| ·   | We      are working with our borrowers on repayment plans and aggressive      resolution of problem loans. |
|--------------------|------------------------------------------------------------------------------------------------------------|

| ·   | We      are continuing aggressive additions to loan loss  reserves. |
|--------------------|---------------------------------------------------------------------|

| ·   | We      have suspended the origination of new residential construction and land      development loans. |
|--------------------|---------------------------------------------------------------------------------------------------------|

| ·   | We      are working to expand our business banking unit, which is comprised of      some of the most seasoned and experienced commercial bankers in the      Northwest. Over time, we will achieve a balanced asset mix for      the Bank. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | We      are strengthening our capital position by selling assets, reducing      expenses and seeking outside investors, and have made the difficult      decision to suspend the payment of adividend. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| ·   | We      have established new communication channels with our customers,      shareholders and employees. |
|--------------------|----------------------------------------------------------------------------------------------------------|

----

----

|                                                                                 |   | December      31, |      |
|--------------------------------------------------------------------------------------|--------|-------------------|-----------|
|                                                                                 |   | 2008              |      |   | 2007 |   |
| ASSETS                                                                               |   |              |      |   |   |   |
| Cash      and due from banks                                                         |   | $                 | 52,022    |   |   | $ | 99,102 |   |
| Federal      funds sold                                                              |   |              | 117,740   |   |   |   | 5 |   |
| Securities                                                                           |   |              |      |   |   |   |   |   |
| Available      for sale, at fair value                                               |   |              | 90,606    |   |   |   | 131,378 |   |
| Held      to maturity (fair value $3,340 and $3,766)                                 |   |              | 3,085     |   |   |   | 3,743 |   |
| Total      securities                                                                |   |              | 93,691    |   |   |   | 135,121 |   |
|                                                                                 |   |              |      |   |   |   |   |   |
| Loans      held for resale                                                           |   |              | 6,678     |   |   |   | 6,227 |   |
| Loans                                                                                |   |              | 3,772,055 |   |   |   | 3,605,895 |   |
| Allowance      for loan losses                                                       |   |              | (112,556  | ) |   |   | (53,995 | ) |
| Net      loans                                                                       |   |              | 3,666,177 |   |   |   | 3,558,127 |   |
|                                                                                 |   |              |      |   |   |   |   |   |
| Premises      and equipment, net                                                     |   |              | 51,502    |   |   |   | 47,293 |   |
| Intangible      assets                                                               |   |              | 794       |   |   |   | 78,150 |   |
| Federal      Home Loan Bank (FHLB) stock                                             |   |              | 19,885    |   |   |   | 18,738 |   |
| Bank      owned life insurance                                                       |   |              | 24,321    |   |   |   | 23,734 |   |
| Other      real estate owned                                                         |   |              | 10,803    |   |   |   | 367 |   |
| Other      assets                                                                    |   |              | 67,510    |   |   |   | 35,052 |   |
| Total      assets                                                                    |   | $                 | 4,104,445 |   |   | $ | 3,995,689 |   |
|                                                                                 |   |              |      |   |   |   |   |   |
| LIABILITIES                                                                          |   |              |      |   |   |   |   |   |
| Deposits                                                                             |   |              |      |   |   |   |   |   |
| Noninterest      bearing                                                             |   | $                 | 395,451   |   |   | $ | 390,526 |   |
| Interest      bearing                                                                |   |              | 2,879,714 |   |   |   | 2,552,710 |   |
| Total      deposits                                                                  |   |              | 3,275,165 |   |   |   | 2,943,236 |   |
|                                                                                 |   |              |      |   |   |   |   |   |
| Federal      funds purchased and securities sold under agreements to      repurchase |   |              | 21,616    |   |   |   | 258,145 |   |
| Federal      Home Loan Bank advances                                                 |   |              | 429,417   |   |   |   | 298,636 |   |
| Junior      subordinated debentures                                                  |   |              | 5,156     |   |   |   | 5,156 |   |
| Other      liabilities                                                               |   |              | 21,048    |   |   |   | 30,904 |   |
| Total      liabilities                                                               |   |              | 3,752,402 |   |   |   | 3,536,077 |   |
|                                                                                 |   |              |      |   |   |   |   |   |
| Commitments      and Contingent Liabilities (Note 19)                                |   |              |      |   |   |   |   |   |
|                                                                                 |   |              |      |   |   |   |   |   |
| SHAREHOLDERS'      EQUITY                                                            |   |              |      |   |   |   |   |   |
| Preferred      stock, no par value; 10,000,000 shares authorized                     |   |              | -         |   |   |   | - |   |
| Common      stock, no par value; 100,000,000 shares authorized; 47,095,103      and  |   |              |      |   |   |   |   |   |
| 46,950,878      shares issued and outstanding in 2008 and 2007,    respectively      |   |              | 256,137   |   |   |   | 252,292 |   |
| Retained      earnings                                                               |   |              | 98,020    |   |   |   | 202,453 |   |
| Accumulated      other comprehensive income (loss), net of tax                       |   |              | (2,114    | ) |   |   | 4,867 |   |
| Total      shareholders' equity                                                      |   |              | 352,043   |   |   |   | 459,612 |   |
| Total      liabilities and shareholders' equity                                      |   | $                 | 4,104,445 |   |   | $ | 3,995,689 |   |

----

|                                                           |   | For      the Year Ended December 31, |       |
|----------------------------------------------------------------|--------|--------------------------------------|------------|
|                                                           |   | 2008                                 |       |   | 2007 |   |   | 2006 |   |
| INTEREST      INCOME                                           |   |                                 |       |   |   |   |   |   |   |
| Interest      and fees on loans                                |   | $                                    | 273,392    |   |   | $ | 294,099 |   |   | $ | 244,493 |   |
| Interest      on federal funds sold                            |   |                                 | 457        |   |   |   | 958 |   |   |   | 1,448 |   |
| Interest      on investments                                   |   |                                 |       |   |   |   |   |   |   |   |   |   |
| Taxable                                                        |   |                                 | 4,999      |   |   |   | 4,475 |   |   |   | 3,998 |   |
| Exempt      from federal income tax                            |   |                                 | 207        |   |   |   | 140 |   |   |   | 205 |   |
| Total      interest income                                     |   |                                 | 279,055    |   |   |   | 299,672 |   |   |   | 250,144 |   |
| INTEREST      EXPENSE                                          |   |                                 |       |   |   |   |   |   |   |   |   |   |
| Interest      on deposits                                      |   |                                 | 96,091     |   |   |   | 97,080 |   |   |   | 73,526 |   |
| Interest      on FHLB advances                                 |   |                                 | 14,244     |   |   |   | 13,402 |   |   |   | 12,195 |   |
| Interest      on federal funds purchased and securities        |   |                                 |       |   |   |   |   |   |   |   |   |   |
| sold      under agreements to repurchase                       |   |                                 | 1,850      |   |   |   | 2,559 |   |   |   | 1,221 |   |
| Total      interest expense                                    |   |                                 | 112,185    |   |   |   | 113,041 |   |   |   | 86,942 |   |
| Net      interest income                                       |   |                                 | 166,870    |   |   |   | 186,631 |   |   |   | 163,202 |   |
|                                                           |   |                                 |       |   |   |   |   |   |   |   |   |   |
| PROVISION      FOR LOAN LOSSES                                 |   |                                 | 120,000    |   |   |   | 11,400 |   |   |   | 7,500 |   |
|                                                           |   |                                 |       |   |   |   |   |   |   |   |   |   |
| Net      interest income after provision for loan losses       |   |                                 | 46,870     |   |   |   | 175,231 |   |   |   | 155,702 |   |
|                                                           |   |                                 |       |   |   |   |   |   |   |   |   |   |
| NONINTEREST      INCOME                                        |   |                                 |       |   |   |   |   |   |   |   |   |   |
| Provision      for loss on  impairment of securities |   |                                 | (6,430     | ) |   |   | - |   |   |   | - |   |
| Gain      (loss) on sale of securities                         |   |                                 | 4,570      |   |   |   | (937 | ) |   |   | (25 | ) |
| Gain      on sale of secondary mortgage loans                  |   |                                 | 1,321      |   |   |   | 1,586 |   |   |   | 1,491 |   |
| Gain      on sale of premises and equipment                    |   |                                 | 30         |   |   |   | 24 |   |   |   | 2,445 |   |
| Gain      on sale of other real estate owned                   |   |                                 | 97         |   |   |   | - |   |   |   | - |   |
| Service      charges on deposit accounts                       |   |                                 | 5,421      |   |   |   | 4,721 |   |   |   | 4,214 |   |
| Other      noninterest income                                  |   |                                 | 9,821      |   |   |   | 7,915 |   |   |   | 7,498 |   |
| Total      noninterest income                                  |   |                                 | 14,830     |   |   |   | 13,309 |   |   |   | 15,623 |   |
|                                                           |   |                                 |       |   |   |   |   |   |   |   |   |   |
| NONINTEREST      EXPENSE                                       |   |                                 |       |   |   |   |   |   |   |   |   |   |
| Salaries      and employee benefits                            |   |                                 | 48,403     |   |   |   | 48,297 |   |   |   | 42,104 |   |
| Occupancy      expense                                         |   |                                 | 11,148     |   |   |   | 9,956 |   |   |   | 9,108 |   |
| State      business taxes                                      |   |                                 | 2,013      |   |   |   | 2,066 |   |   |   | 2,213 |   |
| FHLB      prepayment penalty                                   |   |                                 | -          |   |   |   | 1,534 |   |   |   | - |   |
| Other      noninterest expense                                 |   |                                 | 21,435     |   |   |   | 15,163 |   |   |   | 13,621 |   |
|                                                           |   |                                 | 82,999     |   |   |   | 77,016 |   |   |   | 67,046 |   |
| Goodwill      impairment                                       |   |                                 | 77,073     |   |   |   | - |   |   |   | - |   |
| Total      noninterest expense                                 |   |                                 | 160,072    |   |   |   | 77,016 |   |   |   | 67,046 |   |
| INCOME      (LOSS) BEFORE PROVISION (BENEFIT)                  |   |                                 |       |   |   |   |   |   |   |   |   |   |
| FOR      INCOME TAX                                            |   |                                 | (98,372    | ) |   |   | 111,524 |   |   |   | 104,279 |   |
| PROVISION      (BENEFIT) FOR INCOME TAX                        |   |                                 | (8,635     | ) |   |   | 37,586 |   |   |   | 35,369 |   |
| NET      INCOME (LOSS)                                         |   | $                                    | (89,737    | ) |   | $ | 73,938 |   |   | $ | 68,910 |   |
| Weighted      average number of                                |   |                                 |       |   |   |   |   |   |   |   |   |   |
| shares      outstanding for the period                         |   |                                 | 46,991,625 |   |   |   | 45,265,723 |   |   |   | 45,009,526 |   |
| Basic      earnings (loss) per share                           |   | $                                    | (1.91      | ) |   | $ | 1.63 |   |   | $ | 1.53 |   |
| Weighted      average number of diluted shares                 |   |                                 |       |   |   |   |   |   |   |   |   |   |
| outstanding      for the period                                |   |                                 | 46,991,625 |   |   |   | 45,601,066 |   |   |   | 45,484,897 |   |
| Diluted      earnings (loss) per share                         |   | $                                    | (1.91      | ) |   | $ | 1.62 |   |   | $ | 1.52 |   |

