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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-K
 
 Annual Report Pursuant to Section 13 or 15(d) of theSecurities Exchange Act of 1934
 For the fiscal year ended: December 31, 2010
    
    Commission File Number: 000-11448
 NewBridge Bancorp
 (Exact name of Registrant as specified in its Charter)
 North Carolina
(State of Incorporation)
    
    56-1348147
(I.R.S. Employer Identification No.)1501 Highwoods Blvd., Suite 400Greensboro, North Carolina
    
    27410(Address of principal executive offices)
    
    (Zip Code)
 (336) 369-0900
 
 Securities Registered Pursuant to Section 12(g) of the Securities Exchange Act of 1934:
 Name of each exchangeTitle of each class
    
    on which registeredCommon Stock, par value $5.00 per share
    
    Nasdaq Global Select Market
 o þ
 o þ
 þ o
 þ o
 þ
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting company þ(Do not check if a smaller reporting company)
 o þ




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##### 



NewBridge Bancorp
Annual Report on Form 10-K for the fiscal year ended December 31, 2010
Table of Contents
 Index
    
    
    
    PagePART IItem 1.
    
    Business
    
    
    4Item 1A.
    
    Risk Factors
    
    
    14Item 1B.
    
    unresolved staff comments
    
    
    24Item 2.
    
    Properties
    
    
    25Item 3.
    
    Legal Proceedings
    
    
    26PART IIItem 5.
    
    Market
for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
    
    
    27Item 6.
    
    Selected Financial Data
    
    
    30Item 7.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    31Item 7A.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    54Item 8.
    
    Financial Statements and Supplementary Data
    
    
    58Item 9.
    
    Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
    
    
    87Item 9A.
    
    Controls and Procedures
    
    
    87Item 9B.
    
    Other Information
    
    
    87PART IIIItem 10.
    
    Directors, Executive Officers And Corporate Governance
    
    
    88Item 11.
    
    Executive Compensation
    
    
    88Item 12.
    
    Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
    
    
    88Item 13.
    
    Certain Relationships and Related Transactions, and director independence
    
    
    88Item 14.
    
    Principal Accountant Fees and Services
    
    
    88PART IVItem 15.
    
    Exhibits and Financial Statement Schedules
    
    
    89Signatures
    
    
    94EX-21.01EX-23.01EX-31.01EX-31.02EX-32.01EX-99.01EX-99.02




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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
  
    
    revenues are lower than expected;
 
    
    credit quality deterioration which could cause an increase in the provision for
credit losses;
 
    
    competitive pressure among depository institutions increases significantly;
 
    
    changes in consumer spending, borrowings and savings habits;
 
    
    regulatory approval for paying dividends cannot be obtained
 
    
    technological changes and security and operations risks associated with the use
of technology;
 
    
    the cost of additional capital is more than expected;
 
    
    a change in the interest rate environment reduces interest margins;
 
    
    asset/liability repricing risks, ineffective hedging and liquidity risks;
 
    
    counterparty risk;
 
    
    general economic conditions, particularly those affecting real estate values,
either nationally or in the market areas in which we do or anticipate doing business,
are less favorable than expected;
 
    
    the effects of the Federal Deposit Insurance Corporation (FDIC) deposit
insurance premiums and assessments;
 
    
    the effects of and changes in monetary and fiscal policies and laws, including
the interest rate policies of the Federal Reserve Board;
 
    
    volatility in the credit or equity markets and its effect on the general
economy;
 
    
    demand for the products or services of the Company, as well as its ability to
attract and retain qualified people;
 
    
    the costs and effects of legal, accounting and regulatory developments and
compliance;
 
    
    regulatory approvals for acquisitions cannot be obtained on the terms expected
or on the anticipated schedule; and
 
    
    the effects of the recent enactment of the Dodd-Frank Wall Street Reform and
Consumer Protection Act; and the enactment of further regulations related to this Act.
  3




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PART I
 
 Item 1.
    
    Business
 General
    Business of Bank and Other Subsidiaries
      4




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Market Areas
  Piedmont Triad Region:
    
    Piedmont Triad Region (continued):Greensboro (five offices)
    
    MidwayLexington (three offices)
    
    ThomasvilleReidsville (two offices)
    
    TyroWinston-Salem (two offices)
    
    WalkertownArchdale
    
    WallburgClemmons
    
    WelcomeDanburyEden
    
    Coastal Region:High Point
    
    Wilmington (two offices)Jamestown
    
    BurgawKernersvilleKing
    
    Shenandoah Valley Region:Madison
    
    Harrisonburg 1
 
 1
    
    On December 21, 2010, the Bank announced it had entered into an agreement to
sell its Harrisonburg, VA operations.      5




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Unemployment Rate
    
    
    As of December 31, 2010Nonperforming
    
    
    
    
    
    
    
    % of TotalDecember 31
    
    
    Loans
    
    
    Total Loans
    
    
    Loans2007
    
    
    2008
    
    
    2009
    
    
    2010
    
    
    (in thousands)Piedmont Triad:Guilford County
    
    
    4.5%
    
    
    8.3%
    
    
    11.2%
    
    
    
    10.1
    %
    
    
    $
    6,473
    
    
    
    $
    275,978
    
    
    
    2.35%Davidson County
    
    
    5.3
    
    
    9.7
    
    
    13.4
    
    
    
    11.1
    
    
    
    
    12,448
    
    
    
    
    367,112
    
    
    
    3.39Rockingham County
    
    
    5.7
    
    
    10.1
    
    
    12.6
    
    
    
    12.1
    
    
    
    
    2,577
    
    
    
    
    90,239
    
    
    
    2.86Forsyth County
    
    
    4.3
    
    
    7.4
    
    
    9.9
    
    
    
    9.1
    
    
    
    
    5,617
    
    
    
    
    217,959
    
    
    
    2.58Coastal
    
    
    3.9
    
    
    7.5
    
    
    9.7
    
    
    
    8.9
    
    
    
    
    17,340
    
    
    
    
    187,730
    
    
    
    9.24Shenandoah Valley
    
    
    2.4
    
    
    4.2
    
    
    5.5
    
    
    
    5.4
    
    
    
    
    1,004
    
    
    
    
    104,653
    
    
    
    0.96
  Number of
    
    
    Deposit MarketRegion
    
    Loans(1)
    
    
    Deposits
    
    
    Branches
    
    
    Share Rank(2)Piedmont Triad
    
    $
    1,033,887
    
    
    $
    1,293,431
    
    
    
    27
    
    
    
    1Coastal
    
    
    194,388
    
    
    
    102,945
    
    
    
    3
    
    
    
    5Shenandoah Valley
    
    
    32,310
    
    
    
    56,619
    
    
    
    1
    
    
    
    4
 
 (1)
    
    Excludes loans held for sale.(2)
    
    Rank for community financial institutions; excludes banks greater
than $10 billion in assets. 6




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Deposits
  As of December 31,2010
    
    
    2009
    
    
    2008Noninterest-bearing demand
    
    
    11.1
    %
    
    
    10.4
    %
    
    
    9.0
    %Savings, NOW, MMA
    
    
    54.8
    
    
    
    44.6
    
    
    
    36.9Certificates of deposit
    
    
    34.1
    
    
    
    45.0
    
    
    
    54.1100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
   Scheduled maturity of time deposits
    
    $100,000 or more
    
    
    $250,000 or more(In thousands)Less than three months
    
    $
    124,886
    
    
    $
    43,844Three through six months
    
    
    53,904
    
    
    
    25,047Seven through twelve months
    
    
    38,602
    
    
    
    7,512Over twelve months
    
    
    29,762
    
    
    
    6,012Total
    
    $
    247,154
    
    
    $
    82,415
 See also Note 7 in the Notes to Consolidated Financial Statements of this Annual Report on Form
10-K.
 Marketing
  Competition
  7




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##### Table of Contents



Employees
  Supervision and Regulation
 Bank holding companies and commercial banks are extensively regulated under both federal and state
law. The following is a brief summary of certain statutes and rules and regulations that affect or
will affect Bancorp, the Bank and the Banks subsidiaries. This summary is qualified in its
entirety by reference to the particular statute and regulatory provisions referred to below, and is
not intended to be an exhaustive description of the statutes or regulations applicable to the
business of Bancorp and the Bank. Supervision, regulation and examination of Bancorp and the Bank
by the regulatory agencies are intended primarily for the protection of depositors rather than
shareholders of Bancorp. Statutes and regulations which contain wide-ranging proposals for
altering the structures, regulations and competitive relationship of financial institutions are
introduced regularly. Bancorp cannot predict whether, or in what form, any proposed statute or
regulation will be adopted or the extent to which the business of Bancorp and the Bank may be
affected by such statute or regulation.
 General.
  U.S. Treasury Capital Purchase Program.
 8




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Capital Adequacy Guidelines for Bank Holding Companies.
 Capital Requirements for the Bank.
 Dividend and Repurchase Limitations.
  9




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Deposit Insurance Assessments.
 Federal Home Loan Bank System.
 Community Reinvestment.
 Prompt Corrective Action.
 10




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Changes in Control.
 Federal Securities Law
 Transactions with Affiliates.
 Loans to One Borrower.
 Gramm-Leach-Bliley Act.
 11




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USA Patriot Act of 2001.
 Sarbanes-Oxley Act of 2002.
   Dodd-Frank Wall Street Reform and Consumer Protection Act
 Limits on Rates Paid on Deposits and Brokered Deposits
 Taxation Federal Income Taxation
 State Taxation
 12




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Other.
  Future Requirements
 Available Information
 www.newbridgebank.com www.sec.gov
 Investor Relations
 13




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Item 1A.
    
    Risk Factors
 An investment in Bancorps common stock is subject to risks inherent in Bancorps business. The
material risks and uncertainties that management believes affect Bancorp are described below.
Before making an investment decision, you should carefully consider these risks and uncertainties,
together with all of the other information included or incorporated by reference in this Annual
Report on Form 10-K. These risks and uncertainties are not the only ones facing Bancorp. Additional
risks and uncertainties that management is not aware of or focused on, or that management currently
deems immaterial may also impair Bancorps business operations. This report is qualified in its
entirety by these risk factors.
 If any of the following risks actually occur, Bancorps financial condition and results of
operations could be materially and adversely affected. If this were to happen, the value of
Bancorps common stock could decline significantly, and you could lose all or part of your
investment.
 Risks Related to Recent Economic Conditions and Governmental Response Efforts
 Our business has been and may continue to be adversely affected by current conditions in the
financial markets and economic conditions generally.
 
    
    a decrease in the demand for loans or other products and services
offered by us;
    
    a decrease in the value of our loans or other assets secured by
consumer or commercial real estate;
    
    a decrease in deposit balances due to overall reductions in the
accounts of customers;
    
    an impairment of certain intangible assets or investment
securities;
    
    a decreased ability to raise additional capital on terms
acceptable to us or at all; or
    
    an increase in the number of borrowers who become delinquent,
file for protection under bankruptcy laws or default on their loans or other
obligations to us. An increase in the number of delinquencies, bankruptcies or
defaults could result in a higher level of nonperforming assets, net charge-offs
and provision for credit losses, which would reduce our earnings.
  Financial reform legislation recently enacted by Congress will result in new laws and regulations
that are expected to increase our costs of operations.
  14




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Increases in FDIC insurance premiums may adversely affect Bancorps net income and profitability.
 The capital and credit markets have experienced unprecedented levels of volatility.
 Additional requirements under our regulatory framework, especially those imposed under ARRA, EESA
or other legislation or regulations intended to strengthen the U.S. financial system, could
adversely affect us.
 15




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Our participation in the CPP imposes restrictions and obligations on us that limit our ability to
increase dividends, repurchase shares of our common stock and access the capital markets.
 The limitations on incentive compensation contained in the ARRA and subsequent regulations may
adversely affect our ability to retain our highest performing employees.
 The soundness of other financial institutions could adversely affect us.
   16




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Market developments may adversely affect our industry, business and results of operations.
 Risks Associated with Our Business
 We rely on dividends from the Bank for most of our revenue.
 The Bank is exposed to risks in connection with the loans it makes.
 Our allowance for loan losses may be insufficient.
 17




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If the value of real estate in the markets we serve were to further decline, a significant portion
of our loan portfolio could become under-collateralized, which could have a material adverse effect
on us.
 Our commercial real estate lending may expose us to risk of loss and hurt our earnings and
profitability.
 Our construction loans and land development loans involve a higher degree of risk than other
segments of our loan portfolio.
 Our lending on unimproved land may expose us to a greater risk of loss and may have an adverse
effect on results of operations.
 18




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If our investment in the common stock of the FHLB of Atlanta is classified as
other-than-temporarily impaired or as permanently impaired, our earnings and stockholders equity
could decrease.
  If the Bank loses key employees with significant business contacts in its market areas, its
business may suffer.
 Bancorps growth strategy may not be successful.
 The Bank is subject to interest rate risk.
 19




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We may face increasing deposit-pricing pressures, which may, among other things, reduce our
profitability.
 Bancorps operating results and financial condition would likely suffer if there is a further
deterioration in the general economic condition of the areas in which the Bank does business.
 Bancorp and the Bank compete with much larger companies for some of the same business.
 
    
    Changes in regulations;
    
    Changes in technology and product delivery systems; and
    
    The accelerating pace of consolidation among financial services
providers.
  Negative publicity could damage our reputation.
 The Bank is subject to environmental liability risk associated with lending activities.
 20




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Financial services companies depend on the accuracy and completeness of information about customers
and counterparties.
 Liquidity risk could impair our ability to fund operations and jeopardize our financial condition,
results of operations and cash flows.
  Changes in our accounting policies or in accounting standards could materially affect how we report
our financial results and condition.
  21




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Impairment of investment securities, certain other intangible assets, or deferred tax assets could
require charges to earnings, which could result in a negative impact on our results of operations.
 Technological advances impact Bancorps business.
 We rely on other companies to provide key components of our business infrastructure.
 Our information systems may experience an interruption or breach in security.
 Government regulations may prevent or impair Bancorps ability to engage in mergers or operate in
other ways.
 22




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
    
    The payment of dividends to our stockholders;
    
    The payment of dividends on trust preferred securities;
    
    Possible mergers with or acquisitions of or by other
institutions;
    
    Our desired investments;
    
    Loans and interest rates on loans;
    
    Interest rates paid on our deposits;
    
    The possible expansion of our branch offices; and
    
    Our ability to provide securities or trust services.
  Unpredictable catastrophic events could have a material adverse effect on Bancorp.
 Risks Related to our Common Stock
 Our stock price can be volatile.
 
    
    Actual or anticipated variations in quarterly results of
operations;
    
    Recommendations by securities analysts;
    
    Operating results and stock price performance of other companies
that investors deem comparable to us;
    
    News reports relating to trends, concerns, and other issues in
the financial services industry;
    
    Perceptions in the marketplace regarding us and/or our
competitors;
    
    New technology used or services offered by competitors;
    
    Significant acquisitions or business combinations, strategic
partnerships, joint ventures, or capital commitments by or involving us or our
competitors; and
    
    Changes in government regulations.
  Bancorps trading volume is low compared with larger national and regional banks.
 23




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Bancorp has issued preferred stock and subordinated debentures, all of which rank senior to our
common stock.
 Our preferred stock reduces net income available to holders of our common stock and earnings per
common share and the Warrant may be dilutive to holders of our common stock.
 There may be future sales of additional common stock or preferred stock or other dilution of our
equity, which may adversely affect the market price of our common stock.
 There may be future issuances of additional subordinated debentures, which may adversely affect the
market price of our common stock.
 Our common stock is not FDIC insured.
 
 Item 1B.
    
    Unresolved Staff Comments
  24




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Item 2.
    
    Properties
  Location
    
    Owned or Leased
    
    
    Deposits
    
    
    Year(in thousands)1501 Highwoods Boulevard, Greensboro, NC (1)
    
    Leased
    
    $
    
    
    
    
    200438 West First Avenue, Lexington, NC (2)
    
    Owned
    
    
    223,037
    
    
    
    1949202 South Main Street, Reidsville, NC (3)
    
    Owned
    
    
    79,476
    
    
    
    191010401 South Main Street, Archdale, NC
    
    Owned
    
    
    13,545
    
    
    
    2003301 East Fremont Street, Burgaw, NC
    
    Leased
    
    
    34,229
    
    
    
    19992386 Lewisville-Clemmons Road, Clemmons, NC
    
    Owned
    
    
    24,430
    
    
    
    20011101 North Main Street, Danbury, NC
    
    Owned
    
    
    24,808
    
    
    
    1997801 South Van Buren Road, Eden, NC
    
    Owned
    
    
    51,317
    
    
    
    19962132 New Garden Road, Greensboro, NC
    
    Owned
    
    
    76,076
    
    
    
    19974638 Hicone Road, Greensboro, NC
    
    Owned
    
    
    31,699
    
    
    
    20003202 Randleman Road, Greensboro, NC
    
    Owned
    
    
    42,539
    
    
    
    20001702 Battleground Avenue, Greensboro, NC
    
    Owned
    
    
    16,510
    
    
    
    2008201 North Elm Street, Greensboro, NC
    
    Leased
    
    
    6,415
    
    
    
    2009200 Westchester Drive, High Point, NC
    
    Owned
    
    
    38,069
    
    
    
    2001120 East Main Street, Jamestown, NC
    
    Owned
    
    
    26,652
    
    
    
    2004230 East Mountain Street, Kernersville, NC
    
    Leased
    
    
    19,502
    
    
    
    1997647 South Main Street, King, NC
    
    Owned
    
    
    53,888
    
    
    
    19971926 Cotton Grove Road, Lexington, NC
    
    Owned
    
    
    33,120
    
    
    
    1968500 South Main Street, Lexington, NC (4)
    
    Leased
    
    
    
    
    
    
    2004605 North Highway Street, Madison, NC
    
    Owned
    
    
    29,941
    
    
    
    199711492 Old U.S. Highway 52, Midway, NC
    
    Owned
    
    
    32,109
    
    
    
    19731646 Freeway Drive, Reidsville, NC
    
    Owned
    
    
    50,085
    
    
    
    1972941 Randolph Street, Thomasville, NC
    
    Owned
    
    
    46,972
    
    
    
    19874481 Highway 150 South, Tyro, NC
    
    Owned
    
    
    25,797
    
    
    
    20023000 Old Hollow Road, Walkertown, NC
    
    Owned
    
    
    24,838
    
    
    
    199710335 North NC Highway 109, Wallburg, NC
    
    Owned
    
    
    30,852
    
    
    
    19926123 Old U.S. Highway 52, Welcome, NC
    
    Owned
    
    
    53,606
    
    
    
    1958161 South Stratford Road, Winston-Salem, NC
    
    Leased
    
    
    70,680
    
    
    
    19973500 Old Salisbury Road, Winston-Salem, NC
    
    Owned
    
    
    41,578
    
    
    
    1978704 South College Road, Wilmington, NC
    
    Leased
    
    
    36,247
    
    
    
    19971001 Military Cutoff Road, Wilmington, NC
    
    Leased
    
    
    32,469
    
    
    
    2006440 South Main Street, Harrisonburg, VA (5)
    
    Owned
    
    
    56,619
    
    
    
    1988
 
 (1)
    
    Executive offices of Bancorp and the Bank since July 2007 and November 2007, respectively.(2)
    
    Former headquarters of LSB and LSB Bank. Serves as a full service branch as well as an
operations center for the Bank.(3)
    
    Former headquarters of FNB Southeast. Serves as a full service branch as well as an
operations center for the Bank.(4)
    
    This location is an express drive through facility that only processes transactions and
does not open customer accounts.(5)
    
    On December 21, 2010, the Bank announced it had entered into an agreement to sell its
Harrisonburg, VA operation. 25




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Item 3.
    
