility or present other unfavorable features.

The Company does maintain certain related party transaction and conflict of interest policies that require the disclosure by management, including directors and NEO’s of any business or financial interest or relationship that may pose a potential conflict of interest or which might otherwise interfere with the best interests of the Company. The Company also maintains a Code of Conduct & Ethics under the supervision of the Audit Committee.

None of the directors, executive officers, beneficial owners or immediate family members have an interest or are involved in any transactions with the Company or its bank in which the amount involved exceeds $120,000.00, or was not subject to the usual terms and conditions, or was not determined by competitive bids. Other than transactions with Dlesk Realty and Investment Company and Dlesk, Inc, which is owned by Sylvan J. Dlesk and his wife, Rosalie J. Dlesk, detailed above at Certain Business Relationships, no director, executive officer or beneficial owner has an equity interest in excess of 10 percent in a business or professional entity that has made payments to or received payments from the Company or its bank in 2006, 2007 or 2008 which exceed 5 percent of either party’s gross revenue for those periods, respectively. In 2008 transactions with Dlesk Realty and Investment Company and Dlesk, Inc. represent approximately 8.4% and 54.1%, respectively, of each Company’s gross revenue. During 2007 transactions with Dlesk Realty and Investment Company represented approximately 5.9% of the Company’s gross revenue.

VI.  Voting

The affirmative vote of the holders of a majority of the shares entitled to vote which are present in person or represented by proxy at the 2009 Annual Meeting is required to elect directors and to act on any other matters properly brought before the meeting. Shares represented by proxies which are marked “withhold authority” with respect to the election of any one or more nominees for election as directors and proxies which are marked to deny discretionary authority on other matters will be counted for the purpose of determining the number of shares represented by proxy at the meeting. Such proxies will thus have the same effect as if the shares represented thereby were voted against such nominee or nominees or against such other matters. If a broker indicates on a proxy that the broker does not have discretionary authority as to certain shares to vote on a particular matter, those shares will not be considered as present and entitled to vote with respect to that matter.

In the election for directors every shareholder entitled to vote shall have the right to vote, in person or by proxy, the number of shares owned by him or her for as many persons as there are directors to be elected and for whose election he or she has a right to vote, or, upon 48 hours notice given under West Virginia law, to cumulate his or her votes by giving one candidate as many votes as the number of such directors multiplied by the number of his or her shares shall equal, or by distributing such votes on the same principal among any number of such candidates. Such rights may be exercised by a clear indication of the shareholder’s intent on the form of proxy. Under applicable law, there are no dissenter’s rights of appraisal as to the election of directors.

VII.  Independent Auditors

S.R. Snodgrass, A.C. were the auditors for the year ended December 31, 2008. Upon the recommendation of the Audit Committee, the Board of Directors has reappointed them as the Company’s independent registered accounting firm

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for the year ending December 31, 2009. Shareholder ratification of this selection is not required. A representative of S.R. Snodgrass, A.C. will be present at the meeting with the opportunity to make a statement and/or to respond to appropriate questions from shareholders.

S.R. Snodgrass, A.C. advised the Company that no member of that accounting firm has any direct or indirect material interest in the Company or its subsidiary. The table below presents the fees that were paid by the Company and the bank to S.R. Snodgrass, A.C. during the years ended December 31, 2008 and 2007, respectively.

	2008		2007
Audit Fees (1)	$	58,750.00	$	60,440.00
Audit Related Fees	$	—	$	—
Tax Fees (2)	$	8,000.00	$	6,000.00
All Other Fees (3)	$	1,000.00	$	1,250.00

(1)	Audit fees consist of fees for professional service rendered for the audit of the consolidated financial statements and the review of financial statements included in the Company’s quarterly reports.
(2)	Tax fees consist of fees for the preparation of original and amended federal and state income tax returns and franchise tax returns.
(3)	Other service consist of fees for consulting on various accounting matters.

The audit committee has considered whether S.R. Snodgrass, A.C., has maintained its independence during the fiscal year ended December 31, 2008. The audit committee charter requires that the audit committee pre-approve all audit and non-audit services to be provided to the Company by the independent accountants; provided, however, that the audit committee may specifically authorize its chairman to pre-approve the provision of any non-audit service to the Company. Further, the foregoing pre-approval policies may be waived, with respect to the provision of any non-audit services consistent with the exceptions for federal securities law. All of the services described above for which S.R. Snodgrass, A.C. billed the Company for the fiscal year ended December 31, 2008, were pre-approved by the Company’s audit committee. For the fiscal year ended December 31, 2008, the Company’s audit committee did not waive the pre-approval requirement of any non-audit services to be provided to the Company by S.R. Snodgrass, A.C.

