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|  Large accelerated filer [   ] |   Accelerated Filer  [X] |  Non-accelerated Filer  [   ]           |  Small reporting company [   ] |
|----------------------------------------------------|----------------------------------------------|---------------------------------------------------------------------------------------------------------------|-----------------------------------------------|

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|      |                                                                     |   | Page   |   |
|-----------|--------------------------------------------------------------------------|--------|--------|--------|
|      |                                                                     |   |   |   |
| Part I.   |                                                                     |   |   | 1      |   |
| Item 1.   | Business                                                                 |   |   | 2      |   |
| Item 1A.  | Risk Factors                                                             |   |   | 15     |   |
| Item 1B.  | Unresolved Staff Comments                                                |   |   | 22     |   |
| Item 2.   | Properties                                                               |   |   | 22     |   |
| Item 3.   | Legal Proceedings                                                        |   |   | 22     |   |
| Item 4.   | Reserved                                                                 |   |   | 22     |   |
|      |                                                                     |   |   |   |   |
| Part II.  |                                                                     |   |   | 23     |   |
| Item 5.   | Market for Registrant's Common Equity, Related Shareholder Matters       |   |   |   |   |
|      | and Issuer Purchases of Equity Securities                                |   |   | 23     |   |
| Item 6.   | Selected Financial Data                                                  |   |   | 25     |   |
| Item 7.   | Management's Discussion and Analysis of Financial Condition and          |   |   |   |   |
|      | Results of Operations                                                    |   |   | 26     |   |
| Item 7A.  | Quantitative and Qualitative Disclosures about Market Risk               |   |   | 44     |   |
| Item 8.   | Financial Statements and Supplementary Data                              |   |   | 47     |   |
| Item 9.   | Changes in and Disagreements With Accountants on Accounting              |   |   |   |   |
|      | and Financial Disclosure                                                 |   |   | 47     |   |
| Item 9A.  | Controls and Procedures                                                  |   |   | 47     |   |
| Item 9B.  | Other Information                                                        |   |   | 48     |   |
|      |                                                                     |   |   |   |   |
| Part III. |                                                                     |   |   | 48     |   |
| Item 10.  | Directors and Executive Officers and Corporate Governance                |   |   | 48     |   |
| Item 11.  | Executive Compensation                                                   |   |   | 48     |   |
| Item 12.  | Security Ownership of Certain Beneficial Owners and Management           |   |   |   |   |
|      | and Related Shareholder Matters                                          |   |   | 48     |   |
| Item 13.  | Certain Relationships and Related Transactions and Director Independence |   |   | 48     |   |
| Item 14.  | Principal Accountant Fees and Services                                   |   |   | 49     |   |
|      |                                                                     |   |   |   |   |
| Part IV.  |                                                                     |   |   | 49     |   |
| Item 15.  | Exhibits and Financial Statement Schedules                               |   |   | 49     |   |
|      | Signatures                                                               |   |   | 50     |   |

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PART I

| ·   | management’s ability to effectively execute its business plan and strategy; |
|--------------------|-----------------------------------------------------------------------------------|

| ·   | the possibility that we will be unable to raise sufficient capital and comply with the conditions imposed upon us in regulatory actions against us, which could result in the imposition of further restrictions on our operations, penalties or other regulatory actions; |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | the credit risks of lending activities, including changes in the level and trend of loan delinquencies, collections and write-offs and changes in our allowance for loan losses and provision for loan losses that may be impacted by deterioration in the residential housing and commercial real estate markets; |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | changes in general economic conditions, either nationally or in our market areas; |
|--------------------|-----------------------------------------------------------------------------------|

| ·   | the availability of and costs associated with sources of liquidity; |
|--------------------|---------------------------------------------------------------------|

| ·   | inflation, interest rates, market and monetary fluctuations; |
|--------------------|--------------------------------------------------------------|

| ·   | legislative or regulatory changes or changes in accounting principles, policies or guidelines; |
|--------------------|------------------------------------------------------------------------------------------------|

| ·   | the costs and effects of legal and regulatory developments, including the resolution of legal proceedings or regulatory or other governmental inquiries and the results of regulatory examinations or reviews; |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | our ability to attract and retain deposits; |
|--------------------|---------------------------------------------|

| ·   | further increases in premiums for deposit insurance; |
|--------------------|------------------------------------------------------|

| ·   | the use of estimates in determining fair value of certain of our assets, which estimates may prove to be incorrect and result in significant declines in valuation; |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | the failure or security breach of computer systems on which we depend; |
|--------------------|------------------------------------------------------------------------|

| ·   | increased competitive pressures among financial services companies; |
|--------------------|---------------------------------------------------------------------|

| ·   | adverse changes in the securities markets; |
|--------------------|--------------------------------------------|

| ·   | technological changes; |
|--------------------|------------------------|

| ·   | the ability to increase market share and control expenses; |
|--------------------|------------------------------------------------------------|

| ·   | our success at managing the risks involved in the foregoing; and |
|--------------------|------------------------------------------------------------------|

| ·   | other risks which may be described in Frontier’s future filings with the SEC under the Securities Exchange Act of 1934. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------|

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ITEM 1.                      BUSINESS

| 1.   | Loans for construction of residential and commercial income-producing properties that generally have terms of less than two years and typically bear an interest rate that floats with our base rate. |
|----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2.   | Loans for construction of single-family speculative and owner-occupied properties that generally have terms of one year or less and typically bear an interest rate that floats with our base rate. |
|----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|                               |   | 2009   |      |   | 2008   |   |      | 2007   |   |   | 2006      |   |   | 2005   |      |
|------------------------------------|--------|--------|-----------|--------|--------|--------|-----------|--------|--------|--------|-----------|--------|--------|--------|-----------|
| Real estate commercial loans       |   | $      | 965,266   |   |   | $      | 1,044,833 |   |   | $      | 1,003,916 |   |   | $      | 897,714   |   |   | $ | 859,251 |   |
|                               |   |   |      |   |   |   |      |   |   |   |      |   |   |   |      |   |   |   |   |   |
| Real estate construction loans     |   | $      | 447,879   |   |   | $      | 949,909   |   |   | $      | 1,062,662 |   |   | $      | 735,926   |   |   | $ | 554,021 |   |
|                               |   |   |      |   |   |   |      |   |   |   |      |   |   |   |      |   |   |   |   |   |
| Real estate land development loans |   | $      | 319,320   |   |   | $      | 580,453   |   |   | $      | 537,410   |   |   | $      | 399,950   |   |   | $ | 269,662 |   |
|                               |   |   |      |   |   |   |      |   |   |   |      |   |   |   |      |   |   |   |   |   |
| Total loans at end of period (1)   |   | $      | 2,869,498 |   |   | $      | 3,778,733 |   |   | $      | 3,612,122 |   |   | $      | 2,908,000 |   |   | $ | 2,389,224 |   |
|                               |   |   |      |   |   |   |      |   |   |   |      |   |   |   |      |   |   |   |   |   |
| Real estate commercial loans       |   |   |      |   |   |   |      |   |   |   |      |   |   |   |      |   |   |   |   |   |
| as a percent of total loans        |   |   | 33.6      | %      |   |   | 27.7      | %      |   |   | 27.8      | %      |   |   | 30.9      | % |   |   | 36.0 | % |
| Real estate construction loans     |   |   |      |   |   |   |      |   |   |   |      |   |   |   |      |   |   |   |   |   |
| as a percent of total loans        |   |   | 15.6      | %      |   |   | 25.1      | %      |   |   | 29.4      | %      |   |   | 25.3      | % |   |   | 23.2 | % |
| Real estate land development loans |   |   |      |   |   |   |      |   |   |   |      |   |   |   |      |   |   |   |   |   |
| as a percent of total loans        |   |   | 11.1      | %      |   |   | 15.4      | %      |   |   | 14.9      | %      |   |   | 13.8      | % |   |   | 11.3 | % |
|                               |   |   |      |   |   |   |      |   |   |   |      |   |   |   |      |   |   |   |   |   |
| (1) Includes loans held for resale |   |   |      |   |   |   |      |   |   |   |      |   |   |   |      |   |   |   |   |   |

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| ·   | Strengthening our capital position. |
|--------------------|-------------------------------------|

| ·   | Proactively managing credit quality and loan collections and improving asset quality. |
|--------------------|---------------------------------------------------------------------------------------|

| ·   | Diversifying our loan portfolio by emphasizing commercial and industrial lending through our existing branches. |
|--------------------|-----------------------------------------------------------------------------------------------------------------|

| ·   | Managing liquidity and improving our capital position in compliance with regulatory guidelines. |
|--------------------|-------------------------------------------------------------------------------------------------|

| ·   | Continuing to seek out reasonable expense reduction measures. |
|--------------------|---------------------------------------------------------------|

| ·   | Increasing core deposits to fund loan growth and maintaining net interest margins through an enhanced branch network and online banking. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------|

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| ·   | acquiring direct or indirect ownership or control of any voting shares of any bank if, after the acquisition, the bank holding company will directly or indirectly own or control more than 5% of the bank’s voting shares; |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | acquiring all or substantially all of the assets of any bank; or |
|--------------------|------------------------------------------------------------------|

| ·   | merging or consolidating with any other bank holding company. |
|--------------------|---------------------------------------------------------------|

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| ·   | Truth-In-Lending Act, governing disclosures of credit terms to consumer borrowers; |
|--------------------|------------------------------------------------------------------------------------|

| ·   | Home Mortgage Disclosure Act of 1975, requiring financial institutions to provide information to enable the public and public officials to determine whether a financial institution is fulfilling its obligation to help meet the housing needs of the community it serves; |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Equal Credit Opportunity Act, prohibiting discrimination on the basis of race, creed or other prohibited factors in extending credit; |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Fair Credit Reporting Act of 1978, governing the use and provision of information to credit reporting agencies; |
|--------------------|-----------------------------------------------------------------------------------------------------------------|

| ·   | Fair Debt Collection Practices Act, governing the manner in which consumer debts may be collected by collection agencies; |
|--------------------|---------------------------------------------------------------------------------------------------------------------------|

| ·   | Service Members Civil Relief Act, which amended the Soldiers’ and Sailors’ Civil Relief Act of 1940, governing the repayment terms of, and property rights underlying, secured obligations of persons in military service; and |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Rules and regulations of the various federal agencies charged with the responsibility of implementing these federal laws. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------|

| ·   | the Right to Financial Privacy Act, which imposes a duty to maintain confidentiality of consumer financial records and prescribes procedures for complying with administrative subpoenas of financial records; and |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | the Electronic Funds Transfer Act and Regulation E issued by the Federal Reserve Board to implement that act, which govern automatic deposits to and withdrawals from deposit accounts and customers’ rights and liabilities arising from the use of automated teller machines and other electronic banking services. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| ·   | initial notices to customers about their privacy policies, describing the conditions under which they may disclose nonpublic personal information to nonaffiliated third-parties and affiliates; |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | annual notices of their privacy policies to current customers; and |
|--------------------|--------------------------------------------------------------------|

| ·   | a reasonable method for customers to “opt out” of disclosures to nonaffiliated third-parties. |
|--------------------|-----------------------------------------------------------------------------------------------------------|

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| ·   | raised the deposit insurance limit on certain retirement accounts to $250,000 and indexes that limit for inflation; |
|--------------------|---------------------------------------------------------------------------------------------------------------------|

| ·   | required the FDIC and National Credit Union Administration boards, starting in 2010 and every succeeding five years, to consider raising the standard maximum deposit insurance; and |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | eliminated the current fixed 1.25 percent Designated Reserve Ratio (“DRR”) and provided the FDIC with the discretion to set the DRR within a range of 1.15 to 1.50 percent for any given year. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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ITEM 1A.                      RISK FACTORS

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ITEM 1B.                      UNRESOLVED STAFF COMMENTS