----

|                                                          |   |              |       |   |          |   |    |               |   |   |          |   |   | Accumulated        |    |   |   |   |
|---------------------------------------------------------------|--------|-------------------|------------|--------|---------------|--------|---------|--------------------|--------|--------|---------------|--------|--------|--------------------|---------|--------|--------|--------|
|                                                          |   |              |       |   |          |   |    |               |   |   |          |   |   | Other              |    |   |   |   |
|                                                          |   | Common      Stock |       |   | Comprehensive |   |    | Retained           |   |   | Comprehensive |   |   |               |    |
|                                                          |   | Shares            |       |   | Amount        |   |    | Income      (Loss) |   |   | Earnings      |   |   | Income      (Loss) |    |   | Total  |   |
| Balance,      December 31, 2005                               |   |              | 28,438,150 |   |          | $      | 132,598 |               |   |   |          |   | $      | 159,075            |    |   | $      | 4,424  |   |   | $ | 296,097 |   |
|                                                          |   |              |       |   |          |   |    |               |   |   |          |   |   |               |    |   |   |   |   |   |   |   |   |
| Comprehensive      Income:                                    |   |              |       |   |          |   |    |               |   |   |          |   |   |               |    |   |   |   |   |   |   |   |   |
| Net      income for 2006                                      |   |              | -          |   |          |   | -       |               |   | $      | 68,910        |   |   |               | 68,910  |   |   |   | - |   |   |   | 68,910 |   |
| Other      comprehensive income,                              |   |              |       |   |          |   |    |               |   |   |          |   |   |               |    |   |   |   |   |   |   |   |   |   |
| Unrealized      gain on available                             |   |              |       |   |          |   |    |               |   |   |          |   |   |               |    |   |   |   |   |   |   |   |   |   |
| for      sale securities, net of tax $942                     |   |              | -          |   |          |   | -       |               |   |   | 1,751         |   |   |               | -       |   |   |   | 1,751 |   |   |   | 1,751 |   |
|      Total      comprehensive income |   |              |       |   |          |   |    |               |   | $      | 70,661        |   |   |               |    |   |   |   |   |   |   |   |   |   |
| Stock      options exercised                                  |   |              | 275,283    |   |          |   | 4,218   |               |   |   |          |   |   |               | -       |   |   |   | - |   |   |   | 4,218 |   |
| Stock      award plan                                         |   |              | 20,542     |   |          |   | 1,156   |               |   |   |          |   |   |               | -       |   |   |   | - |   |   |   | 1,156 |   |
| Three      for two stock split                                |   |              | 15,102,634 |   |          |   | -       |               |   |   |          |   |   |               | -       |   |   |   | - |   |   |   | - |   |
| Tax      benefit from stock options                           |   |              |  -    |   |          |   | 1,205   |               |   |   |          |   |   |               | -       |   |   |   | - |   |   |   | 1,205 |   |
| Merger                                                        |   |              | 1,513,707  |   |          |   | 46,913  |               |   |   |          |   |   |               | -       |   |   |   |   |   |   |   | 46,913 |   |
| Stock      option expense                                     |   |              |  -    |   |          |   | 73      |               |   |   |          |   |   |               | -       |   |   |   | - |   |   |   | 73 |   |
| Cash      dividends declared (50¢ per share)             |   |              | -          |   |          |   | -       |               |   |   |          |   |   |               | (25,040 | )      |   |   | - |   |   |   | (25,040 | ) |
| Balance,      December 31, 2006                               |   |              | 45,350,316 |   |          |   | 186,163 |               |   |   |          |   |   |               | 202,945 |   |   |   | 6,175 |   |   |   | 395,283 |   |
|                                                          |   |              |       |   |          |   |    |               |   |   |          |   |   |               |    |   |   |   |   |   |   |   |   |   |
| Comprehensive      Income:                                    |   |              |       |   |          |   |    |               |   |   |          |   |   |               |    |   |   |   |   |   |   |   |   |   |
| Net      income for 2007                                      |   |              | -          |   |          |   | -       |               |   | $      | 73,938        |   |   |               | 73,938  |   |   |   | - |   |   |   | 73,938 |   |
| Other      comprehensive income,                              |   |              |       |   |          |   |    |               |   |   |          |   |   |               |    |   |   |   |   |   |   |   |   |   |
| Unrealized      loss on available                             |   |              |       |   |          |   |    |               |   |   |          |   |   |               |    |   |   |   |   |   |   |   |   |   |
| for      sale securities, net of tax ($699)                   |   |              | -          |   |          |   | -       |               |   |   | (1,308        | )      |   |               | -       |   |   |   | (1,308 | ) |   |   | (1,308 | ) |
|      Total      comprehensive income |   |              |       |   |          |   |    |               |   | $      | 72,630        |   |   |               |    |   |   |   |   |   |   |   |   |   |
| Stock      options exercised                                  |   |              | 139,105    |   |          |   | 1,861   |               |   |   |          |   |   |               | -       |   |   |   | - |   |   |   | 1,861 |   |
| Stock      award plan                                         |   |              | 71,994     |   |          |   | 892     |               |   |   |          |   |   |               | -       |   |   |   | - |   |   |   | 892 |   |
| Tax      benefit from stock options                           |   |              | -          |   |          |   | 237     |               |   |   |          |   |   |               | -       |   |   |   | - |   |   |   | 237 |   |
| Stock      option expense                                     |   |              | -          |   |          |   | 1,691   |               |   |   |          |   |   |               | -       |   |   |   | - |   |   |   | 1,691 |   |
| Merger                                                        |   |              | 3,230,795  |   |          |   | 61,613  |               |   |   |          |   |   |               | -       |   |   |   | - |   |   |   | 61,613 |   |
| Fractional      shares -  merger                    |   |              | -          |   |          |   | -       |               |   |   |          |   |   |               | (1      | )      |   |   | - |   |   |   | (1 | ) |
| Stock      repurchased                                        |   |              | (1,841,332 | )      |          |   | (165    | )                  |   |   |          |   |   |               | (44,219 | )      |   |   | - |   |   |   | (44,384 | ) |
| Cash      dividends declared (65¢ per share)             |   |              | -          |   |          |   | -       |               |   |   |          |   |   |               | (30,210 | )      |   |   | - |   |   |   | (30,210 | ) |
| Balance,      December 31, 2007                               |   |              | 46,950,878 |   |          |   | 252,292 |               |   |   |          |   |   |               | 202,453 |   |   |   | 4,867 |   |   |   | 459,612 |   |
|                                                          |   |              |       |   |          |   |    |               |   |   |          |   |   |               |    |   |   |   |   |   |   |   |   |   |
| Comprehensive      Income:                                    |   |              |       |   |          |   |    |               |   |   |          |   |   |               |    |   |   |   |   |   |   |   |   |   |
| Net      loss for 2008                                        |   |              | -          |   |          |   | -       |               |   | $      | (89,737       | )      |   |               | (89,737 | )      |   |   | - |   |   |   | (89,737 | ) |
| Other      comprehensive loss,                                |   |              |       |   |          |   |    |               |   |   |          |   |   |               |    |   |   |   |   |   |   |   |   |   |
| Unrealized      loss on available                             |   |              |       |   |          |   |    |               |   |   |          |   |   |               |    |   |   |   |   |   |   |   |   |   |
| for      sale securities, net of tax ($4,085)                 |   |              | -          |   |          |   | -       |               |   |   | (6,981        | )      |   |               | -       |   |   |   | (6,981 | ) |   |   | (6,981 | ) |
|      Total      comprehensive loss   |   |              |       |   |          |   |    |               |   | $      | (96,718       | )      |   |               |    |   |   |   |   |   |   |   |   |   |
| Stock      options exercised                                  |   |              | 31,125     |   |          |   | 391     |               |   |   |          |   |   |               | -       |   |   |   | - |   |   |   | 391 |   |
| Stock      award plan                                         |   |              | 130,223    |   |          |   | 700     |               |   |   |          |   |   |               | -       |   |   |   | - |   |   |   | 700 |   |
| Tax      benefit from stock options                           |   |              | -          |   |          |   | 49      |               |   |   |          |   |   |               | -       |   |   |   | - |   |   |   | 49 |   |
| Stock      option expense                                     |   |              | -          |   |          |   | 2,707   |               |   |   |          |   |   |               | -       |   |   |   | - |   |   |   | 2,707 |   |
| Stock      repurchased                                        |   |              | (17,123    | )      |          |   | (2      | )                  |   |   |          |   |   |               | (70     | )      |   |   | - |   |   |   | (72 | ) |
| Cumulative      effect of change in                           |   |              |       |   |          |   |    |               |   |   |          |   |   |               |    |   |   |   |   |   |   |   |   |   |
| accounting      principle, net of tax                         |   |              | -          |   |          |   | -       |               |   |   |          |   |   |               | (413    | )      |   |   | - |   |   |   | (413 | ) |
| Cash      dividends declared (48¢ per share)             |   |              | -          |   |          |   | -       |               |   |   |          |   |   |               | (14,213 | )      |   |   | - |   |   |   | (14,213 | ) |
| Balance,      December 31, 2008                               |   |              | 47,095,103 |   |          | $      | 256,137 |               |   |   |          |   |   | $                  | 98,020  |   |   | $      | (2,114 | ) |   | $ | 352,043 |   |

