January 28, 2010

Dear Shareholder:

We are pleased to share with you that the fourth quarter of 2009 was again very positive with net earnings of $1.13 million compared with $1.01 million for the last quarter of 2008. For the entire year, net income reached almost $4.1 million, up 3.4% over 2008, and on target with our financial plan. The Company has exceeded a new milestone with this performance as 2009 marks the sixth year of record earnings performance, even during the continuing challenges of a significantly strained economy and banking sector. A myriad of new regulatory, legislative, accounting, and other continual changes have created uncertainty in the business environment.

To navigate this successfully, your Company's management strives to maintain a steady traditional banking course. This is the concept of community banking which has been increasingly valued and differentiated from "too big to fail" firms that precipitated the financial services crisis. In fact, community banks like Steuben have provided a true stimulus for economic recovery through continued brisk lending. Steuben's loan portfolio increased $12.6 million or 6.4% to $211.3 million and the loan to deposit ratio grew to 78.5%. The quality of the portfolio remained sound with net loan losses of .19% improved from .29% in 2008 and outperforming the industry peer average. Non-performing loans declined from 1.07% of total loans at 12/31/08 to .81% at year end, significantly more positive than peer group experience, despite the continued economic strains on consumers and small businesses which is monitored carefully.

For the year, return on average assets was 1.18%, which is approximately three times more favorable than the peer group. On average shareholders' equity, net income represented 13.88% with earnings per common share increasing to $2.50. Dividends per share totaled $0.845 with $1.38 million of earnings paid to shareholders, an increase of 10.3% from $1.25 million in 2008.

Total deposits and assets at 12/31/09 were impacted temporarily at the end of December by shifting of municipal deposits and delayed NYS revenue sharing payments which were partially restored in January. Despite this, average deposits for the year were up $11.2 million, while average assets reached $347.8 million compared to $331.2 million for 2008.

The Company's strategic plan was completed in the fourth quarter and continues to be a key determinant of our progress.

A dividend of $0.215 per common share was declared by the Board of Directors payable February 1, 2010, to shareholders of record January 20, 2010.

We extend best wishes to you for a successful 2010. Thank you again for providing the customer and shareholder support that enables Steuben Trust Corporation to distinguish our Company's service for the banking and business needs of our Western New York consumers, farms and small businesses.

Sincerely,

Brenda L. Copeland
President & CEO