ITEM 2.                      PROPERTIES

ITEM 3.                      LEGAL PROCEEDINGS

ITEM 4.                      RESERVED

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PART II

| ITEM 5. | MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED SHAREHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES |
|---------|--------------------------------------------------------------------------------------------------------------|

|           |   | Year Ended December 31, |   |
|----------------|--------|-------------------------|--------|
|           |   | 2009                    |   |   | 2008 |   |
|           |   | High                    |   |   | Low |   |   | High |   |   | Low |   |
| First Quarter  |   | $                       | 50.20  |   |   | $ | 11.20 |   |   | $ | 202.10 |   |   | $ | 150.55 |   |
| Second Quarter |   |                    | 25.90  |   |   |   | 11.40 |   |   |   | 198.95 |   |   |   | 82.80 |   |
| Third Quarter  |   |                    | 17.10  |   |   |   | 6.55 |   |   |   | 178.85 |   |   |   | 87.20 |   |
| Fourth Quarter |   |                    | 9.90   |   |   |   | 3.41 |   |   |   | 130.95 |   |   |   | 21.80 |   |

| Dividend Declared |   | Record Date |            | Payment Date |
|-------------------|--------|-------------|-----------------|--------------|
| $                 | 1.75   |        | January 7, 2008 |         | January 21, 2008 |
|              | 1.80   |        | April 7, 2008   |         | April 21, 2008 |
|              | 0.60   |        | July 8, 2008    |         | July 22, 2008 |
|              | 0.60   |        | October 7, 2008 |         | October 21, 2008 |

|                                                                      |   | Number of securities to be issued upon exercise of outstanding options, warrants and rights |    |   | Weighted average exercise price of outstanding options, warrants and rights |   |   | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in the first column) |   |
|---------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------|---------|--------|-----------------------------------------------------------------------------|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| Equity compensation plans approved by                                     |   |                                                                                        |    |   |                                                                        |   |   |                                                                                                                                              |   |
| security holders (A)                                                      |   |                                                                                        | 231,724 |   |                                                                        | $      | 84.65  |                                                                                                                                              |   |   | 322,357 |   |
| Equity compensation plans not approved by                                 |   |                                                                                        |    |   |                                                                        |   |   |                                                                                                                                              |   |   |   |   |
| security holders (B)                                                      |   |                                                                                        | 926     |   |                                                                        |   | N/A    |                                                                                                                                              |   |   | - |   |
|                                                                      |   |                                                                                        | 232,650 |   |                                                                        |   |   |                                                                                                                                              |   |   | 322,357 |   |
|                                                                      |   |                                                                                        |    |   |                                                                        |   |   |                                                                                                                                              |   |   |   |   |
| (A) Consists of FFC Incentive Stock Options Plan                          |   |                                                                                        |    |   |                                                                        |   |   |                                                                                                                                              |   |   |   |   |
| (B) Consists of FFC 1999 Employee Stock Award Plan, which expired in 2009 |   |                                                                                        |    |   |                                                                        |   |   |                                                                                                                                              |   |

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| Index                          |   | 12/31/2004 |   |   | 12/31/2005 |   |   | 12/31/2006 |   |   | 12/31/2007 |   |   | 12/31/2008 |   |   | 12/31/2009 |   |
|--------------------------------|--------|------------|--------|--------|------------|--------|--------|------------|--------|--------|------------|--------|--------|------------|--------|--------|------------|--------|
| Frontier Financial Corporation |   | $          | 100.00 |   |       | $      | 126.70 |       |   | $      | 175.77     |   |   | $          | 115.57 |   |       | $      | 30.09 |   |   | $ | 2.42 |   |
| NASDAQ Bank Index              |   | $          | 100.00 |   |       | $      | 97.70  |       |   | $      | 109.63     |   |   | $          | 132.37 |   |       | $      | 96.51 |   |   | $ | 80.86 |   |
| S&P 500 Index              |   | $          | 100.00 |   |       | $      | 103.00 |       |   | $      | 119.26     |   |   | $          | 125.81 |   |       | $      | 79.26 |   |   | $ | 100.24 |   |

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ITEM 6.                      SELECTED FINANCIAL DATA

| In thousands, except per share amounts and percentages |   |   |      |   |   |   |      |   |   |   |      |   |   |
|--------------------------------------------------------|--------|--------|-----------|--------|--------|--------|-----------|--------|--------|--------|-----------|--------|--------|
|                                                   |   |   |      |   |   |   |      |   |   |   |      |   |   |   |   |   | % Change |   |
| AT YEAR END                                            |   | 2009   |      |   | 2008   |   |      | 2007   |   |   | 2006      |   |   | 2005 |   |   |   | 2009-2008 |   |
| Total assets                                           |   | $      | 3,594,984 |   |   | $      | 4,104,445 |   |   | $      | 3,995,689 |   |   | $ | 3,238,464 |   |   | $ | 2,640,275 |   |   |   | -12.4 | % |
| Net loans                                              |   |   | 2,718,149 |   |   |   | 3,666,177 |   |   |   | 3,558,127 |   |   |   | 2,867,351 |   |   |   | 2,355,419 |   |   |   | -25.9 | % |
| Securities                                             |   |   | 87,194    |   |   |   | 93,691    |   |   |   | 135,121   |   |   |   | 114,711 |   |   |   | 110,617 |   |   |   | -6.9 | % |
| Deposits                                               |   |   | 3,122,476 |   |   |   | 3,275,165 |   |   |   | 2,943,236 |   |   |   | 2,453,632 |   |   |   | 2,061,380 |   |   |   | -4.7 | % |
| Shareholders' equity                                   |   |   | 61,486    |   |   |   | 352,043   |   |   |   | 459,612   |   |   |   | 395,283 |   |   |   | 296,097 |   |   |   | -82.5 | % |
|                                                   |   |   |      |   |   |   |      |   |   |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| FOR THE YEAR                                           |   |   |      |   |   |   |      |   |   |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest income                                        |   | $      | 177,533   |   |   | $      | 279,055   |   |   | $      | 299,672   |   |   | $ | 250,144 |   |   | $ | 178,886 |   |   |   | -36.4 | % |
| Interest expense                                       |   |   | 93,462    |   |   |   | 112,185   |   |   |   | 113,041   |   |   |   | 86,942 |   |   |   | 51,736 |   |   |   | -16.7 | % |
| Net interest income                                    |   |   | 84,071    |   |   |   | 166,870   |   |   |   | 186,631   |   |   |   | 163,202 |   |   |   | 127,150 |   |   |   | -49.6 | % |
| Provision for loan losses                              |   |   | 375,000   |   |   |   | 120,000   |   |   |   | 11,400    |   |   |   | 7,500 |   |   |   | 4,200 |   |   |   | 212.5 | % |
| Securities gains (losses)                              |   |   | (102      | )      |   |   | 4,570     |   |   |   | (937      | )      |   |   | (25 | ) |   |   | (211 | ) |   |   | -102.2 | % |
| Net income (loss)                                      |   |   | (295,094  | )      |   |   | (89,737   | )      |   |   | 73,938    |   |   |   | 68,910 |   |   |   | 51,584 |   |   |   | 228.8 | % |
| Basic earnings (loss) per share                        |   | $      | (62.61    | )      |   | $      | (19.10    | )      |   | $      | 16.33     |   |   | $ | 15.31 |   |   | $ | 12.14 |   |   |   | 227.8 | % |
| Diluted earnings (loss) per share                      |   | $      | (62.61    | )      |   | $      | (19.10    | )      |   | $      | 16.21     |   |   | $ | 15.15 |   |   | $ | 12.07 |   |   |   | 227.8 | % |
| Cash dividends declared                                |   |   |      |   |   |   |      |   |   |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| per common share                                       |   | $      | -         |   |   | $      | 4.75      |   |   | $      | 6.50      |   |   | $ | 5.00 |   |   | $ | 4.00 |   |   |   | -100.0 | % |
| Dividend payout ratio                                  |   |   | 0.0       | %      |   |   | -25.1     | %      |   |   | 40.1      | %      |   |   | 33.0 | % |   |   | 33.1 | % |   |   | -100.0 | % |
| Return on Average                                      |   |   |      |   |   |   |      |   |   |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Assets                                                 |   |   | -6.51     | %      |   |   | -2.18     | %      |   |   | 2.13      | %      |   |   | 2.27 | % |   |   | 2.09 | % |   |   | 198.6 | % |
| Equity                                                 |   |   | -101.36   | %      |   |   | -19.42    | %      |   |   | 18.76     | %      |   |   | 18.91 | % |   |   | 18.75 | % |   |   | 421.9 | % |
| Avg. equity/avg. assets                                |   |   | 6.42      | %      |   |   | 11.25     | %      |   |   | 11.36     | %      |   |   | 11.98 | % |   |   | 11.16 | % |   |   | -42.9 | % |
| Efficiency Ratio                                       |   |   | 98        | %      |   |   | 45        | %      |   |   | 37        | %      |   |   | 38 | % |   |   | 41 | % |   |   | 117.8 | % |

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ITEM 7.                      MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTSOF OPERATIONS

| ·   | Allowance for loan losses of $151.3 million, or 5.27%, of total loans outstanding at December 31, 2009, compared to $112.6 million, or 2.98%, at December 31, 2008, and $54.0 million, or 1.49%, at December 31, 2007. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Net charge-offs of $337.3 million for 2009, compared to $63.0 million and $920 thousand for 2008 and 2007, respectively. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------|

| ·   | Nonperforming assets totaling $874.9 million, or 24.34% of total assets at December 31, 2009, compared to $446.0 million, or 10.87% of total assets at December 31, 2008. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Successfully reduced our concentrations in real estate construction and land development loans, including undisbursed loan commitments as defined by the FDIC, by $979.7 million, or 48.7%, from December 31, 2008 to December 31, 2009. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Continued to closely monitor and manage our liquidity position and at December 31, 2009, total liquidity, as a percentage of assets, was at its highest level for 2009, totaling 13.5%. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Successfully reduced other targeted noninterest expenses.  Management set a goal of reducing targeted noninterest expense categories by $8.5 million for 2009.  The cost containment efforts resulted in a reduction of targeted expense categories by $10.2 million in 2009.  Those categories included salaries and benefits, consulting,marketing, advertising, director fees and expenses related to furniture and equipment. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|                       |   | 2009           |   |   | 2008       |   |   | 2007           |   |
|----------------------------|--------|----------------|--------|--------|------------|--------|--------|----------------|--------|
|                       |   | Amortized Cost |   |   | Fair Value |   |   | Amortized Cost |   |   | Fair Value |   |   | Amortized Cost |   |   | Fair Value |   |
| AFS Securities             |   |           |   |   |       |   |   |           |   |   |   |   |   |   |   |   |   |   |
| Equities                   |   | $              | 1,818  |   |       | $      | 2,099  |           |   | $ | 6,107 |   |   | $ | 1,930 |   |   | $ | 27,606 |   |   | $ | 34,575 |   |
| U.S. Treasuries            |   |           | 250    |   |       |   | 311    |           |   |   | 6,304 |   |   |   | 6,457 |   |   |   | 6,223 |   |   |   | 6,311 |   |
| U.S. Agencies              |   |           | 39,786 |   |       |   | 39,877 |           |   |   | 51,594 |   |   |   | 52,055 |   |   |   | 71,385 |   |   |   | 72,167 |   |
| Corporate securities       |   |           | 7,841  |   |       |   | 6,882  |           |   |   | 4,528 |   |   |   | 4,439 |   |   |   | 15,537 |   |   |   | 15,180 |   |
| Mortgage-backed securities |   |           | 32,653 |   |       |   | 33,336 |           |   |   | 22,791 |   |   |   | 22,791 |   |   |   | - |   |   |   | - |   |
| Municipal securities       |   |           | 2,500  |   |       |   | 2,587  |           |   |   | 2,855 |   |   |   | 2,934 |   |   |   | 3,134 |   |   |   | 3,145 |   |
|                       |   |           | 84,848 |   |       |   | 85,092 |           |   |   | 94,179 |   |   |   | 90,606 |   |   |   | 123,885 |   |   |   | 131,378 |   |
|                       |   |           |   |   |       |   |   |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| HTM Securities             |   |           |   |   |       |   |   |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Corporate securities       |   |           | 1,524  |   |       |   | 1,435  |           |   |   | 1,524 |   |   |   | 1,753 |   |   |   | 1,525 |   |   |   | 1,524 |   |
| Municipal securities       |   |           | 578    |   |       |   | 589    |           |   |   | 1,561 |   |   |   | 1,587 |   |   |   | 2,218 |   |   |   | 2,242 |   |
|                       |   |           | 2,102  |   |       |   | 2,024  |           |   |   | 3,085 |   |   |   | 3,340 |   |   |   | 3,743 |   |   |   | 3,766 |   |
| Total                      |   | $              | 86,950 |   |       | $      | 87,116 |           |   | $ | 97,264 |   |   | $ | 93,946 |   |   | $ | 127,628 |   |   | $ | 135,144 |   |

