UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

FORM 10-K

(Mark One)

[X]		ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934: For the fiscal year ended December 31, 2010
		OR
[  ]		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. 000-09785

TRI CITY BANKSHARES CORPORATION
(Exact name of registrant as specified in its charter)

Wisconsin	39-1158740
(State or other jurisdiction of	(I.R.S. Employer Identification No.)
incorporation or organization)
6400 South 27th Street
Oak Creek, Wisconsin	53154
(Address of principal executive offices)	(Zip Code)
Registrant's telephone number, including area code		(414) 761-1610

Securities registered pursuant to Section 12(b) of the Act:   NONE

Securities registered pursuant to Section 12(g) of the Act

$1.00 par value common stock

(Title of class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.  
Yes  [   ]  No  [ X ]

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.  
Yes  [   ]  No  [ X ]

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 reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes  [ X ]  No  [   ]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). 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  [ X ]

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

Large accelerated filer __ Accelerated filer __ Non-accelerated filer [do not check if smaller reporting company] __
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  [   ]  No  [ X ]

As of June 30, 2010, the aggregate market value of the shares held by non-affiliates computed by reference to the price at which the common equity was last sold as of the last business day of the registrant’s most recently completed second fiscal quarter was approximately $65,199,859.  As of March 18, 2011, 8,904,915 shares of common stock were outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Document	Incorporated in
Annual report to shareholders for fiscal year ended December 31, 2010	Parts II and IV
Proxy statement for annual meeting of shareholders to be held on June 8, 2011	Part III
Form 10-K Table of Contents

PART I		PAGE #
Item 1	Business	3
Item 1A	Risk Factors	12
Item 1B	Unresolved Staff Comments	18
Item 2	Properties	18
Item 3	Legal Proceedings	18

PART II

Item 5	Market for the Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	19
Item 6	Selected Financial Data	19
Item 7	Management's Discussion and Analysis of Financial Condition and Results of Operation	20
Item 7A	Quantitative and Qualitative Disclosures About Market Risk	20
Item 8	Financial Statements and Supplementary Data	20
Item 9 Item 9A	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure Controls and Procedures	20 20
Item 9B	Other Information	21

PART III

Item 10	Directors, Executive Officers and Corporate Governance	22
Item 11	Executive Compensation	22
Item 12	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	22
Item 13	Certain Relationships and Related Transactions, and Director Independence	22
Item 14	Principal Accountant Fees and Services	22

PART IV

Item 15	Exhibits and Financial Statement Schedules	23
	Signatures	27

2

PART I

Item 1.	BUSINESS

THE REGISTRANT

Tri City Bankshares Corporation (the “Registrant”), a Wisconsin corporation, was organized in 1970 for the purpose of acquiring the outstanding shares of Tri City National Bank (the “Bank”).  The Bank is a wholly owned subsidiary of the Registrant.

At December 31, 2010, the Registrant had total assets of $1.1 billion and total stockholders’ equity of $114.3 million.

THE BANK

The Bank was organized as a Wisconsin state-chartered bank in 1963 and converted to a national bank charter in 1969. The Bank is supervised by the Office of the Comptroller of the Currency (“OCC”) and its deposits are insured by the Federal Deposit Insurance Corporation (“FDIC”).  The Bank conducts business out of its main office located at 6400 South 27^th Street, Oak Creek, Wisconsin.  The Bank maintains 43 additional offices throughout Southeastern Wisconsin.

The Bank provides a full range of consumer and commercial banking services to individuals and businesses.  The basic services offered include demand deposit accounts, money market deposit accounts, NOW accounts, time deposits, safe deposit services, direct deposits, notary services, money orders, night depository, travelers’ checks, cashier’s checks, savings bonds and secured and unsecured consumer, commercial, installment, real estate and mortgage loans.  The Bank offers automated teller machine (“ATM”) services and debit cards.  In addition, the Bank maintains an investment portfolio consisting primarily of U.S. government sponsored agency and state and political subdivision securities.

As is the case with banking institutions generally, the Bank derives its revenues from interest on its loan and investment portfolios and fee income related to loans and deposits.  The sale of alternative investment products provides additional fee income.  The source of funds for the lending activities are deposits, repayment of loans, maturity of investment securities and short-term borrowing through correspondent banking relationships and the Federal Reserve Bank of Chicago.  Principal expenses are the interest paid on deposits and borrowings, and operating and general administrative expenses.

THE ACQUISITION

Effective October 23, 2009 (the “Acquisition Date”), the Bank acquired substantially all of the assets and assumed substantially all of the liabilities, including the insured and uninsured deposits, of Bank of Elmwood (the “Acquired Bank”), a Wisconsin state-chartered bank headquartered in Racine, Wisconsin from the FDIC, as receiver for the Acquired Bank (the “Acquisition”).  

LENDING ACTIVITIES

The Bank offers a range of lending services including secured and unsecured consumer, commercial, installment, real estate and mortgage loans to individuals, small businesses and other organizations that are located in or conduct a substantial portion of their business in the Bank’s market area.  The Bank’s total loans as of December 31, 2010 were $746.8 million, or approximately 65.4% of total assets.  Interest rates charged on loans vary with the degree of risk, maturity and amount of the loan, and are further subject to competitive pressures, the cost and availability of funds and government policy.

The Bank maintains a comprehensive loan policy that establishes guidelines with respect to all categories of lending activity.  The policy establishes lending authority for each individual loan officer, the officer loan committee and the Board of Directors.  All loans to directors and executive officers are approved by the Board of Directors with the interested director abstaining.  The Bank’s loans are concentrated in three major areas: real estate loans, commercial loans and consumer loans.  The Bank’s lending strategy is focused on the development and maintenance of a high quality loan portfolio.

The Bank’s residential real estate loans are collateralized by mortgages and consist primarily of loans to individuals for the purchase and improvement of real estate and for the purchase of residential lots and construction of single-family residential units.  The Bank’s residential real estate loans generally are repayable in monthly installments based on up to a thirty-year amortization schedule.

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Commercial loans include loans to individuals and small businesses, including loans for working capital, machinery and equipment purchases, premises and equipment acquisitions, purchase, improvement and investment in real estate and real estate development, and other business needs.  Commercial lines of credit are typically for a one-year term.  Other commercial loans with terms or amortization schedules of longer than one year will normally carry interest rates that vary based on the term and will become payable in full, and are generally refinanced, in two to four years.  Commercial loans typically entail a thorough analysis of the borrower, its industry, current and projected economic conditions and other factors.  The Bank typically requires commercial borrowers to provide annual financial statements and requires appraisals or evaluations in connection with the loans collateralized by real estate.  The Bank typically requires personal guarantees from principals involved with closely-held corporate borrowers.

The Bank’s consumer loan portfolio consists primarily of loans to individuals for various personal, household or family purposes, payable on an installment basis.  The loans are generally for terms of five years or less and are collateralized by liens on various personal assets of the borrower.

DEPOSIT ACTIVITIES

Deposits are the major source of the Bank’s funds for lending and other investment activities.  The majority of the Bank’s deposits are generated from the Bank’s market area.  Generally, the Bank attempts to maintain the rates paid on deposits at a competitive level in its market area.  The Bank considers the majority of its regular savings, investor checking, demand, NOW and money market deposit accounts (which comprised 79.3% of the Bank’s total deposits at December 31, 2010) to be core deposits.  Approximately 20.7% of the Bank’s deposits at December 31, 2010 were certificates of deposit (“CDs”).  CDs of $100,000 and over made up approximately 41.7% of the Bank’s total CDs at December 31, 2010.    For additional information regarding the Bank’s deposit accounts, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Interest Rate Sensitivity Management” and Note 12 of Notes to Consolidated Financial Statements, both of which are contained in the Registrant’s 2010 Annual Report to Shareholders (“2010 Shareholder Report”), which discussion is incorporated by reference in Item 8 below.

INVESTMENTS

The Bank invests a portion of its assets in obligations of U.S. government-sponsored entities, (the Federal Home Loan Mortgage Corporation, the Federal National Mortgage Association and the Federal Home Loan Bank), state, county and municipal obligations and federal funds (“Fed Funds”) sold.  While the Federal Home Loan Bank is a U.S. government sponsored entity, the Bank’s investments in Federal Home Loan Bank securities are not guaranteed by the U.S. Government.  The investments are managed in relation to the loan demand and deposit growth and are generally used to provide for the investment of excess funds at reduced yields and risks relative to yields and risks of the loan portfolio, while providing liquidity to fund increases in loan demand or to offset fluctuations in deposits.  For further information regarding the Registrant’s investment portfolio, see Note 5 of Notes to Consolidated Financial Statements in the 2010 Shareholder Report, incorporated by reference in Item 8 below.

SUPERVISION AND REGULATION

The Registrant and the Bank are subject to extensive supervision and regulation by federal and state agencies.  The following is a summary of the regulatory agencies, statutes and related regulations that have, or could have, a material impact on the Registrant’s business.  This discussion is qualified in its entirety by reference to such regulations and statutes.

Bank Holding Company

The Registrant is a legal entity separate and distinct from its subsidiaries and affiliated companies.  As a registered bank holding company, the Registrant is subject to regulation under the Bank Holding Company Act of 1956, as amended (the “BHCA”), and to inspection, examination and supervision by the Board of Governors of the Federal Reserve System (the “Federal Reserve Board”).