    Legal Proceedings
  26




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PART II
 
 Item 5.
    
    Market for Registrants Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities
 Market Prices and Dividend Policies
  Quarter ended
    
    High
    
    
    Low
    
    
    CloseDecember 31, 2010
    
    $
    5.00
    
    
    $
    3.40
    
    
    $
    4.70September 30, 2010
    
    
    4.00
    
    
    
    2.94
    
    
    
    3.57June 30, 2010
    
    
    5.28
    
    
    
    3.46
    
    
    
    3.51March 31, 2010
    
    
    4.34
    
    
    
    2.08
    
    
    
    3.56December 31, 2009
    
    $
    2.78
    
    
    $
    1.89
    
    
    $
    2.22September 30, 2009
    
    
    3.11
    
    
    
    1.82
    
    
    
    2.74June 30, 2009
    
    
    2.70
    
    
    
    1.39
    
    
    
    2.07March 31, 2009
    
    
    3.04
    
    
    
    0.94
    
    
    
    2.11
    27




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Number of SharesRemaining Availablefor Future Issuanceunder EquityNumber of Shares to be
    
    
    Weighted-Average
    
    
    Compensation PlansIssued Upon Exercise of
    
    
    Exercise Price of
    
    
    (excluding sharesOutstanding Options,
    
    
    Outstanding Options,
    
    
    reflected inWarrants and Rights
    
    
    Warrants and Rights
    
    
    column (a))Plan Category
    
    (a)
    
    
    (b)
    
    
    (c)Equity Compensation Plans
Approved by Shareholders (1)
    
    
    821,767
    
    
    $
    14.23
    
    
    
    1,439,942Equity Compensation Plans Not
Approved by Shareholders
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    821,767
    
    
    $
    14.23
    
    
    
    1,439,942
 
 (1)
    
    Includes 557,353 shares to be issued upon the exercise of outstanding options, warrants and
rights assumed in connection with the Merger and having a weighted average exercise price of
$13.44. Purchases of Equity Securities by the Issuer and Affiliated Purchasers
  Recent Sales of Unregistered Securities
  28




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FIVE-YEAR STOCK PERFORMANCE TABLE
  
 NEWBRIDGE BANCORP
Comparison of Cumulative Total Shareholder Return
Years Ended December 31
 2005
    
    2006
    
    2007
    
    2008
    
    2009
    
    2010NewBridge Bancorp
    
    
    100
    
    
    
    99
    
    
    
    67
    
    
    
    16
    
    
    
    15
    
    
    
    31The Carson Medlin
Companys
Independent Bank
Index1
    
    
    100
    
    
    
    112
    
    
    
    90
    
    
    
    77
    
    
    
    88
    
    
    
    87S&P 500 Index
    
    
    100
    
    
    
    116
    
    
    
    122
    
    
    
    77
    
    
    
    97
    
    
    
    112
 
 1
    
    The Carson Medlin Companys Independent Bank Index is the compilation of the total return to
shareholders over the past five years of a group of 23 independent community banks located in the
southeastern states of Alabama, Florida, Georgia, North Carolina, South Carolina, Tennessee,
Virginia and West Virginia. The total five year return was calculated for each of the banks in the
peer group taking into consideration changes in stock price, cash dividends, stock dividends and
stock splits since December 31, 2005. The individual results were then weighted by the market
capitalization of each bank relative to the entire peer group. The total return approach and the
weighting based upon market capitalization are consistent with the preparation of the S&P 500 total
return index. 29




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Item 6.
    
    Selected Financial Data
  Years Ended December 31(In thousands, except per share data and performancemeasures)
    
    2010
    
    
    2009
    
    
    2008
    
    
    2007
    
    
    2006SUMMARY OF OPERATIONSInterest income
    
    $
    89,913
    
    
    $
    98,500
    
    
    $
    117,286
    
    
    $
    97,621
    
    
    $
    67,323Interest expense
    
    
    20,454
    
    
    
    39,156
    
    
    
    53,852
    
    
    
    42,368
    
    
    
    24,195Net interest income
    
    
    69,459
    
    
    
    59,344
    
    
    
    63,434
    
    
    
    55,253
    
    
    
    43,128Provision for credit losses
    
    
    21,252
    
    
    
    35,749
    
    
    
    25,262
    
    
    
    18,952
    
    
    
    5,510Net interest income after provision for credit losses
    
    
    48,207
    
    
    
    23,595
    
    
    
    38,172
    
    
    
    36,301
    
    
    
    37,618Noninterest income
    
    
    19,507
    
    
    
    19,177
    
    
    
    20,630
    
    
    
    14,998
    
    
    
    14,290Goodwill impairment
    
    
    
    
    
    
    
    
    
    
    50,437
    
    
    
    
    
    
    
    Noninterest expense
    
    
    64,581
    
    
    
    69,546
    
    
    
    72,191
    
    
    
    62,356
    
    
    
    43,324Income (loss) before income taxes
    
    
    3,133
    
    
    
    (26,774
    )
    
    
    (63,826
    )
    
    
    (11,057
    )
    
    
    8,584Income taxes
    
    
    (247
    )
    
    
    (11,641
    )
    
    
    (6,924
    )
    
    
    (5,394
    )
    
    
    2,584Net income (loss)
    
    
    3,380
    
    
    
    (15,133
    )
    
    
    (56,902
    )
    
    
    (5,663
    )
    
    
    6,000Dividends and accretion on preferred stock
    
    
    (2,919
    )
    
    
    (2,917
    )
    
    
    (170
    )
    
    
    
    
    
    
    Net income (loss) available to common shareholders
    
    $
    461
    
    
    $
    (18,050
    )
    
    $
    (57,072
    )
    
    $
    (5,663
    )
    
    $
    6,000Cash dividends declared
    
    $
    
    
    
    $
    
    
    
    $
    6,106
    
    
    $
    8,255
    
    
    $
    5,755SELECTED YEAR END ASSETS
AND LIABILITIESInvestment Securities
    
    $
    325,129
    
    
    $
    325,339
    
    
    $
    288,572
    
    
    $
    369,423
    
    
    $
    147,129Loans held for investment, net of unearned income
    
    
    1,260,585
    
    
    
    1,456,526
    
    
    
    1,603,588
    
    
    
    1,490,084
    
    
    
    759,978Assets
    
    
    1,807,161
    
    
    
    1,946,526
    
    
    
    2,078,627
    
    
    
    2,057,358
    
    
    
    987,746Deposits
    
    
    1,452,995
    
    
    
    1,499,310
    
    
    
    1,663,463
    
    
    
    1,627,720
    
    
    
    817,683Shareholders equity
    
    
    163,188
    
    
    
    164,604
    
    
    
    179,236
    
    
    
    193,153
    
    
    
    89,309PERFORMANCE MEASURESNet income (loss) to average total assets
    
    
    0.02
    %
    
    
    (0.88
    )%
    
    
    (2.72
    )%
    
    
    (0.40
    )%
    
    
    0.61
    %Net income (loss) to average shareholders equity
    
    
    0.28
    
    
    
    (11.75
    )
    
    
    (29.38
    )
    
    
    (3.76
    )
    
    
    6.47Dividend payout
    
    
    
    
    
    
    
    
    
    
    N/M
    
    
    
    N/M
    
    
    
    95.92Average shareholders equity to average
total assets
    
    
    8.68
    
    
    
    8.30
    
    
    
    9.25
    
    
    
    9.18
    
    
    
    9.44Average tangible shareholders equity to average
tangible total assets
    
    
    8.45
    
    
    
    8.05
    
    
    
    6.73
    
    
    
    7.51
    
    
    
    9.40PER SHARE DATAEarnings (loss) per share:Basic
    
    $
    0.03
    
    
    $
    (1.15
    )
    
    $
    (3.64
    )
    
    $
    (0.49
    )
    
    $
    0.71Diluted
    
    
    0.03
    
    
    
    (1.15
    )
    
    
    (3.64
    )
    
    
    (0.49
    )
    
    
    0.71Cash dividends declared
    
    
    
    
    
    
    
    
    
    
    0.39
    
    
    
    0.68
    
    
    
    0.68Book value at end of year
    
    
    7.08
    
    
    
    7.17
    
    
    
    8.10
    
    
    
    12.30
    
    
    
    10.60Tangible book value at end of year
    
    
    6.79
    
    
    
    6.83
    
    
    
    7.72
    
    
    
    9.10
    
    
    
    10.54
 30




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Item 7.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
  Executive Overview
   
    
    Five consecutive quarters of profit, including $3.4 million of full-year profit in 2010
    
    Pre-tax income increased $29.9 million from 2009 to 2010
    
    Net interest margin of 4.00% in 2010, an 82 basis point improvement over the prior year
    
    Core deposit growth of 16% in 2010
    
    Provision for credit losses declined $14.5 million from 2009 to 2010
    
    Nonperforming loans declined 47% from the June 2009 peak, excluding changes in troubled
debt restructured loans
    
    Total noninterest expense declined by $5.0 million in 2010 and $53.1 million in 2009;
recurring operating expense declined by $4.6 million in 2010 and $8.9 million in 2009
compared to the prior years
    
    Total and tier one leverage capital improved to 13.14% and 9.69%, respectively, at
December 31, 2010 from their lows of 12.20% and 8.83%, respectively
  31




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Our Community Bank Strategy and Operating Plan
   
    
    Manage the net interest margin (NIM), including growing and expanding profitable
customer relationships
    
    Improve asset quality
    
    Increase non-interest income
    
    Implement a disciplined cost management culture
    
    Position the Company to fulfill its Vision and Mission.
 Manage Net Interest Margin
   
    
    Identifying and growing profitable relationships, by focusing our efforts and incentives
on growing these relationships. Our performance-based sales culture identifies specific
methodologies and tools to use in cross-selling to existing clients and introducing the
Bank to new prospects. The Bank looks to take advantage of the current turbulent financial
environment to grow market share throughout our markets.
    
    Enhancing our interest rate risk management tools. Early in 2009, management engaged a
prominent consulting firm to improve managements interest rate risk management tools and
practices. This firm works with more than 300 banks across the country and has been a
leader in the asset liability management field since the 1980s.
    
    Reducing the Companys dependence on high cost time deposits in favor of lower cost core
accounts, including DDA, NOW checking, money market and savings accounts.
    
    Pricing loans consistently while considering relationship pricing for deposit and other
relationships. Management is also seeking to develop more consistency on loan pricing
relative to the various durations of fixed rate loans.
    
    Implementing a more disciplined and accountable budget process to include monitoring
loan, investment and deposit yields, rates and balances so that variances are questioned
and controllable items are controlled.
   32




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Improve Asset Quality
   Increase Non-interest Income
  33




---



##### Table of Contents



Implement a Disciplined Cost Management Culture
   
    
    Conservative in forecasts and expectations
    
    Accountable on an account by account basis
    
    Specific to each individual in the organization so goals and budgets are understood
    
    Timely so that continued monitoring and adjustments can be made
   Position the Company to fulfill its Vision and Mission
   34




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Financial Condition at December 31, 2010 and 2009
   Investment Securities,
  35




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##### Table of Contents



Financial Condition at December 31, 2009 and 2008
     36




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##### Table of Contents



Net Interest Income
  Average Balances and Net Interest Income Analysis.
 37




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##### Table of Contents



Average Balances and Net Interest Income Analysis
 Fully
taxable equivalent
basis (1) (Dollars in thousands)
 2010
    
    
    
    
    
    
    
    
    
    
    2009
    
    
    
    
    
    
    
    
    
    
    2008Interest
    
    
    
    
    
    
    
    
    
    
    Interest
    
    
    
    
    
    
    
    
    
    
    InterestAverage
    
    
    Income/
    
    
    Average
    
    
    Average
    
    
    Income/
    
    
    Average
    
    
    Average
    
    
    Income/
    
    
    AverageBalance
    
    
    Expense
    
    
    Yield/Rate
    
    
    Balance
    
    
    Expense
    
    
    Yield/Rate
    
    
    Balance
    
    
    Expense
    
    
    Yield/RateEarning assets:Loans receivable(2)
    
    $
    1,406,624
    
    
    $
    74,795
    
    
    
    5.32
    %
    
    $
    1,538,777
    
    
    $
    84,089
    
    
    
    5.46
    %
    
    $
    1,575,064
    
    
    $
    101,550
    
    
    
    6.49
    %Taxable securities
    
    
    253,585
    
    
    
    11,659
    
    
    
    4.60
    
    
    
    197,132
    
    
    
    9,425
    
    
    
    4.78
    
    
    
    191,766
    
    
    
    10,229
    
    
    
    5.33Tax exempt securities
    
    
    65,807
    
    
    
    4,821
    
    
    
    7.33
    
    
    
    109,622
    
    
    
    6,754
    
    
    
    6.16
    
    
    
    113,480
    
    
    
    6,539
    
    
    
    5.76FHLB stock
    
    
    11,241
    
    
    
    39
    
    
    
    0.35
    
    
    
    11,177
    
    
    
    4
    
    
    
    0.04
    
    
    
    10,281
    
    
    
    368
    
    
    
    3.58Interest-bearing bank balances
    
    
    34,496
    
    
    
    96
    
    
    
    0.28
    
    
    
    54,667
    
    
    
    186
    
    
    
    0.34
    
    
    
    10,189
    
    
    
    267
    
    
    
    2.62Federal funds sold
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    18,751
    
    
    
    46
    
    
    
    0.25
    
    
    
    11,187
    
    
    
    114
    
    
    
    1.02Total earning assets
    
    
    1,771,753
    
    
    
    91,410
    
    
    
    5.16
    
    
    
    1,930,126
    
    
    
    100,504
    
    
    
    5.21
    
    
    
    1,911,967
    
    
    
    119,067
    
    
    
    6.23Non-earning assets:Cash and due from banks
    
    
    27,525
    
    
    
    
    
    
    
    
    
    
    
    24,120
    
    
    
    
    
    
    
    
    
    
    
    41,829Premises and equipment
    
    
    39,815
    
    
    
    
    
    
    
    
    
    
    
    42,889
    
    
    
    
    
    
    
    
    
    
    
    45,415Other assets
    
    
    105,160
    
    
    
    
    
    
    
    
    
    
    
    97,936
    
    
    
    
    
    
    
    
    
    
    
    124,075Allowance for credit losses
    
    
    (35,630
    )
    
    
    
    
    
    
    
    
    
    
    (40,584
    )
    
    
    
    
    
    
    
    
    
    
    (31,020
    )Total assets
    
    $
    1,908,623
    
    
    
    
    
    
    
    
    
    
    $
    2,054,487
    
    
    
    
    
    
    
    
    
    
    $
    2,092,266Interest-bearing liabilities:Savings deposits
    
    $
    40,222
    
    
    $
    40
    
    
    
    0.10
    %
    
    $
    40,703
    
    
    $
    41
    
    
    
    0.10
    %
    
    $
    41,430
    
    
    $
    65
    
    
    
    0.16
    %NOW deposits
    
    
    368,702
    
    
    
    3,201
    
    
    
    0.87
    
    
    
    195,626
    
    
    
    778
    
    
    
    0.40
    
    
    
    170,221
    
    
    
    802
    
    
    
    0.47Money market deposits
    
    
    344,033
    
    
    
    2,838
    
    
    
    0.82
    
    
    
    390,042
    
    
    
    4,327
    
    
    
    1.11
    
    
    
    429,322
    
    
    
    10,145
    
    
    
    2.36Time deposits
    
    
    606,636
    
    
    
    8,881
    
    
    
    1.46
    
    
    
    853,100
    
    
    
    26,746
    
    
    
    3.14
    
    
    
    838,205
    
    
    
    33,660
    
    
    
    4.02Other Borrowings
    
    
    76,415
    
    
    
    2,407
    
    
    
    3.15
    
    
    
    75,462
    
    
    
    2,559
    
    
    
    3.39
    
    
    
    92,296
    
    
    
    3,697
    
    
    
    4.01Borrowings from FederalHome Loan Bank
    
    
    123,015
    
    
    
    3,087
    
    
    
    2.51
    
    
    
    149,559
    
    
    
    4,706
    
    
    
    3.15
    
    
    
    148,206
    
    
    
    5,483
    
    
    
    3.70Total interest-bearing
liabilities
    
    
    1,559,023
    
    
    
    20,454
    
    
    
    1.31
    
    
    
    1,704,492
    
    
    
    39,157
    
    
    
    2.30
    
    
    
    1,719,680
    
    
    
    53,852
    
    
    
    3.13Other liabilities and
shareholders equity:Demand deposits
    
    
    164,958
    
    
    
    
    
    
    
    
    
    
    
    158,436
    
    
    
    
    
    
    
    
    
    
    
    164,712Other liabilities
    
    
    18,921
    
    
    
    
    
    
    
    
    
    
    
    20,988
    
    
    
    
    
    
    
    
    
    
    
    14,223Shareholders equity
    
    
    165,721
    
    
    
    
    
    
    
    
    
    
    
    170,571
    
    
    
    
    
    
    
    
    
    
    
    193,651Total liabilities and
shareholders equity
    
    $
    1,908,623
    
    
    
    
    
    
    
    
    
    
    $
    2,054,487
    
    
    
    
    
    
    
    
    
    
    $
    2,092,266Net interest income and net
interest margin(3)
    
    
    
    
    
    $
    70,956
    
    
    
    4.00
    %
    
    
    
    
    
    $
    61,347
    
    
    
    3.18
    %
    
    
    
    
    
    $
    65,215
    
    
    
    3.41
    %Interest rate spread(4)
    
    
    
    
    
    
    
    
    
    
    3.85
    %
    
    
    
    
    
    
    
    
    
    
    2.91
    %
    
    
    
    
    
    
    
    
    
    
    3.10
    %
 
 (1)
    
    Income related to securities exempt from federal income taxes is stated on a
fully taxable-equivalent basis, assuming a federal income tax rate of 35%, and is then reduced
by the non-deductible portion of interest expense. The adjustments made to convert to a fully
taxable-equivalent basis were $1,497 for 2010, $2,004 for 2009 and $1,781 for 2008.(2)
    
    Average loans receivable include non-accruing loans. Amortization of loan fees, net
of deferred costs, of $935, $1,449 and $2,231, for 2010, 2009 and 2008, respectively, are
included in interest income.(3)
    
    Net interest margin is computed by dividing taxable-equivalent net interest income
by average earning assets.(4)
    
    Interest rate spread is computed by subtracting interest-bearing liability rate from
earning asset yield. 38




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##### Table of Contents



Volume and Rate Variance Analysis
  Volume and Rate Variance Analysis
 Fully
taxable-equivalent basis (1) (in thousands)
 2010
    
    
    
    
    
    
    
    
    
    
    2009Volume
    
    
    Rate
    
    
    Total
    
    
    Volume
    
    
    Rate
    
    
    TotalVariance(2)
    
    
    Variance(2)
    
    
    Variance
    
    
    Variance(2)
    