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Table of Contents

|                       |   |    |   |   | After 1 Yr |   |   | After 5 Yrs |   |   |      |   |   | Total & |   |
|----------------------------|--------|---------|--------|--------|------------|--------|--------|-------------|--------|--------|-----------|--------|--------|-------------|--------|
|                       |   | Within  |   |   | But Within |   |   | But Within  |   |   | After     |   |   | Weighted    |   |
|                       |   | 1 Year/ |   |   | 5 Years/   |   |   | 10 Years/   |   |   | 10 Years/ |   |   | Average     |   |
|                       |   | Yield   |   |   | Yield      |   |   | Yield       |   |   | Yield     |   |   | Yield       |   |
| Equities                   |   | $       | -      |   |       | $      | -      |        |   | $      | -         |   |   | $           | 1,818  |   |   | $ | 1,818 |   |
|                       |   |    | -      |   |       |   | -      |        |   |   | -         |   |   |        | 0.42   | % |   |   | 0.42 | % |
|                       |   |    |   |   |       |   |   |        |   |   |      |   |   |        |   |   |   |   |   |   |
| U.S. Treasury              |   |    | -      |   |       |   | -      |        |   |   | 250       |   |   |        | -      |   |   |   | 250 |   |
|                       |   |    | -      |   |       |   | -      |        |   |   | 7.20      | %      |   |        | -      |   |   |   | 7.20 | % |
|                       |   |    |   |   |       |   |   |        |   |   |      |   |   |        |   |   |   |   |   |   |
| U.S. Agencies              |   |    | 1,508  |   |       |   | 38,278 |        |   |   | -         |   |   |        | -      |   |   |   | 39,786 |   |
|                       |   |    | 3.86   | %      |       |   | 1.38   | %           |   |   | -         |   |   |        | -      |   |   |   | 1.48 | % |
|                       |   |    |   |   |       |   |   |        |   |   |      |   |   |        |   |   |   |   |   |   |
| Corporate securities       |   |    | 5,325  |   |       |   | -      |        |   |   | -         |   |   |        | 4,040  |   |   |   | 9,365 |   |
|                       |   |    | 0.38   | %      |       |   | -      |        |   |   | -         |   |   |        | 10.13  | % |   |   | 4.59 | % |
|                       |   |    |   |   |       |   |   |        |   |   |      |   |   |        |   |   |   |   |   |   |
| Mortgage-backed securities |   |    | -      |   |       |   | -      |        |   |   | -         |   |   |        | 32,653 |   |   |   | 32,653 |   |
|                       |   |    | -      |   |       |   | -      |        |   |   | -         |   |   |        | 4.16   | % |   |   | 4.16 | % |
|                       |   |    |   |   |       |   |   |        |   |   |      |   |   |        |   |   |   |   |   |   |
| Municipal securities       |   |    | 753    |   |       |   | -      |        |   |   | 1,354     |   |   |        | 971    |   |   |   | 3,078 |   |
|                       |   |    | 5.32   | %      |       |   | -      |        |   |   | 5.15      | %      |   |        | 7.24   | % |   |   | 5.85 | % |
|                       |   | $       | 7,586  |   |       | $      | 38,278 |        |   | $      | 1,604     |   |   | $           | 39,482 |   |   | $ | 86,950 |   |
|                       |   |    | 1.56   | %      |       |   | 1.38   | %           |   |   | 5.47      | %      |   |        | 4.26   | % |   |   | 2.85 | % |

|                        |   | 2009   |      |   | 2008   |   |      | 2007   |   |   | 2006      |   |   | 2005   |      |
|-----------------------------|--------|--------|-----------|--------|--------|--------|-----------|--------|--------|--------|-----------|--------|--------|--------|-----------|
| Commercial and industrial   |   | $      | 388,548   |   |   | $      | 457,215   |   |   | $      | 402,569   |   |   | $      | 380,939   |   |   | $ | 321,303 |   |
| Real Estate:                |   |   |      |   |   |   |      |   |   |   |      |   |   |   |      |   |   |   |   |   |
| Commercial                  |   |   | 965,266   |   |   |   | 1,044,833 |   |   |   | 1,003,916 |   |   |   | 897,714   |   |   |   | 859,251 |   |
| Construction                |   |   | 447,879   |   |   |   | 949,909   |   |   |   | 1,062,662 |   |   |   | 735,926   |   |   |   | 554,021 |   |
| Land development            |   |   | 319,320   |   |   |   | 580,453   |   |   |   | 537,410   |   |   |   | 399,950   |   |   |   | 269,662 |   |
| Completed lots              |   |   | 252,492   |   |   |   | 249,685   |   |   |   | 249,573   |   |   |   | 188,032   |   |   |   | 143,652 |   |
| Residential 1-4 family      |   |   | 423,032   |   |   |   | 424,492   |   |   |   | 282,344   |   |   |   | 235,169   |   |   |   | 188,772 |   |
| Installment and other loans |   |   | 69,740    |   |   |   | 65,468    |   |   |   | 67,421    |   |   |   | 63,050    |   |   |   | 46,852 |   |
| Total loans                 |   | $      | 2,866,277 |   |   | $      | 3,772,055 |   |   | $      | 3,605,895 |   |   | $      | 2,900,780 |   |   | $ | 2,383,513 |   |

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Table of Contents

|                        |   | Within 1 Year |      |   | 1 -5 Years |       |      | After 5 Years |          |   | Total   |   |
|-----------------------------|--------|---------------|-----------|--------|------------|------------|-----------|---------------|---------------|--------|---------|--------|
| Commercial and industrial   |   | $             | 240,476   |   |       | $          | 102,185   |          |          | $      | 45,887  |   |   | $ | 388,548 |   |
| Real Estate:                |   |          |      |   |       |       |      |          |          |   |    |   |   |   |   |   |
| Commercial                  |   |          | 115,682   |   |       |       | 558,693   |          |          |   | 290,891 |   |   |   | 965,266 |   |
| Construction                |   |          | 399,646   |   |       |       | 48,233    |          |          |   | -       |   |   |   | 447,879 |   |
| Land development            |   |          | 293,038   |   |       |       | 26,282    |          |          |   | -       |   |   |   | 319,320 |   |
| Completed lots              |   |          | 196,795   |   |       |       | 53,661    |          |          |   | 2,036   |   |   |   | 252,492 |   |
| Residential 1-4 family      |   |          | 136,187   |   |       |       | 209,410   |          |          |   | 77,435  |   |   |   | 423,032 |   |
| Installment and other loans |   |          | 18,401    |   |       |       | 14,113    |          |          |   | 37,226  |   |   |   | 69,740 |   |
| Total loans                 |   | $             | 1,400,225 |   |       | $          | 1,012,577 |          |          | $      | 453,475 |   |   | $ | 2,866,277 |   |
|                        |   |          |      |   |       |       |      |          |          |   |    |   |   |   |   |   |
|                        |   |          |      |   |       | 1 -5 Years |      |          | After 5 Years |   |    |   |   |   |
| Fixed rates                 |   |          |      |   |       | $          | 781,942   |          |          | $      | 102,894 |   |   |   |   |   |
| Variable rates              |   |          |      |   |       |       | 230,635   |          |          |   | 350,581 |   |   |   |   |   |
|                        |   |          |      |   |       | $          | 1,012,577 |          |          | $      | 453,475 |   |   |   |   |   |

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Table of Contents

|                                                           |   | 2009   |      |   | 2008   |   |
|----------------------------------------------------------------|--------|--------|-----------|--------|--------|--------|
| Total loans                                                    |   | $      | 2,869,498 |   |   | $      | 3,778,733 |   |
|                                                           |   |   |      |   |   |   |   |   |
| General reserves                                               |   | $      | 96,531    |   |   | $      | 99,671 |   |
| Specific reserves                                              |   |   | 54,818    |   |   |   | 12,885 |   |
| Total allowance for loan losses                                |   | $      | 151,349   |   |   | $      | 112,556 |   |
|                                                           |   |   |      |   |   |   |   |   |
| Nonperforming loans with specific reserves                     |   |   |      |   |   |   |   |   |
| included in the allowance for loan losses                      |   |   | 361,541   |   |   | $      | 96,238 |   |
| Nonperforming loans without specific reserves                  |   |   |      |   |   |   |   |   |
| included in the allowance for loan losses                      |   |   | 343,652   |   |   |   | 338,987 |   |
| Total nonperforming loans                                      |   | $      | 705,193   |   |   | $      | 435,225 |   |
|                                                           |   |   |      |   |   |   |   |   |
| Total charge-offs related to nonperforming loans               |   | $      | 185,306   |   |   | $      | 48,168 |   |
|                                                           |   |   |      |   |   |   |   |   |
| Nonperforming loans recorded at carrying                       |   |   |      |   |   |   |   |   |
| value to total loans                                           |   |   | 11.98     | %      |   |   | 8.97 | % |
| Nonperforming loans recorded at carrying value                 |   |   |      |   |   |   |   |   |
| to total nonperforming loans                                   |   |   | 48.73     | %      |   |   | 77.89 | % |
|                                                           |   |   |      |   |   |   |   |   |
| Coverage ratio (total allowance for loan losses divided        |   |   |      |   |   |   |   |   |
| by total nonperforming loans)                                  |   |   | 21.46     | %      |   |   | 25.86 | % |
| Coverage ratio after considering effects of charge-offs        |   |   | 37.81     | %      |   |   | 33.25 | % |
| Coverage ratio net of nonperforming loans carried at           |   |   |      |   |   |   |   |   |
| carrying value                                                 |   |   | 41.86     | %      |   |   | 116.96 | % |
| Total loans less nonperforming loans at carrying value         |   | $      | 2,525,846 |   |   | $      | 3,439,746 |   |
|                                                           |   |   |      |   |   |   |   |   |
| Total allowance for loan losses/total loans                    |   |   | 5.27      | %      |   |   | 2.98 | % |
| Total allowance for loan losses/total loans less nonperforming |   |   |      |   |   |   |   |   |
| loans at carrying value                                        |   |   | 5.99      | %      |   |   | 3.27 | % |
| Specific reserves/balance of nonperforming loans with          |   |   |      |   |   |   |   |   |
| specific reserves                                              |   |   | 15.16     | %      |   |   | 13.39 | % |

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Table of Contents

|                                          |   | 2009   |      |   | 2008   |   |      | 2007   |   |   | 2006      |   |   | 2005   |      |
|-----------------------------------------------|--------|--------|-----------|--------|--------|--------|-----------|--------|--------|--------|-----------|--------|--------|--------|-----------|
| Balance at beginning of year                  |   | $      | 114,638   |   |   | $      | 57,658    |   |   | $      | 44,195    |   |   | $      | 37,075    |   |   | $ | 32,728 |   |
|                                          |   |   |      |   |   |   |      |   |   |   |      |   |   |   |      |   |   |   |   |   |
| Provision for loan losses                     |   |   | 375,000   |   |   |   | 120,000   |   |   |   | 11,400    |   |   |   | 7,500     |   |   |   | 4,200 |   |
|                                          |   |   |      |   |   |   |      |   |   |   |      |   |   |   |      |   |   |   |   |   |
| Loans charged-off:                            |   |   |      |   |   |   |      |   |   |   |      |   |   |   |      |   |   |   |   |   |
| Commercial and industrial                     |   |   | (39,044   | )      |   |   | (3,101    | )      |   |   | (1,183    | )      |   |   | (2,283    | ) |   |   | (342 | ) |
| Real estate:                                  |   |   |      |   |   |   |      |   |   |   |      |   |   |   |      |   |   |   |   |   |
| Commercial                                    |   |   | (10,477   | )      |   |   | (1,264    | )      |   |   | -         |   |   |   | -         |   |   |   | (4 | ) |
| Construction                                  |   |   | (117,258  | )      |   |   | (31,968   | )      |   |   | (201      | )      |   |   | (855      | ) |   |   | - |   |
| Land development                              |   |   | (109,651  | )      |   |   | (12,165   | )      |   |   | -         |   |   |   | -         |   |   |   | - |   |
| Completed lots                                |   |   | (44,031   | )      |   |   | (13,839   | )      |   |   | -         |   |   |   | -         |   |   |   | - |   |
| Residential 1-4 family                        |   |   | (18,708   | )      |   |   | (846      | )      |   |   | (300      | )      |   |   | -         |   |   |   | (116 | ) |
| Installment and other                         |   |   | (2,362    | )      |   |   | (343      | )      |   |   | (222      | )      |   |   | (156      | ) |   |   | (244 | ) |
| Total charged-off loans                       |   |   | (341,531  | )      |   |   | (63,526   | )      |   |   | (1,906    | )      |   |   | (3,294    | ) |   |   | (706 | ) |
|                                          |   |   |      |   |   |   |      |   |   |   |      |   |   |   |      |   |   |   |   |   |
| Recoveries:                                   |   |   |      |   |   |   |      |   |   |   |      |   |   |   |      |   |   |   |   |   |
| Commercial and industrial                     |   |   | 715       |   |   |   | 308       |   |   |   | 845       |   |   |   | 353       |   |   |   | 623 |   |
| Real estate:                                  |   |   |      |   |   |   |      |   |   |   |      |   |   |   |      |   |   |   |   |   |
| Commercial                                    |   |   | 2         |   |   |   | -         |   |   |   | -         |   |   |   | -         |   |   |   | - |   |
| Construction                                  |   |   | 2,705     |   |   |   | 161       |   |   |   | -         |   |   |   | -         |   |   |   | 142 |   |
| Land development                              |   |   | 12        |   |   |   | -         |   |   |   | -         |   |   |   | -         |   |   |   | - |   |
| Completed lots                                |   |   | 665       |   |   |   | 9         |   |   |   | -         |   |   |   | -         |   |   |   | - |   |
| Residential 1-4 family                        |   |   | 62        |   |   |   | -         |   |   |   | -         |   |   |   | -         |   |   |   | 27 |   |
| Installment and other                         |   |   | 72        |   |   |   | 28        |   |   |   | 141       |   |   |   | 60        |   |   |   | 61 |   |
| Total recoveries                              |   |   | 4,233     |   |   |   | 506       |   |   |   | 986       |   |   |   | 413       |   |   |   | 853 |   |
|                                          |   |   |      |   |   |   |      |   |   |   |      |   |   |   |      |   |   |   |   |   |
| Net (charge-offs) recoveries                  |   |   | (337,298  | )      |   |   | (63,020   | )      |   |   | (920      | )      |   |   | (2,881    | ) |   |   | 147 |   |
| Balance before portion identified             |   |   |      |   |   |   |      |   |   |   |      |   |   |   |      |   |   |   |   |   |
|     for undisbursed loans |   |   | 152,340   |   |   |   | 114,638   |   |   |   | 54,675    |   |   |   | 41,694    |   |   |   | 37,075 |   |
| Reserve acquired in merger                    |   |   | -         |   |   |   | -         |   |   |   | 2,983     |   |   |   | 2,501     |   |   |   | - |   |
| Portion of reserve identified for             |   |   |      |   |   |   |      |   |   |   |      |   |   |   |      |   |   |   |   |   |
| undisbursed loans and                         |   |   |      |   |   |   |      |   |   |   |      |   |   |   |      |   |   |   |   |   |
| reclassified as a liability                   |   |   | (991      | )      |   |   | (2,082    | )      |   |   | (3,663    | )      |   |   | (3,546    | ) |   |   | (3,270 | ) |
| Balance at end of year                        |   | $      | 151,349   |   |   | $      | 112,556   |   |   | $      | 53,995    |   |   | $      | 40,649    |   |   | $ | 33,805 |   |
|                                          |   |   |      |   |   |   |      |   |   |   |      |   |   |   |      |   |   |   |   |   |
| Total loans at end of period (1)              |   | $      | 2,869,498 |   |   | $      | 3,778,733 |   |   | $      | 3,612,122 |   |   | $      | 2,908,000 |   |   | $ | 2,389,224 |   |
|                                          |   |   |      |   |   |   |      |   |   |   |      |   |   |   |      |   |   |   |   |   |
| Daily average loans                           |   | $      | 3,430,885 |   |   | $      | 3,774,501 |   |   | $      | 3,185,751 |   |   | $      | 2,731,257 |   |   | $ | 2,200,344 |   |
|                                          |   |   |      |   |   |   |      |   |   |   |      |   |   |   |      |   |   |   |   |   |
| Ratio of net charged-offs                     |   |   |      |   |   |   |      |   |   |   |      |   |   |   |      |   |   |   |   |   |
| (recoveries) during the period                |   |   |      |   |   |   |      |   |   |   |      |   |   |   |      |   |   |   |   |   |
| to average loans outstanding                  |   |   | 9.83      | %      |   |   | 1.67      | %      |   |   | 0.03      | %      |   |   | 0.11      | % |   |   | -0.01 | % |
| Loan loss reserve as a                        |   |   |      |   |   |   |      |   |   |   |      |   |   |   |      |   |   |   |   |   |
| percentage of total loans                     |   |   | 5.27      | %      |   |   | 2.98      | %      |   |   | 1.49      | %      |   |   | 1.40      | % |   |   | 1.41 | % |
|                                          |   |   |      |   |   |   |      |   |   |   |      |   |   |   |      |   |   |   |   |   |
| (1) Includes loans held for resale            |   |   |      |   |   |   |      |   |   |   |      |   |   |   |      |   |   |   |   |   |