----

|                                                                                                           |   | For      the Year Ended December 31, |     |
|----------------------------------------------------------------------------------------------------------------|--------|--------------------------------------|----------|
|                                                                                                           |   | 2008                                 |     |   | 2007 |   |   | 2006 |   |
| CASH      FLOWS FROM OPERATING ACTIVITIES                                                                      |   |                                 |     |   |   |   |   |   |   |
| Net      income (loss)                                                                                         |   | $                                    | (89,737  | ) |   | $ | 73,938 |   |   | $ | 68,910 |   |
|         Adjustments to reconcile net income (loss) to net cash provided by      operating activities |   |                                 |     |   |   |   |   |   |   |
| Depreciation                                                                                                   |   |                                 | 3,750    |   |   |   | 2,733 |   |   |   | 2,851 |   |
| Amortization                                                                                                   |   |                                 | 247      |   |   |   | 64 |   |   |   | 144 |   |
| Intangible      amortization                                                                                   |   |                                 | 283      |   |   |   | 235 |   |   |   | 231 |   |
| Provision      for loan losses                                                                                 |   |                                 | 120,000  |   |   |   | 11,400 |   |   |   | 7,500 |   |
| Provision      for loss on impairment of securities                                                            |   |                                 | 6,430    |   |   |   | - |   |   |   | - |   |
| (Gain)      loss on sale of securities                                                                         |   |                                 | (4,570   | ) |   |   | 937 |   |   |   | 25 |   |
| Gain      on sale of premises and equipment                                                                    |   |                                 | (30      | ) |   |   | (24 | ) |   |   | (2,445 | ) |
| Gain      on sale of other real estate owned                                                                   |   |                                 | (97      | ) |   |   | - |   |   |   | - |   |
| Gain      on sale of secondary market loans                                                                    |   |                                 | (1,321   | ) |   |   | (1,586 | ) |   |   | (1,491 | ) |
| Proceeds      from sales of mortgage loans                                                                     |   |                                 | 94,815   |   |   |   | 158,345 |   |   |   | 111,720 |   |
| Origination      of mortgage loans held for sale                                                               |   |                                 | (93,945  | ) |   |   | (155,766 | ) |   |   | (111,736 | ) |
| Goodwill      impairment                                                                                       |   |                                 | 77,073   |   |   |   | - |   |   |   | - |   |
| Deferred      taxes                                                                                            |   |                                 | (20,431  | ) |   |   | (5,480 | ) |   |   | (1,721 | ) |
| Stock      award plan compensation                                                                             |   |                                 | 700      |   |   |   | 892 |   |   |   | 1,156 |   |
| Stock      option expense                                                                                      |   |                                 | 2,707    |   |   |   | 1,691 |   |   |   | 73 |   |
| Excess      tax benefits associated with equity-based compensation                                             |   |                                 | (49      | ) |   |   | (237 | ) |   |   | (1,205 | ) |
| Increase      in cash surrender value of BOLI                                                                  |   |                                 | (587     | ) |   |   | (1,536 | ) |   |   | (888 | ) |
| Changes      in operating assets and liabilities                                                               |   |                                 |     |   |   |   |   |   |   |   |   |   |
| Income      taxes receivable                                                                                   |   |                                 | (8,430   | ) |   |   | - |   |   |   | - |   |
| Income      taxes payable                                                                                      |   |                                 | 665      |   |   |   | (2,100 | ) |   |   | (1,950 | ) |
| Interest      receivable                                                                                       |   |                                 | 1,254    |   |   |   | (2,689 | ) |   |   | (3,780 | ) |
| Interest      payable                                                                                          |   |                                 | 4,332    |   |   |   | 4,292 |   |   |   | 4,513 |   |
| Other      operating activities                                                                                |   |                                 | (6,182   | ) |   |   | (1,161 | ) |   |   | (1,343 | ) |
| Net      cash provided by operating activities                                                                 |   |                                 | 86,877   |   |   |   | 83,948 |   |   |   | 70,564 |   |
| CASH      FLOWS FROM INVESTING ACTIVITIES                                                                      |   |                                 |     |   |   |   |   |   |   |   |   |   |
| Net      change in federal funds sold                                                                          |   |                                 | (117,735 | ) |   |   | 18,668 |   |   |   | (17,940 | ) |
| Purchase      of securities available for sale                                                                 |   |                                 | (306,126 | ) |   |   | (84,724 | ) |   |   | (17,324 | ) |
| Proceeds      from sales of available for sale securities                                                      |   |                                 | 45,568   |   |   |   | 48,039 |   |   |   | - |   |
| Proceeds      from maturities of available for sale securities                                                 |   |                                 | 288,165  |   |   |   | 21,390 |   |   |   | 20,515 |   |
| Purchase      of held to maturity securities                                                                   |   |                                 | -        |   |   |   | (1,019 | ) |   |   | - |   |
| Proceeds      from maturities of held to maturity securities                                                   |   |                                 | 650      |   |   |   | 875 |   |   |   | 2,114 |   |
| Purchase      of Federal Home Loan Bank stock                                                                  |   |                                 | (1,147   | ) |   |   | (3,116 | ) |   |   | - |   |
| Net      cash flows from loan activities                                                                       |   |                                 | (242,727 | ) |   |   | (510,865 | ) |   |   | (517,267 | ) |
| Purchases      of premises and equipment                                                                       |   |                                 | (7,959   | ) |   |   | (16,665 | ) |   |   | (3,927 | ) |
| Proceeds      from the sale of premises and equipment                                                          |   |                                 | 30       |   |   |   | 24 |   |   |   | 3,443 |   |
| Proceeds      from the sale of other real estate owned                                                         |   |                                 | 3,208    |   |   |   | - |   |   |   | - |   |
| Cash      acquired in merger                                                                                   |   |                                 | -        |   |   |   | 1,234 |   |   |   | 7,121 |   |
| Other      investing activities                                                                                |   |                                 | -        |   |   |   | 2,615 |   |   |   | (3,069 | ) |
| Net      cash used in investing activities                                                                     |   | $                                    | (338,073 | ) |   | $ | (523,544 | ) |   | $ | (526,334 | ) |