    
    Variance(2)
    
    
    VarianceInterest income:Loans receivable
    
    $
    (7,157
    )
    
    $
    (2,137
    )
    
    $
    (9,294
    )
    
    $
    (2,214
    )
    
    $
    (15,247
    )
    
    $
    (17,461
    )Taxable investment securities
    
    
    2,602
    
    
    
    (368
    )
    
    
    2,234
    
    
    
    278
    
    
    
    (1,082
    )
    
    
    (804
    )Tax exempt investment securities
    
    
    (3,049
    )
    
    
    1,116
    
    
    
    (1,933
    )
    
    
    (228
    )
    
    
    443
    
    
    
    215FHLB stock
    
    
    0
    
    
    
    36
    
    
    
    36
    
    
    
    29
    
    
    
    (393
    )
    
    
    (364
    )Interest-bearing bank balances
    
    
    (62
    )
    
    
    (29
    )
    
    
    (91
    )
    
    
    320
    
    
    
    (401
    )
    
    
    (81
    )Federal funds sold
    
    
    (46
    )
    
    
    0
    
    
    
    (46
    )
    
    
    49
    
    
    
    (117
    )
    
    
    (68
    )Total interest income
    
    
    (7,712
    )
    
    
    (1,382
    )
    
    
    (9,094
    )
    
    
    (1,766
    )
    
    
    (16,797
    )
    
    
    (18,563
    )Interest expense:Savings deposits
    
    
    (1
    )
    
    
    0
    
    
    
    (1
    )
    
    
    (1
    )
    
    
    (23
    )
    
    
    (24
    )NOW deposits
    
    
    1,041
    
    
    
    1,382
    
    
    
    2,423
    
    
    
    107
    
    
    
    (131
    )
    
    
    (24
    )Money market deposits
    
    
    (463
    )
    
    
    (1,026
    )
    
    
    (1,489
    )
    
    
    (857
    )
    
    
    (4,961
    )
    
    
    (5,818
    )Time deposits
    
    
    (6,264
    )
    
    
    (11,601
    )
    
    
    (17,865
    )
    
    
    589
    
    
    
    (7,503
    )
    
    
    (6,914
    )Other borrowings
    
    
    31
    
    
    
    (183
    )
    
    
    (152
    )
    
    
    (616
    )
    
    
    (522
    )
    
    
    (1,138
    )Borrowings from FHLB
    
    
    (755
    )
    
    
    (864
    )
    
    
    (1,619
    )
    
    
    49
    
    
    
    (826
    )
    
    
    (777
    )Total interest expense
    
    
    (6,411
    )
    
    
    (12,292
    )
    
    
    (18,703
    )
    
    
    (729
    )
    
    
    (13,966
    )
    
    
    (14,695
    )Increase (decrease) in net interest income
    
    $
    (1,301
    )
    
    $
    10,910
    
    
    $
    9,609
    
    
    $
    (1,035
    )
    
    $
    (2,833
    )
    
    $
    (3,868
    )
 
 (1)
    
    Income related to securities exempt from federal income taxes is stated on a
fully taxable-equivalent basis, assuming a federal income tax rate of 35% and is then reduced
by the non-deductible portion of interest expense.(2)
    
    The volume/rate variance for each category has been allocated on a consistent basis
between rate and volume variances, based on the percentage of rate, or volume, variance to the
sum of the two absolute variances. Results of Operations Years Ended December 31, 2010 and 2009
 Net Income.
 Net Interest Income.
 39




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##### Table of Contents



Average Balances and Net Interest Income Analysis Volume and Rate Variance Analysis
 Provision for Credit Losses and Allowance for Credit Losses.
 Noninterest Income. Other Operating Income and Expenses
 Noninterest Expense. Other Operating Income and
Expenses
 Provision for Income Taxes.
 40




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##### Table of Contents



Results of Operations Years Ended December 31, 2009 and 2008
 Net Income.
 Net Interest Income.
  Average Balances and Net Interest Income Analysis Volume and Rate Variance Analysis
 Provision for Credit Losses and Allowance for Credit Losses.
 Noninterest Income.
 41




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##### Table of Contents



Other Operating Income and Expenses
 Noninterest Expense. Other Operating
Income and Expense
 Provision for Income Taxes.
 Liquidity and Cash Flow
      42




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##### Table of Contents



Contractual Obligations and Commitments
  43




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##### Table of Contents



Contractual Obligations  (in thousands)
 Payments Due by PeriodOne Year
    
    
    Three Years
    
    
    AfterWithin One
    
    
    to Three
    
    
    to Five
    
    
    FiveYear
    
    
    Years
    
    
    Years
    
    
    Years
    
    
    TotalJunior subordinated notes and
wholesale repurchase agreements
    
    $
    15,000
    
    
    $
    
    
    
    $
    
    
    
    $
    46,774
    
    
    $
    61,774Federal Home Loan Bank borrowings
    
    
    60,000
    
    
    
    32,700
    
    
    
    20,000
    
    
    
    
    
    
    
    112,700Operating lease obligations
    
    
    1,454
    
    
    
    2,607
    
    
    
    1,767
    
    
    
    664
    
    
    
    6,492Purchase obligations
    
    
    6,946
    
    
    
    7,260
    
    
    
    4,961
    
    
    
    1,892
    
    
    
    21,059Other long-term liabilities
    
    
    1,482
    
    
    
    2,911
    
    
    
    3,017
    
    
    
    9,010
    
    
    
    16,420Total contractual cash
obligations excluding
deposits
    
    
    84,882
    
    
    
    45,478
    
    
    
    29,745
    
    
    
    58,340
    
    
    
    218,445Deposits
    
    
    1,377,119
    
    
    
    50,348
    
    
    
    25,395
    
    
    
    133
    
    
    
    1,452,995Total contractual cash obligations
    
    $
    1,462,001
    
    
    $
    95,826
    
    
    $
    55,140
    
    
    $
    58,473
    
    
    $
    1,671,440
 Capital Resources
   Lending Activities
 General.
 Loan Composition.
 44




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##### Table of Contents



Summary of Loan Portfolio
 December 312010
    
    
    2009
    
    
    2008
    
    
    2007
    
    
    2006% Of
    
    
    
    
    
    
    % Of
    
    
    
    
    
    
    % Of
    
    
    
    
    
    
    % Of
    
    
    
    
    
    
    % OfTotal
    
    
    
    
    
    
    Total
    
    
    
    
    
    
    Total
    
    
    
    
    
    
    Total
    
    
    
    
    
    
    TotalAmount
    
    
    Loans
    
    
    Amount
    
    
    Loans
    
    
    Amount
    
    
    Loans
    
    
    Amount
    
    
    Loans
    
    
    Amount
    
    
    LoansSecured by owner-occupied nonfarm non-
residential properties
    
    $
    222,889
    
    
    
    
    
    
    $
    232,769
    
    
    
    
    
    
    $
    242,379
    
    
    
    
    
    
    $
    
    (a)
    
    
    
    
    
    $
    
    (a)Secured by other nonfarm nonresidential
properties
    
    
    159,086
    
    
    
    
    
    
    
    202,030
    
    
    
    
    
    
    
    202,069
    
    
    
    
    
    
    
    407,015
    
    
    
    
    
    
    
    195,660Other commercial and industrial
    
    
    134,011
    
    
    
    
    
    
    
    158,624
    
    
    
    
    
    
    
    173,197
    
    
    
    
    
    
    
    164,559
    
    
    
    
    
    
    
    83,712Total Commercial
    
    
    515,986
    
    
    
    40.9
    %
    
    
    593,423
    
    
    
    40.7
    %
    
    
    617,645
    
    
    
    38.5
    %
    
    
    571,574
    
    
    
    38.4
    %
    
    
    279,372
    
    
    
    36.8
    %Construction loans  1 to 4 family residential
    
    
    16,736
    
    
    
    
    
    
    
    28,929
    
    
    
    
    
    
    
    27,131
    
    
    
    
    
    
    
    
    (a)
    
    
    
    
    
    
    
    (a)Other construction and land development
    
    
    122,382
    
    
    
    
    
    
    
    148,356
    
    
    
    
    
    
    
    212,622
    
    
    
    
    
    
    
    248,222
    
    
    
    
    
    
    
    59,959Total Real estate  construction
    
    
    139,118
    
    
    
    11.0
    
    
    
    177,285
    
    
    
    12.2
    
    
    
    239,753
    
    
    
    13.7
    
    
    
    248,222
    
    
    
    16.6
    
    
    
    59,959
    
    
    
    7.9Closed-end loans secured by 1 to 4 family
residential properties
    
    
    304,640
    
    
    
    
    
    
    
    339,485
    
    
    
    
    
    
    
    371,592
    
    
    
    
    
    
    
    353,814
    
    
    
    
    
    
    
    240,631Lines of credit secured by 1 to 4 family
residential properties
    
    
    219,557
    
    
    
    
    
    
    
    234,674
    
    
    
    
    
    
    
    231,314
    
    
    
    
    
    
    
    203,779
    
    
    
    
    
    
    
    107,067Loans secured by 5 or more family residential
properties
    
    
    20,207
    
    
    
    
    
    
    
    24,333
    
    
    
    
    
    
    
    28,888
    
    
    
    
    
    
    
    17,546
    
    
    
    
    
    
    
    10,073Total Real estate  mortgage
    
    
    544,404
    
    
    
    43.2
    
    
    
    598,492
    
    
    
    41.1
    
    
    
    631,794
    
    
    
    39.4
    
    
    
    575,139
    
    
    
    38.6
    
    
    
    357,771
    
    
    
    47.1Credit cards
    
    
    7,749
    
    
    
    
    
    
    
    7,416
    
    
    
    
    
    
    
    6,703
    
    
    
    
    
    
    
    6,555
    
    
    
    
    
    
    
    6,648Other revolving credit plans
    
    
    9,042
    
    
    
    
    
    
    
    10,974
    
    
    
    
    
    
    
    14,354
    
    
    
    
    
    
    
    17,781
    
    
    
    
    
    
    
    4,544Other consumer loans
    
    
    36,224
    
    
    
    
    
    
    
    57,079
    
    
    
    
    
    
    
    80,342
    
    
    
    
    
    
    
    67,490
    
    
    
    
    
    
    
    49,761Total Consumer
    
    
    53,015
    
    
    
    4.2
    
    
    
    75,469
    
    
    
    5.2
    
    
    
    101,399
    
    
    
    7.6
    
    
    
    91,826
    
    
    
    6.2
    
    
    
    60,953
    
    
    
    8.0Loans to other depository institutions
    
    
    3,800
    
    
    
    
    
    
    
    10,000
    
    
    
    
    
    
    
    10,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    All other loans
    
    
    4,262
    
    
    
    
    
    
    
    1,857
    
    
    
    
    
    
    
    2,997
    
    
    
    
    
    
    
    3,323
    
    
    
    
    
    
    
    1,923Total Other
    
    
    8,062
    
    
    
    0.7
    
    
    
    11,857
    
    
    
    0.8
    
    
    
    12,997
    
    
    
    0.8
    
    
    
    3,323
    
    
    
    0.2
    
    
    
    1,923
    
    
    
    0.2Total
    
    $
    1,260,585
    
    
    
    100.0
    %
    
    $
    1,456,526
    
    
    
    100.0
    %
    
    $
    1,603,588
    
    
    
    100.0
    %
    
    $
    1,490,084
    
    
    
    100.0
    %
    
    $
    759,978
    
    
    
    100.0
    %
 
 (a)
    
    Data is not available for these line items prior to 2008  Real Estate Loans
 Real Estate  Mortgage.
 Real Estate  Construction Loans
 45




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##### Table of Contents



Commercial Loans.
 Consumer Loans.
 Loan Approval and Review.
   46




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##### Table of Contents



Loan Portfolio  Maturities and Interest Rate Sensitivities  (in thousands, including loans held for sale)
 Maturity
    
    
    Maturity Greater Than One YearOver One
    
    
    Over
    
    
    
    
    
    
    Fixed
    
    
    Floating orOne Year
    
    
    Year to
    
    
    Five
    
    
    
    
    
    
    Interest
    
    
    Adjustableor Less
    
    
    Five Years
    
    
    Years
    
    
    Total
    
    
    Rate
    
    
    RateSecured by owner-occupied nonfarm
non-residential properties
    
    $
    40,345
    
    
    $
    158,998
    
    
    $
    32,082
    
    
    $
    231,425
    
    
    $
    165,553
    
    
    $
    25,527Secured by other nonfarm
non-residential properties
    
    
    30,581
    
    
    
    125,920
    
    
    
    23,381
    
    
    
    179,882
    
    
    
    109,477
    
    
    
    39,824Other commercial and industrial
    
    
    52,765
    
    
    
    75,283
    
    
    
    10,486
    
    
    
    138,534
    
    
    
    63,559
    
    
    
    22,210Total Commercial
    
    $
    123,691
    
    
    $
    360,201
    
    
    $
    65,949
    
    
    $
    549,841
    
    
    $
    338,589
    
    
    $
    87,561Construction loans  1 to 4 family
residential
    
    
    15,999
    
    
    
    959
    
    
    
    
    
    
    
    16,958
    
    
    
    612
    
    
    
    347Other construction and land
development
    
    
    52,703
    
    
    
    56,067
    
    
    
    20,228
    
    
    
    128,998
    
    
    
    57,393
    
    
    
    18,902Total Real estate  construction
    
    
    68,702
    
    
    
    57,026
    
    
    
    20,228
    
    
    
    145,956
    
    
    
    58,005
    
    
    
    19,249Closed-end loans secured by 1 to 4
family residential properties
    
    
    52,469
    
    
    
    121,835
    
    
    
    151,101
    
    
    
    325,405
    
    
    
    133,977
    
    
    
    138,959Lines of credit secured by 1 to 4
family residential properties
    
    
    2,106
    
    
    
    9,898
    
    
    
    217,519
    
    
    
    229,523
    
    
    
    100
    
    
    
    227,317Loans secured by 5 or more family
residential properties
    
    
    924
    
    
    
    23,244
    
    
    
    461
    
    
    
    24,629
    
    
    
    19,890
    
    
    
    3,815Total Real estate  mortgage
    
    
    55,499
    
    
    
    154,977
    
    
    
    369,081
    
    
    
    579,557
    
    
    
    153,967
    
    
    
    370,091Credit cards
    
    
    7,749
    
    
    
    
    
    
    
    
    
    
    
    7,749
    
    
    
    
    
    
    
    Other revolving credit plans
    
    
    1,004
    
    
    
    148
    
    
    
    8,160
    
    
    
    9,312
    
    
    
    3,061
    
    
    
    5,247Other consumer loans
    
    
    6,237
    
    
    
    29,717
    
    
    
    1,148
    
    
    
    37,102
    
    
    
    30,466
    
    
    
    399Total Consumer
    
    
    14,990
    
    
    
    29,865
    
    
    
    9,308
    
    
    
    54,163
    
    
    
    33,527
    
    
    
    5,646Loans to other depository institutions
    
    
    
    
    
    
    3,800
    
    
    
    
    
    
    
    3,800
    
    
    
    
    
    
    
    3,800All other loans
    
    
    712
    
    
    
    1,274
    
    
    
    2,276
    
    
    
    4,262
    
    
    
    3,515
    
    
    
    35Total Other
    
    
    712
    
    
    
    5,074
    
    
    
    2,276
    
    
    
    8,062
    
    
    
    3,515
    
    
    
    3,835Total
    
    $
    263,594
    
    
    $
    607,143
    
    
    $
    466,842
    
    
    $
    1,337,579
    
    
    $
    587,603
    
    
    $
    486,382
 Asset Quality
   47




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Risk Profile by Internally Assigned Risk Grade
 December 312010
    
    
    2009Special
    
    
    Sub-
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Special
    
    
    Sub-Pass
    
    
    Mention
    
    
    standard
    
    
    Doubtful
    
    
    Total
    
    
    Pass
    
    
    Mention
    
    
    standard
    
    
    Doubtful
    
    
    TotalCommercial
    
    $
    423,474
    
    
    $
    48,651
    
    
    $
    75,682
    
    
    $
    1,121
    
    
    $
    548,928
    
    
    $
    503,985
    
    
    $
    55,806
    
    
    $
    37,977
    
    
    $
    15,270
    
    
    $
    613,038Real estate  construction
    
    
    66,766
    
    
    
    13,673
    
    
    
    47,319
    
    
    
    630
    
    
    
    128,388
    
    
    
    71,516
    
    
    
    27,135
    
    
    
    37,521
    
    
    
    10,080
    
    
    
    146,252Real estate  mortgage
    
    
    92,610
    
    
    
    7,898
    
    
    
    20,288
    
    
    
    798
    
    
    
    121,594
    
    
    
    104,379
    
    
    
    12,227
    
    
    
    12,726
    
    
    
    2,817
    
    
    
    132,149Consumer
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2
    
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2Other
    
    
    3,448
    
    
    
    
    
    
    
    3,903
    
    
    
    
    
    
    
    7,351
    
    
    
    896
    
    
    
    105
    
    
    
    
    
    
    
    
    
    
    
    1,001Total
    
    $
    586,300
    
    
    $
    70,222
    
    
    $
    147,192
    
    
    $
    2,549
    
    
    $
    806,263
    
    
    $
    680,778
    
    
    $
    95,273
    
    
    $
    88,224
    
    
    $
    28,167
    
    
    $
    892,442
  Allocation of Allowance for Credit Losses
 December 312010
    
    
    2009
    
    
    2008
    
    
    2007
    
    
    2006% Of
    
    
    
    
    
    
    % Of
    
    
    
    
    
    
    % Of
    
    
    
    
    
    
    % Of
    
    
    
    
    
    
    % OfTotal
    
    
    
    
    
    
    Total
    
    
    
    
    
    
    Total
    
    
    
    
    
    
    Total
    
    
    
    
    
    
    TotalAmount
    
    
    Loans
    
    
    Amount
    
    
    Loans
    
    
    Amount
    
    
    Loans
    
    
    Amount
    
    
    Loans
    
    
    Amount
    
    
    LoansCommercial
    
    $
    9,952
    
    
    
    40.9
    %
    
    $
    10,648
    
    
    
    40.7
    %
    
    $
    7,351
    
    
    
    38.5
    %
    
    $
    11,185
    
    
    
    38.4
    %
    
    $
    2,724
    
    
    
    36.8
    %Real estate  construction
    
    
    6,865
    
    
    
    11.0
    
    
    
    11,662
    
    
    
    12.2
    
    
    
    13,039
    
    
    
    13.6
    
    
    
    6,945
    
    
    
    16.6
    
    
    
    1,032
    
    
    
    7.9Real estate  mortgage
    
    
    9,056
    
    
    
    43.2
    
    
    
    9,615
    
    
    
    41.1
    
    
    
    8,555
    
    
    
    39.5
    
    
    
    7,928
    
    
    
    38.6
    
    
    
    3,827
    
    
    
    47.1Consumer
    
    
    2,827
    
    
    
    4.2
    
    
    
    3,858
    
    
    
    5.2
    
    
    
    6,742
    
    
    
    7.6
    
    
    
    4,295
    
    
    
    6.2
    
    
    
    1,606
    
    
    
    8.0Other
    
    
    52
    
    
    
    0.7
    
    
    
    60
    
    
    
    0.8
    
    
    
    118
    
    
    