VIII.  Shareholder Proposals

Proposals of shareholders intended to be presented at the 2010 Annual Meeting scheduled to be held on April 13, 2010 must be received by the Company by November 17, 2009 for inclusion in the Company’s proxy statement and proxy relating to that meeting. Upon receipt of any such proposal, the Company will determine whether or not to include such proposal in the proxy statement and proxy in accordance with regulations governing the solicitation of proxies.

In order for a shareholder to nominate a candidate for director, under the Company’s Bylaws nominations must be made in writing and shall be delivered or mailed to the president of the Company or to the chairman of the Board not less than 14 days nor more than 40 days prior to any meeting of shareholders called for the election of directors, provided, however, that if less than 21 days’ notice of the meeting is given to shareholders, such nominations shall be mailed or delivered to the president of the Company or the chairman of the Board not later than the close of business on the seventh day following the day on which the notice of the meeting was mailed. Such notification shall contain the following information to the extent known to the notifying shareholder: (a) the name and address of each proposed nominee; (b) the principal occupation of each proposed nominee; (c) the total number of shares of stock of the Company that will be voted by him or her for each proposed nominee; (d) the name and residence address of the notifying shareholder; and (e) the number of shares of stock of the Company owned by the notifying shareholder. Nominations not made in accordance with such procedure may, in the discretion of the presiding officer, be disregarded, and upon the presiding officer’s instructions, the vote teller shall disregard all votes cast for each such nominee.

In order for a shareholder to bring other business before a shareholder meeting, timely notice must be received by the Company. Such notice must include a description of the proposed business, the reasons therefore, and other specified matters. These requirements are separate from and in addition to the requirements a shareholder must meet to have a proposal included in the Company’s proxy statement.

In each case the notice must be given to the Secretary of the Company, whose address is 1701 Warwood Avenue, Wheeling, West Virginia 26003. Any shareholder desiring a copy of the Company’s Bylaws will be furnished one without charge upon written request to the Secretary.

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IX.  Shareholder Communications with the Board

Any shareholder desiring to contact the Board of Directors or any individual director serving on the Board may do so by written communication mailed to: Board of Directors (Attention: (name of director(s), as applicable), care of Deborah A. Kloeppner, Corporate Secretary, First West Virginia Bancorp, Inc., 1701 Warwood Avenue, Wheeling, West Virginia 26003. Any proper communication so received will be processed by the Corporate Secretary as agent for the Board. Unless, in the judgment of the Corporate Secretary, the matter is not intended or appropriate for the Board (and subject to any applicable regulatory requirements), the Corporate Secretary will prepare a summary of the communication for prompt delivery to each member of the Board or, as appropriate, to the member(s) of the Board named in the communication. Any director may request the Corporate Secretary to produce for his or her review the original of the shareholder communication.

X.  Legal Proceedings

The Company is unaware of any litigation other than ordinary routine litigation incident to the business of the Company, to which it or its subsidiary is a party or of which any of their property is the subject.

XI.  Annual Report To Shareholders

The Company’s Annual report of Form 10-K, as integrated into the Annual report to Shareholders for the fiscal year ended December 31, 2008, accompanies this proxy Statement. The Annual report does not constitute outside solicitation materials. Additional copies of Form 10-K and any exhibits to Form 10-K are available at no expense. The Company’s public filings may also be obtained free of charge at the Company’s website, www.progbank.com under the tab for “Investor Relations”.

XII.  Other Matters

The Company knows of no other matters to come before the meeting. If any other matters properly come before the meeting, the proxies solicited hereby will be voted on such matters in accordance with the judgment of the persons voting such proxies.

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Appendix 1

AMEX COMPANY GUIDE

Sec. 121. INDEPENDENT DIRECTORS AND AUDIT COMMITTEE

A. Independent Directors:

(1) Each issuer must have a sufficient number of independent directors on its board of directors (a) such that at least a majority of such directors are independent directors (subject to the exceptions set forth in Section 801 and, with respect to small business issuers, Section 121B(2)(c)), and (b) to satisfy the audit committee requirement set forth below.