----

|                                                                                 |   | For      the Year Ended December 31, |     |
|--------------------------------------------------------------------------------------|--------|--------------------------------------|----------|
|                                                                                 |   | 2008                                 |     |   | 2007 |   |   | 2006 |   |
| CASH      FLOWS FROM FINANCING ACTIVITIES                                            |   |                                 |     |   |   |   |   |   |   |
| Net      change in money market, sweep, NOW and savings accounts                     |   | $                                    | (304,909 | ) |   | $ | (35,344 | ) |   | $ | 182,986 |   |
| Net      change in certificates of deposit                                           |   |                                 | 636,838  |   |   |   | 354,906 |   |   |   | 209,266 |   |
| Net      change in federal funds purchased and securities soldunder                  |   |                                 |     |   |   |   |   |   |   |   |   |   |
| agreements      to repurchase                                                        |   |                                 | (236,529 | ) |   |   | 176,472 |   |   |   | 60,860 |   |
| Advances      from the Federal Home Loan Bank                                        |   |                                 | 410,000  |   |   |   | 324,052 |   |   |   | 111,756 |   |
| Repayments      to the Federal Home Loan Bank                                        |   |                                 | (279,219 | ) |   |   | (321,023 | ) |   |   | (69,739 | ) |
| Stock      options exercised                                                         |   |                                 | 391      |   |   |   | 1,861 |   |   |   | 4,218 |   |
| Excess      tax benefits associated with equity-based compensation                   |   |                                 | 49       |   |   |   | 237 |   |   |   | 1,205 |   |
| Purchase      of common stock                                                        |   |                                 | (72      | ) |   |   | (44,384 | ) |   |   | - |   |
| Cash      dividends paid                                                             |   |                                 | (22,433  | ) |   |   | (29,045 | ) |   |   | (22,358 | ) |
| Other      financing activities                                                      |   |                                 | -        |   |   |   | 6,744 |   |   |   | (3,833 | ) |
| Net      cash provided by financing activities                                       |   |                                 | 204,116  |   |   |   | 434,476 |   |   |   | 474,361 |   |
| INCREASE      (DECREASE) IN CASH AND DUE FROM BANKS                                  |   |                                 | (47,080  | ) |   |   | (5,120 | ) |   |   | 18,591 |   |
| CASH      AND DUE FROM BANKS AT BEGINNING OF YEAR                                    |   |                                 | 99,102   |   |   |   | 104,222 |   |   |   | 85,631 |   |
| CASH      AND DUE FROM BANKS AT END OF YEAR                                          |   | $                                    | 52,022   |   |   | $ | 99,102 |   |   | $ | 104,222 |   |
|                                                                                 |   |                                 |     |   |   |   |   |   |   |   |   |   |
| SUPPLEMENTAL      DISCLOSURE OF CASH FLOW INFORMATION                                |   |                                 |     |   |   |   |   |   |   |   |   |   |
| Cash      paid during the year for interest                                          |   | $                                    | 107,853  |   |   | $ | 107,879 |   |   | $ | 82,157 |   |
| Cash      paid during the year for income taxes                                      |   | $                                    | 19,700   |   |   | $ | 40,000 |   |   | $ | 36,595 |   |
|                                                                                 |   |                                 |     |   |   |   |   |   |   |   |   |   |
|                                                                                 |   |                                 |     |   |   |   |   |   |   |   |   |   |
| SUPPLEMENTAL      INFORMATION ABOUT NONCASH INVESTING AND FINANCING    ACTIVITIES    |   |                                 |     |   |   |
| Transfer      of loans to other real estate owned, net of valuation      adjustments |   | $                                    | 13,547   |   |   | $ | 367 |   |   | $ | - |   |
| Change      in portion of reserve identified for undisbursed loans and               |   |                                 |     |   |   |   |   |   |   |   |   |   |
| reclassified      as a liability                                                     |   | $                                    | 1,581    |   |   | $ | (117 | ) |   | $ | (276 | ) |
| Acquisitions:                                                                        |   |                                 |     |   |   |   |   |   |   |   |   |   |
| Assets      aquired                                                                  |   | $                                    | -        |   |   | $ | 247,078 |   |   | $ | 209,600 |   |
| Liabilities      assumed                                                             |   | $                                    | -        |   |   | $ | 185,270 |   |   | $ | 162,687 |   |
|        Net                                                                      |   | $                                    | -        |   |   | $ | 61,808 |   |   | $ | 46,913 |   |

----

----

----

----

| Premises                               |   |   | 7      to 40 years |
|----------------------------------------|--------|--------|--------------------|
| Furniture,      fixtures and equipment |   |   | 3      to 7 years  |

----

----

|                                                                                           |   | Years      Ended December 31, |    |
|------------------------------------------------------------------------------------------------|--------|-------------------------------|---------|
|                                                                                           |   | 2008                          |    |   | 2007 |   |   | 2006 |   |
| Unrealized      gains (losses) arising during the period on securities available for      sale |   | $                             | (12,926 | ) |   | $ | (2,944 | ) |   | $ | 2,668 |   |
| Reclassification      adjustment for losses realized in net income, net of tax                 |   |                          |    |   |   |   |   |   |   |   |   |   |
| (tax      benefit of $651, $328 and $9, respectively)                                          |   |                          | 1,209   |   |   |   | 609 |   |   |   | 16 |   |
| Tax      effect                                                                                |   |                          | 4,736   |   |   |   | 1,027 |   |   |   | (933 | ) |
| Net      unrealized gains (losses) on securities available for sale                            |   | $                             | (6,981  | ) |   | $ | (1,308 | ) |   | $ | 1,751 |   |

|                                                                    |   | Years      Ended December 31, |   |
|-------------------------------------------------------------------------|--------|-------------------------------|--------|
|                                                                    |   | 2008                          |   |   | 2007 |   |   | 2006 |   |
| Unrealized      holding gains (losses) on available for sale securities |   | $                             | (3,573 | ) |   | $ | 7,493 |   |   | $ | 9,500 |   |
| Tax      effect                                                         |   |                          | 1,459  |   |   |   | (2,626 | ) |   |   | (3,325 | ) |
| Accumulated      other comprehensive income (loss), net of tax          |   | $                             | (2,114 | ) |   | $ | 4,867 |   |   | $ | 6,175 |   |

----

----

----

----

| Total      value of common stock exchanged                                             |   | $      | 61,613 |   |
|----------------------------------------------------------------------------------------|--------|--------|--------|--------|
| Direct      merger related expenses                                                    |   |   | 195    |   |
| Total      purchase price                                                              |   |   | 61,808 |   |
|                                                                                   |   |   |   |   |
| Allocation      of purchase price:                                                     |   |   |   |   |
| Bank      of Salem shareowners' equity                                                 |   |   | 26,981 |   |
| Adjustments      to reflect assets acquired and liabilities assumed at fair      value |   |   |   |   |
| Loans                                                                                  |   |   | (4,162 | )      |
| Buildings      and land                                                                |   |   | 1,347  |   |
| Certificates      of deposit                                                           |   |   | (570   | )      |
| Core      deposit intangible asset                                                     |   |   | 373    |   |
| Deferred      tax asset                                                                |   |   | 1,054  |   |
| Fair      value of net assets acquired                                                 |   |   | 25,023 |   |
| Goodwill                                                                               |   | $      | 36,785 |   |

----

|                                                 |   | November      30, 2007 |    |
|------------------------------------------------------|--------|------------------------|---------|
| Cash      and due from banks                         |   | $                      | 1,234   |   |
| Securities      available for sale                   |   |                   | 8,581   |   |
| Loans,      net of allowance for loan loss of $2,983 |   |                   | 192,671 |   |
| Premises      and equipment, net                     |   |                   | 3,341   |   |
| Goodwill                                             |   |                   | 36,785  |   |
| Other      assets                                    |   |                   | 4,466   |   |
| Total      assets                                    |   |                   | 247,078 |   |
|                                                 |   |                   |    |   |
| Deposits                                             |   |                   | 170,042 |   |
| FHLB      advances                                   |   |                   | 13,590  |   |
| Other      liabilities                               |   |                   | 1,638   |   |
| Total      liabilities                               |   |                   | 185,270 |   |
| Net      assets acquired                             |   | $                      | 61,808  |   |

|                                                               |   | Years      Ended December 31, |       |
|--------------------------------------------------------------------|--------|-------------------------------|------------|
|                                                               |   | 2007                          |       |   | 2006 |   |
| Net      interest income                                           |   | $                             | 196,022    |   |   | $ | 173,665 |   |
| Provision      for loan losses                                     |   |                          | 12,662     |   |   |   | 8,152 |   |
| Noninterest      income                                            |   |                          | 13,659     |   |   |   | 15,988 |   |
| Noninterest      expense                                           |   |                          | 83,616     |   |   |   | 70,896 |   |
| Income      before income tax                                      |   |                          | 113,403    |   |   |   | 110,605 |   |
| Net      income                                                    |   | $                             | 74,846     |   |   | $ | 72,783 |   |
|                                                               |   |                          |       |   |   |   |   |   |
| Basic      earnings per share                                      |   | $                             | 1.65       |   |   | $ | 1.51 |   |
| Diluted      earnings per share                                    |   | $                             | 1.64       |   |   | $ | 1.49 |   |
|                                                               |   |                          |       |   |   |   |   |   |
| Weighted      average common shares issued and outstanding         |   |                          | 45,265,723 |   |   |   | 48,240,321 |   |
| Weighted      average diluted common shares issued and outstanding |   |                          | 45,601,066 |   |   |   | 48,715,692 |   |