    0.8
    
    
    
    17
    
    
    
    0.2
    
    
    
    375
    
    
    
    0.2Total
    
    $
    28,752
    
    
    
    100.0
    %
    
    $
    35,843
    
    
    
    100.0
    %
    
    $
    35,805
    
    
    
    100.0
    %
    
    $
    30,370
    
    
    
    100.0
    %
    
    $
    9,564
    
    
    
    100.0
    %
 The allowance for credit losses has been allocated on an approximate basis. The entire amount
of the allowance is available to absorb losses occurring in any category. The allocation is not
necessarily indicative of future losses.
   48




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49




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##### Table of Contents



Analysis of Allowance for Credit Losses
  As of or for the Years EndedDecember 312010
    
    
    2009
    
    
    2008
    
    
    2007
    
    
    2006Average amount of loans outstanding
    
    $
    1,406,624
    
    
    $
    1,538,777
    
    
    $
    1,575,064
    
    
    $
    1,060,522
    
    
    $
    756,088Amount of loans outstanding at December 31
    
    
    1,337,579
    
    
    
    1,463,094
    
    
    
    1,604,525
    
    
    
    1,490,084
    
    
    
    759,978Allowance for credit losses:Balance on January 1
    
    $
    35,843
    
    
    $
    35,805
    
    
    $
    30,370
    
    
    $
    9,564
    
    
    $
    8,440Loans charged off:Secured by owner-occupied nonfarm non-residential properties
    
    
    1,433
    
    
    
    3,108
    
    
    
    2,745
    
    
    
    
    (a)
    
    
    
    (a)Secured by other nonfarm nonresidential properties
    
    
    1,767
    
    
    
    4,425
    
    
    
    707
    
    
    
    1,668
    
    
    
    Other commercial and industrial
    
    
    5,852
    
    
    
    3,699
    
    
    
    1,594
    
    
    
    3,384
    
    
    
    1,864Total Commercial
    
    
    9,052
    
    
    
    11,232
    
    
    
    5,046
    
    
    
    5,052
    
    
    
    1,864Construction loans  1 to 4 family residential
    
    
    526
    
    
    
    2,055
    
    
    
    
    
    
    
    
    (a)
    
    
    
    (a)Other construction and land development
    
    
    4,853
    
    
    
    10,172
    
    
    
    7,339
    
    
    
    825
    
    
    
    144Total Real estate  construction
    
    
    5,379
    
    
    
    12,227
    
    
    
    7,339
    
    
    
    825
    
    
    
    144Closed end loans secured by 1 to 4 family
residential properties
    
    
    4,262
    
    
    
    4,877
    
    
    
    3,740
    
    
    
    437
    
    
    
    Lines of credit secured by 1 to 4 family
residential properties
    
    
    2,998
    
    
    
    5,233
    
    
    
    1,272
    
    
    
    863
    
    
    
    Total Real estate  mortgage
    
    
    7,260
    
    
    
    10,110
    
    
    
    5,012
    
    
    
    1,300
    
    
    
    Credit Cards
    
    
    291
    
    
    
    276
    
    
    
    300
    
    
    
    221
    
    
    
    286Other consumer loans
    
    
    2,538
    
    
    
    4,649
    
    
    
    4,771
    
    
    
    2,014
    
    
    
    3,153Total Consumer
    
    
    2,829
    
    
    
    4,925
    
    
    
    5,071
    
    
    
    2,235
    
    
    
    3,439All Other
    
    
    6,200
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total chargeoffs
    
    
    30,720
    
    
    
    38,494
    
    
    
    22,468
    
    
    
    9,412
    
    
    
    5,447Recoveries of loans previously charged off:Total Commercial
    
    
    1,370
    
    
    
    605
    
    
    
    978
    
    
    
    210
    
    
    
    406Total Real estate  construction
    
    
    80
    
    
    
    588
    
    
    
    95
    
    
    
    8
    
    
    
    11Total Real estate  mortgage
    
    
    270
    
    
    
    514
    
    
    
    243
    
    
    
    34
    
    
    
    Total Consumer
    
    
    647
    
    
    
    1,076
    
    
    
    1,296
    
    
    
    702
    
    
    
    644Total Other
    
    
    10
    
    
    
    
    
    
    
    29
    
    
    
    2
    
    
    
    Total recoveries
    
    
    2,377
    
    
    
    2,783
    
    
    
    2,641
    
    
    
    956
    
    
    
    1,061Net loans charged off
    
    
    28,343
    
    
    
    35,711
    
    
    
    19,827
    
    
    
    8,456
    
    
    
    4,386Provision for loan losses
    
    
    21,252
    
    
    
    35,749
    
    
    
    25,262
    
    
    
    18,952
    
    
    
    5,510Allowance acquired via merger
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,310
    
    
    
    Balance on December 31
    
    $
    28,752
    
    
    $
    35,843
    
    
    $
    35,805
    
    
    $
    30,370
    
    
    $
    9,564Ratio of net chargeoffs of loans to average
loans outstanding during the year
    
    
    2.01
    %
    
    
    2.32
    %
    
    
    1.26
    %
    
    
    0.79
    %
    
    
    0.58
    %Ratio of allowance to loans outstanding
    
    
    2.15
    %
    
    
    2.45
    %
    
    
    2.23
    %
    
    
    2.04
    %
    
    
    1.26
    %Ratio of non-performing assets to loans outstanding
    
    
    5.78
    %
    
    
    5.85
    %
    
    
    3.03
    %
    
    
    1.16
    %
    
    
    1.30
    %Ratio of allowance to non-performing loans
    
    
    56.84
    %
    
    
    61.56
    %
    
    
    90.52
    %
    
    
    234.35
    %
    
    
    161.50
    %
 
 (a)
    
    Data is not available for these line items prior to 2008 50




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##### Table of Contents



Commercial loans.
 Mortgage, home equity, and credit lines.
 Retail loans.
 Specific impairment.
 Other potential problem loans.
 Provision for credit losses
 51




---



##### Table of Contents



Nonperforming
Assets
 December 312010
    
    
    2009
    
    
    2008
    
    
    2007
    
    
    2006Commercial nonaccrual loans, not restructured
    
    $
    23,453
    
    
    $
    46,788
    
    
    $
    32,428
    
    
    $
    8,688
    
    
    $
    3,682Commercial nonaccrual loans, restructured
    
    
    11,190
    
    
    
    1,777
    
    
    
    160
    
    
    
    
    
    
    
    Non-commercial nonaccrual loans
    
    
    8,537
    
    
    
    4,772
    
    
    
    5,601
    
    
    
    3,548
    
    
    
    4Total nonaccrual loans
    
    
    43,180
    
    
    
    53,337
    
    
    
    38,189
    
    
    
    12,236
    
    
    
    3,686Loans past due 90 days or more and still accruing
    
    
    27
    
    
    
    3,450
    
    
    
    1,277
    
    
    
    72
    
    
    
    2,103Accruing restructured loans
    
    
    7,378
    
    
    
    1,442
    
    
    
    90
    
    
    
    651
    
    
    
    133Total nonperforming loans
    
    
    50,585
    
    
    
    58,229
    
    
    
    39,556
    
    
    
    12,959
    
    
    
    5,922Real estate acquired in settlement of loans
    
    
    26,718
    
    
    
    27,337
    
    
    
    9,080
    
    
    
    4,280
    
    
    
    3,969Total nonperforming assets
    
    $
    77,303
    
    
    $
    85,566
    
    
    $
    48,636
    
    
    $
    17,239
    
    
    $
    9,891Nonperforming loans to loans outstanding at end of
year
    
    
    4.01
    %
    
    
    3.98
    %
    
    
    2.47
    %
    
    
    0.87
    %
    
    
    0.78
    %Nonperforming assets to total assets at end of year4.28
    %
    
    
    4.40
    %
    
    
    2.34
    %
    
    
    0.84
    %
    
    
    1.00
    %
  Investment Activities
    Investment Securities
 December 31, 2010
    
    
    December 31, 2009
    
    
    December 31, 2008Amortized
    
    
    Market
    
    
    Amortized
    
    
    Market
    
    
    Amortized
    
    
    MarketCost
    
    
    Value
    
    
    Cost
    
    
    Value
    
    
    Cost
    
    
    ValueU.S. government agencies obligations
    
    $
    109,274
    
    
    $
    107,524
    
    
    $
    49,005
    
    
    $
    49,519
    
    
    $
    56,622
    
    
    $
    57,954Mortgage backed securities
    
    
    55,989
    
    
    
    60,309
    
    
    
    77,430
    
    
    
    81,690
    
    
    
    97,843
    
    
    
    102,042Corporate bonds
    
    
    82,816
    
    
    
    84,513
    
    
    
    33,978
    
    
    
    35,604
    
    
    
    
    
    
    
    Collateralized mortgage obligations
    
    
    39,679
    
    
    
    40,412
    
    
    
    35,124
    
    
    
    35,368
    
    
    
    
    
    
    
    State and municipal obligations
    
    
    17,380
    
    
    
    15,411
    
    
    
    105,169
    
    
    
    105,994
    
    
    
    115,627
    
    
    
    114,912Total debt securities
    
    
    305,138
    
    
    
    308,169
    
    
    
    300,706
    
    
    
    308,175
    
    
    
    270,092
    
    
    
    274,908Other equity
    
    
    16,174
    
    
    
    16,959
    
    
    
    17,189
    
    
    
    17,694
    
    
    
    13,642
    
    
    
    13,896Total securities
    
    $
    321,312
    
    
    $
    325,128
    
    
    $
    317,895
    
    
    $
    325,869
    
    
    $
    283,734
    
    
    $
    288,804
 52




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##### Table of Contents



Investment Securities Portfolio Maturity Schedule
 December 31, 2010WeightedMarket
    
    
    AverageValue
    
    
    Yield(1)U. S. government agencies and mortgage backed obligations:Within one year
    
    $
    
    
    
    
    
    %One to five years
    
    
    8,198
    
    
    
    2.67Five to ten years
    
    
    69,123
    
    
    
    4.12After ten years
    
    
    130,924
    
    
    
    5.15Total
    
    
    208,245
    
    
    
    4.71Obligations of states and political subdivisions:Within one year
    
    
    
    
    
    
    One to five years
    
    
    466
    
    
    
    5.12Five to ten years
    
    
    2,358
    
    
    
    4.10After ten years
    
    
    12,587
    
    
    
    4.38Total
    
    
    15,411
    
    
    
    4.36Corporate Bonds:Within one year
    
    
    7,919
    
    
    
    5.53One to five years
    
    
    32,862
    
    
    
    5.29Five to ten years
    
    
    43,732
    
    
    
    5.44After ten years
    
    
    
    
    
    
    Total
    
    
    84,513
    
    
    
    5.39Total debt securities
    
    $
    308,169
    
    
    
    4.86
    %
 
 (1)
    
    The yield related to securities exempt from federal income taxes is stated on a
fully taxable-equivalent basis, assuming a federal income tax rate of 35%.  Off-Balance Sheet Arrangements
  Market Risk
   Effects of Inflation
  53




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##### Table of Contents



Application of Critical Accounting Policies
   
 Item 7A. Quantitative and Qualitative Disclosures About Market Risk
   Earnings Simulation Modeling.
 54




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##### Table of Contents



Change in Net Interest IncomeYear 1
    
    
    Year 2Change in Market Interest Rates:200 basis point ramped increase
    
    
    (1.92
    )%
    
    
    (2.50
    )%Base case  no change
    
    
    
    
    
    
    (1.21
    )%100 basis point ramped decrease
    
    
    0.15
    %
    
    
    (3.57
    )%
 Net Portfolio Value Analysis.
 Estimated Change in Net Portfolio ValueAmount in 000s
    
    
    PercentChange in Market Interest Rates:200 basis point increase
    
    $
    (10,319
    )
    
    
    (4.61
    )%Base case  no change
    
    
    
    
    
    
    100 basis point decrease
    
    $
    (12,584
    )
    
    
    (5.62
    )%
    55




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##### Table of Contents



Interest Sensitivity Analysis
 (in thousands, except ratios)
 Total
    
    
    Total1  90
    
    
    91  365
    
    
    Sensitive
    
    
    SensitiveDay
    
    
    Day
    
    
    Within
    
    
    OverSensitive
    
    
    Sensitive
    
    
    One Year
    
    
    One Year
    
    
    TotalInterest earning assets:Loans (including held for sale),
net of unearned income
    
    $
    664,553
    
    
    $
    85,423
    
    
    $
    749,976
    
    
    $
    587,603
    
    
    $
    1,337,579U. S. government agencies and
mortgage backed obligations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    204,941
    
    
    
    204,941State and municipal obligations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    17,380
    
    
    
    17,380Corporate bonds
    
    
    
    
    
    
    7,669
    
    
    
    7,669
    
    
    
    75,147
    
    
    
    82,816Other investment securities
    
    
    10,399
    
    
    
    
    
    
    
    10,399
    
    
    
    5,775
    
    
    
    16,174Overnight funds
    
    
    5,596
    
    
    
    
    
    
    
    5,596
    
    
    
    
    
    
    
    5,596Total interest earning assets
    
    
    680,548
    
    
    
    93,092
    
    
    
    773,640
    
    
    
    890,846
    
    
    
    1,664,486Interest bearing liabilities:NOW
    
    
    440,190
    
    
    
    
    
    
    
    440,190
    
    
    
    
    
    
    
    440,190MMI
    
    
    316,608
    
    
    
    
    
    
    
    316,608
    
    
    
    
    
    
    
    316,608Savings
    
    
    38,898
    
    
    
    
    
    
    
    38,898
    
    
    
    
    
    
    
    38,898Time deposits
    
    
    210,132
    
    
    
    209,557
    
    
    
    419,689
    
    
    
    75,876
    
    
    
    495,565Junior subordinated notes
    
    
    25,774
    
    
    
    
    
    
    
    25,774
    
    
    
    
    
    
    
    25,774FHLB borrowings
    
    
    35,000
    
    
    
    25,000
    
    
    
    60,000
    
    
    
    52,700
    
    
    
    112,700Wholesale repurchase agreements
    
    
    36,000
    
    
    
    
    
    
    
    36,000
    
    
    
    
    
    
    
    36,000Total interest bearing
liabilities
    
    
    1,102,602
    
    
    
    234,557
    
    
    
    1,337,159
    
    
    
    128,576
    
    
    
    1,465,735Interest sensitivity gap
    
    $
    (422,054
    )
    
    $
    (141,465
    )
    
    $
    (563,519
    )
    
    $
    762,270
    
    
    $
    198,751Ratio of interest sensitive
assets to liabilities
    
    
    0.62
    
    
    
    0.40
    
    
    
    0.58
    
    
    
    6.93
    
    
    
    1.14
 Interest Sensitivity Analysis
 Market Sensitive Financial Instruments Maturities
 56




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##### Table of Contents



Market Sensitive Financial Instruments Maturities  (Dollars in thousands)
 Contractual Maturities as of December 31, 2010AfterFive2011
    
    
    2012
    
    
    2013
    
    
    2014
    
    
    2015
    
    
    Years
    
    
    TotalFinancial assets:Investment securities
    
    $
    7,669
    
    
    $
    25,429
    
    
    $
    2,449
    
    
    $
    6,946
    
    
    $
    4,982
    
    
    $
    257,662
    
    
    $
    305,137Loans:Fixed rate
    
    
    137,502
    
    
    
    129,326
    
    
    
    192,742
    
    
    
    67,113
    
    
    
    94,917
    
    
    
    103,504
    
    
    
    725,104Variable rate
    
    
    126,093
    
    
    
    24,068
    
    
    
    47,158
    
    
    
    31,925
    
    
    
    19,893
    
    
    
    363,338
    
    
    
    612,475Total
    
    $
    271,264
    
    
    $
    178,823
    
    
    $
    242,349
    
    
    $
    105,984
    
    
    $
    119,792
    
    
    $
    724,504
    
    
    $
    1,642,716Financial liabilities:NOW
    
    $
    440,190
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    440,190MMI
    
    
    316,608
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    316,608Savings
    
    
    38,898
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    38,898Time deposits
    
    
    419,689
    
    
    
    43,609
    
    
    
    6,739
    
    
    
    24,882
    
    
    
    513
    
    
    
    133
    
    
    
    495,565Wholesale repurchase
agreements
    
    
    15,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    21,000
    
    
    
    36,000FHLB borrowing
    
    
    60,000
    
    
    
    17,700
    
    
    
    15,000
    
    
    
    20,000
    
    
    
    
    
    
    
    
    
    
    
    112,700Junior subordinated notes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    25,774
    
    
    
    25,774Total
    
    $
    1,290,385
    
    
    $
    61,309
    
    
    $
    21,739
    
    
    $
    44,882
    
    
    $
    513
    
    
    $
    46,907
    
    
    $
    1,465,735
 Market Sensitive Financial Instruments Maturities (continued)  (Dollars in thousands)
 Average Interest
    
    
    Estimated FairRate
    
    
    ValueFinancial assets:Investment securities
    
    
    4.86
    %
    
    $
    308,169Loans:Fixed rate
    
    
    6.00
    
    
    
    730,760Variable rate
    
    
    4.23
    
    
    
    612,475Total
    
    
    
    
    
    $
    1,651,404Financial liabilities:NOW
    
    
    0.79
    
    
    $
    440,190MMI
    
    
    0.70
    
    
    
    316,608Savings
    
    
    0.10
    
    
    
    38,898Time deposits
    
    
    1.19
    
    
    
    500,073Wholesale repurchase agreements
    
    
    4.19
    
    
    
    37,231FHLB borrowing
    
    
    1.53
    
    
    
    113,580Junior subordinated notes
    
    
    1.77
    
    
    
    16,706Total
    
    
    
    
    
    $
    1,463,286
 57




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##### Table of Contents



Item 8. Financial Statements and Supplementary Data
 
 QUARTERLY FINANCIAL INFORMATION
  Quarterly Financial Data
 (Dollars in thousands, except per share data)
 2010
    
    4th Qtr
    
    
    3rd Qtr
    
    
    2nd Qtr
    
    
    1st QtrInterest income
    
    $
    21,272
    
    
    $
    22,419
    
    
    $
    22,972
    
    
    $
    23,250Interest expense
    
    
    4,152
    
    
    
    4,693
    
    
    
    5,597
    
    
    
    6,012Net interest income
    
    
    17,120
    
    
    
    17,726
    
    
    
    17,375
    
    
    
    17,238Provision for credit losses
    
    
    4,636
    
    
    
    7,965
    
    
    
    4,928
    
    
    
    3,723Net interest income after provision for
credit losses
    
    
    12,484
    
    
    
    9,761
    
    
    
    12,447
    
    
    
    13,515Noninterest income
    
    
    4,119
    
    
    
    7,699
    
    
    
    4,259
    
    
    
    3,430Noninterest expense
    
    
    15,982
    
    
    
    16,312
    
    
    
    15,818
    
    
    
    16,469Income before income taxes
    
    
    621
    
    
    
    1,148
    
    
    
    888
    
    
    
    476Provision for income taxes
    
    
    (499
    )
    
    
    115
    
    
    
    34
    
    
    
    103Net income
    
    
    1,120
    
    
    
    1,033
    
    
    
    854
    
    
    
    373Dividends and accretion on preferred stock
    
    
    (729
    )
    
    
    (730
    )
    