(2) “Independent director” means a person other than an executive officer or employee of the company. No director qualifies as independent unless the issuer’s board of directors affirmatively determines that the director does not have a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. In addition to the requirements contained in this Section 121A, directors serving on audit committees must also comply with the additional, more stringent requirements set forth in Section 121B(2) below. The following is a non-exclusive list of persons who shall not be considered independent:

(a) a director who is, or during the past three years was, employed by the company, other than prior employment as an interim executive officer (provided the interim employment did not last longer than one year) (See Commentary .08);

(b) a director who accepted or has an immediate family member who accepted any compensation from the company in excess of $60,000 during any period of twelve consecutive months within the three years preceding the determination of independence, other than the following:

(i) compensation for board or board committee service,

(ii) compensation paid to an immediate family member who is an employee (other than an executive officer) of the company,

(iii) compensation received for former service as an interim executive officer (provided the interim employment did not last longer than one year) (See Commentary .08), or

(iv) benefits under a tax-qualified retirement plan, or non-discretionary compensation;

(c) a director who is an immediate family member of an individual who is, or at any time during the past three years was, employed by the company as an executive officer;

(d) a director who is, or has an immediate family member who is, a partner in, or a controlling shareholder or an executive officer of, any organization to which the company made, or from which the company received, payments (other than those arising solely from investments in the company’s securities or payments under non-discretionary charitable contribution matching programs) that exceed 5% of the organization’s consolidated gross revenues for that year, or $200,000, whichever is more, in any of the most recent three fiscal years;

(e) a director who is, or has an immediate family member who is, employed as an executive officer of another entity where at any time during the most recent three fiscal years any of the issuer’s executive officers serve on the compensation committee of such other entity; or

(f) a director who is, or has an immediate family member who is, a current partner of the company’s outside auditor, or was a partner or employee of the company’s outside auditor who worked on the company’s audit at any time during any of the past three years.

(3) In the case of an investment company, in lieu of Sections 121A(2)(a) through (f), a director who is an “interested person” of the investment company as defined in Section 2(a)(19) of the Investment Company Act of 1940, other than in his or her capacity as a member of the board of directors or any board committee.

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Appendix 2

FIRST WEST VIRGINIA BANCORP, INC.

AUDIT COMMITTEE CHARTER

I. PURPOSE

The primary function of the Audit Committee of First West Virginia Bancorp, Inc. (hereinafter the “Company”) is to assist the Board of Directors in fulfilling its oversight responsibilities by reviewing: the financial reports and other financial information provided by the Company to the shareholders, any governmental body, and others; the Company’s systems of internal controls regarding finance, accounting, legal compliance and ethics that management and the Board have established; and the Company’s auditing, accounting and financial reporting processes generally. Consistent with this function, the Audit committee should encourage continuous improvement of, and should foster adherence to, the Company’s policies, procedures, and practices at all levels.

II. RESPONSIBILITIES

The responsibilities of the Audit Committee are to:

1. Review and update this Charter annually, reassess the adequacy of the charter, and recommend any proposed changes to the Board of Directors as conditions may dictate.

2. Appoint the independent auditors to be engaged by the Company, establish the audit fees of the independent auditors, pre-approve any non-audit services provided by the independent auditors, including tax services, before the services are rendered.

3. Review and evaluate the performance of the independent auditors and review with the Board of Directors any proposed discharge of the independent auditors.

4. Ascertain that the lead audit partner from the independent auditor’s accounting firm, serves in that capacity for no more than five fiscal years of the Company. In addition, ascertain that any partner, other that the lead partner serves no more than seven years at the partner level on the Company’s audit.

5. Review and concur in the appointment, replacement, reassignment, or dismissal of the internal auditor and director of internal audit.

6. Inquire of management, the director of internal audit, and the independent auditors about significant risks or exposures facing the Company; assess the steps management has taken or proposes to take to minimize such risks to the Company; and periodically reviews compliance with such steps.

7. Consider, with management the rationale for employing audit firms other than the principal independent accountants.

8. Review with the independent auditor, the chief financial officer, and the director of internal audit, the audit scope and plan of the internal auditors and the independent auditors. Address the coordination of audit efforts to assure completeness of coverage, reduction of redundant efforts, and the effective use of audit resources.

9. Review with the independent auditors:

a. All critical accounting policies and practices used by the Company.

b. All alternative treatments of financial information within generally accepted accounting principles that have been discussed with management of the Company, the ramifications of each alternative, and the treatment preferred by the Company.

10. Review with the independent accountants and the director of internal audit:

a. The adequacy of the company’s internal controls including computerized information system controls and security.

b. Any related significant findings and recommendations of the independent auditors and internal auditor services together with management’s responses thereto.

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11. Review with management and the independent auditors:

a. The company’s annual financial statements and related footnotes.

b. The independent auditors’ audit of the financial statements and their report thereon.

c. The independent auditors’ judgements about the quality, not just the acceptability, of the company’s accounting principles as applied in its financial reporting.

d. Any significant changes required in the independent auditors’ audit plan.

e. Any serious difficulties or disputes with management encountered during the audit.

f. Matters required to be discussed by Statement on Auditing Standards (SAS) No. 61, Communication With Audit Committees (AICPA, Professional Standards, vol. 1 AU sec. 380),
as amended, related to the conduct of the audit.