----

| 2008                            |   |                |   |                        |   |                                               |   |                                             |   |   |                      |   |
|---------------------------------|--------|---------------------|--------|-----------------------------|--------|----------------------------------------------------|--------|--------------------------------------------------|--------|--------|---------------------------|--------|
|                            |   | Amortized      Cost |   | Gross      Unrealized Gains |   | Gross      Unrealized Losses (less than 12 months) |   | Gross      Unrealized Losses (12 months or more) |   |   | Aggregate      Fair Value |   |
| AFS      Securities             |   |                |   |                        |   |                                               |   |                                             |   |   |                      |   |
| Equities                        |   | $                   | 6,107  |                        | $      | 61                                                 |   | $                                                | (4,057 | )      | $                         | (181   | ) |   | $ | 1,930 |   |
| U.S.      Treasuries            |   |                | 6,304  |                        |   | 153                                                |   |                                             | -      |   |                      | -      |   |   |   | 6,457 |   |
| U.S.      Agencies              |   |                | 51,594 |                        |   | 461                                                |   |                                             | -      |   |                      | -      |   |   |   | 52,055 |   |
| Corporate      securities       |   |                | 4,528  |                        |   | 153                                                |   |                                             | -      |   |                      | (242   | ) |   |   | 4,439 |   |
| Mortgage-backed      securities |   |                | 22,791 |                        |   | -                                                  |   |                                             | -      |   |                      | -      |   |   |   | 22,791 |   |
| Municipal      securities       |   |                | 2,855  |                        |   | 81                                                 |   |                                             | -      |   |                      | (2     | ) |   |   | 2,934 |   |
|                            |   |                | 94,179 |                        |   | 909                                                |   |                                             | (4,057 | )      |                      | (425   | ) |   |   | 90,606 |   |
|                            |   |                |   |                        |   |                                               |   |                                             |   |   |                      |   |   |   |   |   |   |
| HTM      Securities             |   |                |   |                        |   |                                               |   |                                             |   |   |                      |   |   |   |   |   |   |
| Corporate      securities       |   |                | 1,524  |                        |   | 229                                                |   |                                             | -      |   |                      | -      |   |   |   | 1,753 |   |
| Municipal      securities       |   |                | 1,561  |                        |   | 26                                                 |   |                                             | -      |   |                      | -      |   |   |   | 1,587 |   |
|                            |   |                | 3,085  |                        |   | 255                                                |   |                                             | -      |   |                      | -      |   |   |   | 3,340 |   |
| Total                           |   | $                   | 97,264 |                        | $      | 1,164                                              |   | $                                                | (4,057 | )      | $                         | (425   | ) |   | $ | 93,946 |   |

| 2007                            |   |                |    |                        |   |                                               |   |                                             |   |   |                      |   |
|---------------------------------|--------|---------------------|---------|-----------------------------|--------|----------------------------------------------------|--------|--------------------------------------------------|--------|--------|---------------------------|--------|
|                            |   | Amortized      Cost |    | Gross      Unrealized Gains |   | Gross      Unrealized Losses (less than 12 months) |   | Gross      Unrealized Losses (12 months or more) |   |   | Aggregate      Fair Value |   |
| AFS      Securities             |   |                |    |                        |   |                                               |   |                                             |   |   |                      |   |
| Equities                        |   | $                   | 27,606  |                        | $      | 9,255                                              |   | $                                                | (922   | )      | $                         | (1,364 | ) |   | $ | 34,575 |   |
| U.S.      Treasuries            |   |                | 6,223   |                        |   | 88                                                 |   |                                             | -      |   |                      | -      |   |   |   | 6,311 |   |
| U.S.      Agencies              |   |                | 71,385  |                        |   | 782                                                |   |                                             | -      |   |                      | -      |   |   |   | 72,167 |   |
| Corporate      securities       |   |                | 15,537  |                        |   | 87                                                 |   |                                             | (320   | )      |                      | (124   | ) |   |   | 15,180 |   |
| Mortgage-backed      securities |   |                | -       |                        |   | -                                                  |   |                                             | -      |   |                      | -      |   |   |   | - |   |
| Municipal      securities       |   |                | 3,134   |                        |   | 14                                                 |   |                                             | -      |   |                      | (3     | ) |   |   | 3,145 |   |
|                            |   |                | 123,885 |                        |   | 10,226                                             |   |                                             | (1,242 | )      |                      | (1,491 | ) |   |   | 131,378 |   |
|                            |   |                |    |                        |   |                                               |   |                                             |   |   |                      |   |   |   |   |   |   |
| HTM      Securities             |   |                |    |                        |   |                                               |   |                                             |   |   |                      |   |   |   |   |   |   |
| Corporate      securities       |   |                | 1,525   |                        |   | -                                                  |   |                                             | (1     | )      |                      | -      |   |   |   | 1,524 |   |
| Municipal      securities       |   |                | 2,218   |                        |   | 27                                                 |   |                                             | (3     | )      |                      | -      |   |   |   | 2,242 |   |
|                            |   |                | 3,743   |                        |   | 27                                                 |   |                                             | (4     | )      |                      | -      |   |   |   | 3,766 |   |
| Total                           |   | $                   | 127,628 |                        | $      | 10,253                                             |   | $                                                | (1,246 | )      | $                         | (1,491 | ) |   | $ | 135,144 |   |

----

|   2008                     |   | Less      Than 12 Months     |   |   | 12      Months or More |   |   | Total                        |   |
|---------------------------------|--------|------------------------------|--------|--------|------------------------|--------|--------|------------------------------|--------|
|                            |   | Gross      Unrealized Losses |   |   | Fair      Value        |   |   | Gross      Unrealized Losses |   |   | Fair      Value |   |   | Gross      Unrealized Losses |   |   | Fair      Value |   |
| AFS      Securities             |   |                         |   |   |                   |   |   |                         |   |   |   |   |   |   |   |   |   |   |
| Equities                        |   | $                            | (4,057 | )      |                   | $      | 923    |                         |   | $ | (181 | ) |   | $ | 425 |   |   | $ | (4,238 | ) |   | $ | 1,348 |   |
| U.S.      Treasuries            |   |                         | -      |   |                   |   | -      |                         |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| U.S.      Agencies              |   |                         | -      |   |                   |   | -      |                         |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Corporate      securities       |   |                         | -      |   |                   |   | -      |                         |   |   | (242 | ) |   |   | 1,769 |   |   |   | (242 | ) |   |   | 1,769 |   |
| Mortgage-backed      securities |   |                         | -      |   |                   |   | -      |                         |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Municipal      securities       |   |                         | -      |   |                   |   | -      |                         |   |   | (2 | ) |   |   | 23 |   |   |   | (2 | ) |   |   | 23 |   |
|                            |   | $                            | (4,057 | )      |                   | $      | 923    |                         |   | $ | (425 | ) |   | $ | 2,217 |   |   | $ | (4,482 | ) |   | $ | 3,140 |   |

| 2007                            |   | Less      Than 12 Months     |   |   | 12      Months or More |   |   | Total                        |   |
|---------------------------------|--------|------------------------------|--------|--------|------------------------|--------|--------|------------------------------|--------|
|                            |   | Gross      Unrealized Losses |   |   | Fair      Value        |   |   | Gross      Unrealized Losses |   |   | Fair      Value |   |   | Gross      Unrealized Losses |   |   | Fair      Value |   |
| AFS      Securities             |   |                         |   |   |                   |   |   |                         |   |   |   |   |   |   |   |   |   |   |
| Equities                        |   | $                            | (922   | )      |                   | $      | 7,190  |                         |   | $ | (1,364 | ) |   | $ | 3,561 |   |   | $ | (2,286 | ) |   | $ | 10,751 |   |
| U.S.      Treasuries            |   |                         | -      |   |                   |   | -      |                         |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| U.S.      Agencies              |   |                         | -      |   |                   |   | -      |                         |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Corporate      securities       |   |                         | (320   | )      |                   |   | 5,722  |                         |   |   | (124 | ) |   |   | 5,867 |   |   |   | (444 | ) |   |   | 11,589 |   |
| Mortgage-backed      securities |   |                         | -      |   |                   |   | -      |                         |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Municipal      securities       |   |                         | -      |   |                   |   | -      |                         |   |   | (3 | ) |   |   | 22 |   |   |   | (3 | ) |   |   | 22 |   |
|                            |   |                         | (1,242 | )      |                   |   | 12,912 |                         |   |   | (1,491 | ) |   |   | 9,450 |   |   |   | (2,733 | ) |   |   | 22,362 |   |
|                            |   |                         |   |   |                   |   |   |                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| HTM      Securities             |   |                         |   |   |                   |   |   |                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Corporate      securities       |   |                         | (1     | )      |                   |   | 1,524  |                         |   |   | - |   |   |   | - |   |   |   | (1 | ) |   |   | 1,524 |   |
| Municipal      securities       |   |                         | (3     | )      |                   |   | 1,016  |                         |   |   | - |   |   |   | - |   |   |   | (3 | ) |   |   | 1,016 |   |
|                            |   |                         | (4     | )      |                   |   | 2,540  |                         |   |   | - |   |   |   | - |   |   |   | (4 | ) |   |   | 2,540 |   |
| Total                           |   | $                            | (1,246 | )      |                   | $      | 15,452 |                         |   | $ | (1,491 | ) |   | $ | 9,450 |   |   | $ | (2,737 | ) |   | $ | 24,902 |   |