The Federal Reserve Board also has extensive enforcement authority over bank holding companies.  In general, the Federal Reserve Board may initiate enforcement actions for violations of laws and regulations and unsafe or unsound practices.  The Registrant is also required to file reports and other information with the Federal Reserve Board regarding its business operations and those of its subsidiaries.

4

Subsidiary Bank

The Bank is subject to regulation and examination primarily by the OCC and secondarily by the FDIC.

The Bank is subject to certain restrictions imposed by the Federal Reserve Board Act and Federal Reserve Board regulations regarding such matters as the maintenance of reserves against deposits, extensions of credit to the bank holding company or any of its subsidiaries, investments in the stock or other securities of the bank holding company or its subsidiaries and the taking of such stock or securities as collateral for loans to any borrower.

Non-Banking Subsidiaries

The Registrant’s non-banking subsidiaries are also subject to regulation by the Federal Reserve Board and other applicable federal and state agencies.

Other Regulatory Agencies

Securities and Exchange Commission (“SEC”).  The Registrant is also under the jurisdiction of the SEC and certain states securities commissions for matters relating to the offering and sale of its securities.  The Registrant is subject to disclosure and regulatory requirements of the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as administered by the SEC.

The FDIC/Depository Insurance Fund.  The FDIC is an independent federal agency which insures the deposits, up to prescribed statutory limits, of federally-insured banks and savings associations and safeguards the safety and soundness of the financial institution industry.  The Bank’s deposits are insured up to applicable limits by the Deposit Insurance Fund (“DIF”) of the FDIC and subject to premium assessments to maintain the DIF.

The FDIC uses a risk-based assessment system that imposes insurance premiums on a four-tier risk matrix based upon a bank’s capital level and supervisory, or CAMELS, rating.  On February 27, 2009, the FDIC adopted a final rule that changes the way its assessment system differentiates risk and changes assessment rates beginning April 1, 2009.  The Bank is currently in the lowest risk category and pays deposit assessments ranging from 12 to 14 cents per $100 of assessable deposits.  The FDIC also imposed an emergency special assessment of 20 cents per $100 of assessable deposits on all insured institutions on June 30, 2009, which was collected on September 30, 2009.  The FDIC is also permitted to impose an emergency special assessment after June 30, 2009, of up to 10 cents per $100 of assessable deposits if necessary to maintain public confidence in federal deposit insurance. On November 12, 2009, the FDIC issued new assessment regulations that required FDIC-insured institutions to prepay on December 30, 2009, their estimated quarterly risk-based assessments for the fourth quarter of 2009 and for all of 2010, 2011 and 2012.  While the Bank’s full prepayment was made in December 2009, the quarterly amounts will not be reflected as a charge against earnings until the periods to which they apply.

The enactment of the Emergency Economic Stabilization Act of 2008 temporarily raised the basic limit on federal deposit insurance coverage from $100,000 to $250,000 per depositor.  The temporary increase in deposit insurance coverage became effective on October 3, 2008.  On May 20, 2009, the FDIC extended this increased insurance level of $250,000 per depositor through December 31, 2013.  On July 21, 2010, the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) permanently increased the FDIC insurance coverage to $250,000 per depositor.

On October 14, 2008, the FDIC announced its temporary Transaction Account Guarantee Program (“TAGP”), which provided full coverage for noninterest-bearing transaction deposit accounts at FDIC-insured institutions that agreed to participate in the program.  The unlimited coverage applied to all personal and business checking deposit accounts that did not earn interest (including demand deposit accounts), low-interest NOW accounts (NOW accounts that could not earn more than 0.25% interest), Official Items and IOLTA accounts.  A 10-basis point surcharge was added to a participating institution’s current insurance assessment in order to fully cover all transaction accounts.  The Bank elected to participate in the TAGP.  This unlimited insurance coverage was temporary and was originally scheduled to expire on December 31, 2009.  On August 26, 2009, the FDIC extended the TAGP through June 30, 2010 and it was again extended through December 31, 2010.  The deposit insurance surcharge was increased from 10 to 25 basis points for institutions electing to continue in the TAGP.  The Bank elected to continue to participate in the TAGP through December 31, 2010.  On July 21, 2010, the Dodd-Frank Act extended unlimited FDIC insurance to noninterest-bearing transaction deposit accounts and IOLTA accounts through January 1, 2013.  The unlimited FDIC insurance does not apply to accounts earning any level of interest with the exception of IOLTA accounts.  This unlimited FDIC insurance coverage applies to all applicable deposits at any FDIC-insured financial institution.  Therefore, there is no additional FDIC insurance surcharge related to this coverage after December 31, 2010.  This change is expected to lower the Bank’s FDIC insurance premiums.

5

The FDIC may terminate insurance coverage upon a finding that the insured institution has engaged in unsafe or unsound practices, is in an unsafe or unsound condition to continue operations, or has violated any applicable law, regulation, rule, order or condition enacted or imposed by the institution’s regulatory agency.

The Dodd-Frank Act

On July 21, 2010, President Obama signed the Dodd-Frank Act into law, which resulted in sweeping changes in the regulation of financial institutions aimed at strengthening safety and soundness for the financial services sector. A summary of certain provisions of the Dodd-Frank Act is set forth below:

·

Increased Capital Standards and Enhanced Supervision. The federal banking agencies are required to establish minimum leverage and risk-based capital requirements for banks and bank holding companies. These new standards will be no lower than current regulatory capital and leverage standards applicable to insured depository institutions and may, in fact, be higher when established by the agencies. The Dodd-Frank Act also increases regulatory oversight, supervision and examination of banks, bank holding companies and their respective subsidiaries by the appropriate regulatory agency.

·

Federal Deposit Insurance. The Dodd-Frank Act makes permanent the $250,000 deposit insurance limit for insured deposits and provides unlimited federal deposit insurance on non-interest bearing transaction accounts at all insured depository institutions until December 31, 2012. The Dodd-Frank Act also changes the assessment base for federal deposit insurance from the amount of insured deposits to consolidated assets less tangible equity, eliminates the ceiling on the size of the DIF and increases the floor of the size of the DIF.

·

The Consumer Financial Protection Bureau (“Bureau”). The Dodd-Frank Act centralizes responsibility for consumer financial protection by creating a new agency, the Bureau, responsible for implementing, examining and, for large financial institutions, enforcing compliance with federal consumer financial laws. Because the Bank has under $10 billion in total assets, however, the OCC will still continue to examine it at the federal level for compliance with such laws.

·

Interest on Demand Deposit Accounts. The Dodd-Frank Act repeals the prohibition on the payment of interest on demand deposit accounts effective one year after the date of enactment, thereby permitting depository institutions to pay interest on business checking and other accounts.

·

Mortgage Reform. The Dodd-Frank Act provides for mortgage reform addressing a customer’s ability to repay, restricts variable-rate lending by requiring the ability to repay to be determined for variable rate loans by using the maximum rate that will apply during the first five years of a variable-rate loan term, and makes more loans subject to requirement for higher-cost loans, new disclosures and certain other restrictions.

The Registrant expects that many of the requirements called for in the Dodd-Frank Act will be implemented over time, and most will be subject to implementing regulations over the course of several years. Given the uncertainty associated with the manner in which the provisions of the Dodd-Frank Act will be implement by the various regulatory agencies and through regulations, the full extent of the impact such requirements will have on financial institutions’ operations is unclear. The changes resulting from the Dodd-Frank Act may impact the profitability of the Registrant’s business activities, require changes to certain of its business practices, impose upon it more stringent capital, liquidity and leverage ratio requirements or otherwise adversely affect its business. These changes may also require the Registrant to invest significant management attention and resources to evaluate and make necessary changes in order to comply with new statutory and regulatory requirements.

Bank Holding Company Act

In general, the BHCA limits the business of bank holding companies to banking, managing or controlling banks and other activities that the Federal Reserve Board has determined to be so closely related to banking as to be a proper incident thereto.

The BHCA and other federal and state statutes regulate acquisitions of commercial banks.  The BHCA requires the prior approval of the Federal Reserve Board for the direct or indirect acquisition by a bank holding company  of more than 5% of the voting shares of a commercial bank or its parent holding company.  Under the Federal Bank Merger Act, the prior approval of the OCC is required for a national bank to merge with, or purchase the assets or assume the deposits of, another bank. In reviewing applications seeking approval of merger and acquisition transactions, the bank regulatory authorities will consider, among other things, the competitive effect and public benefits of the transactions, the capital position of the combined organization, the applicant’s performance record under the Community Reinvestment Act and fair housing laws and the effectiveness of the subject organizations in combating money laundering activities.

6

In 1999, Congress enacted the Gramm-Leach-Bliley Act (the “GLB Act”), which eliminated certain barriers to and restrictions on affiliations between banks and securities firms, insurance companies and other financial services organizations.  Among other things, the GLB Act repealed certain Glass-Steagall Act restrictions on affiliations between banks and securities firms, and amended the BHCA to permit bank holding companies that qualify as “financial holding companies” to engage in a broad list of “financial activities,” and any non-financial activity that the Federal Reserve Board, in consultation with the Secretary of the Treasury, determines is “complementary” to a financial activity and poses no substantial risk to the safety and soundness of depository institutions or the financial system.  The GLB Act treats various lending, insurance underwriting, insurance company portfolio investment, financial advisory, securities underwriting, dealing and market-making, and merchant banking activities as financial in nature for this purpose.  Under the GLB Act, a bank holding company may become certified as a financial holding company by filing a notice with the Federal Reserve Board, together with a certification that the bank holding company meets certain criteria, including capital, management, and Community Reinvestment Act requirements. The Registrant has chosen not to become certified as a financial holding company at this time.  The Registrant may reconsider this determination in the future.