    
    (730
    )
    
    
    (730
    )Net income (loss) available to common shareholders
    
    $
    391
    
    
    $
    303
    
    
    $
    124
    
    
    $
    (357
    )Earnings per share:Basic
    
    $
    0.02
    
    
    $
    0.02
    
    
    $
    0.01
    
    
    $
    (0.02
    )Diluted
    
    $
    0.02
    
    
    $
    0.02
    
    
    $
    0.01
    
    
    $
    (0.02
    )
 2009
    
    4th Qtr
    
    
    3rd Qtr
    
    
    2nd Qtr
    
    
    1st QtrInterest income
    
    $
    23,933
    
    
    $
    24,471
    
    
    $
    24,725
    
    
    $
    25,371Interest expense
    
    
    7,466
    
    
    
    9,441
    
    
    
    10,856
    
    
    
    11,395Net interest income
    
    
    16,467
    
    
    
    15,030
    
    
    
    13,869
    
    
    
    13,976Provision for credit losses
    
    
    5,569
    
    
    
    10,808
    
    
    
    10,853
    
    
    
    8,518Net interest income after provision for
credit losses
    
    
    10,898
    
    
    
    4,222
    
    
    
    3,016
    
    
    
    5,458Noninterest income
    
    
    4,884
    
    
    
    5,555
    
    
    
    4,726
    
    
    
    4,014Noninterest expense
    
    
    15,653
    
    
    
    19,818
    
    
    
    18,093
    
    
    
    15,983Income (loss) before income taxes
    
    
    129
    
    
    
    (10,041
    )
    
    
    (10,351
    )
    
    
    (6,511
    )Provision for income taxes
    
    
    78
    
    
    
    (4,347
    )
    
    
    (4,440
    )
    
    
    (2,933
    )Net income (loss)
    
    
    51
    
    
    
    (5,694
    )
    
    
    (5,911
    )
    
    
    (3,578
    )Dividends and accretion on preferred stock
    
    
    (729
    )
    
    
    (729
    )
    
    
    (729
    )
    
    
    (729
    )Net income (loss) available to common shareholders
    
    $
    (678
    )
    
    $
    (6,423
    )
    
    $
    (6,640
    )
    
    $
    (4,307
    )Earnings per share:Basic
    
    $
    (0.04
    )
    
    $
    (0.41
    )
    
    $
    (0.42
    )
    
    $
    (0.28
    )Diluted
    
    $
    (0.04
    )
    
    $
    (0.41
    )
    
    $
    (0.42
    )
    
    $
    (0.28
    )
 58




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##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
    Internal ControlIntegrated Framework )
 
 59




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##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
 Internal ControlIntegrated Framework
   Internal ControlIntegrated
Framework
  
 60




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##### Table of Contents



NewBridge Bancorp and Subsidiary  
 Consolidated Balance Sheets
 (Dollars in thousands, except per share data)
 2010
    
    
    2009ASSETSCash and due from banks
    
    $
    23,479
    
    
    $
    29,674Interest-bearing bank balances
    
    
    5,596
    
    
    
    15,166Loans held for sale
    
    
    76,994
    
    
    
    6,568Investment securities:Held to maturity, market value $0 in 2010 and $20,487 in 2009
    
    
    
    
    
    
    19,957Available for sale
    
    
    325,129
    
    
    
    305,382Loans
    
    
    1,260,585
    
    
    
    1,456,526Less allowance for credit losses
    
    
    (28,752
    )
    
    
    (35,843
    )Net Loans
    
    
    1,231,833
    
    
    
    1,420,683Premises and equipment, net
    
    
    38,442
    
    
    
    40,406Real estate acquired in settlement of loans
    
    
    26,718
    
    
    
    27,337Bank-owned life insurance
    
    
    30,317
    
    
    
    28,986Deferred tax assets
    
    
    27,089
    
    
    
    26,022Accrued income and other assets
    
    
    21,564
    
    
    
    26,345Total assets
    
    $
    1,807,161
    
    
    $
    1,946,526LIABILITIES AND SHAREHOLDERS EQUITYDeposits:Noninterest-bearing
    
    $
    161,734
    
    
    $
    156,040Savings, NOW and money market accounts
    
    
    795,696
    
    
    
    668,875Time deposits
    
    
    495,565
    
    
    
    674,395Total deposits
    
    
    1,452,995
    
    
    
    1,499,310Borrowings from the Federal Home Loan Bank
    
    
    112,700
    
    
    
    165,200Other borrowings
    
    
    61,774
    
    
    
    99,374Accrued expenses and other liabilities
    
    
    16,504
    
    
    
    18,038Total liabilities
    
    
    1,643,973
    
    
    
    1,781,922Commitments and contingent liabilitiesShareholders equity:Preferred stock, par value $.01 per share;
Authorized  10,000,000 shares; issued and outstanding (liquidation
preference $1,000 per share)  52,372
    
    
    51,490
    
    
    
    51,190Common stock, par value $5.00 per share;
Authorized  50,000,000 shares; issued and outstanding - 15,655,868
    
    
    78,279
    
    
    
    78,279Paid-in capital
    
    
    87,048
    
    
    
    86,969Directors deferred compensation plan
    
    
    (618
    )
    
    
    (634
    )Retained deficit
    
    
    (52,016
    )
    
    
    (52,477
    )Accumulated other comprehensive income (loss)
    
    
    (995
    )
    
    
    1,277Total shareholders equity
    
    
    163,188
    
    
    
    164,604Total liabilities and shareholders equity
    
    $
    1,807,161
    
    
    $
    1,946,526
 See notes to consolidated financial statements
 61




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##### Table of Contents



NewBridge Bancorp and Subsidiary  
 Consolidated Statements of Income
 (Dollars in thousands, except per share data)
 2010
    
    
    2009
    
    
    2008Interest IncomeInterest and fees on loans
    
    $
    74,795
    
    
    $
    84,089
    
    
    $
    101,550Interest on taxable investment securities
    
    
    11,698
    
    
    
    9,416
    
    
    
    10,229Interest on tax exempt investment securities
    
    
    3,324
    
    
    
    4,759
    
    
    
    4,758Interest-bearing bank balances and federal funds sold
    
    
    96
    
    
    
    236
    
    
    
    749Total interest income
    
    
    89,913
    
    
    
    98,500
    
    
    
    117,286Interest ExpenseDeposits
    
    
    14,960
    
    
    
    31,891
    
    
    
    44,672Borrowings from the Federal Home Loan Bank
    
    
    3,087
    
    
    
    4,706
    
    
    
    5,483Other borrowings
    
    
    2,407
    
    
    
    2,559
    
    
    
    3,697Total Interest Expense
    
    
    20,454
    
    
    
    39,156
    
    
    
    53,852Net Interest Income
    
    
    69,459
    
    
    
    59,344
    
    
    
    63,434Provision for credit losses
    
    
    21,252
    
    
    
    35,749
    
    
    
    25,262Net interest income after provision for credit losses
    
    
    48,207
    
    
    
    23,595
    
    
    
    38,172Noninterest IncomeService charges on deposit accounts
    
    
    7,392
    
    
    
    8,527
    
    
    
    9,333Fee income
    
    
    3,604
    
    
    
    3,816
    
    
    
    2,959Gain on sales of mortgage loans
    
    
    2,438
    
    
    
    601
    
    
    
    396Gain on sales of investment securities
    
    
    3,637
    
    
    
    389
    
    
    
    2,459Loss on sale of OREO
    
    
    (1,817
    )
    
    
    (591
    )
    
    
    (508
    )Other operating income
    
    
    4,253
    
    
    
    6,435
    
    
    
    5,991Total Noninterest Income
    
    
    19,507
    
    
    
    19,177
    
    
    
    20,630Noninterest ExpensePersonnel
    
    
    29,897
    
    
    
    30,901
    
    
    
    35,175Occupancy
    
    
    4,189
    
    
    
    5,436
    
    
    
    4,546Furniture and equipment
    
    
    4,644
    
    
    
    6,012
    
    
    
    4,679Technology and data processing
    
    
    4,359
    
    
    
    5,724
    
    
    
    6,006FDIC insurance
    
    
    3,491
    
    
    
    4,528
    
    
    
    1,037OREO writedowns/expense
    
    
    5,117
    
    
    
    1,622
    
    
    
    3,871Goodwill impairment
    
    
    
    
    
    
    
    
    
    
    50,437Other operating
    
    
    12,884
    
    
    
    15,323
    
    
    
    16,877Total Noninterest Expense
    
    
    64,581
    
    
    
    69,546
    
    
    
    122,628Income (Loss) Before Income Taxes
    
    
    3,133
    
    
    
    (26,774
    )
    
    
    (63,826
    )Income Taxes
    
    
    (247
    )
    
    
    (11,641
    )
    
    
    (6,924
    )Net Income (Loss)
    
    
    3,380
    
    
    
    (15,133
    )
    
    
    (56,902
    )Dividends and accretion on preferred stock
    
    
    (2,919
    )
    
    
    (2,917
    )
    
    
    (170
    )Net Income (Loss) available to common shareholders
    
    $
    461
    
    
    $
    (18,050
    )
    
    $
    (57,072
    )Income (Loss) Per ShareBasic
    
    $
    0.03
    
    
    $
    (1.15
    )
    
    $
    (3.64
    )Diluted
    
    $
    0.03
    
    
    $
    (1.15
    )
    
    $
    (3.64
    )Weighted Average Shares OutstandingBasic
    
    
    15,655,868
    
    
    
    15,655,868
    
    
    
    15,663,719Diluted
    
    
    16,101,122
    
    
    
    15,655,868
    
    
    
    15,663,719
 See notes to consolidated financial statements
 62




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##### Table of Contents



NewBridge Bancorp and Subsidiary  
 Consolidated Statements of Changes in Shareholders Equity and Comprehensive Income
 (Dollars in thousands, except share data)
 AccumulatedDirectors
    
    
    
    
    
    
    Other
    
    
    TotalPreferred
    
    
    Common Stock
    
    
    Paid-In
    
    
    Deferred
    
    
    Retained
    
    
    Comprehensive
    
    
    ShareholdersStock
    
    
    Shares
    
    
    Amount
    
    
    Capital
    
    
    Comp Plan
    
    
    Earnings
    
    
    Income (Loss)
    
    
    EquityBalances at December 31, 2007
    
    $
    
    
    
    
    15,694,068
    
    
    $
    78,470
    
    
    $
    85,412
    
    
    $
    (1,301
    )
    
    $
    28,751
    
    
    $
    1,821
    
    
    $
    193,153Net Loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (56,902
    )
    
    
    
    
    
    
    (56,902
    )Change in unrealized gain on securities
available for sale
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    205
    
    
    
    205Change in funded status of pension plans
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,735
    )
    
    
    (3,735
    )Comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (60,432
    )Cash dividends declared on common stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6,106
    )
    
    
    
    
    
    
    (6,106
    )Preferred stock issued, including Warrant
    
    
    50,875
    
    
    
    
    
    
    
    
    
    
    
    1,497
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    52,372Dividends and accretion on preferred stock
    
    
    16
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (170
    )
    
    
    
    
    
    
    (154
    )Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    93
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    93Common stock distributed
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    651
    
    
    
    
    
    
    
    
    
    
    
    651Common stock acquired and cancelled
    
    
    
    
    
    
    (38,200
    )
    
    
    (191
    )
    
    
    (150
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (341
    )Balances at December 31, 2008
    
    $
    50,891
    
    
    
    15,655,868
    
    
    $
    78,279
    
    
    $
    86,852
    
    
    $
    (650
    )
    
    $
    (34,427
    )
    
    $
    (1,709
    )
    
    $
    179,236Net Loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (15,133
    )
    
    
    
    
    
    
    (15,133
    )Change in unrealized gain on securities
available for sale
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,577
    
    
    
    1,577Change in funded status of pension plans
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,409
    
    
    
    1,409Comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (12,147
    )Dividends and accretion on preferred stock
    
    
    299
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,917
    )
    
    
    
    
    
    
    (2,618
    )Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    117
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    117Common stock distributed
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    16
    
    
    
    
    
    
    
    
    
    
    
    16Balances at December 31, 2009
    
    $
    51,190
    
    
    
    15,655,868
    
    
    $
    78,279
    
    
    $
    86,969
    
    
    $
    (634
    )
    
    $
    (52,477
    )
    
    $
    1,277
    
    
    $
    164,604Net Income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,380
    
    
    
    
    
    
    
    3,380Change in unrealized gain on securities
available for sale
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,195
    )
    
    
    (2,195
    )Change in funded status of pension plans
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (77
    )
    
    
    (77
    )Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,108Dividends and accretion on preferred stock
    
    
    300
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,919
    )
    
    
    
    
    
    
    (2,619
    )Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    79
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    79Common stock distributed
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    16
    
    
    
    
    
    
    
    
    
    
    
    16Balances at December 31, 2010
    
    $
    51,490
    
    
    
    15,655,868
    
    
    $
    78,279
    
    
    $
    87,048
    
    
    $
    (618
    )
    
    $
    (52,016
    )
    
    $
    (995
    )
    
    $
    163,188
 See notes to consolidated financial statements
 63




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##### Table of Contents



NewBridge Bancorp and Subsidiary  
 Consolidated Statements of Cash Flows
 (Dollars in thousands)
 2010
    
    
    2009
    
    
    2008CASH FLOW FROM OPERATING ACTIVITIESNet Income (Loss)
    
    $
    3,380
    
    
    $
    (15,133
    )
    
    $
    (56,902
    )Adjustments to reconcile net income (loss) to net cash provided by
operating activities:Depreciation and amortization
    
    
    5,500
    
    
    
    6,669
    
    
    
    4,737Securities premium amortization and discount accretion, net
    
    
    697
    
    
    
    591
    
    
    
    565Gain on sale of loans held for sale
    
    
    (2,438
    )
    
    
    (601
    )
    
    
    (396
    )Originations of loans held for sale
    
    
    (195,602
    )
    
    
    (97,360
    )
    
    
    (130,027
    )Proceeds from sales of loans held for sale
    
    
    199,957
    
    
    
    92,330
    
    
    
    141,837Goodwill impairment
    
    
    
    
    
    
    
    
    
    
    50,437(Increase) decrease in deferred tax assets
    
    
    (1,067
    )
    
    
    (4,158
    )
    
    
    (8,360
    )(Increase) decrease in income taxes receivable
    
    
    3,632
    
    
    
    (2,560
    )
    
    
    (2,800
    )(Increase) decrease in interest earned but not received
    
    
    1,179
    
    
    
    700
    
    
    
    3,014Increase (decrease) in interest accrued but not paid
    
    
    (623
    )
    
    
    (1,470
    )
    
    
    (572
    )Net (increase)
decrease in other assets
    
    
    5,445
    
    
    
    (115
    )
    
    
    (9,849
    )Net increase (decrease) in other liabilities
    
    
    (687
    )
    
    
    (589
    )
    
    
    4,287Provision for credit losses
    
    
    21,252
    
    
    
    35,749
    
    
    
    25,262Stock-based compensation
    
    
    79
    
    
    
    117
    
    
    
    93Loss on sales of premises and equipment and OREO
    
    
    2,236
    
    
    
    572
    
    
    
    731Net cash provided by operating activities
    
    
    42,940
    
    
    
    14,742
    
    
    
    22,057CASH FLOW FROM INVESTING ACTIVITIESPurchases of securities available for sale
    
    
    (226,705
    )
    
    
    (108,828
    )
    
    
    (128,665
    )Proceeds from maturities of securities available for sale
    
    
    220,104
    
    
    
    78,325
    
    
    
    210,355Net (increase) decrease in loans
    
    
    73,606
    
    
    
    83,853
    
    
    
    (156,319
    )Purchases of premises and equipment and expenditures for
improvements to real estate acquired in settlement of loans
    
    
    (2,296
    )
    
    
    (1,894
    )
    
    
    (5,808
    )Proceeds from sales of premises and equipment and OREO
    
    
    15,827
    
    
    
    8,794
    
    
    
    4,686Net (increase) decrease in federal funds sold
    
    
    
    
    
    
    42,043
    
    
    
    (39,870
    )Net cash provided by (used in) investing activities
    
    
    80,536
    
    
    
    102,293
    
    
    
    (115,621
    )CASH FLOW FROM FINANCING ACTIVITIESNet increase (decrease) in demand deposits, NOW, money
market and savings accounts
    
    
    132,515
    
    
    
    61,600
    
    
    
    (50,204
    )Net increase (decrease) in time deposits
    
    
    (178,830
    )
    
    
    (225,753
    )
    
    
    85,945Net increase (decrease) in other borrowings
    
    
    (37,823
    )
    
    
    22,543
    
    
    
    (22,471
    )Net increase (decrease) in borrowings from FHLB
    
    
    (52,500
    )
    
    
    26,200
    
    
    
    21,000Dividends paid
    
    
    (2,619
    )
    
    
    (2,618
    )
    
    
    (6,260
    )Proceeds from issuance of preferred stock and warrants
    
    
    
    
    
    
    
    
    
    
    52,372Common stock distributed
    
    
    16
    
    
    
    16
    
    
    
    310Net cash provided by (used in) financing activities
    
    
    (139,241
    )
    
    
    (118,012
    )
    
    
    80,692Increase (decrease) in cash and cash equivalents
    
    
    (15,765
    )
    
    
    (977
    )
    
    
    (12,872
    )Cash and cash equivalents at the beginning of the years
    
    
    44,840
    
    
    
    45,817
    
    
    
    58,689Cash and cash equivalents at the end of the years
    
    $
    29,075
    
    
    $
    44,840
    
    
    $
    45,817SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATIONCash paid during the years for:Interest
    
    $
    21,077
    
    
    $
    40,626
    
    
    $
    54,424Income taxes
    
    
    
    
    
    
    
    
    
    
    3,500SUPPLEMENTAL DISCLOSURE OF NONCASH TRANSACTIONSTransfer of loans to other real estate owned
    
    $
    20,667
    
    
    $
    26,216
    
    
    $
    9,963Transfer of loans to loans held for sale
    
    
    72,343
    
    
    
    
    
    
    
    Reclassification of investment securities from held to maturity
to available for sale
    
    
    43,679
    
    
    
    
    
    
    
    Unrealized gain on securities available for sale:Change in securities available for sale
    
    
    5,099
    
    
    
    (5,308
    )
    
    
    (298
    )Change in deferred income taxes
    
    
    (2,826
    )
    
    
    3,731
    
    
    
    93Change in shareholders equity
    
    
    (2,273
    )
    
    
    1,577
    
    
    
    205
 See notes to consolidated financial statements
 64




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##### Table of Contents



NewBridge Bancorp and Subsidiary  
 Notes to Consolidated Financial Statements
  Note 1  Summary of significant accounting policies
 Principles of consolidation
  Nature of operations
  Use of estimates
   Cash and cash equivalents
  Investment securities
  
    
    Held to Maturity  reported at amortized cost,
    
    Trading  reported at fair value with unrealized gains and losses included in earnings, or
    
    Available for Sale  reported at fair value with unrealized gains and
losses reported in other comprehensive income.
  65




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##### Table of Contents



Other Than Temporary Impairment of Investment Securities
  Loans
  Loan origination fees and costs
  Impaired loans
   Allowance for credit losses
   Real estate acquired in settlement of loans
  66