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Table of Contents

|                                          |   |    |    |   | Loan     |     |   |    |   |   | Loan     |   |     |    |   |   | Loan     |   |
|-----------------------------------------------|--------|---------|---------|--------|----------|----------|--------|---------|--------|--------|----------|--------|----------|---------|--------|--------|----------|--------|
|                                          |   | 2009    |    |   | Category |     |   | 2008    |   |   | Category |   |     | 2007    |   |   | Category |   |
|                                          |   | Reserve |    |   | Percent  |     |   | Reserve |   |   | Percent  |   |     | Reserve |   |   | Percent  |   |
| Commercial and industrial                     |   | $       | 19,856  |   |     |     | 13.6   | %       |   | $      | 15,127   |   |     |    | 12.1   | %      |     | $      | 9,856 |   |   |   | 11.2 | % |
| Real estate:                                  |   |    |    |   |     |     |   |    |   |   |     |   |     |    |   |   |     |   |   |   |   |   |   |   |
| Commercial                                    |   |    | 17,557  |   |     |     | 33.7   | %       |   |   | 11,388   |   |     |    | 27.7   | %      |     |   | 12,373 |   |   |   | 27.8 | % |
| Construction                                  |   |    | 31,997  |   |     |     | 15.6   | %       |   |   | 27,636   |   |     |    | 25.2   | %      |     |   | 824 |   |   |   | 29.5 | % |
| Land development                              |   |    | 24,437  |   |     |     | 11.1   | %       |   |   | 22,701   |   |     |    | 15.4   | %      |     |   | 5,257 |   |   |   | 14.9 | % |
| Completed lots                                |   |    | 19,447  |   |     |     | 8.8    | %       |   |   | 9,054    |   |     |    | 6.6    | %      |     |   | 3,443 |   |   |   | 6.9 | % |
| Residential 1-4 family                        |   |    | 26,128  |   |     |     | 14.8   | %       |   |   | 14,056   |   |     |    | 11.3   | %      |     |   | 16,900 |   |   |   | 7.8 | % |
| Installment and other                         |   |    | 3,132   |   |     |     | 2.4    | %       |   |   | 1,071    |   |     |    | 1.7    | %      |     |   | 1,060 |   |   |   | 1.9 | % |
| Unallocated                                   |   |    | 8,795   |   |     |     |   |    |   |   | 11,523   |   |     |    |   |   |     |   | 4,282 |   |   |   |   |   |
|                                          |   |    | 151,349 |   |     |     |   |    |   |   | 112,556  |   |     |    |   |   |     |   | 53,995 |   |   |   |   |   |
| Portion of reserve identified for undisbursed |   |    |    |   |     |     |   |    |   |   |     |   |     |    |   |   |     |   |   |   |   |   |   |   |
| loans and reclassifed as a liability          |   |    | 991     |   |     |     |   |    |   |   | 2,082    |   |     |    |   |   |     |   | 3,663 |   |   |   |   |   |
|                                          |   | $       | 152,340 |   |     |     | 100.0  | %       |   | $      | 114,638  |   |     |    | 100.0  | %      |     | $      | 57,658 |   |   |   | 100.0 | % |
|                                          |   |    |    |   |     |     |   |    |   |   |     |   |     |    |   |   |     |   |   |   |   |   |   |   |
|                                          |   |    |    |   |     | Loan     |   |    |   |   |     |   | Loan     |    |   |   |     |   |   |   |   |   |
|                                          |   |    | 2006    |   |     | Category |   |    |   | 2005   |     |   | Category |    |   |   |     |   |   |   |   |   |
|                                          |   | Reserve |    |   | Percent  |     |   | Reserve |   |   | Percent  |   |     |    |   |   |     |   |   |   |
| Commercial and industrial                     |   | $       | 9,726   |   |     |     | 13.1   | %       |   | $      | 11,061   |   |     |    | 13.5   | %      |     |   |   |   |   |   |   |   |
| Real estate:                                  |   |    |    |   |     |     |   |    |   |   |     |   |     |    |   |   |     |   |   |   |   |   |   |   |
| Commercial                                    |   |    | 11,040  |   |     |     | 30.9   | %       |   |   | 12,622   |   |     |    | 36.0   | %      |     |   |   |   |   |   |   |   |
| Construction                                  |   |    | 809     |   |     |     | 25.4   | %       |   |   | 504      |   |     |    | 23.2   | %      |     |   |   |   |   |   |   |   |
| Land development                              |   |    | 4,123   |   |     |     | 13.8   | %       |   |   | 1,699    |   |     |    | 11.3   | %      |     |   |   |   |   |   |   |   |
| Completed lots                                |   |    | 1,560   |   |     |     | 6.5    | %       |   |   | 907      |   |     |    | 6.0    | %      |     |   |   |   |   |   |   |   |
| Residential 1-4 family                        |   |    | 7,168   |   |     |     | 8.1    | %       |   |   | 4,088    |   |     |    | 7.9    | %      |     |   |   |   |   |   |   |   |
| Installment and other                         |   |    | 1,012   |   |     |     | 2.2    | %       |   |   | 724      |   |     |    | 2.1    | %      |     |   |   |   |   |   |   |   |
| Unallocated                                   |   |    | 5,211   |   |     |     |   |    |   |   | 2,200    |   |     |    |   |   |     |   |   |   |   |   |   |   |
|                                          |   |    | 40,649  |   |     |     |   |    |   |   | 33,805   |   |     |    |   |   |     |   |   |   |   |   |   |   |
| Portion of reserve identified for undisbursed |   |    |    |   |     |     |   |    |   |   |     |   |     |    |   |   |     |   |   |   |   |   |   |   |
| loans and reclassified as a liability         |   |    | 3,546   |   |     |     |   |    |   |   | 3,270    |   |     |    |   |   |     |   |   |   |   |   |   |   |
|                                          |   | $       | 44,195  |   |     |     | 100.0  | %       |   | $      | 37,075   |   |     |    | 100.0  | %      |     |   |   |   |   |   |   |   |

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Table of Contents

|                                       |   | 2009   |      |   | 2008   |   |      | 2007   |   |   | 2006      |   |   | 2005   |      |
|--------------------------------------------|--------|--------|-----------|--------|--------|--------|-----------|--------|--------|--------|-----------|--------|--------|--------|-----------|
| Commercial and industrial                  |   | $      | 31,401    |   |   | $      | 12,908    |   |   | $      | 159       |   |   | $      | 574       |   |   | $ | 4,939 |   |
| Real estate:                               |   |   |      |   |   |   |      |   |   |   |      |   |   |   |      |   |   |   |   |   |
| Commercial                                 |   |   | 89,708    |   |   |   | 10,937    |   |   |   | -         |   |   |   | -         |   |   |   | - |   |
| Construction                               |   |   | 192,215   |   |   |   | 181,905   |   |   |   | 19,842    |   |   |   | 47        |   |   |   | - |   |
| Land development                           |   |   | 234,627   |   |   |   | 177,139   |   |   |   | -         |   |   |   | 7,143     |   |   |   | - |   |
| Completed lots                             |   |   | 87,632    |   |   |   | 34,005    |   |   |   | 804       |   |   |   | -         |   |   |   | - |   |
| Residential 1-4 family                     |   |   | 68,178    |   |   |   | 17,686    |   |   |   | 93        |   |   |   | 889       |   |   |   | - |   |
| Installment and other                      |   |   | 1,432     |   |   |   | 645       |   |   |   | 10        |   |   |   | -         |   |   |   | 10 |   |
| Total nonaccruing loans                    |   |   | 705,193   |   |   |   | 435,225   |   |   |   | 20,908    |   |   |   | 8,653     |   |   |   | 4,949 |   |
| Other real estate owned                    |   |   | 169,674   |   |   |   | 10,803    |   |   |   | 367       |   |   |   | -         |   |   |   | - |   |
| Total nonperforming assets                 |   | $      | 874,867   |   |   | $      | 446,028   |   |   | $      | 21,275    |   |   | $      | 8,653     |   |   | $ | 4,949 |   |
|                                       |   |   |      |   |   |   |      |   |   |   |      |   |   |   |      |   |   |   |   |   |
| Restructured loans                         |   | $      | -         |   |   | $      | -         |   |   | $      | -         |   |   | $      | -         |   |   | $ | - |   |
|                                       |   |   |      |   |   |   |      |   |   |   |      |   |   |   |      |   |   |   |   |   |
| Total loans at end of period (1)           |   | $      | 2,869,498 |   |   | $      | 3,778,733 |   |   | $      | 3,612,122 |   |   | $      | 2,908,000 |   |   | $ | 2,389,224 |   |
| Total assets at end of period              |   | $      | 3,594,984 |   |   | $      | 4,104,445 |   |   | $      | 3,995,689 |   |   | $      | 3,238,464 |   |   | $ | 2,640,275 |   |
|                                       |   |   |      |   |   |   |      |   |   |   |      |   |   |   |      |   |   |   |   |   |
| Total nonperforming loans to total loans   |   |   | 24.58     | %      |   |   | 11.52     | %      |   |   | 0.58      | %      |   |   | 0.30      | % |   |   | 0.21 | % |
| Total nonperforming assets to total assets |   |   | 24.34     | %      |   |   | 10.87     | %      |   |   | 0.53      | %      |   |   | 0.27      | % |   |   | 0.19 | % |
|                                       |   |   |      |   |   |   |      |   |   |   |      |   |   |   |      |   |   |   |   |   |
| (1) Includes loans held for resale         |   |   |      |   |   |   |      |   |   |   |      |   |   |   |      |   |   |   |   |   |

|                                |   | 2009   |   |   | 2008   |   |   | 2007   |   |   | 2006   |   |   | 2005   |   |
|-------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Additional interest income which    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| would have been recorded during the |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| period under original loan terms    |   | $      | 65,790 |   |   | $      | 18,915 |   |   | $      | 757    |   |   | $      | 761    |   |   | $ | 67 |   |
|                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest collected and included in  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| net income for the period           |   | $      | 18,100 |   |   | $      | 21,004 |   |   | $      | 1,131  |   |   | $      | 344    |   |   | $ | 327 |   |
|                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commitments for additional funds    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| related to loans above              |   | $      | -      |   |   | $      | -      |   |   | $      | -      |   |   | $      | -      |   |   | $ | - |   |