Capital Adequacy and Prompt Corrective Action

The Federal Deposit Insurance Corporation Improvement Act of 1991 (“FDICIA”), among other things, identifies five capital categories for insured depository institutions and requires the respective federal regulatory agencies to implement systems for “prompt corrective action” for insured depository institutions that do not meet minimum capital requirements within such categories.  The federal regulatory agencies, including the Federal Reserve Board and the OCC, have adopted substantially similar regulatory capital guidelines and regulations consistent with the requirements of FDICIA, as well as established a system of prompt corrective action to resolve certain of the problems of undercapitalized institutions.  This system is based on five capital level categories for insured depository institutions: “well-capitalized,” “adequately capitalized,” “under capitalized,” “significantly under capitalized” and “critically under capitalized.”

Both the Registrant and the Bank are required to maintain sufficient capital to meet both a risk-based asset ratio test and leverage ratio test.  From time to time, the regulatory agencies may require the Registrant and the Bank to maintain capital above these minimum levels should certain conditions exist, such as deterioration of their financial condition or growth in assets, either actual or expected.  

Both the Registrant and the Bank were “well capitalized” under applicable regulatory guidelines as of both December 31, 2010 and 2009. Additional information regarding the Registrant’s and the Bank’s capital requirements and ratios can be found in Note 19 of the Notes to the Consolidated Financial Statements which are contained in the Registrant’s Annual Shareholders Report and incorporated by reference in Item 8, below.

Community Reinvestment Act

The Community Reinvestment Act of 1977 (“CRA”) requires depository institutions to assist in meeting the credit needs of their market areas consistent with safe and sound banking practice.  Under the CRA, each depository institution is required to help meet the credit needs of its market areas by, among other things, providing credit to low and moderate-income individuals and communities.  Depository institutions are periodically examined for compliance with the CRA and assigned ratings.  As of December 31, 2010, the most recent performance evaluation by the OCC (conducted in February 2006) resulted in an overall rating of “satisfactory” for the Bank.

Emergency Economic Stabilization Act of 2008

In response to global credit and liquidity issues involving a number of financial institutions, the United States government, particularly the United States Department of Treasury (the “U.S. Treasury”) and the FDIC, have taken a variety of extraordinary measures designed to restore confidence in the financial markets and to strengthen financial institutions, including capital injections, guarantees of bank liabilities and the acquisition of illiquid assets from banks.

On October 3, 2008, President Bush signed into law the Emergency Economic Stabilization Act of 2008 (the “EESA”) enacted by the U.S. Congress.  Pursuant to the EESA, the U.S. Treasury was granted the authority to take a range of actions for the purpose of stabilizing and providing liquidity to the U.S. financial markets and has proposed several programs, including the purchase by  the U.S. Treasury of certain troubled assets from financial institutions (the “Troubled Asset Relief Program” or “TARP”) and the direct purchase by the U.S. Treasury of equity of healthy financial institutions (the “Capital Purchase Program” or “CPP”).  The EESA also temporarily raised the limit on federal deposit insurance coverage provided by the FDIC from $100,000 to $250,000 per depositor, which has now been made permanent under the Dodd-Frank Act as discussed above.

Among other programs and actions taken by the U.S. regulatory agencies under EESA, the FDIC implemented the Temporary Liquidity Guarantee Program (“TLGP”) to strengthen confidence and encourage liquidity in the banking system.  

7

The TLGP comprises the Debt Guarantee Program (“DGP”) and the Transaction Account Guarantee Program (“TAGP”).  The DGP guaranteed all newly issued senior unsecured debt (e.g., promissory notes, unsubordinated unsecured notes and commercial paper) up to prescribed limits issued by participating entities beginning on October 14, 2008 and continuing through October 31, 2009.  The FDIC extended the DGP, on an emergency basis only, through April 30, 2010.  The Bank did not participate in the DGP.

The TAGP offers full guarantee for noninterest-bearing transaction accounts held at FDIC-insured depository institutions.  The unlimited deposit coverage was voluntary for eligible institutions and was in addition to the $250,000 FDIC deposit insurance per account that was included as part of the EESA.  The TAGP coverage became effective on October 14, 2008 and continued for participating institutions through December 31, 2010.  The Bank participated in the TAGP.  Under the Dodd-Frank Act, this unlimited coverage was extended for non-interest bearing transaction accounts and IOLTA accounts for all federally-insured financial institutions through January 1, 2014.

On February 17, 2009, the American Recovery and Reinvestment Act of 2009 (the “ARRA”) was signed into law.  Section 7001 of the ARRA amended Section 111 of the EESA in its entirety.  Among other things, ARRA significantly expands the executive compensation restrictions previously imposed by the EESA.  Such restrictions apply to any entity that has received financial assistance provided under TARP, and shall generally continue to apply for as long as any obligation arising from financial assistance provided under TARP, including preferred stock issued under the CPP, remains outstanding.  Since the Registrant elected not to participate in the CPP, Section 7001 of the ARRA does not apply to it.

Dividend Restrictions

Current federal banking regulations impose restrictions on the Bank’s ability to pay dividends to the Registrant.  These restrictions include a limit on the amount of dividends that may be paid in a given year without prior approval of the OCC and a prohibition on paying dividends that would cause the Bank’s total capital to be less than the required minimum levels under the risk-based capital requirements.  The Bank’s regulators may prohibit the payment of dividends at any time if the regulators determine the dividends represent unsafe and/or unsound banking practices or reduce the Bank’s total capital below adequate levels.

The Registrant’s ability to pay dividends to its shareholders may also be restricted.  Under current Federal Reserve Board policy, the Registrant is expected to act as a source of financial strength to, and commit resources to support, the Bank.  Under this policy, the Federal Reserve Board may require the Registrant to contribute additional capital to the Bank, which could restrict the amount of cash available for dividends.

Even when the legal ability exists, the Registrant or the Bank may decide to limit the payment of dividends in order to retain earnings for corporate use.

Customer Privacy and Other Consumer Protections

The Registrant is subject to regulations limiting the ability of financial institutions to disclose non-public information about consumers to nonaffiliated third parties.  These limitations require disclosure of privacy policies to consumers and, in some circumstances, allow consumers to prevent disclosure of certain personal information to a nonaffiliated party.  The Registrant is also subject to numerous federal and state laws aimed at protecting consumers, including the Home Mortgage Disclosure Act, the Real Estate Settlement Procedures Act, the Equal Credit Opportunity Act, the Truth in Lending Act, the Bank Secrecy Act, the Community Reinvestment Act and the Fair Credit Reporting Act.

USA PATRIOT Act

The Uniting and Strengthening of America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (the “USA PATRIOT Act”) and related regulations, among other things, require financial institutions to establish programs specifying procedures for obtaining identifying information from customers and establishing enhanced due diligence policies, procedures and controls designed to detect and report suspicious activity.  The Bank has established policies and procedures that the Registrant believes comply with the requirements of the USA PATRIOT Act.

8

Monetary Policy

The Federal Reserve Board regulates money and credit conditions and interest rates in order to influence general economic conditions primarily through open market operations in U.S. government securities, changes in the discount rate on bank borrowings, and changes in the reserve requirements against depository institutions’ deposits.  These policies and regulations significantly affect the overall growth and distribution of loans, investments and deposits, as well as interest rates charged on loans and paid on deposits.

The monetary policies of the Federal Reserve Board have had a significant effect on the operating results of financial institutions in the past and are expected to continue to have significant effects in the future.  In view of the changing conditions in the economy, the money markets and the activities of monetary and fiscal authorities, the Registrant can make no definitive predictions as to future changes in interest rates, credit availability or deposit levels.

COMPETITION

The banking industry is highly competitive.  The Bank competes for loans, deposits and other financial services in Southeastern Wisconsin.  In addition to local, regional and national banking competition in the markets it serves, the Bank competes with other financial institutions, money market and other mutual funds, insurance companies, brokerage companies and other non-depository financial services companies, including certain governmental organizations which may offer subsidized financing at lower rates than those offered by the Bank.

For well over a decade, the banking industry has been undergoing a restructuring process that is contributing to greater competition within the industry which the Registrant expects to continue for the foreseeable future.  The restructuring has been caused by product and technological innovations in the financial services industry, deregulation of interest rates, and increased competition from foreign and nontraditional banking competitors, and has been characterized principally by the gradual erosion of geographic barriers to intrastate and interstate banking and the gradual expansion of investment and lending authorities for bank institutions.  

EMPLOYEES

As of December 31, 2010, the Registrant employed 400 full-time employees and 120 part-time employees.  The employees are not represented by a collective bargaining unit.  The Registrant considers relations with employees to be good.

STATISTICAL PROFILE AND OTHER FINANCIAL DATA

The following statistical information relating to the Registrant and its subsidiaries on a consolidated basis, as required by Guide 3 of the Securities Act Industry Guides, is set forth in the Management’s Discussion and Analysis of Financial Position and Results of Operations (“MD&A”) section of the 2010 Shareholder Report:

(1)

Average Balances and Interest Rates for each of the last three fiscal years;

(2)

Interest Income and Expense Volume and Rate Change for each of the last two years;

(3)

Investment Securities Portfolio Maturity Distribution at December 31, 2010;

(4)

Investment Securities Portfolio for each of the last three years;

(5)

Loan Portfolio Composition for each of the last five years;

(6)

Summary of Loan Loss Experience for each of the last five years; and

(7)

Average Daily Balance of Deposits and Average Rate Paid on Deposits for each of the last three years.