----

|               |   | Available      for sale |   |   | Held      to maturity |   |
|--------------------|--------|-------------------------|--------|--------|-----------------------|--------|
| Maturity           |   | Amortized      Cost     |   |   | Fair      Value       |   |   | Amortized      Cost |   |   | Fair      Value |   |
| 0 -      1 years   |   | $                       | 11,223 |   |                  | $      | 11,291 |   |   | $ | 574 |   |   | $ | 579 |   |
| 1 -      5 years   |   |                    | 48,940 |   |                  |   | 49,163 |   |   |   | 987 |   |   |   | 1,008 |   |
| 5 -      10 years  |   |                    | 1,625  |   |                  |   | 1,731 |   |   |   | - |   |   |   | - |   |
| Over      10 years |   |                    | 32,391 |   |                  |   | 28,421 |   |   |   | 1,524 |   |   |   | 1,753 |   |
|               |   | $                       | 94,179 |   |                  | $      | 90,606 |   |   | $ | 3,085 |   |   | $ | 3,340 |   |

|                                                    |   | Amortized      Cost |   |   | Fair      Value |   |
|---------------------------------------------------------|--------|---------------------|--------|--------|-----------------|--------|
| To      the Federal Home Loan Bank to secure borrowings |   | $                   | 502    |   |            | $      | 517 |   |
| To      state government to secure public deposits      |   |                | 25,213 |   |            |   | 25,303 |   |
| To      Federal Reserve to secure repurchase agreements |   |                | 26,069 |   |            |   | 26,319 |   |
| To      Federal Reserve to secure customer tax payments |   |                | 4,000  |   |            |   | 4,080 |   |
| Other      securities pledged                           |   |                | 7,004  |   |            |   | 7,178 |   |
| Total      pledged securities                           |   | $                   | 62,788 |   |            | $      | 63,397 |   |

----

|                             |   | 2008   |      |   | 2007   |   |
|----------------------------------|--------|--------|-----------|--------|--------|--------|
| Commercial      and industrial   |   | $      | 458,263   |   |   | $      | 403,511 |   |
| Real      Estate:                |   |   |      |   |   |   |   |   |
| Commercial                       |   |   | 1,048,431 |   |   |   | 1,007,152 |   |
| Construction                     |   |   | 952,619   |   |   |   | 1,068,196 |   |
| Land      development            |   |   | 581,683   |   |   |   | 540,419 |   |
| Completed      lots              |   |   | 250,405   |   |   |   | 250,738 |   |
| Residential      1-4 family      |   |   | 425,874   |   |   |   | 283,470 |   |
| Installment      and other loans |   |   | 65,490    |   |   |   | 67,460 |   |
|                             |   |   | 3,782,765 |   |   |   | 3,620,946 |   |
| Unearned      fee income         |   |   | (10,710   | )      |   |   | (15,051 | ) |
| Total      loans                 |   | $      | 3,772,055 |   |   | $      | 3,605,895 |   |

|                             |   | Within      1 Year |      |   | 1      -5 Years |            |      | After      5 Years |               |   | Total   |   |
|----------------------------------|--------|--------------------|-----------|--------|-----------------|-----------------|-----------|--------------------|--------------------|--------|---------|--------|
| Commercial      and industrial   |   | $                  | 272,955   |   |            | $               | 154,565   |               |               | $      | 29,695  |   |   | $ | 457,215 |   |
| Real      Estate:                |   |               |      |   |            |            |      |               |               |   |    |   |   |   |   |   |
| Commercial                       |   |               | 124,502   |   |            |            | 630,986   |               |               |   | 289,345 |   |   |   | 1,044,833 |   |
| Construction                     |   |               | 861,079   |   |            |            | 84,970    |               |               |   | 3,860   |   |   |   | 949,909 |   |
| Land      development            |   |               | 544,019   |   |            |            | 36,434    |               |               |   | -       |   |   |   | 580,453 |   |
| Completed      lots              |   |               | 207,124   |   |            |            | 40,819    |               |               |   | 1,742   |   |   |   | 249,685 |   |
| Residential      1-4 family      |   |               | 164,406   |   |            |            | 203,399   |               |               |   | 56,687  |   |   |   | 424,492 |   |
| Installment      and other loans |   |               | 15,883    |   |            |            | 15,384    |               |               |   | 34,201  |   |   |   | 65,468 |   |
| Total      loans                 |   | $                  | 2,189,968 |   |            | $               | 1,166,557 |               |               | $      | 415,530 |   |   | $ | 3,772,055 |   |
|                             |   |               |      |   |            |            |      |               |               |   |    |   |   |   |   |   |
|                             |   |               |      |   |            |            |      |               |               |   |    |   |   |   |   |   |
|                             |   |               |      |   |            | 1      -5 Years |      |               | After      5 Years |   |    |   |   |   |
| Fixed      rates                 |   |               |      |   |            | $               | 818,792   |               |               | $      | 79,270  |   |   |   |   |   |
| Variable      rates              |   |               |      |   |            |            | 347,765   |               |               |   | 336,260 |   |   |   |   |   |
|                             |   |               |      |   |            | $               | 1,166,557 |               |               | $      | 415,530 |   |   |   |   |   |

----

|                                                         |   | 2008   |    |   | 2007   |   |   | 2006   |   |
|--------------------------------------------------------------|--------|--------|---------|--------|--------|--------|--------|--------|--------|
| Beginning      balance                                       |   | $      | 57,658  |   |   | $      | 44,195 |   |   | $ | 37,075 |   |
| Provision      for loan losses                               |   |   | 120,000 |   |   |   | 11,400 |   |   |   | 7,500 |   |
| Charge-offs                                                  |   |   | (63,526 | )      |   |   | (1,906 | )      |   |   | (3,294 | ) |
| Recoveries                                                   |   |   | 506     |   |   |   | 986    |   |   |   | 413 |   |
| Merger                                                       |   |   | -       |   |   |   | 2,983  |   |   |   | 2,501 |   |
| Balance      before portion identified for undisbursed loans |   |   | 114,638 |   |   |   | 57,658 |   |   |   | 44,195 |   |
| Portion      of reserve identified for undisbursed           |   |   |    |   |   |   |   |   |   |   |   |   |
| loans      and reclassified as a liability                   |   |   | (2,082  | )      |   |   | (3,663 | )      |   |   | (3,546 | ) |
| Balance      at end of period                                |   | $      | 112,556 |   |   | $      | 53,995 |   |   | $ | 40,649 |   |

|                                            |   | 2008   |      |   | 2007   |   |      | 2006   |   |
|-------------------------------------------------|--------|--------|-----------|--------|--------|--------|-----------|--------|--------|
| Commercial      and industrial                  |   | $      | 12,908    |   |   | $      | 159       |   |   | $ | 574 |   |
| Real      estate:                               |   |   |      |   |   |   |      |   |   |   |   |   |
| Commercial                                      |   |   | 10,937    |   |   |   | -         |   |   |   | - |   |
| Construction                                    |   |   | 181,905   |   |   |   | 19,842    |   |   |   | 47 |   |
| Land      development                           |   |   | 177,139   |   |   |   | -         |   |   |   | 7,143 |   |
| Completed      lots                             |   |   | 34,005    |   |   |   | 804       |   |   |   | - |   |
| Residential      1-4 family                     |   |   | 17,686    |   |   |   | 93        |   |   |   | 889 |   |
| Installment      and other                      |   |   | 645       |   |   |   | 10        |   |   |   | - |   |
| Total      nonaccruing loans                    |   |   | 435,225   |   |   |   | 20,908    |   |   |   | 8,653 |   |
| Other      real estate owned                    |   |   | 10,803    |   |   |   | 367       |   |   |   | - |   |
| Total      nonperforming assets                 |   | $      | 446,028   |   |   | $      | 21,275    |   |   | $ | 8,653 |   |
|                                            |   |   |      |   |   |   |      |   |   |   |   |   |
| Restructured      loans                         |   | $      | -         |   |   | $      | -         |   |   | $ | - |   |
|                                            |   |   |      |   |   |   |      |   |   |   |   |   |
| Total      loans at end of period (1)           |   | $      | 3,778,733 |   |   | $      | 3,612,122 |   |   | $ | 2,908,000 |   |
| Total      assets at end of period              |   | $      | 4,104,445 |   |   | $      | 3,995,689 |   |   | $ | 3,238,464 |   |
|                                            |   |   |      |   |   |   |      |   |   |   |   |   |
| Total      nonperforming loans to total loans   |   |   | 11.52     | %      |   |   | 0.58      | %      |   |   | 0.30 | % |
| Total      nonperforming assets to total assets |   |   | 10.87     | %      |   |   | 0.53      | %      |   |   | 0.27 | % |
|                                            |   |   |      |   |   |   |      |   |   |   |   |   |
| (1)      Includes loans held for resale         |   |   |      |   |   |   |      |   |   |   |   |   |