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|                     |   | 2009   |    |   | 2008   |   |
|--------------------------|--------|--------|---------|--------|--------|--------|
|                     |   | Amount |    |   | Number |   |   | Amount |   |   | Number |   |
| Beginning balance        |   | $      | 10,803  |   |   |   | 64 |   |   | $ | 367 |   |   |   | 1 |   |
| Additions to OREO        |   |   | 217,720 |   |   |   | 618 |   |   |   | 12,992 |   |   |   | 76 |   |
| Capitalized improvements |   |   | 884     |   |   |   |   |   |   |   | 623 |   |   |   |   |   |
| Valuation adjustments    |   |   | (9,702  | )      |   |   |   |   |   |   | (68 | ) |   |   |   |   |
| Disposition of OREO      |   |   | (50,031 | )      |   |   | (188 | ) |   |   | (3,111 | ) |   |   | (13 | ) |
| Ending balance           |   | $      | 169,674 |   |   |   | 494 |   |   | $ | 10,803 |   |   |   | 64 |   |

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|                                 |   | 2009   |      |   | %      |   |   | 2008 |   |   | %         |   |   | 2007   |   |   | %      |   |
|--------------------------------------|--------|--------|-----------|--------|--------|--------|--------|------|--------|--------|-----------|--------|--------|--------|--------|--------|--------|--------|
| Money market, sweep and NOW accounts |   | $      | 497,952   |   |   |   | 18.1   | %    |   | $      | 325,554   |   |   |   | 11.3   | %      |   | $      | 745,780 |   |   |   | 29.2 | % |
| Savings                              |   |   | 241,261   |   |   |   | 8.8    | %    |   |   | 365,114   |   |   |   | 12.7   | %      |   |   | 254,722 |   |   |   | 10.0 | % |
| Time deposits, $100,000 and over     |   |   | 830,508   |   |   |   | 30.3   | %    |   |   | 1,430,685 |   |   |   | 49.7   | %      |   |   | 832,373 |   |   |   | 32.6 | % |
| Other time deposits                  |   |   | 1,175,497 |   |   |   | 42.8   | %    |   |   | 758,361   |   |   |   | 26.3   | %      |   |   | 719,835 |   |   |   | 28.2 | % |
| Total interest bearing deposits      |   | $      | 2,745,218 |   |   |   | 100.0  | %    |   | $      | 2,879,714 |   |   |   | 100.0  | %      |   | $      | 2,552,710 |   |   |   | 100.0 | % |

| 3 months or less                |   | $      | 179,533 |   |
|---------------------------------|--------|--------|---------|--------|
| Over 3 months through 6 months  |   |   | 134,425 |   |
| Over 6 months through 12 months |   |   | 352,894 |   |
| Over 12 months                  |   |   | 163,656 |   |
| Total                           |   | $      | 830,508 |   |

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Table of Contents

|                      |   |   |   |   | Weighted |   |   |   |   |   | Weighted |   |   |   |   |   | Weighted |   |
|---------------------------|--------|--------|--------|--------|----------|--------|--------|--------|--------|--------|----------|--------|--------|--------|--------|--------|----------|--------|
|                      |   |   |   |   | Average  |   |   |   |   |   | Average  |   |   |   |   |   | Average  |   |
|                      |   |   |   |   | Interest |   |   |   |   |   | Interest |   |   |   |   |   | Interest |   |
|                      |   | 2009   |   |   | Rate     |   |   | 2008   |   |   | Rate     |   |   | 2007   |   |   | Rate     |   |
| Year end balance          |   | $      | 11,107 |   |     |   | 0.09   | %      |   | $      | 21,616   |   |   |   | 0.10   | %      |     | $      | 258,145 |   |   |   | 4.92 | % |
|                      |   |   |   |   |     |   |   |   |   |   |     |   |   |   |   |   |     |   |   |   |   |   |   |   |
| Highest month end balance |   |   |   |   |     |   |   |   |   |   |     |   |   |   |   |   |     |   |   |   |   |   |   |   |
| during the period         |   | $      | 25,259 |   |     |   |   |   |   | $      | 198,200  |   |   |   |   |   |     | $      | 260,554 |   |   |   |   |   |

|                                 |   | 2009   |    |   | 2008   |   |    | 2007   |   |
|--------------------------------------|--------|--------|---------|--------|--------|--------|---------|--------|--------|
| Maximum outstanding at any month end |   | $      | 429,279 |   |   | $      | 429,417 |   |   | $ | 341,704 |   |
| Average outstanding                  |   |   | 407,015 |   |   |   | 340,350 |   |   |   | 294,169 |   |
|                                 |   |   |    |   |   |   |    |   |   |   |   |   |
| Weighted average interest rates      |   |   |    |   |   |   |    |   |   |   |   |   |
| Annual                               |   |   | 3.78    | %      |   |   | 4.09    | %      |   |   | 4.15 | % |
| End of year                          |   |   | 3.91    | %      |   |   | 3.91    | %      |   |   | 4.43 | % |

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Table of Contents

|                                                                                                      |   | Year Ended December 31, |      |
|-----------------------------------------------------------------------------------------------------------|--------|-------------------------|-----------|
|                                                                                                      |   | 2009                    |      |   | 2008 |   |   | 2007 |   |
|                                                                                                      |   |                    |      |   | TE |   |   | Average |   |   |   |   |   | TE |   |   | Average |   |   |   |   |   | TE |   |   | Average |   |
|                                                                                                      |   |                    |      |   | Interest |   |   | Rates |   |   |   |   |   | Interest |   |   | Rates |   |   |   |   |   | Interest |   |   | Rates |   |
|                                                                                                      |   | Average                 |      |   | Income/ |   |   | Earned/ |   |   | Average |   |   | Income/ |   |   | Earned/ |   |   | Average |   |   | Income/ |   |   | Earned/ |   |
|                                                                                                      |   | Balance                 |      |   | Expense |   |   | Paid |   |   | Balance |   |   | Expense |   |   | Paid |   |   | Balance |   |   | Expense |   |   | Paid |   |
| Interest Earning Assets                                                                                   |   |                    |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Taxable investments                                                                                       |   | $                       | 97,301    |   |   | $ | 2,663 |   |   |   | 2.74 | % |   | $ | 139,753 |   |   | $ | 5,054 |   |   |   | 3.62 | % |   | $ | 109,798 |   |   | $ | 4,585 |   |   |   | 4.18 | % |
| Nontaxable investments (1)                                                                                |   |                    | 4,218     |   |   |   | 258 |   |   |   | 6.12 | % |   |   | 5,018 |   |   |   | 309 |   |   |   | 6.16 | % |   |   | 2,907 |   |   |   | 209 |   |   |   | 7.19 | % |
| Total                                                                                                     |   |                    | 101,519   |   |   |   | 2,921 |   |   |   | 2.88 | % |   |   | 144,771 |   |   |   | 5,363 |   |   |   | 3.70 | % |   |   | 112,705 |   |   |   | 4,794 |   |   |   | 4.25 | % |
| Federal funds sold                                                                                        |   |                    | 300,617   |   |   |   | 766 |   |   |   | 0.25 | % |   |   | 29,197 |   |   |   | 457 |   |   |   | 1.57 | % |   |   | 18,405 |   |   |   | 958 |   |   |   | 5.21 | % |
| Loans (1) (2)                                                                                             |   |                    |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Installment                                                                                               |   |                    | 69,851    |   |   |   | 5,004 |   |   |   | 7.16 | % |   |   | 68,562 |   |   |   | 5,813 |   |   |   | 8.48 | % |   |   | 62,841 |   |   |   | 6,083 |   |   |   | 9.68 | % |
| Commercial(1)                                                                                             |   |                    | 429,256   |   |   |   | 26,616 |   |   |   | 6.20 | % |   |   | 437,481 |   |   |   | 32,064 |   |   |   | 7.33 | % |   |   | 383,242 |   |   |   | 33,776 |   |   |   | 8.81 | % |
| Real estate                                                                                               |   |                    |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commercial (1)                                                                                            |   |                    | 1,008,493 |   |   |   | 71,044 |   |   |   | 7.04 | % |   |   | 1,036,171 |   |   |   | 79,573 |   |   |   | 7.68 | % |   |   | 919,028 |   |   |   | 72,313 |   |   |   | 7.87 | % |
| Construction                                                                                              |   |                    | 738,100   |   |   |   | 25,652 |   |   |   | 3.48 | % |   |   | 1,056,159 |   |   |   | 73,315 |   |   |   | 6.94 | % |   |   | 890,404 |   |   |   | 91,963 |   |   |   | 10.33 | % |
| Land development                                                                                          |   |                    | 474,046   |   |   |   | 10,585 |   |   |   | 2.23 | % |   |   | 585,508 |   |   |   | 40,313 |   |   |   | 6.89 | % |   |   | 457,116 |   |   |   | 48,310 |   |   |   | 10.57 | % |
| Completed lots                                                                                            |   |                    | 275,010   |   |   |   | 10,255 |   |   |   | 3.73 | % |   |   | 244,575 |   |   |   | 17,400 |   |   |   | 7.11 | % |   |   | 209,916 |   |   |   | 20,784 |   |   |   | 9.90 | % |
| Residential 1-4 family                                                                                    |   |                    | 436,129   |   |   |   | 26,014 |   |   |   | 5.96 | % |   |   | 346,045 |   |   |   | 26,238 |   |   |   | 7.58 | % |   |   | 263,204 |   |   |   | 21,965 |   |   |   | 8.35 | % |
| Total loans                                                                                               |   |                    | 3,430,885 |   |   |   | 175,170 |   |   |   | 5.11 | % |   |   | 3,774,501 |   |   |   | 274,716 |   |   |   | 7.28 | % |   |   | 3,185,751 |   |   |   | 295,194 |   |   |   | 9.27 | % |
| Total earning assets/total                                                                                |   |                    |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|      interest income                                                             |   |                    | 3,833,021 |   |   |   | 178,857 |   |   |   | 4.67 | % |   |   | 3,948,469 |   |   |   | 280,536 |   |   |   | 7.10 | % |   |   | 3,316,861 |   |   |   | 300,946 |   |   |   | 9.07 | % |
| Reserve for loan losses                                                                                   |   |                    | (120,733  | ) |   |   |   |   |   |   |   |   |   |   | (82,529 | ) |   |   |   |   |   |   |   |   |   |   | (43,972 | ) |   |   |   |   |   |   |   |   |
| Cash and due from banks                                                                                   |   |                    | 44,680    |   |   |   |   |   |   |   |   |   |   |   | 50,410 |   |   |   |   |   |   |   |   |   |   |   | 68,285 |   |   |   |   |   |   |   |   |   |
| Other assets                                                                                              |   |                    | 218,946   |   |   |   |   |   |   |   |   |   |   |   | 191,221 |   |   |   |   |   |   |   |   |   |   |   | 129,390 |   |   |   |   |   |   |   |   |   |
| TOTAL ASSETS                                                                                              |   | $                       | 3,975,914 |   |   |   |   |   |   |   |   |   |   | $ | 4,107,571 |   |   |   |   |   |   |   |   |   |   | $ | 3,470,564 |   |   |   |   |   |   |   |   |   |
| Interest Bearing Liabilities                                                                              |   |                    |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Money Market, Sweep &                                                                                 |   |                    |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|      NOW accounts                                                                |   | $                       | 396,287   |   |   | $ | 2,753 |   |   |   | 0.69 | % |   | $ | 586,943 |   |   | $ | 8,950 |   |   |   | 1.52 | % |   | $ | 716,777 |   |   | $ | 23,990 |   |   |   | 3.35 | % |
| Savings accounts                                                                                          |   |                    | 298,370   |   |   |   | 3,293 |   |   |   | 1.10 | % |   |   | 349,318 |   |   |   | 7,405 |   |   |   | 2.12 | % |   |   | 268,017 |   |   |   | 6,207 |   |   |   | 2.32 | % |
| Other time deposits                                                                                       |   |                    | 2,177,546 |   |   |   | 71,615 |   |   |   | 3.29 | % |   |   | 1,894,455 |   |   |   | 79,736 |   |   |   | 4.21 | % |   |   | 1,325,777 |   |   |   | 66,883 |   |   |   | 5.04 | % |
| Total interest bearing                                                                                    |   |                    |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|      deposits                                                                    |   |                    | 2,872,203 |   |   |   | 77,661 |   |   |   | 2.70 | % |   |   | 2,830,716 |   |   |   | 96,091 |   |   |   | 3.39 | % |   |   | 2,310,571 |   |   |   | 97,080 |   |   |   | 4.20 | % |
| Short-term borrowings                                                                                     |   |                    | 16,226    |   |   |   | 15 |   |   |   | 0.09 | % |   |   | 73,460 |   |   |   | 1,562 |   |   |   | 2.13 | % |   |   | 42,542 |   |   |   | 2,212 |   |   |   | 5.20 | % |
| FHLB borrowings                                                                                           |   |                    | 407,015   |   |   |   | 15,555 |   |   |   | 3.82 | % |   |   | 338,268 |   |   |   | 14,244 |   |   |   | 4.21 | % |   |   | 294,169 |   |   |   | 13,402 |   |   |   | 4.56 | % |
| Subordinated debt                                                                                         |   |                    | 5,156     |   |   |   | 231 |   |   |   | 4.48 | % |   |   | 5,156 |   |   |   | 288 |   |   |   | 5.59 | % |   |   | 5,156 |   |   |   | 347 |   |   |   | 6.73 | % |
| Total interest bearing                                                                                    |   |                    |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|      liabilities/total                                                           |   |                    |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|      interest expense                                                            |   |                    | 3,300,600 |   |   |   | 93,462 |   |   |   | 2.83 | % |   |   | 3,247,600 |   |   |   | 112,185 |   |   |   | 3.45 | % |   |   | 2,652,438 |   |   |   | 113,041 |   |   |   | 4.26 | % |
| Noninterest bearing                                                                                       |   |                    |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|      deposits                                                                    |   |                    | 397,533   |   |   |   |   |   |   |   |   |   |   |   | 379,766 |   |   |   |   |   |   |   |   |   |   |   | 396,293 |   |   |   |   |   |   |   |   |   |
| Other liabilities                                                                                         |   |                    | 22,424    |   |   |   |   |   |   |   |   |   |   |   | 18,224 |   |   |   |   |   |   |   |   |   |   |   | 27,657 |   |   |   |   |   |   |   |   |   |
| Shareholders' equity                                                                                      |   |                    | 255,357   |   |   |   |   |   |   |   |   |   |   |   | 461,981 |   |   |   |   |   |   |   |   |   |   |   | 394,176 |   |   |   |   |   |   |   |   |   |
| TOTAL LIABILITIES                                                                                         |   |                    |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|      AND CAPITAL                                                                 |   | $                       | 3,975,914 |   |   |   |   |   |   |   |   |   |   | $ | 4,107,571 |   |   |   |   |   |   |   |   |   |   | $ | 3,470,564 |   |   |   |   |   |   |   |   |   |
| NET INTEREST INCOME                                                                                       |   |                    |      |   |   | $ | 85,395 |   |   |   |   |   |   |   |   |   |   | $ | 168,351 |   |   |   |   |   |   |   |   |   |   | $ | 187,905 |   |   |   |   |   |
| NET YIELD ON INTEREST                                                                                     |   |                    |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|      EARNING ASSETS                                                              |   |                    |      |   |   |   |   |   |   |   | 2.23 | % |   |   |   |   |   |   |   |   |   |   | 4.26 | % |   |   |   |   |   |   |   |   |   |   | 5.67 | % |
| (1) Includes amounts to convert nontaxable amounts to a fully taxable equivalent basis at a 35% tax rate. |   |                    |      |   |   |   |   |   |   |   |   |   |   |
| (2) Includes nonaccruing loans.                                                                           |   |                    |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