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The following additional tables set forth certain statistical information relating to the Registrant and its subsidiaries on a consolidated basis.

LOAN PORTFOLIO

The following table presents information concerning the aggregate amount of nonperforming loans. Nonperforming loans comprise (a) loans accounted for on a nonaccrual basis and (b) loans contractually past due 90 days or more as to interest or principal payments, for which interest continues to be accrued.

		(Dollars in Thousands)
		December 31,
		2010		2009		2008		2007		2006
Nonaccrual loans	$	23,182	$	5,937	$	2,930	$	2,024	$	-
Loans past due 90 days or more		1,433		9,391		5,684		3,703		3,417
Total nonperforming loans(1)	$	24,615	$	15,328	$	8,614	$	5,727	$	3,417
Ratio of nonaccrual loans to total loans		3.10%		0.75%		0.49%		0.35%		-%
Ratio of nonperforming loans to total loans		3.30%		1.95%		1.44%		0.98%		0.64%
(1)This amount in 2009 and 2010 excludes purchased credit-impaired loans.  Purchased credit-impaired loans have evidence of deterioration in credit quality prior to acquisition.  Fair value of these loans as of the acquisition date includes estimates of credit losses.

Interest income of $0.2 million was recognized during 2010 on loans that were accounted for on a nonaccrual basis. Additional interest income would have been recognized during 2010 under the original loan terms had these loans not been assigned nonaccrual status.

The accrual of interest income is generally discontinued when a loan becomes 90 days past due as to principal or interest. Management may continue the accrual of interest when the estimated net realizable value of collateral is sufficient to cover the principal balance and accrued interest.

There were sixty-five loans at December 31, 2010 classified as troubled debt restructuring whose terms had been renegotiated to provide a reduction or deferral of interest or principal because of a deterioration in the financial position of the borrower.  There were three loans classified as troubled debit restructuring at December 31, 2009 and no loans classified as troubled debt restructuring at December 31, 2008.

RETURN ON EQUITY AND ASSETS AND SELECTED CAPITAL RATIOS

The following table shows consolidated operating and capital ratios of the Registrant for each of the last three years:

		Year Ended December 31,
		2010		2009		2008
Percentage of net income to:
Average stockholders’ equity	11.69%		20.16%		10.21%
Average total assets	1.32%		2.67%		1.46%
Percentage of dividends declared per
common share to net income per
common share	149.07%		43.56%		83.99%
Percentage of average stockholders’
equity to daily average total assets	11.26%		13.24%		14.33%

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SHORT-TERM BORROWINGS
(Dollars in Thousands)

Information relating to short-term borrowings follows:

	Federal Funds Purchased			Other Short-
	and Securities Sold Under			term
	Agreements to Repurchase			Borrowings
Balance at December 31:
2010	$            -			$   4,816
2009	-			1,812
2008	-			3,911
Weighted average interest rate at year end:
2010	0.00%			0.00%
2009	0.00%			0.00%
2008	0.00%			0.07%
Maximum amount outstanding at any month’s end:
2010	$            -			$   4,816
2009	33,384			1,622
2008	24,332			3,911
Average amount outstanding during the year:
2010	$      235			$   1,340
2009	4,708			934
2008	4,949			1,488
Average interest rate during the year:
2010	0.35%			0.00%
2009	0.61%			0.00%
2008	1.96%			1.77%

Fed Funds purchased and securities sold under agreements to repurchase generally mature within one to four days of the transaction date.  Other short-term borrowings generally mature within 90 days.

AVAILABLE INFORMATION

The Registrant maintains a website at www.tcnb.com.  The Registrant  makes  available  through its  website, free of charge, copies of its Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-k, and amendments to the reports (“SEC Reports”), as soon as reasonably practicable after the Registrant electronically files those materials with, or furnishes them to, the Securities and Exchange Commission (the “SEC”).  Materials filed by the Registrant with the SEC, can be read and copied at the    SEC public reference rooms located at 450 Fifth Street, N.W. Room 1024, Washington, D.C. 20549 and  500 West Madison Street Suite 1400, Chicago, Illinois 60661.  Please call the SEC at 800-SEC-0330 for further information on the public reference rooms. The Registrant’s SEC filings will also be available to the public on the SEC’s website at http:/www.sec.gov.  The Registrant’s SEC reports can also be accessed through the “About TCNB” link of its website.   The Registrant’s SEC reports can also be accessed through the “About TCNB” link of its website.  The Registrant’s web address is included as an inactive textual reference only and the information thereon shall not be deemed to be incorporated by reference in this Report.  Any reference to an SEC report available on the Registrant’s website is qualified with reference to any later-dated SEC report, regardless of whether such later-dated SEC report is immediately available on the Registrant’s website.

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Item 1A.   RISK FACTORS

Cautionary Statements Relating To Forward-Looking Information And Risk Factors.

This Form 10-K Annual Report and the documents and materials incorporated herein, as well as other SEC reports filed by the Registrant, contain forward-looking statements, and the Registrant and its representatives may, from time to time, make written or verbal forward-looking statements. Forward-looking statements relate to developments, results, conditions or other events the Registrant expects or anticipates will occur in the future. The Registrant intends words such as "believes," "anticipates," "plans," "expects" and similar expressions to identify forward-looking statements. Without limiting the foregoing, those statements may relate to future economic or interest rate conditions, loan losses and allowances, loan and deposit growth, new branches and the competitive environment. Forward-looking statements are based on management's then current views and assumptions and, as a result, are subject to certain risks and uncertainties that could cause actual results to differ materially from those projected. Any such forward-looking statements are qualified by the following important risk factors that could cause actual results to differ materially from those predicted by the forward-looking statements.

An investment in the Registrant's common stock carries certain risks. Investors should carefully consider the risks described below and other risks, which may be disclosed from time to time in the Registrant's SEC reports, before investing in the Registrant's securities.

The Registrant and the Bank are affected by conditions in the financial markets and economic conditions generally.

The United States economy has been in a downward cycle since the end of 2007, which has been marked by reduced business activity across a wide range of industries and regions.  Many businesses are experiencing serious difficulty due to the lack of consumer spending and the lack of liquidity in the credit markets.  In addition, unemployment continues to be significant.

The financial services industry and the securities markets generally have been materially and adversely affected by significant declines in the values of nearly all asset classes and by a serious lack of liquidity.  This was initially triggered by declines in home prices and the resulting impact on sub-prime mortgages but has since spread to all mortgage and real estate asset classes.

The economic downturn has also resulted in the failure of a number of prominent financial institutions, resulting in further losses as a consequence of defaults on securities issued by them and defaults under contracts with such entities as counterparties.  In addition, declining asset values, defaults on mortgages and consumer loans, the lack of market and investor confidence and other factors have all combined to cause rating agencies to lower credit ratings and to otherwise increase the cost and decrease the availability of liquidity.  Some banks and other lenders have suffered significant losses and have become reluctant to lend, even on a secured basis, due to the increased risk of default and the impact of declining collateral values.  Although the U.S. government, the Federal Reserve Board, and other regulators took numerous steps in 2008 and 2009 to increase liquidity and to restore investor confidence, including investing in the equity of other banking organizations, asset values have continued to decline and access to liquidity continues to be very limited.

Uncertainty in the financial markets could result in lower fair values for investment securities held by the Registrant and the Bank.

The upheaval in the financial markets over the past two years has adversely impacted all classes of securities and has resulted in volatility in the fair values of the Bank’s investment securities.  Issues with credit quality of the securities could result in lower fair values for these securities and may result in recognition of an other-than-temporary impairment charge, which would have a direct adverse impact on results of operations.

The Bank may be adversely affected by the soundness of other financial institutions.

Financial services institutions are interrelated as a result of trading, clearing, counterparty, or other relationships.  The Bank routinely executes transactions with counterparties in the financial services industry, including commercial banks, brokers and dealers, investment banks, and other institutional clients.  Many of these transactions expose the Bank to credit risk – the risk of a default by a counterparty.  In addition, the Bank’s credit risk may be heightened when the collateral it holds cannot be realized upon liquidation or is liquidated at prices not sufficient to recover the full amount of our credit or derivative exposure.  Any such losses could have a material adverse effect on its financial condition and results of operations.

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Fluctuating interest rates impact the Bank’s results of operations and equity.

The results of operations for financial institutions may be materially and adversely affected by changes in prevailing economic conditions, including rapid changes in interest rates, changes in local market conditions, changes in the habits of the public, declines in real estate market values, increases in tax rates and other operating expenses, and the policies of regulatory authorities, including the monetary and fiscal policies of the Federal Reserve Board.  Changes in the economic environment may influence the growth rate of loans and deposits, the quality of the loan portfolio and loan and deposit pricing.  While the Bank has taken measures intended to manage the risks of operating in a changing interest rate environment, there can be no assurance that such measures will be effective in avoiding undue interest rate risk.  The Bank is unable to predict fluctuations of market interest rates, which are affected by many factors, including inflation, recession, a rise in unemployment, tightening money supply, and domestic and international disorder and instability in domestic and foreign financial markets.