---



##### Table of Contents



Premises and equipment
  Income taxes
  Per share data
  Sales of loans
  Off-balance sheet arrangements
  Segment information
   67




---



##### Table of Contents



Recent accounting pronouncements
  Reclassification
  Note 2  Merger of Equals
    Note 3  Restriction on cash and due from banks
  68




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##### Table of Contents



Note 4  Investment securities
  Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    Estimated FairCost
    
    
    Gains
    
    
    Losses
    
    
    Value2010:Available for sale:U.S. government agency securities
    
    $
    109,274
    
    
    $
    267
    
    
    $
    (2,017
    )
    
    $
    107,524Mortgage backed securities
    
    
    55,989
    
    
    
    4,320
    
    
    
    
    
    
    
    60,309State and municipal obligations
    
    
    17,380
    
    
    
    13
    
    
    
    (1,982
    )
    
    
    15,411Corporate bonds
    
    
    82,816
    
    
    
    2,309
    
    
    
    (612
    )
    
    
    84,513Collateralized mortgage obligations
    
    
    39,679
    
    
    
    823
    
    
    
    (90
    )
    
    
    40,412Federal Home Loan Bank stock
    
    
    10,399
    
    
    
    
    
    
    
    
    
    
    
    10,399Other equity securities
    
    
    5,775
    
    
    
    786
    
    
    
    
    
    
    
    6,561Total available for sale
    
    
    321,312
    
    
    
    8,518
    
    
    
    (4,701
    )
    
    
    325,129Municipal obligations held to maturity
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total investment securities
    
    $
    321,312
    
    
    $
    8,518
    
    
    $
    (4,701
    )
    
    $
    325,1292009:Available for sale:U.S. government agency securities
    
    $
    49,005
    
    
    $
    529
    
    
    $
    (15
    )
    
    $
    49,519Mortgage backed securities
    
    
    77,430
    
    
    
    4,260
    
    
    
    
    
    
    
    81,690State and municipal obligations
    
    
    85,212
    
    
    
    1,747
    
    
    
    (1,452
    )
    
    
    85,507Corporate bonds
    
    
    33,978
    
    
    
    1,626
    
    
    
    
    
    
    
    35,604Collateralized mortgage obligations
    
    
    35,124
    
    
    
    346
    
    
    
    (102
    )
    
    
    35,368Federal Home Loan Bank stock
    
    
    11,414
    
    
    
    
    
    
    
    
    
    
    
    11,414Other equity securities
    
    
    5,775
    
    
    
    725
    
    
    
    (220
    )
    
    
    6,280Total available for sale
    
    
    297,938
    
    
    
    9,233
    
    
    
    (1,789
    )
    
    
    305,382Municipal obligations held to maturity
    
    
    19,957
    
    
    
    550
    
    
    
    (20
    )
    
    
    20,487Total investment securities
    
    $
    317,895
    
    
    $
    9,783
    
    
    $
    (1,809
    )
    
    $
    325,869
   Less than 12 months
    
    
    12 months or more
    
    
    Total2010
    
    Fair value
    
    
    Unrealized losses
    
    
    Fair value
    
    
    Unrealized losses
    
    
    Fair value
    
    
    Unrealized losses(In thousands)Investment securities:U.S. government agency
securities
    
    $
    58,273
    
    
    $
    (2,017
    )
    
    $
    
    
    
    $
    
    
    
    $
    58,273
    
    
    $
    (2,017
    )Collateralized mortgage
obligations
    
    
    3,706
    
    
    
    (90
    )
    
    
    
    
    
    
    
    
    
    
    3,706
    
    
    
    (90
    )State and municipal
obligations
    
    
    8,514
    
    
    
    (924
    )
    
    
    5,059
    
    
    
    (1,058
    )
    
    
    13,573
    
    
    
    (1,982
    )Corporate bonds
    
    
    28,023
    
    
    
    (612
    )
    
    
    
    
    
    
    
    
    
    
    28,023
    
    
    
    (612
    )Total temporarily impaired
securities
    
    $
    98,516
    
    
    $
    (3,643
    )
    
    $
    5,059
    
    
    $
    (1,058
    )
    
    $
    103,575
    
    
    $
    (4,701
    )
 69




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##### Table of Contents



Less than 12 months
    
    
    12 months or more
    
    
    Total2009
    
    Fair value
    
    
    Unrealized losses
    
    
    Fair value
    
    
    Unrealized losses
    
    
    Fair value
    
    
    Unrealized losses(In thousands)Investment securities:U.S. government agency
securities
    
    $
    3,985
    
    
    $
    (15
    )
    
    $
    
    
    
    $
    
    
    
    $
    3,985
    
    
    $
    (15
    )Collateralized mortgage
obligations
    
    
    17,380
    
    
    
    (102
    )
    
    
    
    
    
    
    
    
    
    
    17,380
    
    
    
    (102
    )State and municipal
obligations
    
    
    21,479
    
    
    
    (761
    )
    
    
    4,795
    
    
    
    (711
    )
    
    
    26,274
    
    
    
    (1,472
    )Other equity securities
    
    
    
    
    
    
    
    
    
    
    839
    
    
    
    (220
    )
    
    
    839
    
    
    
    (220
    )Total temporarily impaired
securities
    
    $
    42,844
    
    
    $
    (878
    )
    
    $
    5,634
    
    
    $
    (931
    )
    
    $
    48,478
    
    
    $
    (1,809
    )
  Amortized
    
    
    EstimatedCost
    
    
    Fair ValueDue in one year or less
    
    $
    7,669
    
    
    $
    7,919Due after one through five years
    
    
    39,806
    
    
    
    41,526Due after five through ten years
    
    
    115,561
    
    
    
    115,213Due after ten years
    
    
    142,102
    
    
    
    143,511Total debt securities
    
    $
    305,138
    
    
    $
    308,169
  Years Ended December 312010
    
    2009
    
    2008Proceeds from maturities
    
    $
    1,480
    
    
    $
    
    
    
    $
    
  Years Ended December 312010
    
    2009
    
    2008Proceeds from sales and maturities
    
    $
    82,148
    
    
    $
    10,977
    
    
    $
    210,535Gross realized gains
    
    
    3,637
    
    
    
    389
    
    
    
    2,475Gross realized losses
    
    
    
    
    
    
    
    
    
    
    16
   70




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##### Table of Contents



Note 5  Loans
  December 312010
    
    
    2009Secured by owner-occupied nonfarm nonresidential properties
    
    $
    222,889
    
    
    $
    232,769Secured by other nonfarm nonresidential properties
    
    
    159,086
    
    
    
    202,030Other commercial and industrial
    
    
    134,011
    
    
    
    158,624Total Commercial
    
    
    515,986
    
    
    
    593,423Construction loans  1 to 4 family residential
    
    
    16,736
    
    
    
    28,929Other construction and land development
    
    
    122,382
    
    
    
    148,356Total Real estate  construction
    
    
    139,118
    
    
    
    177,285Closed-end loans secured by 1 to 4 family residential properties
    
    
    304,640
    
    
    
    339,485Lines of credit secured by 1 to 4 family residential properties
    
    
    219,557
    
    
    
    234,674Loans secured by 5 or more family residential
    
    
    20,207
    
    
    
    24,333Total Real estate  mortgage
    
    
    544,404
    
    
    
    598,492Credit cards
    
    
    7,749
    
    
    
    7,416Other revolving credit plans
    
    
    9,042
    
    
    
    10,974Other consumer loans
    
    
    36,224
    
    
    
    57,079Total Consumer
    
    
    53,015
    
    
    
    75,469Loans to other depository institutions
    
    
    3,800
    
    
    
    10,000All other loans
    
    
    4,262
    
    
    
    1,857Total Other
    
    
    8,062
    
    
    
    11,857Total loans
    
    
    1,260,585
    
    
    
    1,456,526Loans held for sale
    
    
    76,994
    
    
    
    6,568Total loans and loans held for sale
    
    $
    1,337,579
    
    
    $
    1,463,094
   December 312010
    
    
    2009Commercial nonaccrual loans, not restructured
    
    $
    23,453
    
    
    $
    46,788Commercial nonaccrual loans, restructured
    
    
    11,190
    
    
    
    1,777Non-commercial nonaccrual loans
    
    
    8,537
    
    
    
    4,772Total nonaccrual loans
    
    
    43,180
    
    
    
    53,337Troubled debt restructured, accruing
    
    
    7,378
    
    
    
    1,442Accruing loans which are contractually
past due 90 days or more
    
    
    27
    
    
    
    3,450Total nonperforming loans
    
    
    50,585
    
    
    
    58,229Real estate acquired in settlement of loans
    
    
    26,718
    
    
    
    27,337Total nonperforming assets
    
    $
    77,303
    
    
    $
    85,566
  December 312010
    
    
    2009
    
    
    2008Loans identified as impaired
    
    $
    38,303
    
    
    $
    46,122
    
    
    $
    39,556Other nonperforming loans
    
    
    12,282
    
    
    
    12,107
    
    
    
    Total nonperforming loans
    
    
    50,585
    
    
    
    58,229
    
    
    
    39,556Other potential problem loans
    
    
    110,924
    
    
    
    66,725
    
    
    
    51,755Total impaired and potential problem loans
    
    $
    161,509
    
    
    $
    124,954
    
    
    $
    91,311
 71




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##### Table of Contents



December 312010
    
    
    2009Special
    
    
    Sub-
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Special
    
    
    Sub-Pass
    
    
    Mention
    
    
    standard
    
    
    Doubtful
    
    
    Total
    
    
    Pass
    
    
    Mention
    
    
    standard
    
    
    Doubtful
    
    
    TotalCommercial
    
    $
    423,474
    
    
    $
    48,651
    
    
    $
    75,682
    
    
    $
    1,121
    
    
    $
    548,928
    
    
    $
    503,985
    
    
    $
    55,806
    
    
    $
    37,977
    
    
    $
    15,270
    
    
    $
    613,038Real estate  construction
    
    
    66,766
    
    
    
    13,673
    
    
    
    47,319
    
    
    
    630
    
    
    
    128,388
    
    
    
    71,516
    
    
    
    27,135
    
    
    
    37,521
    
    
    
    10,080
    
    
    
    146,252Real estate  mortgage
    
    
    92,610
    
    
    
    7,898
    
    
    
    20,288
    
    
    
    798
    
    
    
    121,594
    
    
    
    104,379
    
    
    
    12,227
    
    
    
    12,726
    
    
    
    2,817
    
    
    
    132,149Consumer
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2
    
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2Other
    
    
    3,448
    
    
    
    
    
    
    
    3,903
    
    
    
    
    
    
    
    7,351
    
    
    
    896
    
    
    
    105
    
    
    
    
    
    
    
    
    
    
    
    1,001Total
    
    $
    586,300
    
    
    $
    70,222
    
    
    $
    147,192
    
    
    $
    2,549
    
    
    $
    806,263
    
    
    $
    680,778
    
    
    $
    95,273
    
    
    $
    88,224
    
    
    $
    28,167
    
    
    $
    892,442
  Years Ended December 312010
    
    
    2009
    
    
    2008Balance, beginning of year
    
    $
    35,843
    
    
    $
    35,805
    
    
    $
    30,370Loans charged off:Secured by owner-occupied nonfarm nonresidential properties
    
    
    1,433
    
    
    
    3,108
    
    
    
    2,745Secured by other nonfarm nonresidential properties
    
    
    1,767
    
    
    
    4,425
    
    
    
    707Other commercial and industrial
    
    
    5,852
    
    
    
    3,699
    
    
    
    1,594Total Commercial
    
    
    9,052
    
    
    
    11,232
    
    
    
    5,046Construction loans  1 to 4 family residential
    
    
    526
    
    
    
    2,055
    
    
    
    Other construction and land development
    
    
    4,853
    
    
    
    10,172
    
    
    
    7,339Total Real estate  construction
    
    
    5,379
    
    
    
    12,227
    
    
    
    7,339Closed-end loans secured by 1 to 4 family residential
properties
    
    
    4,262
    
    
    
    4,877
    
    
    
    3,740Lines of credit secured by 1 to 4 family residential properties
    
    
    2,998
    
    
    
    5,233
    
    
    
    1,272Total Real estate  mortgage
    
    
    7,260
    
    
    
    10,110
    
    
    
    5,012Credit cards
    
    
    291
    
    
    
    276
    
    
    
    300Other consumer loans
    
    
    2,538
    
    
    
    4,649
    
    
    
    4,771Total Consumer
    
    
    2,829
    
    
    
    4,925
    
    
    
    5,071Total Other
    
    
    6,200
    
    
    
    
    
    
    
    Total chargeoffs
    
    
    30,720
    
    
    
    38,494
    
    
    
    22,468Recoveries of loans previously charged off:Total Commercial
    
    
    1,370
    
    
    
    605
    
    
    
    978Total Real estate  construction
    
    
    80
    
    
    
    588
    
    
    
    95Total Real estate  mortgage
    
    
    270
    
    
    
    514
    
    
    
    243Total Consumer
    
    
    647
    
    
    
    1,076
    
    
    
    1,296Total Other
    
    
    10
    
    
    
    
    
    
    
    29Total Recoveries
    
    
    2,377
    
    
    
    2,783
    
    
    
    2,641Net loans charged off
    
    
    28,343
    
    
    
    35,711
    
    
    
    19,827Provision for credit losses
    
    
    21,252
    
    
    
    35,749
    
    
    
    25,262Balance, end of year
    
    $
    28,752
    
    
    $
    35,843
    
    
    $
    35,805
  72




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##### Table of Contents



Note 6  Premises and equipment
  December 312010
    
    
    2009Land
    
    $
    15,312
    
    
    $
    15,043Buildings
    
    
    21,721
    
    
    
    21,974Equipment
    
    
    27,866
    
    
    
    31,081Leasehold improvements
    
    
    1,831
    
    
    
    2,109Premises and equipment, total cost
    
    
    66,730
    
    
    
    70,207Less, accumulated depreciation
    
    
    28,288
    
    
    
    29,801Premises and equipment, net
    
    $
    38,442
    
    
    $
    40,406
  Note 7  Deposits
  Years ending December 31,2011
    
    $
    419,6892012
    
    
    43,6092013
    
    
    6,7392014
    
    
    24,8822015
    
    
    513Thereafter
    
    
    133Total time deposits
    
    $
    495,565
 Note 8  Short-term borrowings and long-term debt
  MaximumBalance
    
    
    Interest Rate
    
    
    
    
    
    
    Average
    
    
    Outstandingas of
    
    
    as of
    
    
    Average
    
    
    Interest
    
    
    at AnyDecember 31
    
    
    December 31
    
    
    Balance
    
    
    Rate
    
    
    Month End2010Federal funds purchased and
repurchase agreements
    
    $
    36,000
    
    
    
    4.19
    %
    
    $
    45,933
    
    
    
    4.16
    %
    
    $
    46,000Federal Reserve Bank borrowings
    
    
    
    
    
    
    N/A
    
    
    
    4,708
    
    
    
    0.56
    %
    
    
    26,500Trust preferred securities
    
    
    25,774
    
    
    
    1.77
    %
    
    
    25,774
    
    
    
    1.83
    %
    
    
    25,774FHLB borrowings
    
    
    112,700
    
    
    
    1.53
    %
    
    
    123,015
    
    
    
    2.51
    %
    
    
    162,700Total
    
    $
    174,474
    
    
    
    
    
    
    $
    199,430
    
    
    
    
    
    
    $
    260,9742009Federal funds purchased and
repurchase agreements
    
    $
    46,000
    
    
    
    4.12
    %
    
    $
    47,220
    
    
    
    4.03
    %
    
    $
    53,841Federal Reserve Bank borrowings
    
    
    27,600
    
    
    
    0.50
    %
    
    
    2,467
    
    
    
    0.48
    %
    
    
    27,600Trust preferred securities
    
    
    25,774
    
    
    
    1.76
    %
    
    
    25,774
    
    
    
    2.39
    %
    
    
    25,774FHLB borrowings
    
    
    165,200
    
    
    
    2.86
    %
    
    
    149,559
    
    
    
    3.15
    %
    
    
    174,000Total
    
    $
    264,574
    
    
    
    
    
    
    $
    225,020
    
    
    
    
    
    
    $
    281,215
 73




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##### Table of Contents



2010
    
    
    2009Federal Reserve Bank borrowings
    
    $
    
    
    
    $
    27,600Wholesale repurchase agreements
    
    
    36,000
    
    
    
    46,000Junior subordinated notes
    
    
    25,774
    
    
    
    25,774Total
    
    $
    61,774
    
    
    $
    99,374
 74




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##### Table of Contents



Note 9  Other assets and other liabilities
  2010
    
    
    2009Other assets:Core deposit intangible
    
    $
    4,526
    
    
    $
    5,252Accrued interest receivable
    
    
    7,134
    
    
    
    8,313Deferred compensation
    
    
    4,080
    
    
    
    3,134Other
    
    
    5,824
    
    
    
    9,646Total
    
    $
    21,564
    
    
    $
    26,345Other liabilities:Accrued interest payable
    
    
    911
    
    
    
    1,534Accrued compensation
    
    
    1,009
    
    
    
    1,731Dividends payable
    
    
    405
    
    
    
    335Retirement plans and deferred compensation
    
    
    11,055
    
    
    
    11,156Other
    
    
    2,881
    
    
    
    3,282Total
    
    $
    16,261
    
    
    $
    18,038
 Note 10  Income taxes
  2010
    
    
    2009
    
    
    2008Current tax expenseFederal
    
    $
    78
    
    
    $
    (4,808
    )
    
    $
    (70
    )State
    
    
    (50
    )
    
    
    (613
    )
    
    
    563Total current
    
    
    28
    
    
    
    (5,421
    )
    
    
    493Deferred tax (benefit) expenseFederal
    
    
    (359
    )
    
    
    (5,133
    )
    
    
    (6,121
    )State
    
    
    84
    
    
    
    (1,087
    )
    
    
    (1,296
    )Total deferred
    
    
    (275
    )
    
    
    (6,220
    )
    
    
    (7,417
    )Total income tax benefit
    
    $
    (247
    )
    
    $
    (11,641
    )
    
    $
    (6,924
    )
  2010
    
    
    2009Deferred tax assets:Allowance for credit losses
    
    $
    11,371
    
    
    $
    14,142Non-qualified deferred compensation plans
    
    
    2,020
    
    
    
    1,441Accrued compensation
    
    
    286
    
    
    
    628Writedowns on loans and real estate acquired in
settlement of loans
    
    
    3,459
    
    
    
    2,694Net operating losses
    
    
    17,282
    
    
    
    14,140Pension plans  Other comprehensive income
    
    
    2,156
    
    
    
    2,106Contribution carryforward
    
    
    966
    
    
    
    900Other
    
    
    2,494
    
    
    
    3,977Valuation allowance
    
    
    (483
    )
    
    
    (544
    )Total
    
    $
    39,551
    
    
    $
    39,484Deferred tax liabilities:Depreciable basis of property and equipment
    
    
    5,598
    
    
    
    5,829Deferred loan fees
    
    
    395
    
    
    
    438Net unrealized gain on available for sale securities
    
    
    2,284
    
    
    
    3,026Other
    
    
    4,185
    
    
    
    4,169Total
    
    
    12,462
    
    
    