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|                            |   | Year ended December 31, |    |
|---------------------------------|--------|-------------------------|---------|
|                            |   | 2009 versus 2008        |    |   | 2008 versus 2007 |   |
|                            |   | Increase (Decrease) Due |    |   | Increase (Decrease) Due |   |
|                            |   | to Change in            |    |   | to Change in |   |
|                            |   |                    |    |   |   |   |   | Total |   |   |   |   |   |   |   |   | Total |   |
|                            |   | Average                 |    |   | Average |   |   | Increase |   |   | Average |   |   | Average |   |   | Increase |   |
|                            |   | Volume                  |    |   | Rate |   |   | (Decrease) |   |   | Volume |   |   | Rate |   |   | (Decrease) |   |
| INTEREST INCOME                 |   |                    |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Taxable investments             |   | $                       | (1,535  | ) |   | $ | (856 | ) |   | $ | (2,391 | ) |   | $ | 1,263 |   |   | $ | (794 | ) |   | $ | 469 |   |
| Nontaxable investments          |   |                    | (49     | ) |   |   | (2 | ) |   |   | (51 | ) |   |   | 152 |   |   |   | (52 | ) |   |   | 100 |   |
| Total                           |   |                    | (1,584  | ) |   |   | (858 | ) |   |   | (2,442 | ) |   |   | 1,415 |   |   |   | (846 | ) |   |   | 569 |   |
|                            |   |                    |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Federal funds sold              |   |                    | 4,248   |   |   |   | (3,939 | ) |   |   | 309 |   |   |   | 562 |   |   |   | (1,063 | ) |   |   | (501 | ) |
|                            |   |                    |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loans                           |   |                    |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Installment                     |   |                    | 109     |   |   |   | (918 | ) |   |   | (809 | ) |   |   | 554 |   |   |   | (824 | ) |   |   | (270 | ) |
| Commercial                      |   |                    | (603    | ) |   |   | (4,845 | ) |   |   | (5,448 | ) |   |   | 4,780 |   |   |   | (6,492 | ) |   |   | (1,712 | ) |
| Real estate                     |   |                    |    |   |   |   |   |   |   |   | - |   |   |   |   |   |   |   |   |   |   |   | - |   |
| Commercial                      |   |                    | (2,126  | ) |   |   | (6,428 | ) |   |   | (8,554 | ) |   |   | 9,217 |   |   |   | (1,957 | ) |   |   | 7,260 |   |
| Construction                    |   |                    | (22,079 | ) |   |   | (25,544 | ) |   |   | (47,623 | ) |   |   | 17,120 |   |   |   | (35,768 | ) |   |   | (18,648 | ) |
| Land development                |   |                    | (7,674  | ) |   |   | (22,056 | ) |   |   | (29,730 | ) |   |   | 13,569 |   |   |   | (21,566 | ) |   |   | (7,997 | ) |
| Completed lots                  |   |                    | 2,165   |   |   |   | (9,314 | ) |   |   | (7,149 | ) |   |   | 3,432 |   |   |   | (6,816 | ) |   |   | (3,384 | ) |
| Residential 1-4 family          |   |                    | 6,830   |   |   |   | (7,063 | ) |   |   | (233 | ) |   |   | 6,913 |   |   |   | (2,640 | ) |   |   | 4,273 |   |
| Total loans                     |   |                    | (23,378 | ) |   |   | (76,168 | ) |   |   | (99,546 | ) |   |   | 55,585 |   |   |   | (76,063 | ) |   |   | (20,478 | ) |
|                            |   |                    |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| TOTAL INTEREST INCOME           |   |                    | (20,714 | ) |   |   | (80,965 | ) |   |   | (101,679 | ) |   |   | 57,562 |   |   |   | (77,972 | ) |   |   | (20,410 | ) |
|                            |   |                    |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| INTEREST EXPENSE                |   |                    |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Money Market, Sweep &       |   |                    |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| NOW accounts                    |   |                    | (2,907  | ) |   |   | (3,290 | ) |   |   | (6,197 | ) |   |   | (4,345 | ) |   |   | (10,695 | ) |   |   | (15,040 | ) |
| Savings accounts                |   |                    | (1,080  | ) |   |   | (3,032 | ) |   |   | (4,112 | ) |   |   | 1,883 |   |   |   | (685 | ) |   |   | 1,198 |   |
| Other time deposits             |   |                    | 11,915  |   |   |   | (20,036 | ) |   |   | (8,121 | ) |   |   | 28,689 |   |   |   | (15,836 | ) |   |   | 12,853 |   |
| Total interest bearing deposits |   |                    | 7,928   |   |   |   | (26,358 | ) |   |   | (18,430 | ) |   |   | 26,227 |   |   |   | (27,216 | ) |   |   | (989 | ) |
|                            |   |                    |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Short-term borrowings           |   |                    | (1,217  | ) |   |   | (330 | ) |   |   | (1,547 | ) |   |   | 1,608 |   |   |   | (2,258 | ) |   |   | (650 | ) |
| FHLB borrowing                  |   |                    | 2,895   |   |   |   | (1,584 | ) |   |   | 1,311 |   |   |   | 2,009 |   |   |   | (1,167 | ) |   |   | 842 |   |
| Subordinated debt               |   |                    | -       |   |   |   | (57 | ) |   |   | (57 | ) |   |   | - |   |   |   | (59 | ) |   |   | (59 | ) |
|                            |   |                    |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| TOTAL INTEREST EXPENSE          |   |                    | 9,606   |   |   |   | (28,329 | ) |   |   | (18,723 | ) |   |   | 29,844 |   |   |   | (30,700 | ) |   |   | (856 | ) |
|                            |   |                    |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| CHANGE IN NET INTEREST INCOME   |   | $                       | (30,320 | ) |   | $ | (52,636 | ) |   | $ | (82,956 | ) |   | $ | 27,718 |   |   | $ | (47,272 | ) |   | $ | (19,554 | ) |

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|                                     |   |   |   |   |   |   |   |   |   |   | 2009 compared to 2008 |   |   | 2008 compared to 2007 |   |
|------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|-----------------------|--------|--------|-----------------------|--------|
|                                     |   | 2009   |   |   | 2008   |   |   | 2007   |   |   | $ Change              |   |   | % Change              |   |   | $ Change |   |   | % Change |   |
| Other-than-temporary loss on securities  |   | $      | (4,289 | )      |   | $      | (6,430 | )      |   | $      | -                     |   |   | $                     | 2,141  |   |   |   | -33.3 | % |   | $ | (6,430 | ) |   | NM |   |
| Gain (loss) on sale of securities        |   |   | (102   | )      |   |   | 4,570  |   |   |   | (937                  | )      |   |                  | (4,672 | ) |   |   | -102.2 | % |   |   | 5,507 |   |   |   | -587.7 | % |
| Gain on sale of secondary mortgage loans |   |   | 1,675  |   |   |   | 1,321  |   |   |   | 1,586                 |   |   |                  | 354    |   |   |   | 26.8 | % |   |   | (265 | ) |   |   | -16.7 | % |
| Gain on sale of premises and equipment   |   |   | 136    |   |   |   | 30     |   |   |   | 24                    |   |   |                  | 106    |   |   |   | 353.3 | % |   |   | 6 |   |   |   | 25.0 | % |
| Net gain (loss) on OREO                  |   |   | (7,054 | )      |   |   | 97     |   |   |   | -                     |   |   |                  | (7,151 | ) |   | NM |   |   |   | 97 |   |   | NM |   |
| Service charges on deposit accounts      |   |   | 6,154  |   |   |   | 5,421  |   |   |   | 4,721                 |   |   |                  | 733    |   |   |   | 13.5 | % |   |   | 700 |   |   |   | 14.8 | % |
| Other noninterest income                 |   |   | 8,394  |   |   |   | 9,821  |   |   |   | 7,915                 |   |   |                  | (1,427 | ) |   |   | -14.5 | % |   |   | 1,906 |   |   |   | 24.1 | % |
| Total noninterest income                 |   | $      | 4,914  |   |   | $      | 14,830 |   |   | $      | 13,309                |   |   | $                     | (9,916 | ) |   |   | -66.9 | % |   | $ | 1,521 |   |   |   | 11.4 | % |

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|                           |   |   |   |   |   |   |    |   |   |   | 2009 compared to 2008 |   |   | 2008 compared to 2007 |    |
|--------------------------------|--------|--------|--------|--------|--------|--------|---------|--------|--------|--------|-----------------------|--------|--------|-----------------------|---------|
|                           |   | 2009   |   |   | 2008   |   |    | 2007   |   |   | $ Change              |   |   | % Change              |    |   | $ Change |   |   | % Change |   |
| Salaries and employee benefits |   | $      | 46,985 |   |   | $      | 48,403  |   |   | $      | 48,297                |   |   | $                     | (1,418  | ) |   |   | -2.9 | % |   | $ | 106 |   |   |   | 0.2 | % |
| Occupancy expense              |   |   | 10,953 |   |   |   | 11,148  |   |   |   | 9,956                 |   |   |                  | (195    | ) |   |   | -1.7 | % |   |   | 1,192 |   |   |   | 12.0 | % |
| State business taxes           |   |   | 1,068  |   |   |   | 2,013   |   |   |   | 2,066                 |   |   |                  | (945    | ) |   |   | -46.9 | % |   |   | (53 | ) |   |   | -2.6 | % |
| FHLB prepayment penalty        |   |   | -      |   |   |   | -       |   |   |   | 1,534                 |   |   |                  | -       |   |   |   | - |   |   |   | (1,534 | ) |   |   | -100.0 | % |
| FDIC insurance                 |   |   | 15,962 |   |   |   | 2,650   |   |   |   | 362                   |   |   |                  | 13,312  |   |   |   | 502.3 | % |   |   | 2,288 |   |   |   | 632.0 | % |
| Other noninterest expense      |   |   | 24,766 |   |   |   | 18,785  |   |   |   | 14,801                |   |   |                  | 5,981   |   |   |   | 31.8 | % |   |   | 3,984 |   |   |   | 26.9 | % |
|                           |   |   | 99,734 |   |   |   | 82,999  |   |   |   | 77,016                |   |   |                  | 16,735  |   |   |   | 20.2 | % |   |   | 5,983 |   |   |   | 7.8 | % |
| Goodwill impairment            |   |   | -      |   |   |   | 77,073  |   |   |   | -                     |   |   |                  | (77,073 | ) |   |   | -100.0 | % |   |   | 77,073 |   |   | NM |   |
| Total noninterest expense      |   | $      | 99,734 |   |   | $      | 160,072 |   |   | $      | 77,016                |   |   | $                     | (60,338 | ) |   |   | -37.7 | % |   | $ | 83,056 |   |   |   | 107.8 | % |