The Bank’s profitability depends to a large extent upon its net interest income, which is the difference (or “spread”) between interest income received on interest earning assets, such as loans and investments, and interest expense paid on interest-bearing liabilities, such as deposits and borrowings.  The Bank’s net interest spread and margin will be affected by general economic conditions and other factors that influence market interest rates and the Bank’s ability to respond to changes in such rates.  At any given time, the Bank’s assets and liabilities will be such that they are affected differently by a given change in interest rates.  As a result, an increase or decrease in rates could have a positive or negative effect on the Bank’s net income, capital and liquidity.

The mismatch between maturities and interest rate sensitivities of balance sheet items (i.e., interest-earning assets and interest-bearing liabilities) results in interest rate risk, which risk will change as the level of interest rates changes.  The Bank’s liabilities consist primarily of deposits, which are either of a short-term maturity or have no stated maturity.  These latter deposits consist of NOW accounts, demand accounts, savings accounts and money market accounts.  These accounts typically can react more quickly to changes in market interest rates than the Bank’s assets because of the shorter maturity (or lack of maturity) and repricing characteristics of these deposits.  Consequently, sharp increases or decreases in market interest rates may impact the Bank’s earnings negatively or positively, respectively.

To manage vulnerability to interest rate changes, the Bank’s management monitors the Bank’s interest rate risks.  The Bank’s officers have established investment policies and procedures, which ultimately are reported to the Board of Directors.  Management and the Board of Directors generally meet quarterly and review the Bank’s interest rate risk position, loan and securities repricing, current interest rates and programs for raising deposit-based maturity gaps, including retail and non-brokered deposits, and loan origination pipeline.  The Bank’s assets and liabilities maturing and repricing within one year generally result in a negative one-year gap, which occurs when the level of liabilities estimated to mature and reprice within one year is greater than the level of assets estimated to mature and reprice within that same time frame.  If interest rates were to rise significantly, and for a prolonged period, the Bank’s operating results could be adversely affected.  Gap analysis attempts to estimate the Bank’s earnings sensitivity based on many assumptions, including, but not limited to, the impact of contractual repricing and maturity characteristics for rate-sensitive assets and liabilities.

Changes in interest rates will also affect the level of voluntary prepayments on the Bank’s loans resulting in the receipt of proceeds that the Bank may have to reinvest at a lower rate than the loan being prepaid. Finally, changes in interest rates can result in the flow of funds away from the banking institutions into investments in U.S. government and corporate securities, and other investment vehicles that, because of the absence of federal insurance premiums and reserve requirements, among other reasons, generally can pay higher rates of return than banking institutions.

The Bank is vulnerable because of the concentration of its business in a limited geographic area, and because of its focus on providing certain types of loan products to small to medium business customers.

Most of the Bank’s loans are to businesses and individuals in Wisconsin (and primarily in Milwaukee, Ozaukee, Racine, Kenosha and Waukesha Counties), and any general adverse change in the economic conditions prevailing in these areas could reduce the Bank’s growth rate, impair its ability to collect loans or attract deposits, and generally have an adverse impact on the results of operations and financial condition of the Bank.  If these areas experience adverse economic, political or business conditions, the Bank would likely experience higher rates of loss and delinquency on its loans than if its loans were more geographically diverse.

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One of the primary focal points of the Bank’s business strategy is serving the banking and financial services needs of small to medium-sized businesses in the Bank’s geographic region.  Small to medium-sized businesses generally have fewer financial resources in terms of capital or borrowing capacity than larger entities.  If general economic conditions deteriorate in the Milwaukee, Ozaukee, Racine, Kenosha and Waukesha County regions of Wisconsin, the businesses of the Bank’s lending clients and their ability to repay outstanding loans may be negatively affected.  As a consequence, the Bank’s results of operations and financial condition may be adversely affected.

The Bank offers fixed and adjustable interest rates on loans, with terms of up to 30 years.  Although the majority of the residential mortgage loans that the Bank originates are fixed-rate mortgages, adjustable-rate mortgage (“ARM”) loans increase the responsiveness of the Bank’s loan portfolio to changes in market interest rates.  However, because ARM loans are more responsive to changes in market interest rates than fixed-rate loans, ARM loans also increase the possibility of delinquencies in periods of high interest rates.

The Bank also originates loans collateralized by mortgages on commercial real estate and multi-family residential real estate.  Since these loans usually are larger than one-to-four family residential mortgage loans, they generally involve greater risks than one-to-four family residential mortgage loans.  In addition, since customers’ ability to repay these loans often is dependent on operating and managing those properties successfully, adverse conditions in the real estate market or the economy generally can impact repayment more severely than loans collateralized by one-to-four family residential properties.  Moreover, the commercial real estate business is subject to downturns, overbuilding and local economic conditions.

The Bank also makes construction loans for residences and commercial buildings, as well as on unimproved property.  While these loans, because of their shorter (1-3 year) terms, enable the Bank to increase the interest rate sensitivity of its loan portfolios and receive higher yields than those obtainable on permanent residential mortgage loans, the higher yields correspond to higher risk construction lending.  These include risks associated generally with loans on the type of property collateralizing the loan.  Moreover, commercial construction lending often involves disbursing substantial funds with repayment dependent largely on the success of the ultimate project instead of the borrower’s or guarantor’s ability to repay.  Again, adverse conditions in the real estate market or the economy generally can impact repayment of commercial construction loans more severely than loans collateralized by one-to-four family residential properties.

The Bank operates in a highly regulated environment, which could increase its cost structure or have other negative impacts on its operations.

The Bank is subject to extensive state and federal government supervision, regulation and control.  Existing state and federal banking laws subject the Bank to substantial limitations with respect to loans, purchase of securities, payment of dividends and many other aspects of its business.  There can be no assurance that future legislation or government policy will not adversely affect the banking industry or it’s the Bank’s operations to the advantage of its non-bank competitors.  In addition, economic and monetary policy of the Federal Reserve Board may increase its cost of doing business and affect its ability to attract deposits and make loans.  The techniques used by the Federal Reserve Board include setting the reserve requirements of banks and establishing the discount rate on bank borrowings. The policies of the Federal Reserve Board have a direct effect on the amount of bank loans and deposits, and the interest rates charged and paid thereon.

Recent legislative and regulatory initiatives will impose restrictions and requirements on financial institutions that could have an adverse effect on the Bank and the Registrant.

In response to the recent financial market crisis, the United States government, specifically the U.S. Treasury, the Federal Reserve Board and the FDIC, working in cooperation with foreign governments and other central banks, has taken a variety of extraordinary measures designed to restore confidence in the financial markets and to strengthen financial institutions, including measures available under EESA.  EESA followed, and has been followed by, numerous actions by the Federal Reserve Board, United States Congress, Department of Treasury, FDIC, SEC and others to address the current liquidity and credit crisis.  These measures include homeowner relief that encourages loan restructuring and modification; the establishment of significant liquidity and credit facilities for financial institutions and investment banks, the lowering of the Fed Funds rate; emergency action against short selling practices; a temporary guaranty program for money market funds; the establishment of a commercial paper funding facility to provide back-stop liquidity to commercial paper issuers; and coordinated international efforts to address illiquidity and other weaknesses in the financial sector.  The purpose of these legislative and regulatory actions is to stabilize the U.S. banking system.  However, there can be no assurance as to the actual impact the EESA will have on the financial markets, including the extreme levels of volatility and limited credit availability currently being experienced by some institutions, and they may not have the desired effects.  Partly in response to the programs described above, the Dodd-Frank Act was enacted in July 2010.  Some provisions of the Dodd-Frank Act were effective immediately, while others are becoming effective in stages.  Many of the provisions require governmental agencies to implement rules over varying periods between six and 18 months after enactment (between January 2011 and January 2012).  These rules will increase regulation of the financial services industry and impose restrictions on the ability of firms within the industry to conduct business consistent with historical practices.  These rules will, for example, impact the ability of financial institutions to charge certain banking and other fees, allow interest to be paid on demand deposits, impose new restrictions on lending practices and require depository institution holding companies to maintain capital

14

levels at levels not less than those required for insured depository institutions.  The Registrant cannot predict the substance or impact of pending or future legislation or regulation.  Compliance with such legislation or regulation may, among other effects, significantly increase the Registrant’s costs, limit its product offerings and operating flexibility, require significant adjustments in its internal business process, and possibly require it to maintain its regulatory capital at levels above historical practices.

There can be no assurance as to the actual impact that the Dodd-Frank Act and other programs will continue to have on the financial markets, including credit availability.  The failure of the Dodd-Frank Act or other programs to stabilize the financial markets and a continuation or worsening of current financial market conditions could materially and adversely affect the Registrant’s business, financial condition, results of operations, access to credit or the trading price of its stock.

The U.S. Treasury is currently implementing additional programs to further alleviate the ongoing financial crisis.  There can be no assurance that the Bank will be able or, if able, elect to participate in future programs.  If the Bank does not participate in any such programs, it may have a material adverse effect on its competitive position, financial condition and results of operations.

The Bank is subject to increases in FDIC insurance premiums, a one-time special assessment by the FDIC and a requirement to prepay premiums to the FDIC.

Effective January 1, 2007, the FDIC adopted a risk-based system for assessment of deposit insurance premiums under which all institutions are required to pay at least minimum annual premiums.  In addition, in an effort to replenish the DIF in the wake of the recent increase in bank failures in the United States, the FDIC changed its rate structure in December 2008 to generally increase premiums effective for assessments beginning in the first quarter of 2009.  The system categorizes institutions into one of four risk categories depending on capitalization and supervisory rating criteria.  Further, in February 2009, the FDIC issued an interim rule to impose a special one-time 20 bps assessment against all financial institutions in the second quarter of 2009 that was payable in the third quarter of 2009.  