----

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

|                          |   | December      31, 2008 |   |   | December      31, 2007 |   |
|-------------------------------|--------|------------------------|--------|--------|------------------------|--------|
|                          |   | Amount                 |   |   | Number                 |   |   | Amount |   |   | Number |   |
| Beginning      balance        |   | $                      | 367    |   |                   |   | 1 |   |   | $ | - |   |   |   | - |   |
| Additions      to OREO        |   |                   | 12,992 |   |                   |   | 76 |   |   |   | 367 |   |   |   | 1 |   |
| Capitalized      improvements |   |                   | 623    |   |                   |   |   |   |   |   | - |   |   |   |   |   |
| Valuation      adjustments    |   |                   | (68    | )      |                   |   |   |   |   |   | - |   |   |   |   |   |
| Disposition      of OREO      |   |                   | (3,111 | )      |                   |   | (13 | ) |   |   | - |   |   |   | - |   |
| Ending      balance           |   | $                      | 10,803 |   |                   |   | 64 |   |   | $ | 367 |   |   |   | 1 |   |

|                                   |   | 2008   |    |   | 2007   |   |
|----------------------------------------|--------|--------|---------|--------|--------|--------|
| Premises                               |   | $      | 44,440  |   |   | $      | 31,032 |   |
| Furniture,      fixtures and equipment |   |   | 25,676  |   |   |   | 21,180 |   |
| Land                                   |   |   | 15,593  |   |   |   | 15,597 |   |
| Construction      in process           |   |   | 1,155   |   |   |   | 11,403 |   |
|                                   |   |   | 86,864  |   |   |   | 79,212 |   |
| Accumulated      depreciation          |   |   | (35,362 | )      |   |   | (31,919 | ) |
| Premises      and equipment, net       |   | $      | 51,502  |   |   | $      | 47,293 |   |

----

|                                   |   | 2008   |    |   | 2007   |   |
|----------------------------------------|--------|--------|---------|--------|--------|--------|
| Beginning      balance                 |   | $      | 77,073  |   |   | $      | 40,288 |   |
| Goodwill      acquired during the year |   |   | -       |   |   |   | 36,785 |   |
| Impairment      losses                 |   |   | (77,073 | )      |   |   | - |   |
| Ending      balance                    |   | $      | -       |   |   | $      | 77,073 |   |

| 2008                                   |   |                       |   |   |                          |   |   |                     |   |
|----------------------------------------|--------|----------------------------|--------|--------|-------------------------------|--------|--------|--------------------------|--------|
|                                   |   | Gross      Carrying Amount |   |   | Accumulated      Amortization |   |   | Net      Carrying Amount |   |
| Core      deposit intangible           |   | $                          | 1,054  |   |                          | $      | (434   | )                        |   | $ | 620 |   |
| Other                                  |   |                       | 489    |   |                          |   | (315   | )                        |   |   | 174 |   |
| Total      amortized intangible assets |   | $                          | 1,543  |   |                          | $      | (749   | )                        |   | $ | 794 |   |

| 2007                                   |   |                       |   |   |                          |   |   |                     |   |   |   |   |
|----------------------------------------|--------|----------------------------|--------|--------|-------------------------------|--------|--------|--------------------------|--------|--------|--------|--------|
|                                   |   | Gross      Carrying Amount |   |   | Accumulated      Amortization |   |   | Net      Carrying Amount |   |
| Core      deposit intangible           |   | $                          | 1,054  |   |                          | $      | (256   | )                        |   | $      | 798    |   |
| Other                                  |   |                       | 489    |   |                          |   | (210   | )                        |   |   | 279    |   |
| Total      amortized intangible assets |   | $                          | 1,543  |   |                          | $      | (466   | )                        |   | $      | 1,077  |   |

----

|                                      |   | 2008   |      |   | 2007   |   |
|-------------------------------------------|--------|--------|-----------|--------|--------|--------|
| Money      market, sweep and NOW accounts |   | $      | 325,554   |   |   | $      | 745,780 |   |
| Savings                                   |   |   | 365,114   |   |   |   | 254,722 |   |
| Time      deposits, $100,000 and over     |   |   | 1,430,685 |   |   |   | 832,373 |   |
| Other      time deposits                  |   |   | 758,361   |   |   |   | 719,835 |   |
| Total      interest bearing deposits      |   | $      | 2,879,714 |   |   | $      | 2,552,710 |   |

| Year      Ending December 31, | 2009       |   | $      | 1,882,705 |   |
|-------------------------------|------------|--------|--------|-----------|--------|
|                          | 2010       |   |   | 211,022   |   |
|                          | 2011       |   |   | 31,951    |   |
|                          | 2012       |   |   | 41,469    |   |
|                          | 2013       |   |   | 19,664    |   |
|                          | Thereafter |   |   | 2,235     |   |
|                          |       |   | $      | 2,189,046 |   |

|                          |       |   | Amount |    |   | Interest      Rates |   |
|-------------------------------|------------|--------|--------|---------|--------|---------------------|--------|
| Year      Ending December 31, | 2009       |   | $      | 68,146  |   |                |   | 2.44%      - 4.49 | % |
|                          | 2010       |   |   | 65,786  |   |                |   | 3.03%      - 4.93 | % |
|                          | 2011       |   |   | -       |   |                |   | - |   |
|                          | 2012       |   |   | 100,485 |   |                |   | 3.87%      - 4.97 | % |
|                          | 2013       |   |   | 100,000 |   |                |   | 3.04 | % |
|                          | Thereafter |   |   | 95,000  |   |                |   | 3.71%      - 4.66 | % |
|                          |       |   | $      | 429,417 |   |                |   |   |   |

----

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

----

|                                    |   | 2008   |    |   | 2007   |   |   | 2006   |   |
|-----------------------------------------|--------|--------|---------|--------|--------|--------|--------|--------|--------|
| Current                                 |   | $      | 11,796  |   |   | $      | 43,066 |   |   | $ | 37,090 |   |
| Deferred                                |   |   | (20,431 | )      |   |   | (5,480 | )      |   |   | (1,721 | ) |
| Provision      (benefit) for income tax |   | $      | (8,635  | )      |   | $      | 37,586 |   |   | $ | 35,369 |   |

|                                                               |   | 2008   |   |   | 2007   |   |
|--------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|
| Deferred      tax assets                                           |   |   |   |   |   |   |
| Allowance      for possible loan losses, in excess of tax reserves |   | $      | 40,260 |   |   | $      | 20,159 |   |
| Intangible      assets                                             |   |   | 900    |   |   |   | 1,468 |   |
| Unrealized      loss on available for sale securities              |   |   | 1,459  |   |   |   | - |   |
| Other      deferred tax assets                                     |   |   | 2,097  |   |   |   | 892 |   |
| Total      deferred tax assets                                     |   |   | 44,716 |   |   |   | 22,519 |   |
|                                                               |   |   |   |   |   |   |   |   |
| Deferred      tax liabilities                                      |   |   |   |   |   |   |   |   |
| FHLB      stock dividends                                          |   |   | (2,589 | )      |   |   | (2,574 | ) |
| Deferred      loan fees                                            |   |   | (2,239 | )      |   |   | (1,964 | ) |
| Unrealized      gain on available for sale securities              |   |   | -      |   |   |   | (2,626 | ) |
| Other      deferred tax liabilities                                |   |   | (1,892 | )      |   |   | (1,875 | ) |
| Total      deferred tax liabilities                                |   |   | (6,720 | )      |   |   | (9,039 | ) |
| Net      deferred tax assets                                       |   | $      | 37,996 |   |   | $      | 13,480 |   |

|                                                  |   | 2008   |    |   | 2007   |   |   | 2006   |   |
|-------------------------------------------------------|--------|--------|---------|--------|--------|--------|--------|--------|--------|
|                                                  |   | Amount |    |   | Rate   |   |   | Amount |   |   | Rate |   |   | Amount |   |   | Rate |   |
| Income      tax provision (benefit) at statutory rate |   | $      | (34,627 | )      |   |   | (35    | %)     |   | $ | 39,034 |   |   |   | 35 | % |   | $ | 36,498 |   |   |   | 35 | % |
| Effect      of nontaxable interest income             |   |   | (1,123  | )      |   |   | (1     | %)     |   |   | (1,085 | ) |   |   | (1 | %) |   |   | (1,129 | ) |   |   | (1 | %) |
| Goodwill                                              |   |   | 27,131  |   |   |   | 27     | %      |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Other                                                 |   |   | (16     | )      |   |   | -      |   |   |   | (363 | ) |   |   | - |   |   |   | - |   |   |   | - |   |
| Income      tax provision (benefit) at effective rate |   | $      | (8,635  | )      |   |   | (9     | %)     |   | $ | 37,586 |   |   |   | 34 | % |   | $ | 35,369 |   |   |   | 34 | % |