    13,462Net deferred tax assets
    
    $
    27,089
    
    
    $
    26,022
 75




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##### Table of Contents



2010
    
    
    2009
    
    
    2008Tax based on statutory rates
    
    $
    1,097
    
    
    $
    (9,371
    )
    
    $
    (22,339
    )Increase (decrease) resulting from:Effect of tax-exempt income
    
    
    (1,155
    )
    
    
    (1,570
    )
    
    
    (1,456
    )Write off of goodwill
    
    
    
    
    
    
    
    
    
    
    17,653State income taxes, net of federal benefit
    
    
    22
    
    
    
    (1,105
    )
    
    
    (476
    )Income on bank-owned life insurance
    
    
    (303
    )
    
    
    (205
    )
    
    
    (386
    )Other, net
    
    
    92
    
    
    
    610
    
    
    
    80Total provision (benefit) for income taxes
    
    $
    (247
    )
    
    $
    (11,641
    )
    
    $
    (6,924
    )Effective tax rate
    
    
    (7.9
    %)
    
    
    (43.5
    %)
    
    
    (10.8
    %)
 Note 11  Lease commitments
  Years Ending December 312011
    
    $
    1,4542012
    
    
    1,3292013
    
    
    1,2782014
    
    
    1,0162015
    
    
    751Thereafter
    
    
    664Total lease commitments
    
    $
    6,492
  Note 12  Related party transactions
  2010
    
    
    2009Balance, beginning of year
    
    $
    10,229
    
    
    $
    11,575Amounts removed as a result of director resignations
    
    
    
    
    
    
    (1,801
    )Advances (repayments), net, during year
    
    
    (1,478
    )
    
    
    455Balance, end of year
    
    $
    8,751
    
    
    $
    10,229
 76




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##### Table of Contents



Note 13  Other operating income and expenses
  Years Ended December 312010
    
    
    2009
    
    
    2008Other operating income:Bankcard income
    
    $
    680
    
    
    $
    2,228
    
    
    $
    2,545Investment services commissions
    
    
    1,589
    
    
    
    1,186
    
    
    
    874Insurance commissions
    
    
    65
    
    
    
    78
    
    
    
    153Trust income
    
    
    544
    
    
    
    563
    
    
    
    571Income on bank-owned life insurance
    
    
    1,055
    
    
    
    784
    
    
    
    1,270Gain on sale of merchant services
    
    
    
    
    
    
    1,177
    
    
    
    Other income
    
    
    320
    
    
    
    419
    
    
    
    578$
    4,253
    
    
    $
    6,435
    
    
    $
    5,991Other operating expenses:Advertising
    
    $
    1,594
    
    
    $
    1,428
    
    
    $
    1,940Bankcard expense
    
    
    567
    
    
    
    2,225
    
    
    
    2,413Legal and professional fees
    
    
    3,029
    
    
    
    3,460
    
    
    
    3,448Postage
    
    
    964
    
    
    
    873
    
    
    
    1,040Stationery, printing and supplies
    
    
    675
    
    
    
    590
    
    
    
    909Other expense
    
    
    6,055
    
    
    
    6,747
    
    
    
    7,127$
    12,884
    
    
    $
    15,323
    
    
    $
    16,877
 Note 14  Stock based compensation
   Year Ended December 31, 2008Dividend yield
    
    
    7.40
    %Risk-free interest rate
    
    
    2.50
    %Expected stock volatility
    
    
    36.32
    %Expected years until exercise
    
    
    6.25
     77




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##### Table of Contents



2010
    
    
    2009
    
    
    2008Weighted Avg.
    
    
    
    
    
    
    Weighted Avg.
    
    
    
    
    
    
    Weighted Avg.Options
    
    
    Exercise Price
    
    
    Options
    
    
    Exercise Price
    
    
    Options
    
    
    Exercise PriceOutstanding
 Beginning of year
    
    
    896,991
    
    
    $
    14.45
    
    
    
    1,052,517
    
    
    $
    14.32
    
    
    
    1,394,517
    
    
    $
    14.84Granted
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    24,000
    
    
    
    9.18Exercised
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Forfeited
    
    
    (75,224
    )
    
    
    16.33
    
    
    
    (155,526
    )
    
    
    13.55
    
    
    
    (366,000
    )
    
    
    15.96Outstanding  End
of year
    
    
    821,767
    
    
    $
    14.23
    
    
    
    896,991
    
    
    $
    14.45
    
    
    
    1,052,517
    
    
    $
    14.32Exercisable  End
of year
    
    
    742,067
    
    
    $
    14.13
    
    
    
    811,041
    
    
    $
    14.41
    
    
    
    940,517
    
    
    $
    14.23
 78




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##### Table of Contents



Options Outstanding
    
    
    Options ExercisableWeighted AverageRemaining
    
    
    WeightedRange of
    
    
    
    
    
    Contractual Life
    
    
    Average
    
    
    
    
    
    
    Weighted AverageExercise Prices
    
    Number
    
    
    (Years)
    
    
    Exercise Price
    
    
    Number
    
    
    Exercise Price$5.81  10.05
    
    
    219,085
    
    
    
    1.95
    
    
    $
    8.94
    
    
    
    209,585
    
    
    $
    8.93$11.06  14.93
    
    
    114,770
    
    
    
    2.70
    
    
    
    14.49
    
    
    
    114,770
    
    
    
    14.49$15.42  16.93
    
    
    281,537
    
    
    
    3.88
    
    
    
    15.91
    
    
    
    228,037
    
    
    
    15.99$17.10  18.00
    
    
    206,375
    
    
    
    3.45
    
    
    
    17.43
    
    
    
    189,675
    
    
    
    17.44821,767
    
    
    
    3.09
    
    
    $
    14.23
    
    
    
    742,067
    
    
    $
    14.13
 Note 15  Net income (loss) per share
  For the years ended December 31,2010
    
    
    2009
    
    
    2008Basic:Net income (loss) available to common shareholders
    
    $
    461
    
    
    $
    (18,050
    )
    
    $
    (57,072
    )Weighted average shares outstanding
    
    
    15,655,868
    
    
    
    15,655,868
    
    
    
    15,663,719Net income (loss) per share, basic
    
    $
    0.03
    
    
    $
    (1.15
    )
    
    $
    (3.64
    )Diluted:Net income (loss) available to common shareholders
    
    $
    461
    
    
    $
    (18,050
    )
    
    $
    (57,072
    )Weighted average shares outstanding
    
    
    15,655,868
    
    
    
    15,655,868
    
    
    
    15,663,719Effect of dilutive securities:Restricted stock units
    
    
    13,442
    
    
    
    
    
    
    
    Warrant
    
    
    431,812
    
    
    
    
    
    
    
    Weighted average shares outstanding and dilutive
potential shares outstanding
    
    
    16,101,122
    
    
    
    15,655,868
    
    
    
    15,663,719Net income (loss) per share, diluted
    
    $
    0.03
    
    
    $
    (1.15
    )
    
    $
    (3.64
    )
    79




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##### Table of Contents



Note 16  Parent company only
  2010
    
    
    2009Condensed balance sheetsAssetsCash and due from banks
    
    $
    6,282
    
    
    $
    9,933Investment in wholly-owned subsidiary
    
    
    182,831
    
    
    
    180,911Other assets
    
    
    1,006
    
    
    
    1,097Total assets
    
    $
    190,119
    
    
    $
    191,941Trust preferred securities
    
    $
    25,774
    
    
    $
    25,774Other liabilities
    
    
    1,157
    
    
    
    1,563Shareholders equity
    
    
    163,188
    
    
    
    164,604Total liabilities and shareholders equity
    
    $
    190,119
    
    
    $
    191,941
 2010
    
    
    2009
    
    
    2008Condensed statements of incomeDividends from subsidiary
    
    $
    
    
    
    $
    
    
    
    $
    8,175Other operating expense
    
    
    733
    
    
    
    824
    
    
    
    51,319Income before equity in undistributed net income of subsidiary
    
    
    (733
    )
    
    
    (824
    )
    
    
    (43,144
    )Equity in undistributed net income (loss) of subsidiary
    
    
    4,113
    
    
    
    (14,309
    )
    
    
    (13,758
    )Net income (loss)
    
    $
    3,380
    
    
    $
    (15,133
    )
    
    $
    (56,902
    )
 2010
    
    
    2009
    
    
    2008Condensed statements of cash flowsCash flows from operating activitiesNet income( loss)
    
    $
    3,380
    
    
    $
    (15,133
    )
    
    $
    (56,902
    )Adjustments to reconcile net income (loss) to net cash provided
by operating activities:Other changes, net
    
    
    (299
    )
    
    
    3,243
    
    
    
    49,283Change in investment in wholly-owned subsidiary
    
    
    (4,113
    )
    
    
    14,309
    
    
    
    13,758Net cash (used in) provided by operating activities
    
    
    (1,032
    )
    
    
    2,419
    
    
    
    6,139Cash flows from investing activitiesInvestments in wholly-owned subsidiary
    
    
    
    
    
    
    (16,372
    )
    
    
    (26,000
    )Net cash provided by (used in) investing activities
    
    
    
    
    
    
    (16,372
    )
    
    
    (26,000
    )Cash flows from financing activitiesProceeds from issuance of preferred stock and warrants
    
    
    
    
    
    
    
    
    
    
    52,372Dividends paid
    
    
    (2,619
    )
    
    
    (2,422
    )
    
    
    (6,122
    )Common stock acquired
    
    
    
    
    
    
    
    
    
    
    (341
    )Increase in other liabilities
    
    
    
    
    
    
    
    
    
    
    38Net cash provided by (used in) financing activities
    
    
    (2,619
    )
    
    
    (2,422
    )
    
    
    45,947Increase (decrease) in cash
    
    
    (3,651
    )
    
    
    (16,375
    )
    
    
    26,086Cash at beginning of year
    
    
    9,933
    
    
    
    26,308
    
    
    
    222Cash at end of year
    
    $
    6,282
    
    
    $
    9,933
    
    
    $
    26,308
 80




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##### Table of Contents



Note 17  Off-balance sheet arrangements
  Contractual Amount2010
    
    
    2009Loan commitments
    
    $
    273,536
    
    
    $
    295,041Credit card lines
    
    
    22,457
    
    
    
    21,790Standby letters of credit
    
    
    3,830
    
    
    
    3,994Total commitments and contingent liabilities
    
    $
    299,823
    
    
    $
    320,825
  Note 18  Employee benefit plans
  
    
    A pension plan, which is the result of the merger of two legacy pension plans. The
first plan was a plan covering substantially all of the former employees of Lexington
State Bank, and which was curtailed in December 2006. The second plan was a plan
covering substantially all of the former employees of FNB Southeast, which was
curtailed prior to the Merger. These two plans were merged into one plan, effective
December 31, 2008.
    
    A supplemental executive retirement plan (SERP) covering certain executive and
former executive officers, which was curtailed in 2008; and
    
    A retiree health benefit plan, which provides partial health insurance benefits for
certain early retired former employees of Lexington State Bank, which was curtailed in
2007.
   81




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##### Table of Contents



2010
    
    
    2009Change in benefit obligationProjected benefit obligation at beginning of year
    
    $
    25,716
    
    
    $
    24,104Service cost
    
    
    42
    
    
    
    43Interest cost
    
    
    1,523
    
    
    
    1,494Actuarial (gain) loss
    
    
    1,231
    
    
    
    1,346Benefits paid
    
    
    (1,409
    )
    
    
    (1,271
    )Curtailment
    
    
    
    
    
    
    Projected benefit obligation at end of year
    
    
    27,103
    
    
    
    25,716Change in plan assetsFair value of plan assets at beginning of year
    
    
    18,688
    
    
    
    14,644Actual return on plan assets
    
    
    2,252
    
    
    
    4,351Employer contributions
    
    
    1,150
    
    
    
    964Benefits paid
    
    
    (1,408
    )
    
    
    (1,271
    )Fair value of plan assets at end of year
    
    
    20,682
    
    
    
    18,688Funded status at end of yearPlan assets less projected benefit obligation
    
    
    (6,421
    )
    
    
    (7,028
    )Unrecognized transitional obligation
    
    
    
    
    
    
    Pension asset (liability)
    
    $
    (6,421
    )
    
    $
    (7,028
    )
 2010
    
    
    2009Amounts recognized in the consolidated balance sheets consist of:Pension liability
    
    $
    (6,421
    )
    
    $
    (7,028
    )Deferred tax asset
    
    
    2,535
    
    
    
    3,256Accumulated comprehensive income, net
    
    
    3,304
    
    
    
    3,227Net amount recognized
    
    $
    (582
    )
    
    $
    (545
    )
 2010
    
    
    2009
    
    
    2008Components of net periodic pension costService
    
    $
    42
    
    
    $
    43
    
    
    $
    213Interest
    
    
    1,523
    
    
    
    1,494
    
    
    
    1,520Expected return on plan assets
    
    
    (1,524
    )
    
    
    (1,197
    )
    
    
    (1,630
    )Amortization of prior service cost
    
    
    1
    
    
    
    1
    
    
    
    82Amortization of transition obligation
    
    
    
    
    
    
    
    
    
    
    Amortization of net gain (loss)
    
    
    241
    
    
    
    416
    
    
    
    54Curtailment
    
    
    
    
    
    
    
    
    
    
    (241
    )Net periodic pension cost
    
    $
    283
    
    
    $
    757
    
    
    $
    (2
    )Weighted-average assumptionsDiscount rate
    
    
    5.65
    %
    
    
    6.00
    %
    
    
    6.25
    %Expected return on plan assets
    
    
    8.25
    %
    
    
    8.25
    %
    
    
    8.25
    %Rate of compensation increases
    
    
    4.50
    %
    
    
    4.50
    %
    
    
    4.75
    %
  82




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##### Table of Contents



Market Value as of
    
    
    Actual AllocationDecember 31, 2010
    
    
    as of December 31,
    
    
    Long-TermPlan Assets
    
    (in thousands)
    
    
    2010
    
    
    Allocation TargetEquity securities
    
    $
    12,155
    
    
    
    58.8
    %
    
    
    40% - 75
    %Debt securities
    
    
    8,527
    
    
    
    41.2
    %
    
    
    25% - 60
    %Total
    
    $
    20,682
    
    
    
    100
    %
    
    
    100
    %
    Note 19  Regulatory matters
   83




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##### Table of Contents



To Be WellFor Capital
    
    Capitalized UnderAdequacy
    
    Prompt CorrectiveActual
    
    Purposes
    
    Action ProvisionsAmount
    
    Ratio
    
    Amount
    
    Ratio
    
    Amount
    
    RatioDecember 31, 2010Total Capital (To Risk Weighted Assets)Consolidated
    
    $
    194,931
    
    
    
    13.1
    %
    
    $
    118,781
    
    
    
    ≥8.0
    %
    
    
    N/ABank
    
    
    188,261
    
    
    
    12.7
    
    
    
    118,657
    
    
    
    ≥8.0
    
    
    $
    148,321
    
    
    
    ≥10.0
    %Tier 1 Capital (To Risk Weighted Assets)Consolidated
    
    
    175,893
    
    
    
    11.8
    
    
    
    59,390
    
    
    
    ≥4.0
    
    
    
    N/ABank
    
    
    169,242
    
    
    
    11.4
    
    
    
    59,328
    
    
    
    ≥4.0
    
    
    
    88,992
    
    
    
    ≥6.0
    %Tier 1 Capital (To Average Assets)Consolidated
    
    
    175,893
    
    
    
    9.7
    
    
    
    72,644
    
    
    
    ≥4.0
    
    
    
    N/ABank
    
    
    169,242
    
    
    
    9.3
    
    
    
    72,551
    
    
    
    ≥4.0
    
    
    
    90,689
    
    
    
    ≥5.0
    %December 31, 2009Total Capital (To Risk Weighted Assets)Consolidated
    
    $
    195,658
    
    
    
    12.3
    %
    
    $
    127,551
    
    
    
    ≥8.0
    %
    
    
    N/ABank
    
    
    185,579
    
    
    
    11.7
    
    
    
    127,414
    
    
    
    ≥8.0
    
    
    $
    159,268
    
    
    
    ≥10.0
    %Tier 1 Capital (To Risk Weighted Assets)Consolidated
    
    
    175,304
    
    
    
    11.0
    
    
    
    63,776
    
    
    
    ≥4.0
    
    
    
    N/ABank
    
    
    165,246
    
    
    
    10.4
    
    
    
    63,707
    
    
    
    ≥4.0
    
    
    
    95,561
    
    
    
    ≥6.0
    %Tier 1 Capital (To Average Assets)Consolidated
    
    
    175,304
    
    
    
    8.9
    
    
    
    78,531
    
    
    
    ≥4.0
    
    
    
    N/ABank
    
    
    165,246
    
    
    
    8.4
    
    
    
    78,439
    
    
    
    ≥4.0
    
    
    
    98,049
    
    
    
    ≥5.0
    %
 Note 20  Fair value of financial instruments
  Cash and cash equivalents.
 Investment securities.
 84




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##### Table of Contents



Loans.
 Investment in bank-owned life insurance.
 Deposits.
 Federal funds purchased and retail repurchase agreements.
 Wholesale repurchase agreements and other borrowings.
 Accrued interest
 Financial instruments with off-balance sheet risk
  2010
    
    
    2009Carrying
    
    
    Estimated
    
    
    Carrying
    
    
    EstimatedValue
    
    
    Fair Value
    
    
    Value
    
    
    Fair ValueFinancial assets:Cash and short term investments
    
    $
    29,075
    
    
    $
    29,075
    
    
    $
    44,840
    
    
    $
    44,840Investment securities
    
    
    325,129
    
    
    
    325,129
    
    
    
    325,339
    
    
    
    325,869Loans (including held for sale)
    
    
    1,337,579
    
    
    
    1,343,235
    
    
    
    1,463,094
    
    
    
    1,475,084Less allowance for loan losses
    
    
    (28,752
    )
    
    
    
    
    
    
    (35,843
    )
    
    
    Net loans
    
    
    1,308,827
    
    
    
    1,343,235
    
    
    
    1,427,251
    
    
    
    1,475,084Financial liabilities:Deposits
    
    
    1,452,995
    
    
    
    1,455,838
    
    
    
    1,499,310
    
    
    
    1,504,123Federal funds purchased and
retail repurchase
agreements
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Federal Reserve Bank borrowings
    
    
    
    
    
    
    
    
    
    
    27,600
    
    
    
    27,600Wholesale repurchase agreements
    
    
    36,000
    
    
    
    37,231
    
    
    
    46,000
    
    
    
    46,931Junior subordinated notes
    
    
    25,774
    
    
    
    16,706
    
    
    
    25,774
    
    
    
    12,586FHLB borrowings
    
    
    112,700
    
    
    
    113,580
    
    
    
    165,200
    
    
    
    167,810
  85




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##### Table of Contents



Quoted pricesin active markets
    
    
    Significant other
    
    
    Significantfor identical
    
    
    observable inputs
    
    
    unobservable inputsassets (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)Available for sale securities at December 31, 2010
    
    $
    
    
    
    $
    314,730
    
    
    $
    Available for sale securities at December 31, 2009
    
    
    
    
    
    
    305,382
    
    
    
    
  Quoted pricesin active markets
    
    
    Significant other
    
    
    Significantfor identical
    
    
    observable inputs
    
    
    unobservable inputsassets (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)Loans held for sale at December 31, 2010
    
    $
    
    
    
    $
    76,994
    
    
    $
    Loans held for sale at December 31, 2009
    
    
    
    
    
    
    6,568
    
    
    
    Real estate acquired in settlement of loans at
December 31, 2010
    
    
    
    
    
    
    
    
    
    
    26,718Real estate acquired in settlement of loans at
December 31, 2009
    
    
    
    
    
    
    
    
    
    
    27,337Core deposit intangible at December 31, 2010
    
    
    
    
    
    
    
    
    
    
    4,526Core deposit intangible at December 31, 2009
    
    
    
    
    
    
    
    
    
    
    5,252Impaired loans net of allowance at December
31, 2010
    
    
    
    
    
    
    
    
    
    
    36,368Impaired loans net of allowance at December
31, 2009
    
    
    
    
    
    
    
    
    
    
    43,418
 Note 21  U.S. Treasury Capital Purchase Program
  Note 22  Pending sale of Virginia operations
  86




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##### Table of Contents



Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
  
 Item 9A.Controls and Procedures
 Evaluation of Disclosure Controls and Procedures
  Managements Annual Report on Internal Control over Financial Reporting
 Internal
Control Integrated Framework.
 