In addition, on November 12, 2009, the FDIC issued new assessment regulations that required FDIC-insured institutions to prepay on December 30, 2009 their estimated quarterly risk-based assessments for the fourth quarter of 2009 and for all of 2010, 2011 and 2012.

On February 7, 2011, the FDIC adopted final rules to implement changes required by the Dodd-Frank Act with respect to the FDIC assessment rules.  In particular, the definition of an institution’s deposit insurance assessment base is being changed from total deposits to total assets less tangible equity.  In addition, the FDIC is revising the deposit insurance assessment rates down.  The changes will become effective April 1, 2011.  The new initial base assessment rates range from 5 to 9 basis points for Category I banks to 35 basis points for Category IV banks.  Category II and III banks will have an initial base assessment rate of 14 and 23 basis points, respectively.  The Bank expects that the new rates and assessment base will reduce its current FDIC insurance assessments.  However, if the risk category of the Bank changes adversely, its FDIC insurance premiums could rise.

The FDIC may further increase or decrease the assessment rate schedule in order to manage the DIF to prescribed statutory target levels.  An increase in the assessment rates could have an adverse effect on the Bank’s earnings.  The FDIC may terminate deposit insurance if it determines the institution involved has engaged in or is engaging in unsafe or unsound banking practices, is in an unsafe or unsound condition, or has violated applicable laws, regulations or orders.

If the Bank has significant loan losses, it would need to further increase its allowance for loan losses and its earnings would decrease.

The Bank’s loan customers may not repay their loans according to their terms, and the collateral securing the repayment of these loans may be insufficient to assure repayment.  The risk of nonpayment of loans is inherent in commercial banking and such nonpayment, if it occurs, may have a material adverse effect on the Registrant’s results of operations and overall financial condition. Management attempts to minimize its credit exposure by carefully monitoring the concentration of its loans within specific industries and through prudent loan underwriting and approval procedures, including a determination of the creditworthiness of borrowers and the value of the assets serving as collateral for repayment of certain loans.  However, there can be no assurance that such monitoring and procedures will reduce the Bank’s lending risks.

If the Bank has underestimated its allowance for loan losses, it may have to take additional charges to income to restore the balance in the allowance.

The Bank makes various assumptions and judgments about the collectability of its loan portfolio and provides an allowance for loan losses based on a number of factors.  The Bank’s allowance for loan losses is established by management and is maintained at a level considered adequate by management to absorb loan losses that are probable and inherent in the Bank’s portfolio.  The amount of future losses is susceptible to changes in economic, operating and other conditions, including changes in interest rates that may be beyond the Bank’s control, and such losses may exceed current estimates.  Although the Bank’s management believes that the allowance for loan losses as of the end of each fiscal quarter is adequate to absorb probable and estimatible losses in its portfolio of loans, there can be no assurance that the allowance will prove sufficient to cover actual loan losses in the future.

15

In addition, federal and state regulators periodically review the Bank’s allowance for loan losses and may require the Bank to increase its provision for loan losses or recognize further loan charge-offs, based on judgments different than those of the Bank’s management.  Any increase in the Bank’s allowance for loan losses or loan charge-offs as required by these regulatory agencies would have a negative effect on the operating results of the Bank.

Non-performing loans at December 31, 2010 were $24.6 million, compared to $15.3 million at December 31, 2009, excluding purchased credit impaired loans.  Purchased credit-impaired loans have evidence of deterioration in credit quality prior to acquisition.  Fair value of these loans as of the Acquisition Date includes estimates of credit losses.  Management believes that the recent increase in non-performing loans is a result of normal business fluctuations and the downturn in the real estate loan market and the U.S. and local economies in general.  No assurance can be given that non-performing loans will not increase in the future or that the bank’s allowance for loan losses will be sufficient to cover any such increases.

The Bank is subject to environmental liability risk associated with collateral securing its real estate lending.

Because a significant portion of its loan portfolio is secured by real property, the Bank from time to time may find it necessary to foreclose on and take title to properties securing such loans.  In doing so, there is a risk that hazardous or toxic substances could be found on those properties.  If such substances are found, the Bank could be held liable for remediation costs, as well as for personal injury and property damage.  The Bank could also be required to incur substantial expenses that could materially reduce the affected property’s value or limit its ability to use or sell the affected property.  In addition, future environmental laws or more stringent interpretations or enforcement policies with respect to existing laws may increase the Bank’s exposure to environmental liability in such circumstances.  Although the Bank is careful to perform environmental reviews on properties prior to loan closing, such reviews might not detect all environmental hazards.

An increase in the competition in markets the Bank serves could negatively impact financial results.

The financial services industry is highly competitive.  The Bank faces intense competition from financial institutions in its market area and surrounding markets, and from non-bank financial institutions, such as mutual funds, brokerage firms and insurance companies that are aggressively expanding into markets traditionally served by banks.  Many non-bank competitors are not subject to the same degree of regulation as applies to bank holding companies, federally insured banks and Wisconsin-chartered state banks.  As a result, such non-bank competitors may have advantages over the Bank in providing certain services.  The Bank also competes indirectly with regional and national financial institutions, many of which have greater liquidity, lending limits, access to capital and market recognition and resources than we do.  Expanded interstate banking may increase competition from out-of-state banking organizations and other financial institutions.  As a small bank relative to many of its competitors, the Bank may lack the resources to compete effectively in the financial services market.

The Bank may not be able to effectively implement new technology, which could put it at a competitive disadvantage and negatively impact its results.

The banking industry is undergoing rapid technological changes with frequent introductions of new technology-driven products and services.  In addition to better serving customers, the effective use of technology increases efficiency and enables financial institutions to reduce costs.  The Bank’s future success will depend in part on its ability to address the needs of its customers by using technology to provide products and services that will satisfy customer demands for convenience as well as create additional efficiencies in its operations.  A number of the Bank’s competitors may have substantially greater resources to invest in technological improvements.  There can be no assurance that the Bank will be able to effectively implement new technology-driven products and services or be successful in marketing such products and services to its customers.

Unauthorized disclosure of sensitive or confidential customer information, whether through a breach of the Bank’s computer system or otherwise, could severely harm the Bank’s business.

As part of the Bank’s normal course of business it collects, processes and retains sensitive and confidential customer information.  Despite the security measures the Bank has in place, its facilities and systems, and those if its third party service providers, may be vulnerable to security breaches, acts of vandalism, computer viruses, misplaced or lost data, programming and/or human errors, or other similar events.  Any security breach involving the misappropriation, loss or other unauthorized disclosure of confidential information, whether by the Bank or its vendors, could severely damage its reputation, expose it to the risk of litigation and liability, disrupt its operations and harm its business.

Shareholders may not be able to liquidate their holdings of Registrant’s common stock when desired.

The trading market for Registrant’s stock is limited and sporadic.  Although the stock is quoted on the over-the-counter bulletin board, shareholders may nevertheless be unable to liquidate their stock quickly or on favorable terms should they desire to do so.

16

Customers may decide not to use banks to complete their financial transactions, which could result in a loss of income to the Bank.

Technology and other changes are allowing customers to complete financial transactions that historically have involved banks at one or both ends of the transaction. For example, customers can now pay bills and transfer funds directly without going through a bank. The process of eliminating banks as intermediaries, known as disintermediation, could result in the loss of fee income, as well as the loss of customer deposits.

The Registrant’s controls and procedures may fail or be circumvented.

Management regularly reviews and updates the Registrant’s internal controls, disclosure controls and procedures, and corporate governance policies and procedures. Any system of controls, however well designed and operated, is based in part on certain assumptions and can provide only reasonable assurances that the objectives of the system are met. Any failure or circumvention of the Registrant’s controls and procedures or failure to comply with regulations related to controls and procedures could have a material adverse effect on its business, financial condition and results of operations.

The Bank relies on the accuracy and completeness of information about customers or counterparties, and inaccurate or incomplete information could negatively impact its financial condition and results of operations.

In deciding whether to extend credit or enter into other transactions with customers and counterparties, the Bank may rely on information provided by such customers and counterparties, including financial statements and other financial information. It may also rely on representations of customers and counterparties as to the accuracy and completeness of that information and, with respect to financial statements, on reports of independent auditors. The Bank’s and the Registrant’s financial condition and results of operations could be negatively impacted to the extent the Bank relies on financial statements that do not comply with generally accepted accounting principles or that are inaccurate or misleading.

The Registrant may not be able to quickly and successfully assimilate the Acquired Bank’s operations into ours.

Although the Acquisition was completed approximately fourteen months ago and the process of integrating the Acquired Bank’s operations into those of the Bank is ongoing, there can be no assurance that the Bank will not experience unforeseen delays, difficulties or costs that will prevent it from completing the integration process in an efficient manner.  Thus, the Registrant may not realize the full benefits of the Acquisition as quickly as management expected, or at all.

The Bank may have underestimated the potential for losses in the loan portfolio that was acquired in the Acquisition.

The fair value estimates for acquired loans were based on an expected cash flow methodology that considered factors including the type of loan, related collateral, classification status, fixed or variable interest rate, term of loan, whether the loan was amortizing, local market economic conditions and underwriting risk and methodology employed by the Acquired Bank.  In calculating expected cash flows, Bank management made additional assumptions regarding prepayments, the timing of defaults and the loss severity of defaults.  The loan valuations reflect the fact the Acquisition was completed as a whole bank purchase without any loss sharing provision on post acquisition loan losses between the Bank and the FDIC, such that the Bank bears all risk of future loan losses.  The Bank could realize significant future losses if it receives less future cash flows on the acquired loans than were estimated.  