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|                                      |   | Frontier Financial Corporation |   |   | Frontier Bank |   |   | Well Capitalized Minimum |   |   | Adequately Capitalized Minimum |   |
|-------------------------------------------|--------|--------------------------------|--------|--------|---------------|--------|--------|--------------------------|--------|--------|--------------------------------|--------|
| Total capital to risk-weighted assets     |   |                           | 3.58   | %      |          |   | 3.38   | %                        |   |   | 10.00                          | %      |   |   | 8.00 | % |
| Tier 1 capital to risk-weighted assets    |   |                           | 2.29   | %      |          |   | 2.09   | %                        |   |   | 6.00                           | %      |   |   | 4.00 | % |
| Tier 1 leverage capital to average assets |   |                           | 1.80   | %      |          |   | 1.65   | %                        |   |   | 5.00                           | %      |   |   | 4.00 | % |

|                     |   | Payments due per period |      |   |      |   |
|--------------------------|--------|-------------------------|-----------|--------|-----------|--------|
|                     |   | Less Than               |      |   |      |   |   |   |   |   |   |   |   |   |   |
|                     |   | One Year                |      |   | 1-3 Years |   |   | 3-5 Years |   |   | Thereafter |   |   | Total |   |
| Time deposits            |   | $                       | 1,564,745 |   |      | $      | 389,244 |   |   | $ | 50,683 |   |   | $ | 1,333 |   |   | $ | 2,006,005 |   |
| FHLB borrowings          |   |                    | 65,137    |   |      |   | 115,342 |   |   |   | 100,000 |   |   |   | 95,000 |   |   |   | 375,479 |   |
| Junior subordinated debt |   |                    | -         |   |      |   | - |   |   |   | - |   |   |   | 5,156 |   |   |   | 5,156 |   |
| Operating leases         |   |                    | 1,692     |   |      |   | 2,430 |   |   |   | 1,541 |   |   |   | 879 |   |   |   | 6,542 |   |
| Total                    |   | $                       | 1,631,574 |   |      | $      | 507,016 |   |   | $ | 152,224 |   |   | $ | 102,368 |   |   | $ | 2,393,182 |   |

|                                     |   | Amount |    |
|------------------------------------------|--------|--------|---------|
| Commitments to extend credit             |   | $      | 225,882 |   |
| Credit card arrangements                 |   |   | 18,903  |   |
| Standby and commercial letters of credit |   |   | 19,591  |   |
|                                     |   | $      | 264,376 |   |

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ITEM 7A.                      QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

|                |   | 2010 Estimated Change |   |   | 2009 Estimated Change |   |   | 2008 Estimated Change |   |
|---------------------|--------|-----------------------|--------|--------|-----------------------|--------|--------|-----------------------|--------|
| Rate shock          |   |                  | (0.25  | %)     |                  |   | 2.0    | %                     |   |   | (1.0 | %) |   |   | 2.0 | % |   |   | (1.0 | %) |   |   | 2.0 | % |
| Net interest income |   | $                     | 961    |   |                  | $      | (8,343 | )                     |   | NA |   |   | $ | 488 |   |   | $ | (974 | ) |   | $ | 4,837 |   |
| Net income          |   |                  | (634   | )      |                  |   | (5,506 | )                     |   | NA |   |   |   | 303 |   |   |   | (643 | ) |   |   | 3,192 |   |

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|                                                                    |   | Expected Maturity Date |      |   | Fair   |   |
|-------------------------------------------------------------------------|--------|------------------------|-----------|--------|--------|--------|
|                                                                    |   | 2010                   |      |   | 2011   |   |   | 2012 |   |   | 2013 |   |   | 2014 |   |   | Thereafter |   |   | Total |   |   | Value |   |
| Financial Assets                                                        |   |                   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash and due from banks                                                 |   |                   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Noninterest bearing                                                     |   | $                      | 93,761    |   |   | $      | - |   |   | $ | - |   |   | $ | - |   |   | $ | - |   |   | $ | - |   |   | $ | 93,761 |   |   | $ | 93,761 |   |
| Fed Funds Sold                                                          |   |                   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Variable Rate                                                           |   |                   | 333,819   |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 333,819 |   |   |   | 333,819 |   |
| Weighted average interest rate                                          |   |                   | 0.25      | %      |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 0.25 | % |   |   |   |   |
| Securities available for sale                                           |   |                   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Fixed Rate                                                              |   |                   | 7,008     |   |   |   | 20,253 |   |   |   | - |   |   |   | - |   |   |   | 18,025 |   |   |   | 39,562 |   |   |   | 84,848 |   |   |   | 85,092 |   |
| Weighted average interest rate (1)                                      |   |                   | 1.27      | %      |   |   | 0.42 | % |   |   | - |   |   |   | - |   |   |   | 2.45 | % |   |   | 4.11 | % |   |   | 2.72 | % |   |   |   |   |
| Securities held to maturity                                             |   |                   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Fixed Rate                                                              |   |                   | 578       |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 1,524 |   |   |   | 2,102 |   |   |   | 2,024 |   |
| Weighted average interest rate (1)                                      |   |                   | 5.06      | %      |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 9.62 | % |   |   | 8.36 | % |   |   |   |   |
| Loans Receivable, net                                                   |   |                   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Fixed Rate                                                              |   |                   | 405,427   |   |   |   | 187,731 |   |   |   | 175,175 |   |   |   | 287,813 |   |   |   | 131,223 |   |   |   | 102,894 |   |   |   | 1,290,263 |   |   |   | 983,647 |   |
| Weighted average interest rate (2)                                      |   |                   | 8.45      | %      |   |   | 7.82 | % |   |   | 7.61 | % |   |   | 6.74 | % |   |   | 6.16 | % |   |   | 6.57 | % |   |   | 7.50 | % |   |   |   |   |
| Variable Rate                                                           |   |                   | 994,798   |   |   |   | 24,852 |   |   |   | 50,679 |   |   |   | 86,714 |   |   |   | 68,390 |   |   |   | 350,581 |   |   |   | 1,576,014 |   |   |   | 1,576,014 |   |
| Weighted average interest rate (2)                                      |   |                   | 7.60      | %      |   |   | 5.32 | % |   |   | 7.67 | % |   |   | 6.90 | % |   |   | 6.24 | % |   |   | 6.63 | % |   |   | 7.25 | % |   |   |   |   |
|                                                                    |   |                   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Financial Liabilities                                                   |   |                   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Noninterest bearing deposits                                            |   | $                      | 22,635    |   |   | $      | 21,277 |   |   | $ | 20,001 |   |   | $ | 18,801 |   |   | $ | 17,673 |   |   | $ | 276,871 |   |   | $ | 377,258 |   |   | $ | 377,258 |   |
| NOW, Sweep and Money Market accounts                                    |   |                   | 39,836    |   |   |   | 36,649 |   |   |   | 33,717 |   |   |   | 31,020 |   |   |   | 28,538 |   |   |   | 328,191 |   |   |   | 497,952 |   |   |   | 497,952 |   |
| Weighted average interest rate                                          |   |                   | 0.68      | %      |   |   | 0.68 | % |   |   | 0.68 | % |   |   | 0.68 | % |   |   | 0.68 | % |   |   | 0.68 | % |   |   | 0.68 | % |   |   |   |   |
| Savings accounts                                                        |   |                   | 24,126    |   |   |   | 21,713 |   |   |   | 19,542 |   |   |   | 17,588 |   |   |   | 15,829 |   |   |   | 142,462 |   |   |   | 241,261 |   |   |   | 241,261 |   |
| Weighted average interest rate                                          |   |                   | 0.88      | %      |   |   | 0.88 | % |   |   | 0.88 | % |   |   | 0.88 | % |   |   | 0.88 | % |   |   | 0.88 | % |   |   | 0.88 | % |   |   |   |   |
| Time Certificates                                                       |   |                   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Fixed Rate                                                              |   |                   | 1,564,745 |   |   |   | 291,218 |   |   |   | 98,026 |   |   |   | 23,258 |   |   |   | 27,425 |   |   |   | 1,333 |   |   |   | 2,006,005 |   |   |   | 2,030,245 |   |
| Weighted average interest rate                                          |   |                   | 2.54      | %      |   |   | 2.81 | % |   |   | 3.84 | % |   |   | 4.09 | % |   |   | 3.52 | % |   |   | 4.56 | % |   |   | 2.67 | % |   |   |   |   |
| Federal funds purchased & securities                                |   |                   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|       sold under agreements to repurchase |   |                   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Variable rate                                                           |   |                   | 11,107    |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 11,107 |   |   |   | 11,107 |   |
| Weighted average interest rate                                          |   |                   | 0.09      | %      |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 0.09 | % |   |   |   |   |
| Subordinated debt                                                       |   |                   | -         |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 5,156 |   |   |   | 5,156 |   |   |   | 2,191 |   |
| Weighted average interest rate                                          |   |                   | -         |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 4.13 | % |   |   | 4.13 | % |   |   |   |   |
| FHLB advances                                                           |   |                   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Fixed Rate                                                              |   |                   | 65,137    |   |   |   | 15,000 |   |   |   | 100,342 |   |   |   | 100,000 |   |   |   | - |   |   |   | 95,000 |   |   |   | 375,479 |   |   |   | 386,976 |   |
| Weighted average interest rate                                          |   |                   | 3.95      | %      |   |   | 2.13 | % |   |   | 4.55 | % |   |   | 3.04 | % |   |   | - |   |   |   | 4.42 | % |   |   | 3.91 | % |   |   |   |   |
|                                                                    |   |                   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (1) Represents tax equivalent yield                                     |   |                   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (2) Represents weighted note rates exclusive of loan fees               |   |                   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