    
    Management has implemented a process to monitor and assess both the
design and operating effectiveness of internal control over financial
reporting.
    
    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.
  Changes in Internal Control over Financial Reporting
  
 Item 9B. Other Information
  87




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##### Table of Contents



PART III
 
 Item 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
     
 Item 11. EXECUTIVE COMPENSATION
  
 Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER
MATTERS
  
 Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
  
 Item 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
  88




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##### Table of Contents



PART IV
 
 Item 15. Exhibits and Financial Statement Schedules
  Financial Statements
    
    PageQuarterly Financial Information
    
    
    58Reports of Independent Registered Public Accounting Firm
    
    
    59Consolidated Balance Sheets as of December 31, 2010 and 2009
    
    
    61Consolidated Statements of Income for the years ended December 31,
2010, 2009 and 2008
    
    
    62Consolidated Statements of Changes in Shareholders Equity and
Comprehensive Income for the years ended December 31, 2010, 2009 and
2008
    
    
    63Consolidated Statements of Cash Flows for the years ended December
31, 2010, 2009 and 2008
    
    
    64Notes
to Consolidated Financial Statements
    
    
    65
 Financial Statement Schedules.
 Exhibits.
   89




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##### Table of Contents



Exhibit Index
 ExhibitNo.
    
    Description3.1
    
    Articles of Incorporation, and amendments thereto, incorporated by reference
to Exhibit 4.1 of the Registration Statement on Form S-8, filed with the SEC
on May 16, 2001 (SEC File No. 333-61046).3.2
    
    Articles of Merger of FNB with and into LSB, including amendments to the
Articles of Incorporation, as amended, incorporated by reference to Exhibit
3.4 of the Quarterly Report on Form 10-Q for the quarter ended September 30,
2007, filed with the SEC on November 9, 2007 (SEC File No. 000-11448).3.3
    
    Amended and Restated Bylaws adopted by the Board of Directors on August 17,
2004 and amended on July 23, 2008 (with identified Bylaw approved by the
shareholders) incorporated by reference to Exhibit 3.3 of the Quarterly Report
on Form 10-Q for the quarter ended March 31, 2009, filed with the SEC on May
8, 2009 (SEC File No. 000-11448).4.1
    
    Specimen certificate of common stock, $5.00 par value, incorporated by
reference to Exhibit 4.1 of the Quarterly Report on Form 10-Q for the quarter
ended September 30, 2007, filed with the SEC on November 9, 2007 (SEC File No.
000-11448).4.2
    
    Amended and Restated Trust Agreement, regarding Trust Preferred Securities,
dated August 23, 2005, incorporated herein by reference to Exhibit 4.02 of the
Quarterly Report on Form 10-Q for the quarter ended September 30, 2005, filed
with the SEC (SEC File No. 000-13086).4.3
    
    Guarantee Agreement, regarding Trust Preferred Securities, dated August 23,
2005, incorporated herein by reference to Exhibit 4.03 of the Quarterly Report
on Form 10-Q for the quarter ended September 30, 2005, filed with the SEC (SEC
File No. 000-13086).4.4
    
    Indenture, regarding Trust Preferred Securities, dated August 23, 2005,
incorporated herein by reference to Exhibit 4.04 of the Quarterly Report on
Form 10-Q for the quarter ended September 30, 2005, filed with the SEC (SEC
File No. 000-13086).4.5
    
    Articles of Amendment, filed with the North Carolina Department of the
Secretary of State on December 12, 2008, incorporated herein by reference to
Exhibit 4.1 of the Current Report on Form 8-K filed with the SEC on December
12, 2008 (SEC File No. 000-11448).4.6
    
    Form of Certificate for the Fixed Rate Cumulative Perpetual Preferred Stock,
Series A, incorporated herein by reference to Exhibit 4.2 of the Current
Report on Form 8-K filed with the SEC on December 12, 2008 (SEC File No.
000-11448).4.7
    
    Warrant for Purchase of Shares of Common Stock issued by Bancorp to the United
States Department of the Treasury on December 12, 2008, incorporated herein by
reference to Exhibit 4.3 of the Current Report on Form 8-K filed with the SEC
on December 12, 2008 (SEC File No. 000-11448).10.1
    
    Benefit Equivalency Plan of FNB Southeast, effective January 1, 1994
incorporated herein by reference to Exhibit 10 of the Quarterly Report on Form
10-QSB for the fiscal quarter ended June 30, 1995, filed with the SEC (SEC
File No. 000-13086).10.2
    
    1994 Director Stock Option Plan, incorporated herein by reference to Exhibit 4
of the Registration Statement on Form S-8 filed with the SEC on July 15, 1994
(SEC File No. 33-81664).10.3
    
    1996 Omnibus Stock Incentive Plan, incorporated herein by reference to Exhibit
10.2 of the Annual Report on Form 10-K for the year ended December 31, 1995
filed with the SEC on March 28, 1996 (SEC File No. 000-11448).
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ExhibitNo.
    
    Description10.4
    
    Omnibus Equity Compensation Plan, incorporated herein by reference to Exhibit
10(B) of the Annual Report on Form 10-KSB40 for the fiscal year ended December
31, 1996, filed with the SEC on March 31, 1997 (SEC File No. 000-13086).10.5
    
    Amendment to Benefit Equivalency Plan of FNB Southeast, effective January 1,
1998., incorporated herein by reference to Exhibit 10.16 of the Annual Report
on Form 10-K for the fiscal year ended December 31, 1998, filed with the SEC
on March 25, 1999 (SEC File No. 000-13086)10.6
    
    Amendment Number 1 to 1996 Omnibus Stock Incentive Plan, incorporated herein
by reference to Exhibit 4.5 of the Registration Statement on Form S-8, filed
with the SEC on May 16, 2001 (SEC File No. 333-61046).10.7
    
    Long Term Stock Incentive Plan for certain senior management employees of FNB
Southeast incorporated herein by reference to Exhibit 10.10 of the Annual
Report on Form 10-K for the fiscal year ended December 31, 2002, filed with
the SEC on March 27, 2003 (SEC File No. 000-13086).10.8
    
    Form of Employment Continuity Agreement effective as of January 1, 2004
between LSB and Robert E. Lineback, Jr. and Philip G. Gibson with a Schedule
setting forth the material details in which such documents differ from the
document a copy of which is filed, incorporated herein by reference to Exhibit
10.10 of the Annual Report on Form 10-K for the year ended December 31, 2003
filed with the SEC on March 15, 2004 (SEC File No. 000-11448).10.9
    
    Form of Stock Option Award Agreement for a Director adopted under LSB
Comprehensive Equity Compensation Plan for Directors and Employees,
incorporated herein by reference to Exhibit 10.1 of the Current Report on Form
8-K filed with the SEC on December 23, 2004 (SEC File No. 000-11448).10.10
    
    Form of Incentive Stock Option Award Agreement for an Employee adopted under
LSB Comprehensive Equity Compensation Plan for Directors and Employees,
incorporated herein by reference to Exhibit 10.2 of the Current Report on Form
8-K filed with the SEC on December 23, 2004 (SEC File No. 000-11448).10.11
    
    Form of Amendment to the applicable Grant Agreements under the 1996 Omnibus
Stock Incentive Plan, incorporated herein by reference to Exhibit 10.2 of the
Current Report on Form 8-K filed with the SEC on April 15, 2005 (SEC File No.
000-11448).10.12
    
    Form of Amendment to the Incentive Stock Option Award Agreement for an
Employee adopted under LSB Comprehensive Equity Compensation Plan for
Directors and Employees, incorporated herein by reference to Exhibit 10.3 of
the Current Report on Form 8-K filed with the SEC on April 15, 2005 (SEC File
No. 000-11448).10.13
    
    Restated Form of Director Fee Deferral Agreement adopted under LSB
Comprehensive Equity Compensation Plan for Directors and Employees,
incorporated herein by reference to Exhibit 99.1 of the Current Report on Form
8-K filed with the SEC on December 23, 2005 (SEC File No. 000-11448).10.14
    
    Form of Stock Appreciation Rights Award Agreement adopted under LSB
Comprehensive Equity Compensation Plan for Directors and Employees,
incorporated herein by reference to Exhibit 99.2 of the Current Report on Form
8-K filed with the SEC on December 23, 2005 (SEC File No. 000-11448).10.15
    
    FNB Amended and Restated Directors Retirement Policy, incorporated herein by
reference to Exhibit 99.1 of the Current Report on Form 8-K, filed with the
SEC on August 3, 2007 (SEC File No. 000-11448).10.16
    
    Amendment to the FNB Directors and Senior Management Deferred Compensation
Plan Trust Agreement among Regions Bank d/b/a/ Regions Morgan Keegan Trust,
FNB Southeast and FNB, dated July 31, 2007, incorporated herein by reference
to Exhibit 99.2 of the Current Report on Form 8-K, filed with the SEC on
August 3, 2007 (SEC File No. 000-11448).10.17
    
    Employment and Change of Control Agreement with William W. Budd, Jr.
incorporated herein by reference to Exhibit 99.1 of the Current Report on Form
8-K, filed with the SEC on March 11, 2010 (SEC File No. 000-11448).
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ExhibitNo.
    
    Description10.18
    
    Employment and Change of Control Agreement with Jerry W. Beasley, incorporated
herein by reference to Exhibit 99.3 of the Current Report on Form 8-K, filed
with the SEC on March 14, 2008 (SEC File No. 000-11448).10.19
    
    Employment and Change of Control Agreement with Robin S. Hager, incorporated
herein by reference to Exhibit 99.1 of the Current Report on Form 8-K, filed
with the SEC on August 3, 2010 (SEC File No. 000-11448).10.20
    
    Employment and Change of Control Agreement with Paul McCombie, incorporated
herein by reference to Exhibit 99.5 of the Current Report on Form 8-K, filed
with the SEC on March 14, 2008 (SEC File No. 000-11448).10.21
    
    Employment and Change of Control Agreement with George Richard Webster,
incorporated herein by reference to Exhibit 99.6 of the Current Report on Form
8-K, filed with the SEC on March 14, 2008 (SEC File No. 000-11448).10.22
    
    Directors and Senior Management Deferred Compensation Plan Trust Agreement
between FNB Southeast and Morgan Trust Company, incorporated herein by
reference to Exhibit 99.7 of the Current Report on Form 8-K, filed with the
SEC on March 14, 2008 (SEC File No. 000-11448).10.23
    
    Second Amendment to the Directors and Senior Management Deferred Compensation
Plan and Directors Retirement Policy Trust Agreement among Regions bank d/b/a/Regions
Morgan Keegan Trust, Bancorp and the Bank, incorporated herein by
reference to Exhibit 99.8 of the Current Report on Form 8-K, filed with the
SEC on March 14, 2008 (SEC File No. 000-11448).10.24
    
    Bancorp Non-Qualified Deferred Compensation Plan for Directors and Senior
Management, incorporated herein by reference to Exhibit 99.9 of the Current
Report on Form 8-K, filed with the SEC on March 14, 2008 (SEC File No.
000-11448).10.25
    
    First Amendment to the Bancorp Non-Qualified Deferred Compensation Plan for
Directors and Senior Management, incorporated herein by reference to Exhibit
99.10 of the Current Report on Form 8-K, filed with the SEC on March 14, 2008
(SEC File No. 000-11448).10.26
    
    Bancorp Amended and Restated Long Term Stock Incentive Plan, formerly the FNB
Long Term Stock Incentive Plan (the 2006 Omnibus Plan), incorporated herein
by reference to Exhibit 10.27 of the Quarterly Report on Form 10-Q filed with
the SEC on May 9, 2008 (SEC File No. 000-11448).10.27
    
    Amended and Restated Comprehensive Equity Compensation Plan for Directors and
Employees, incorporated herein by reference to Exhibit 10.44 of the Quarterly
Report on Form 10-Q, filed with the SEC on August 11, 2008 (SEC File No.
000-11448).10.28
    
    Form of Restricted Stock Award Agreement adopted under the Amended and
Restated Comprehensive Equity Compensation Plan for Directors and Employees,
incorporated herein by reference to Exhibit 10.45 of the Quarterly Report on
Form 10-Q, filed with the SEC on August 11, 2008 (SEC File No. 000-11448).10.29
    
    Employment and Change of Control Agreement with David P. Barksdale,
incorporated herein by reference to Exhibit 99.1 of the Current Report on Form
8-K, filed with the SEC on October 17, 2008 (SEC File No. 000-11448).10.30
    
    Letter Agreement, dated December 12, 2008, between Bancorp and the United
States Department of the Treasury, with respect to the issuance and sale of
the Fixed Rate Cumulative Perpetual Preferred Stock, Series A and the Warrant,
incorporated herein by reference to Exhibit 10.1 of the Current Report on Form
8-K filed with the SEC on December 12, 2008 (SEC File No. 000-11448).10.31
    
    Form of Employment Agreement Amendment, dated December 12, 2008 among Bancorp,
the Bank and the senior executive officers of Bancorp, incorporated herein by
reference to Exhibit 10.2 of the Current Report on Form 8-K filed with the SEC
on December 12, 2008 (SEC File No. 000-11448).
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##### Table of Contents



ExhibitNo.
    
    Description10.32
    
    Bancorp Management Incentive Plan, dated February 18, 2008, incorporated
herein by reference to Exhibit 99.1 of the Current Report on Form 8-K, filed
with the SEC on March 6, 2009 (SEC File No. 000-11448).10.33
    
    Employment and Change of Control Agreement with Ramsey K. Hamadi, incorporated
herein by reference to Exhibit 99.1 of the Current Report on Form 8-K, filed
with the SEC on March 30, 2009 (SEC File No. 000-11448).10.34
    
    Promissory Note by Ramsey K. Hamadi in favor of the Bank incorporated herein
by reference to Exhibit 99.1 of the Current Report on Form 8-K, filed with the
SEC on April 21, 2009 (SEC File No. 000-11448).10.35
    
    Excessive and Luxury Expenditure Policy of Bancorp and the Bank, incorporated
herein by reference to Exhibit 99.1 of the Current Report on Form 8-K filed
with the SEC on September 9, 2009 (SEC File No. 000-11448).10.36
    
    Employment and Change of Control Agreement among Bancorp, the Bank and
Pressley A. Ridgill, executed September 9, 2009, and effective January 1,
2010, incorporated herein by reference to Exhibit 99.1 of the Current Report
on Form 8-K filed with the SEC on September 11, 2009 (SEC File No. 000-11448).10.37
    
    Form of Amendment to Employment and Change of Control Agreement, dated
September 16, 2009, among Bancorp, the Bank and the senior executive officers
of Bancorp, incorporated herein by reference to Exhibit 99.1 of the Current
Report on Form 8-K filed with the SEC on September 16, 2009 (SEC File No.
000-11448).21.01
    
    Schedule of Subsidiaries23.01
    
    Consent of Grant Thornton LLP31.01
    
    Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.31.02
    
    Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32.01
    
    Certifications Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.99.01
    
    Certification Pursuant to the Emergency Economic Stabilization Act of 2008, as
amended by the American Recovery and Reinvestment Act of 2009.99.02
    
    Certification Pursuant to the Emergency Economic Stabilization Act of 2008, as
amended by the American Recovery and Reinvestment Act of 2009.
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##### Table of Contents



SIGNATURES
  NEWBRIDGE BANCORPDate: March 23, 2011
    By: /s/Pressley A. RidgillPressley A. Ridgill,President and Chief Executive Officer  Signature
    
    Capacity
    
    Date/s/pressley a. ridgill
    
    President, Chief Executive Officer, Director
    
    March 23, 2011Pressley A. Ridgill
    
    (Principal Executive Officer)/s/ramsey k. hamadi
Ramsey K. Hamadi
    
    Executive Vice President, Chief Financial
Officer
    
    March 23, 2011(Principal Financial Officer)/s/richard m. cobb
Richard M. Cobb
    
    Senior Vice President, Chief Accounting
Officer, Controller
    
    March 23, 2011(Principal Accounting Officer)/s/michael s. albert
    
    Chairman of the Board
    
    March 23, 2011Michael S. Albert/s/Barry Z. Dodson
    
    Vice Chairman of the Board
    
    March 23, 2011Barry Z. Dodson/s/ j. david branch
    
    Director
    
    March 24, 2011J. David Branch/s/ c. arnold britt
    
    Director
    
    March 23, 2011C. Arnold Britt/s/ robert c. clark
    
    Director
    
    March 23, 2011Robert C. Clark/s/Alex A. Diffey, jr.
    
    Director
    
    March 23, 2011Alex A. Diffey, Jr./s/Joseph H. Kinnarney
    
    Director
    
    March 23, 2011Joseph H. Kinnarney/s/robert f. lowe
    
    Director
    
    March 23, 2011Robert F. Lowe
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##### Table of Contents



Signature
    
    Capacity
    
    Date/s/robert v. perkins, ii
    
    Director
    
    March 23, 2011Robert V. Perkins, II/s/mary e. rittling
    
    Director
    
    March 23, 2011Mary E. Rittling/s/burr w. sullivan
    
    Director
    
    March 23, 2011Burr W. Sullivan/s/E. Reid Teague
    
    Director
    
    March 23, 2011E. Reid Teague/s/john f. watts
    
    Director
    
    March 23, 2011John F. Watts/s/g. alfred webster
    
    Director
    
    March 23, 2011G. Alfred Webster/s/Kenan C. Wright
    
    Director
    
    March 23, 2011Kenan C. Wright/s/julius s. young, jr.
    
    Director
    
    March 23, 2011Julius S. Young, Jr.
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##### Table of Contents



EXHIBIT INDEX
 Exhibit
    
    Description21.01
    
    Schedule of Subsidiaries23.01
    
    Consent of Grant Thornton LLP31.01
    
    Certification of Pressley A. Ridgill31.02
    
    Certification of Ramsey K. Hamadi32.01
    
    Certification of Periodic Financial Report
Pursuant to 18 U.S.C. Section 135099.01
    
    Certification Pursuant to the Emergency Economic
Stabilization Act of 2008, as amended by the American Recovery and Reinvestment Act of 2009.99.02
    
    Certification Pursuant to the Emergency Economic Stabilization Act of 2008, as amended
by the American Recovery and Reinvestment Act of 2009.
 96