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Item 1B.   UNRESOLVED STAFF COMMENTS

None.

Item 2.   PROPERTIES

Tri City National Bank has forty-four locations in Southeastern Wisconsin, including Oak Creek, Milwaukee, Brookfield, Menomonee Falls, West Allis, Hales Corners, Wauwatosa, Cedarburg, Sturtevant, South Milwaukee, Racine, Kenosha and Mount Pleasant.  The Bank owns sixteen of its locations and leases twenty-eight locations; the leased locations include twenty-three full service banking centers located in grocery stores.

Registrant believes that its bank locations are in buildings that are attractive, efficient and adequate for their operations, with sufficient space for parking and drive-in facilities.

Item 3.   LEGAL PROCEEDINGS

The Registrant is not party to any material legal proceedings other than routine litigation arising in the ordinary course of conducting the Registrant’s and the Bank’s business.

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PART II

Item 5.

MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES

MARKET PRICE FOR AND DIVIDENDS ON COMMON STOCK

Information pertaining to the market price of and dividends on the Registrant’s common equity and related stockholder matters specified in Item 201 of Regulation S-K and required under Item 5(a) of Form 10-K is incorporated herein by reference to the 2010 Shareholder Report under the caption “Market for Corporation’s Common Stock and Related Stockholder Matters” (Page 30).

RECENT SALES OF UNREGISTERED SECURITIES

During the three-year period ended December 31, 2010, the Registrant sold a total of 20,685 unregistered shares of its common stock under its Dividend Reinvestment Plan (“DRIP”) at a per-share price of $19.35 per share and aggregate consideration of approximately $400,000.  The most recent such sale occurred in January 2008 after which the DRIP was terminated.  All of these shares were sold to persons who were shareholders of the Registrant as of the respective dividend record dates who had elected to and participated in the DRIP from time to time.  At the time the DRIP was terminated in January 2008 there were approximately 390 shareholders who were participating in the DRIP.  The shares were issued in lieu of cash dividends that would otherwise have been paid to the participants.

All the shares issued under the DRIP, in excess of the 250,000 shares that were originally registered when the DRIP was established, including the approximately 20,685 shares mentioned above, were offered and sold without registration under the Securities Act of 1933 (“Securities Act”) and no exemption from the registration requirements of the Securities Act may have been available to the Registrant in respect thereof.  If these offerings were held to be in violation of the Securities Act of 1933, the Registrant could be required to repurchase the shares sold to purchasers in these offerings at the original purchase price, plus statutory interest from the date of purchase, less dividends received by purchasers on the shares, for a period of one year following the date of the violation.  The Registrant believes that any liability that could arise out of its sale of securities without registration would not be material, although there can be no assurance to such effect.

Although these shares were issued and sold without registration under the Securities Act of 1933, they were nevertheless validly issued under the Wisconsin Business Corporation Law and the Registrant’s Articles of Incorporation and are issued and outstanding for all purposes with all rights (such as voting, dividend and liquidation rights) as all other issued and outstanding shares of the Registrant’s common stock.

Detailed historical information about the Registrant’s sale of registered and unregistered shares pursuant to the DRIP from October 2002 through termination of the DRIP in January 2008 is included in Item 5.  Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities in Registrant’s Annual Report on Form 10-K for the year ended December 31, 2007.  

ISSUER PURCHASES OF EQUITY SECURITIES

The Registrant did not repurchase any shares of its common stock during the fourth quarter of 2010.

Item 6.   SELECTED FINANCIAL DATA

The information required by Item 6 is incorporated herein by reference to the 2010 Shareholder Report under the caption "Selected Financial Data" (Page 30).

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Item 7.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATION

The information required by Item 7 is incorporated herein by reference to the 2010 Shareholder Report under the caption "Management's Discussion and Analysis of Financial Condition and Results of Operation" (Pages 4 to 31).

Item 7A.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The information required by Item 7A is incorporated herein by reference to the 2010 Shareholder Report under the caption “Quantitative and Qualitative Disclosures About Market Risk” (Pages 24  to 27).

Item 8.   CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The information required by Item 8 is incorporated herein by reference to the 2010 Shareholder Report under the caption “Consolidated Financial Statements and Supplementary Data” (Pages 32 to 61).

Item 9.   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE

None.

Item 9A.  CONTROLS AND PROCEDURES

The Registrant maintains a set of disclosure controls and procedures that are designed to provide reasonable assurance that information required to be disclosed by it in the reports filed by it under the Securities Exchange Act of 1934, as amended, is recorded and processed, summarized and reported within the time periods specified in the SEC’s rules and forms.  At year end, the Registrant carried out an evaluation, under the supervision and with the participation of management, including the Chief Executive Officer and the Chief Financial Officer of the Registrant, of the effectiveness of the design and operation of the Registrant’s disclosure controls and procedures pursuant to Rule 13a-15 of the Exchange Act.  Based on that evaluation, the Chief Executive Officer and the Chief Financial Officer of the Registrant concluded that the Registrant’s disclosure controls and procedures were effective as of the end of the period covered by this report.

The Registrant’s management is responsible for establishing and maintaining adequate internal controls over financial reporting as defined in 13a-15(f) and 15d-15(f) under the Exchange Act.  A company’s internal control over financial reporting is a process designed 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.  Internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail accurately and fairly reflect the acquisition, use and disposition of the assets of the Registrant; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Registrant are being made only in accordance with authorizations of management and directors of the Registrant; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Registrant’s assets that could have a material effect on interim or annual consolidated financial statements.  Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.  Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

The Registrant’s management, with the participation of its CEO and the CFO, conducted an evaluation of the effectiveness of the Registrant’s internal controls over financial reporting as of December 31, 2010 based on the framework and criteria established in Internal Controls – Integrated Framework,  issued by the Committee of Sponsoring Organizations of the Treadway Commission.

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This evaluation included review of the documentation of controls, evaluation of the design effectiveness of controls, testing of the operating effectiveness of controls and a conclusion on this evaluation.  Based on this evaluation, management concluded that the Registrant’s internal control over financial reporting is effective as of December 31, 2010.

This annual report on Form 10-K does not include an attestation of the Registrant’s independent registered public accounting firm regarding internal control over financial reporting.  Management’s report was not subject to attestation by the Registrant’s independent registered public accounting firm pursuant to temporary rules of the SEC that permit the Registrant to provide only management’s report in this annual report on Form 10-K.

There have been no changes in the Registrant’s internal control over financial reporting identified in connection  with the evaluation discussed above that occurred during the Registrant’s  last fiscal quarter that have materially affected, or are reasonable likely to materially affect, the Registrant’s internal control over financial reporting.

Item 9B.   OTHER INFORMATION

None.

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PART III

Item 10.   DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

The information required by Item 10 is incorporated herein by reference to Registrant's definitive Proxy Statement for its annual meeting of stockholders on June 8, 2011 (“The 2011 Proxy Statement”) under the captions entitled "Election of Directors" and “Section 16(a) Beneficial Ownership Reporting Compliance”.

The Registrant has a Code of Ethics that applies to its principal executive officer, principal financial officer and principal accounting officer.  Copies of the Registrant’s Code of Ethics are available upon request, free of charge, by contacting the Registrant at 6400 South 27^th Street, Oak Creek, Wisconsin, 53154.

Item 11.   EXECUTIVE COMPENSATION

The information required by Item 11 is incorporated herein by reference to the 2011 Proxy Statement under the caption entitled “Executive Compensation”.

Item 12.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
STOCKHOLDER MATTERS

The information required by Item 12 is incorporated herein by reference to the 2011 Proxy Statement under the caption entitled “Security Ownership of Certain Beneficial Owners and Management” and “Equity Compensation Plan Information”.

Item 13.   CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

The information required by Item 13 is incorporated herein by reference to the 2011 Proxy Statement under the caption entitled “Loans and Other Transactions with Management”.

Item 14.   PRINCIPAL ACCOUNTANT FEES AND SERVICES

The information required by Item 14 is incorporated herein by reference to the 2011Proxy Statement under the caption entitled “Principal Accountant Fees and Services”.

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PART IV

Item 15.   EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a)

(1) and (2) Financial statements and financial statement schedules

The response to this portion of Item 15 is submitted as a separate section of this report.