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Table of Contents

|                                                                 |   | 2010   |      |   | 2011   |   |     | 2012   |   |   | 2013    |   |   | 2014   |    |   | Thereafter |   |    | Total  |   |
|----------------------------------------------------------------------|--------|--------|-----------|--------|--------|--------|----------|--------|--------|--------|---------|--------|--------|--------|---------|--------|------------|--------|---------|--------|--------|
| Assets                                                               |   |   |      |   |   |   |     |   |   |   |    |   |   |   |    |   |       |   |    |   |   |
| Loans (1)(2)                                                         |   | $      | 1,638,912 |   |   | $      | 249,094  |   |   | $      | 272,760 |   |   | $      | 448,204 |   |       | $      | 178,433 |   |   | $ | 78,874 |   |   | $ | 2,866,277 |   |
| Yield                                                                |   |   | 7.93      | %      |   |   | 7.07     | %      |   |   | 7.19    | %      |   |   | 6.53    | %      |       |   | 5.88    | %      |   |   | 4.78 | % |   |   | 7.35 | % |
| Investments (2)(3)                                                   |   |   | 8,934     |   |   |   | 40,526   |   |   |   | 12,380  |   |   |   | 18,024  |   |       |   | 1,604   |   |   |   | 5,482 |   |   |   | 86,950 |   |
| Yield                                                                |   |   | 1.53      | %      |   |   | 2.22     | %      |   |   | 4.38    | %      |   |   | 2.45    | %      |       |   | 5.47    | %      |   |   | 9.22 | % |   |   | 2.85 | % |
| Fed funds sold                                                       |   |   | 333,819   |   |   |   | -        |   |   |   | -       |   |   |   | -       |   |       |   | -       |   |   |   | - |   |   |   | 333,819 |   |
| Yield                                                                |   |   | 0.25      | %      |   |   | -        |   |   |   | -       |   |   |   | -       |   |       |   | -       |   |   |   | - |   |   |   | 0.25 | % |
| Total earning assets                                                 |   | $      | 1,981,665 |   |   | $      | 289,620  |   |   | $      | 285,140 |   |   | $      | 466,228 |   |       | $      | 180,037 |   |   | $ | 84,356 |   |   | $ | 3,287,046 |   |
| Yield                                                                |   |   | 6.60      | %      |   |   | 6.39     | %      |   |   | 7.07    | %      |   |   | 6.37    | %      |       |   | 5.88    | %      |   |   | 5.07 | % |   |   | 6.51 | % |
|                                                                 |   |   |      |   |   |   |     |   |   |   |    |   |   |   |    |   |       |   |    |   |   |   |   |   |   |   |   |   |
| Liabilities                                                          |   |   |      |   |   |   |     |   |   |   |    |   |   |   |    |   |       |   |    |   |   |   |   |   |   |   |   |   |
| NOW, money market,                                                   |   |   |      |   |   |   |     |   |   |   |    |   |   |   |    |   |       |   |    |   |   |   |   |   |   |   |   |   |
| and sweep accounts                                                   |   | $      | 68,886    |   |   | $      | 21,661   |   |   | $      | 21,661  |   |   | $      | 21,661  |   |       | $      | 21,661  |   |   | $ | 342,422 |   |   | $ | 497,952 |   |
| Cost                                                                 |   |   | 0.68      | %      |   |   | 0.68     | %      |   |   | 0.68    | %      |   |   | 0.68    | %      |       |   | 0.68    | %      |   |   | 0.68 | % |   |   | 0.68 | % |
| Savings                                                              |   |   | 71,509    |   |   |   | 71,509   |   |   |   | 71,509  |   |   |   | 26,734  |   |       |   | -       |   |   |   | - |   |   |   | 241,261 |   |
| Cost                                                                 |   |   | 0.88      | %      |   |   | 0.88     | %      |   |   | 0.88    | %      |   |   | 0.88    | %      |       |   |    |   |   |   |   |   |   |   | 0.88 | % |
| Time deposits                                                        |   |   | 1,564,745 |   |   |   | 291,218  |   |   |   | 98,026  |   |   |   | 23,258  |   |       |   | 27,425  |   |   |   | 1,333 |   |   |   | 2,006,005 |   |
| Cost                                                                 |   |   | 2.54      | %      |   |   | 2.81     | %      |   |   | 3.84    | %      |   |   | 4.09    | %      |       |   | 3.52    | %      |   |   | 4.56 | % |   |   | 2.67 | % |
| Fed funds purchased                                                  |   |   |      |   |   |   |     |   |   |   |    |   |   |   |    |   |       |   |    |   |   |   |   |   |   |   |   |   |
| and repurchase agreements                                            |   |   | 11,107    |   |   |   | -        |   |   |   | -       |   |   |   | -       |   |       |   | -       |   |   |   | - |   |   |   | 11,107 |   |
| Cost                                                                 |   |   | 0.09      | %      |   |   |     |   |   |   |    |   |   |   |    |   |       |   |    |   |   |   |   |   |   |   | 0.09 | % |
| Subordinated debt                                                    |   |   | -         |   |   |   | -        |   |   |   | -       |   |   |   | -       |   |       |   | -       |   |   |   | 5,156 |   |   |   | 5,156 |   |
| Cost                                                                 |   |   |      |   |   |   |     |   |   |   |    |   |   |   |    |   |       |   |    |   |   |   | 4.13 | % |   |   | 4.13 | % |
| FHLB borrowings                                                      |   |   | 65,137    |   |   |   | 15,000   |   |   |   | 100,342 |   |   |   | 100,000 |   |       |   | -       |   |   |   | 95,000 |   |   |   | 375,479 |   |
| Cost                                                                 |   |   | 3.95      | %      |   |   | 2.13     | %      |   |   | 4.55    | %      |   |   | 3.04    | %      |       |   |    |   |   |   | 1.42 | % |   |   | 3.15 | % |
| Total interest bearing liabilitites                                  |   | $      | 1,781,384 |   |   | $      | 399,388  |   |   | $      | 291,538 |   |   | $      | 171,653 |   |       | $      | 49,086  |   |   | $ | 443,911 |   |   | $ | 3,136,960 |   |
| Cost                                                                 |   |   | 2.44      | %      |   |   | 2.32     | %      |   |   | 3.12    | %      |   |   | 2.55    | %      |       |   | 2.26    | %      |   |   | 1.48 | % |   |   | 2.35 | % |
| GAP                                                                  |   | $      | 200,281   |   |   | $      | (109,768 | )      |   | $      | (6,398  | )      |   | $      | 294,575 |   |       | $      | 130,951 |   |   | $ | (359,555 | ) |   | $ | 150,086 |   |
|                                                                 |   |   |      |   |   |   |     |   |   |   |    |   |   |   |    |   |       |   |    |   |   |   |   |   |   |   |   |   |
| (1) Loan fees and costs are included in balance but not in the yield |   |   |      |   |   |   |     |   |   |   |    |   |   |   |    |   |       |   |    |   |   |
| (2) Taxable equivalent                                               |   |   |      |   |   |   |     |   |   |   |    |   |   |   |    |   |       |   |    |   |   |   |   |   |   |   |   |   |
| (3) Amortized cost                                                   |   |   |      |   |   |   |     |   |   |   |    |   |   |   |    |   |       |   |    |   |   |   |   |   |   |   |   |   |

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Table of Contents

ITEM 8.                      FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

| ITEM 9. | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE |
|---------|--------------------------------------------------------------------------------------|

ITEM 9A.   

See the 2009 Annual Report to Shareholders.

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Table of Contents

ITEM 9B.   

PART III

ITEM 10.    

ITEM 11.         

ITEM 12.  

ITEM 13.       

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Table of Contents

ITEM 14.         

PART IV

ITEM 15. 

2009 Annual Report to Shareholders.

See Exhibit Index on page 51.

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Table of Contents

SIGNATURES 

|           |   | FRONTIER FINANCIAL CORPORATION       |
|----------------|--------|--------------------------------------|
| March 31, 2010 |   |  /s/ Patrick M. Fahey      |   |
|           |   | Patrick M. Fahey                     |
|           |   | Chairman and Chief Executive Officer |

| March 31, 2010 |   |  /s/ Patrick M. Fahey              |   |
|----------------|--------|----------------------------------------------|--------|
|           |   | Patrick M. Fahey                             |   |
|           |   | Chairman and Chief Executive Officer         |   |
|           |   | (Principal Executive Officer)                |   |
|           |   |                                         |   |
| March 31, 2010 |   |  /s/ Carol E. Wheeler              |   |
|           |   | Carol E. Wheeler                             |   |
|           |   | Chief Financial Officer                      |   |
|           |   | (Principal Financial and Accounting Officer) |   |
|           |   |                                         |   |
| March 31, 2010 |   |  /s/ David M. Cuthill    |   |
|           |   | David M. Cuthill, Director                   |   |
|           |   |                                         |   |
| March 31, 2010 |   |  /s/ Lucy DeYoung             |   |
|           |   | Lucy DeYoung, Director                       |   |
|           |   |                                         |   |
| March 31, 2010 |   |  /s/ Edward D. Hansen              |   |
|           |   | Edward D. Hansen, Director                   |   |
|           |   |                                         |   |
| March 31, 2010 |   |  /s/ Edward C. Rubatino            |   |
|           |   | Edward C. Rubatino, Director                 |   |
|           |   |                                         |   |
| March 31, 2010 |   |  /s/ Darrell J. Storkson           |   |
|           |   | Darrell J. Storkson, Director                |   |
|           |   |                                         |   |
| March 31, 2010 |   |  /s/ Mark O. Zenger                |   |
|           |   | Mark O. Zenger, Director                     |   |

  -50-Table of ContentsFRONTIER FINANCIAL CORPORATION AND SUBSIDIARY

EXHIBIT INDEX

|   |   | (3     | )(a)   | Articles of Incorporation of Frontier Financial Corporation are incorporated herein by reference to Appendix A     |
|--------|--------|--------|--------|--------------------------------------------------------------------------------------------------------------------|
|   |   |   |   | to the registrant's definitive Proxy Statement on Schedule 14A filed on March 20, 1998 (File No. 000-15540).       |
|   |   |   |   |                                                                                                               |
|   |   | (3     | )(b)   | By-laws of Frontier Financial Corporation are incorporated herein by reference to Exhibit 3(ii) to Form 10-Q filed |
|   |   |   |   | on October 29, 2003.                                                                                               |
|   |   |   |   |                                                                                                               |
|   | *      |   | (10    | )(a)                                                                                                               | Amended and Restated Frontier Financial Corporation Incentive Stock Option Plan incorporated by reference |
|   |   |   |   |                                                                                                               | to Exhibit 99.1 to Registration Statement on Form S-8, filed March 27, 1998 (File No. 333-48805). |
|   |   |   |   |                                                                                                               |   |
|   | *      |   | (10    | )(b)                                                                                                               | Frontier Financial Corporation 1999 Employee Stock Award Plan is incorporated herein by reference to Exhibit 99.1 |
|   |   |   |   |                                                                                                               | to Registration Statement on Form S-8, filed March 2, 1999 (File No. 333-73217). |
|   |   |   |   |                                                                                                               |   |
|   | *      |   | (10    | )(c)                                                                                                               | Frontier Financial Corporation 2001 Stock Award Plan is incorporated herein by reference to Exhibit 99.1 |
|   |   |   |   |                                                                                                               | to Registration Statement on Form S-8, filed January 26, 2001 (File No. 333-54362). |
|   |   |   |   |                                                                                                               |   |
|   | *      |   | (10    | )(d)                                                                                                               | Frontier Financial Corporation Employee Stock Option Plan and Interbancorp, Inc. Director Stock Option Plan is |
|   |   |   |   |                                                                                                               | incorporated herein by reference to Exhibit 10.1 to Registration Statement on Form S-8, filed January 26, 2001 |
|   |   |   |   |                                                                                                               | (File No. 333-37242). |
|   |   |   |   |                                                                                                               |   |
|   | *      |   | (10    | )(e)                                                                                                               | Interbancorp, Inc. Employee Stock Option Plan and Interbancorp, Inc. Director Stock Option Plan is incorporated |
|   |   |   |   |                                                                                                               | herein by reference to Exhibit 10.1 to Registration Statement on Form S-8, filed February 13, 2001 |
|   |   |   |   |                                                                                                               | (File No. 333-50882). |
|   |   |   |   |                                                                                                               |   |
|   | *      |   | (10    | )(f)                                                                                                               | Frontier Financial Corporation Employee Stock Option Plan and NorthStar Bank Employee Stock Option Plan, |
|   |   |   |   |                                                                                                               | NorthStar Bank 1994 Employee Stock Option Plan and NorthStar Director Nonqualified Stock Option Plan are |
|   |   |   |   |                                                                                                               | incorporated herein by reference to Exhibit 10.1 to Registration Statement on Form S-8, filed March 16, 2006 |
|   |   |   |   |                                                                                                               | (File No. 333-132487). |
|   |   |   |   |                                                                                                               |   |
|   | *      |   | (10    | )(g)                                                                                                               | Frontier Financial Corporation 2006 Stock Incentive Plan is incorporated herein by reference to Exhibit 99.1 to |
|   |   |   |   |                                                                                                               | Registration Statement on Form S-8, filed August 4, 2006 (File No. 333-136298). |
|   |   |   |   |                                                                                                               |   |
|   | *      |   | (10    | )(h)                                                                                                               | Change of Control Agreement with John J. Dickson is incorporated herein by reference to Exhibit 10.1 to |
|   |   |   |   |                                                                                                               | Current Report on Form 8-K, filed January 19, 2006 (File No. 000-15540). |
|   |   |   |   |                                                                                                               |   |
|   | *      |   | (10    | )(i)                                                                                                               | Change of Control Agreements with other executive officers. |
|   |   |   |   |                                                                                                               |   |
|   |   |   | (13    | )                                                                                                                  | Portions of the Annual Report to Shareholders for the year ended December 31, 2009, are incorporated by |
|   |   |   |   |                                                                                                               | herein by reference. |
|   |   |   |   |                                                                                                               |   |
|   | **     |   | (14    | )                                                                                                                  | Code of Ethics for senior financial officers. |
|   |   |   |   |                                                                                                               |   |
|   |   |   | (21    | )                                                                                                                  | Subsidiaries of Registrant. |
|   |   |   |   |                                                                                                               |   |
|   |   |   | (23.1  | )                                                                                                                  | Consent of Moss Adams LLP, Independent Registered Public Accounting Firm. |
|   |   |   |   |                                                                                                               |   |
|   |   |   | (31.1  | )                                                                                                                  | 302 Certification of Chief Executive Officer. |
|   |   |   |   |                                                                                                               |   |
|   |   |   | (31.2  | )                                                                                                                  | 302 Certification of Chief Financial Officer. |
|   |   |   |   |                                                                                                               |   |
|   |   |   | (32    | )                                                                                                                  | Certification pursuant to 28 U.S.C Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
|   |   |   |   |                                                                                                               |   |
|   |   |   | *      |                                                                                                               | Compensatory plan or arrangement. |
|   |   |   | **     |                                                                                                               | Previously filed. |

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