12. Review with management and the director of internal audit:

a. Significant findings during the year and management’s responses thereto.

b. Any difficulties encountered in the course of their audits, including any restrictions on the scope of their work or access to required information.

c. Any changes required in the planned scope of their audit plan.

d. The internal audit department’s outsourced contract amount and outsourced staff qualifications.

e. The internal audit department charter.

f. Internal auditing’s compliance with the Internal Auditor’s (ILA’s) Standards for the
professional Practice of Internal Auditing (Standards).

13. Review with management, the independent auditors, and the director of internal audit, filings with the SEC or other regulators, and other published documents containing the Company’s financial statements and consider whether the information contained in these documents is consistent with the information

contained in the financial statements.

14. Review with management, the independent auditors, and the director of internal audit, the interim financial report before it is filed with the Securities and Exchange Commission (“SEC”) or other regulators. The Chairman of the Audit Committee may represent the entire Committee for purposes of this review.

15. Review with management the policies and procedures with respect to officers’ expense accounts and perquisites, including their use of corporate assets, and consider the results of any review of these areas by the internal auditor or the independent accountants.

16. Review legal and regulatory matters that may have a material impact on the financial statements, related company compliance policies, and programs and reports received from regulators.

17. Meet with the director of internal audit, the independent accountants, and management in separate executive sessions to discuss any matters that the Committee or these groups believe should be discussed privately with the Audit Committee.

18. Report Audit Committee actions to the Board of Directors with such recommendations as the Committee

may deem appropriate.

19. Oversee the preparation of an annual report of the Audit Committee as required by the rules of the SEC. When required by SEC rules, include in the annual Proxy Statement for the Company a report of the Committee in accordance with the Proxy Rules promulgated by the SEC.

20. The Audit Committee shall have the power to conduct or authorize investigations into any matters within the Committee’s scope of responsibilities. The Audit Committee shall be empowered to retain independent counsel, accountants, or others to assist it in the conduct of any investigation.

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21. The Audit Committee shall meet at least four times per year, and each time the company proposes to issue a press release with its quarterly or annual earnings information. These meetings may be combined with regularly scheduled meetings, or more frequently as circumstances require. The audit committee may ask members of management or others to attend the meetings and provide pertinent information as necessary.

22. The Audit Committee shall maintain minutes or other records of its meetings and activities.

23. The Audit Committee will perform such other functions as assigned by law, the Company’s Charter or Bylaws, or the Board of Directors.

24. Conduct executive sessions with the outside auditors, CEO (Chief Executive Officer), CFO (Chief Financial Officer), director of internal audit, general counsel, or anyone else as desired by the committee.

25. Inquire of the CEO and CFO regarding the “quality of earnings” of the company from a subjective as well as an objective standpoint.

26. Review with management and the independent auditor the effect of any regulatory and accounting initiatives, as well as off-balance-sheet structures, if any.

27. Review all material written communications between the independent auditors and management, such as any management letter or schedule of unadjusted differences.

28. Periodically review the Company’s code of conduct to ensure that it is adequate and up-to-date. Review with the director of internal audit and the Company’s general counsel the results of their review of the monitoring of compliance with the Company’s code of conduct.

29. Review the procedures for the receipt, retention, and treatment of complaints received by the Company regarding accounting, internal accounting controls, or auditing matters that may be submitted by any part internal or external to the organization. Review any complaints that might have been received, current status, and resolution if one has been reached.

30. Review procedures for the confidential, anonymous submission by employees of the organization of concerns regarding questionable accounting or auditing matters. Review any submissions that have been received, the current status, and the resolution if one has been reached.

31. The Audit Committee will evaluate the independent auditors and internal auditors.

32. The Audit Committee will review its effectiveness.

33. Create an agenda for the ensuing year or review and approve the agenda submitted by the Director of internal audit.

III. COMPOSITION

The Audit Committee shall be comprised of three or more directors as determined by the Board. Each member of the Audit Committee shall be a member of the board of directors, in good standing , and shall be independent in order to serve on this committee.

At least one member of the Audit Committee shall be designated as a financial expert. The financial expert shall have an understanding of generally accepted accounting principles (GAAP) and financial statements; ability to assess the general application of such principles in connection with the accounting for estimates, accruals and reserves; experience preparing, auditing, analyzing or evaluating financial statements that present a breadth and level of complexity of accounting issues that are generally comparable to the breadth and complexity of issues that can reasonably be expected to be raised by the registrant’s financial statements, or experience actively supervising one or more persons engaged in such activities; an understanding of internal controls and procedures for financial reporting; and an understanding of audit committee functions. All other members of the Audit Committee shall have a working familiarity with basic finance and accounting practices.

The members of the Audit Committee shall be elected by the Board of Directors at the annual organizational meeting of the Board or until their successors shall be duly elected and qualified.

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