(3)

Listing of Exhibits

Exhibit 2.1 -

Purchase and Assumption Agreement Whole Bank All Deposits, among the Federal Deposit Insurance Corporation, receiver of the Bank of Elmwood, Racine, Wisconsin, the Federal Deposit Insurance Corporation and Tri City National Bank, dated as of October 23, 2009 (incorporated herein by reference to Exhibit 2.1 to Registrant’s current report on Form 8-K filed October 28, 2009)

 Exhibit 3.1 -

Restated Articles of Incorporation (incorporated herein by reference to Exhibit 3.2 to Registrant’s current report on Form 8-K filed February 12, 2003)

Exhibit 3.2 -

By-Laws (incorporated herein by reference to Exhibit 3.2 to Registrant’s Annual Report on Form 10-K for the year ended December 31, 2000)

Exhibit 10.1* -

Summary of compensation arrangements with certain persons

Exhibit 10.2* -

Summary of director compensation

Exhibit 10.3* -

Summary of executive bonus arrangements

Exhibit 10.4

Purchase and Assumption Agreement Whole Bank All Deposits, among the Federal Deposit Insurance Corporation, receiver of the Bank of Elmwood, Racine, Wisconsin, the Federal Deposit Insurance Corporation and Tri City National Bank, dated as of October 23, 2009 (incorporated herein by reference to Exhibit 2.1 to Registrant’s current report on Form 8-K filed October 28, 2009)

Exhibit 13 -

Annual Report to Stockholders for the year ended December 31, 2010

With the exception of the information incorporated by reference into Items 5, 6, 7, 7A, and 8 of this Form 10-K, the 2010 Annual Report to Stockholders is not deemed filed as part of this report

Exhibit 21 -

Subsidiaries of Registrant

Exhibit 31.1

Certification of Chief Executive Officer pursuant to Rule 13a -14(a) or 15d-14(a) under the Securities and Exchange Act of 1934, as amended

Exhibit 31.2

Certification of Chief Financial Officer pursuant to Rule 13a -14(a) or 15d-14(a) under the Securities and Exchange Act of 1934, as amended

Exhibit 32.1

Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350

Exhibit 32.2

Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350

23

*A Management contract or compensation plan or arrangement

(b)

Exhibits

See Item 15(a)(3)

(c)

Financial Statement Schedules

See Item 15(a)(2)

24

PART IV

ANNUAL REPORT ON FORM 10-K

ITEM 15(a)(1), (2) and (b)

LIST OF FINANCIAL STATEMENTS AND FINANCIAL

STATEMENT SCHEDULES

CERTAIN EXHIBITS

Year Ended December 31, 2010

TRI CITY BANKSHARES CORPORATION

OAK CREEK, WISCONSIN

25

FORM 10-K-ITEM 15(a)(1) and (2)

TRI CITY BANKSHARES CORPORATION

LIST OF FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES

The following consolidated financial statements and report of independent registered public accounting firm of Tri City Bankshares Corporation, included in the annual report of the Registrant to its stockholders for the year ended December 31, 2010, are incorporated by reference in Item 8:

Consolidated Balance Sheets-December 31, 2010 and 2009

Consolidated Statements of Income-Years ended December 31, 2010, 2009 and 2008

Consolidated Statements of Stockholders' Equity-Years ended December 31, 2010, 2009 and 2008

Consolidated Statements of Cash Flows-Years ended December 31, 2010, 2009 and 2008

Notes to Consolidated Financial Statements-Years ended December 31, 2010, 2009 and 2008

Report of Independent Registered Public Accounting Firm

Schedules to the consolidated financial statements required by Article 9 of Regulation S-X are not required under the related instructions or are nonapplicable and, therefore, have been omitted.

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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.

	TRI CITY BANKSHARES CORPORATION
	BY:  /s/ /Ronald K. Puetz
	Ronald K. Puetz, President, Chairman and CEO
	Date:  March 23, 2011

Pursuant to the requirements of the Securities Exchange 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.

Name	Capacity	Date
/s/ Ronald K. Puetz                                Ronald K. Puetz	President, Chairman, Chief Executive Officer, and Director (Principal Executive Officer)	03/23/2011
/s/ Scott A. Wilson                                 Scott A. Wilson	Executive Vice President, Treasurer and Director	03/23/2011
/s/ Robert W. Orth                                    Robert W. Orth	Executive Vice President and Director	03/23/2011
/s/ Scott D. Gerardin                               Scott D. Gerardin	Senior Vice President, General Counsel and Director	03/23/2011
/s/ Frederick R. Klug                                Frederick R. Klug	Senior Vice President and Chief Financial Officer	03/23/2011
/s/ Thomas W. Vierthaler                         Thomas W. Vierthaler	Vice President and Comptroller (Principal Accounting Officer)	03/23/2011
/s/ Frank J. Bauer                                      Frank J. Bauer	Director	03/23/2011
/s/ William N. Beres                                William N. Beres	Director	03/23/2011
/s/ Sanford Fedderly                                Sanford Fedderly	Director	03/23/2011
/s/ William Gravitter                                William Gravitter	Director	03/23/2011
/s/ Christ Krantz                                       Christ Krantz	Director	03/23/2011

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/s/ Brian T. McGarry                              Brian T. McGarry	Director	03/23/2011
/s/ Agatha T. Ulrich                               Agatha T. Ulrich	Director	03/23/2011
/s/ David A. Ulrich, Jr.                          David A. Ulrich, Jr.	Director	03/23/2011
/s/ William J. Werry                                William J. Werry	Director	03/23/2011

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EXHIBIT 10.1

Summary of Compensation

Arrangements with Certain Persons

The Bank’s executive officers do not have employment agreements with the Registrant.  Their salaries as of February 28, 2011 were as follows:

		Tri City		Tri City		Tri City
Name		Bankshares		National Bank		Capital Corp.		Total
Ronald K. Puetz	$	44,000	$	428,000	$	1,500	$	473,500
Robert W. Orth	$	22,000	$	348,000	$	1,000	$	371,000
Scott A. Wilson	$	22,000	$	315,000	$	1,000	$	338,000
Scott D. Gerardin	$	5,500	$	184,000	$	-	$	189,500

In addition, executive officers are eligible to participate in the Bank’s bonus plan.

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EXHIBIT 10.2

Summary of Director Compensation

Attached is Schedule B that details Board of Director and Committee Member compensation.  Directors that are salaried officers of the corporation receive no director or committee compensation.  Schedule B is approved annually by the Board of Directors.

30

EXHIBIT 10.2 Continued

SCHEDULE B

DECEMBER 9, 2010

DIRECTORS’ COMPENSATION:	Non-salaried Directors $18,000 annual retainer plus $1,700 per meeting attended of Tri City National Bank and $400 per meeting attended of Tri City Bankshares Corporation, payable quarterly
EXECUTIVE COMMITTEE:	Annual compensation, payable quarterly:
Ronald K. Puetz	Ronald K. Puetz – no compensation

William Gravitter	William Gravitter	$20,000
Sanford Fedderly	Sanford Fedderly	$13,600
Christ Krantz	Christ Krantz	$  6,300
Brian T. McGarry	Brian T. McGarry	$  6,300

	Plus $1,700 per meeting attended
LOAN COMMITTEE:
William Werry, Chairman	Non-salaried Directors:
Robert W. Orth	Chairman $875 per meeting attended
Sanford Fedderly	Other members $575 per meeting attended
William Gravitter	Payable quarterly
Christ Krantz
Ronald K. Puetz
Scott A. Wilson
Brian T. McGarry
AUDIT COMMITTEE:
William N. Beres, Chairman	Chairman $11,500 per annum, payable quarterly
Sanford Fedderly	Non-salaried members $350 per meeting attended
Christ Krantz	Payable quarterly
CRA/COMPLIANCE COMMITTEE
Scott A. Wilson, Chairman	Non-salaried Directors:
David A. Urlich, Jr.	$350 per meeting attended, payable quarterly
Scott D. Gerardin
Georgia Franecki
Joseph Porter
Michael Koenen
William Zick
Mark Dandrea
Kristen Gagliano

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 EXHIBIT 10.3

Summary of Officer Bonus Arrangements

Description

The officers of the Registrant are eligible for a bonus calculated as a percentage of each officer’s base salary.  Executive officers of the Registrant participate in the plan on the same basis as all other participating officers.  The bonus is approved by the Board of Directors and the specific percentage award is determined based on the Registrant’s return on average assets for the twelve month period ending on November 30.

The Board of Directors has the authority to amend, alter, suspend or discontinue the bonus arrangement at any time.  For the twelve month period ending November 30, 2010 the performance of the Registrant and the Bank was positively impacted by the bargain purchase gain resulting from the Acquisition.  As a result the Board approved a bonus for all officers in excess of the bonus which would have been calculated excluding this extra-ordinary event.  The bonus paid December 2010 was 10% of each officer’s base salary.

The Board of Directors also altered the bonus arrangement in 2010 to include additional executive bonus compensation.  The Executive Committee of the Board first reviewed this issue in December 2009 following the Acquisition.  At that time the Executive Committee declined recommending any additional executive bonus compensation for 2009.  They opted to review the Bank’s performance through October 31, 2010 allowing one full year of results from the October 23, 2009 Acquisition.  Performance of the Bank for the twelve months ending October 31, 2010 resulted in recommendation by the Executive Committee and approval by the Board of additional executive bonus compensation for 2010.

Other Provisions

If an officer’s employment is terminated for any reason before the bonus is paid, the officer forfeits all rights to the bonus.

This bonus arrangement does not give any officer the right to be retained in the employment of the Registrant and does not affect the right of the Registrant to terminate, with or without cause, any officer’s employment at any time.

The Registrant has the right to withhold from any compensation payable to an officer, or to cause the officer (or the executor or administrator of his or her estate or his or her distributee) to make payment of any federal, state, local or foreign taxes required to be withheld with respect to any payment.

The Board of Directors may amend, alter, suspend or discontinue the bonus arrangements as it shall at any time or from time to time determine in its sole discretion.

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EXHIBIT 21

SUBSIDIARIES OF REGISTRANT

Name	Percentage of Shares Owned
Tri City National Bank	100.0%
(National Banking Association)
Tri City Capital Corporation	100.0%(1)
(Nevada Corporation)
Title Service of Southeast Wisconsin, Inc.	100.0%(1)
(Wisconsin Corporation)
(1) Owned by Tri City National Bank

33