----

|                         |   |   |    |   |                   |   |   | To      Be Well        |   |   |             |   |   |   |   |
|------------------------------|--------|--------|---------|--------|------------------------|--------|--------|------------------------|--------|--------|------------------|--------|--------|--------|--------|
|                         |   |   |    |   |                   |   |   | Capitalized      Under |   |   |             |   |   |   |   |
|                         |   |   |    |   |                   |   |   | Prompt      Corrective |   |   | For      Capital |   |
|                         |   | Actual |    |   | Action      Provisions |   |   | Adequacy      Purposes |   |
| 2008                         |   | Amount |    |   | Ratio                  |   |   | Amount                 |   |   | Ratio            |   |   | Amount |   |   | Ratio |   |
| Total      Capital (to risk  |   |   |    |   |                   |   |   |                   |   |   |             |   |   |   |   |   |   |   |
| weighted      assets)        |   |   |    |   |                   |   |   |                   |   |   |             |   |   |   |   |   |   |   |
| Consolidated                 |   | $      | 402,612 |   |                   |   | 10.91  | %                      |   |   | N/A              |   |   |   | N/A    |   |   | $ | 295,126 |   |   |   | 8.00 | % |
| Frontier      Bank           |   |   | 390,260 |   |                   |   | 10.55  | %                      |   |   | 370,006          |   |   |   | 10.00  | % |   |   | 296,005 |   |   |   | 8.00 | % |
|                         |   |   |    |   |                   |   |   |                   |   |   |             |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Tier      I Capital (to risk |   |   |    |   |                   |   |   |                   |   |   |             |   |   |   |   |   |   |   |   |   |   |   |   |   |
| weighted      assets)        |   |   |    |   |                   |   |   |                   |   |   |             |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Consolidated                 |   |   | 355,653 |   |                   |   | 9.64   | %                      |   |   | N/A              |   |   |   | N/A    |   |   |   | 147,563 |   |   |   | 4.00 | % |
| Frontier      Bank           |   |   | 343,165 |   |                   |   | 9.27   | %                      |   |   | 222,003          |   |   |   | 6.00   | % |   |   | 148,002 |   |   |   | 4.00 | % |
|                         |   |   |    |   |                   |   |   |                   |   |   |             |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Tier      I Capital (to      |   |   |    |   |                   |   |   |                   |   |   |             |   |   |   |   |   |   |   |   |   |   |   |   |   |
| average      assets)         |   |   |    |   |                   |   |   |                   |   |   |             |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Consolidated                 |   |   | 355,653 |   |                   |   | 8.62   | %                      |   |   | N/A              |   |   |   | N/A    |   |   |   | 164,981 |   |   |   | 4.00 | % |
| Frontier      Bank           |   |   | 343,165 |   |                   |   | 8.53   | %                      |   |   | 201,146          |   |   |   | 5.00   | % |   |   | 160,917 |   |   |   | 4.00 | % |

| 2007                         |   |   |    |   |   |   |   |   |   |   |    |   |   |   |   |   |   |   |    |   |   |   |   |   |
|------------------------------|--------|--------|---------|--------|--------|--------|--------|--------|--------|--------|---------|--------|--------|--------|--------|--------|--------|--------|---------|--------|--------|--------|--------|--------|
|                         |   |   |    |   |   |   |   |   |   |   |    |   |   |   |   |   |   |   |    |   |   |   |   |   |
| Total      Capital (to risk  |   |   |    |   |   |   |   |   |   |   |    |   |   |   |   |   |   |   |    |   |   |   |   |   |
| weighted      assets)        |   |   |    |   |   |   |   |   |   |   |    |   |   |   |   |   |   |   |    |   |   |   |   |   |
| Consolidated                 |   | $      | 429,227 |   |   |   | 11.38  | %      |   |   | N/A     |   |   |   | N/A    |   |   | $      | 301,664 |   |   |   | 8.00   | %      |
| Frontier      Bank           |   |   | 397,844 |   |   |   | 10.62  | %      |   |   | 374,529 |   |   |   | 10.00  | %      |   |   | 299,623 |   |   |   | 8.00   | %      |
|                         |   |   |    |   |   |   |   |   |   |   |    |   |   |   |   |   |   |   |    |   |   |   |   |   |
| Tier      I Capital (to risk |   |   |    |   |   |   |   |   |   |   |    |   |   |   |   |   |   |   |    |   |   |   |   |   |
| weighted      assets)        |   |   |    |   |   |   |   |   |   |   |    |   |   |   |   |   |   |   |    |   |   |   |   |   |
| Consolidated                 |   |   | 381,962 |   |   |   | 10.13  | %      |   |   | N/A     |   |   |   | N/A    |   |   |   | 150,833 |   |   |   | 4.00   | %      |
| Frontier      Bank           |   |   | 350,935 |   |   |   | 9.37   | %      |   |   | 224,718 |   |   |   | 6.00   | %      |   |   | 149,812 |   |   |   | 4.00   | %      |
|                         |   |   |    |   |   |   |   |   |   |   |    |   |   |   |   |   |   |   |    |   |   |   |   |   |
| Tier      I Capital (to      |   |   |    |   |   |   |   |   |   |   |    |   |   |   |   |   |   |   |    |   |   |   |   |   |
| average      assets)         |   |   |    |   |   |   |   |   |   |   |    |   |   |   |   |   |   |   |    |   |   |   |   |   |
| Consolidated                 |   |   | 381,962 |   |   |   | 10.55  | %      |   |   | N/A     |   |   |   | N/A    |   |   |   | 144,841 |   |   |   | 4.00   | %      |
| Frontier      Bank           |   |   | 350,935 |   |   |   | 9.74   | %      |   |   | 180,136 |   |   |   | 5.00   | %      |   |   | 144,109 |   |   |   | 4.00   | %      |

----

|                                              |   | Years      Ended December 31, |   |
|---------------------------------------------------|--------|-------------------------------|--------|
|                                              |   | 2008                          |   |   | 2007 |   |   | 2006 |   |
|  Risk-free      interest rate                |   |                          | 1.53   | % |   |   | 3.41 | % |   |   | 4.60 | % |
|  Expected      dividends                     |   |                          | 3.63   | % |   |   | 2.45 | % |   |   | 1.68 | % |
|  Expected      volatility                    |   |                          | 50.72  | % |   |   | 36.50 | % |   |   | 35.61 | % |
|  Expected      term (in years)               |   |                          | 6.1    |   |   |   | 5.7 |   |   |   | 3.2 |   |
|  Weighted      average grant date fair value |   | $                             | 1.05   |   |   | $ | 5.79 |   |   | $ | 8.06 |   |

----

|                                  |   |        |      |   |                  |   |   | Weighted    |   |   | Aggregate   |   |
|---------------------------------------|--------|-------------|-----------|--------|-----------------------|--------|--------|-------------|--------|--------|-------------|--------|
|                                  |   |        |      |   |                  |   |   | Average     |   |   | Intrinsic   |   |
|                                  |   | Options     |      |   | Weighted      Average |   |   | Contractual |   |   | Value       |   |
|                                  |   | Outstanding |      |   | Exercise      Price   |   |   | Term        |   |   | (Thousands) |   |
| Outstanding,      January 1, 2008     |   |        | 1,331,490 |   |                  | $      | 18.24  |        |   |   |        |   |   |   |
| Granted                               |   |        | 150,750   |   |                  |   | 3.02   |        |   |   |        |   |   |   |
| Exercised                             |   |        | (31,125   | )      |                  |   | 12.55  |        |   |   |        |   |   |   |
| Forfeited/Expired                     |   |        | (76,381   | )      |                  |   | 18.50  |        |   |   |        |   |   |   |
| Outstanding,      December 31, 2008   |   |        | 1,374,734 |   |                  | $      | 16.69  |        |   |   | 6.3         |   |   | $ | 198 |   |
|                                  |   |        |      |   |                  |   |   |        |   |   |        |   |   |   |   |   |
| Exercisable      at December 31, 2008 |   |        | 1,009,946 |   |                  | $      | 16.93  |        |   |   | 5.3         |   |   | $ | 18 |   |

|                                |   |   |     |   | Weighted      Average |   |
|-------------------------------------|--------|--------|----------|--------|-----------------------|--------|
|                                |   |   |     |   | Grant-Date            |   |
|                                |   | Shares |     |   | Fair      Value       |   |
| Nonvested      at January 1, 2008   |   |   | 231,799  |   |                  | $      | 22.64 |   |
| Awarded                             |   |   | 183,150  |   |                  |   | 6.11 |   |
| Released                            |   |   | (128,753 | )      |                  |   | 21.93 |   |
| Forfeited                           |   |   | (16,434  | )      |                  |   | 22.67 |   |
| Nonvested      at December 31, 2008 |   |   | 269,762  |   |                  | $      | 11.74 |   |

----

|                                     |   | 2008   |       |   | 2007   |   |       | 2006   |   |
|------------------------------------------|--------|--------|------------|--------|--------|--------|------------|--------|--------|
| Net      income (loss)                   |   | $      | (89,737    | )      |   | $      | 73,938     |   |   | $ | 68,910 |   |
|                                     |   |   |       |   |   |   |       |   |   |   |   |   |
| Shares      used in the calculation      |   |   |       |   |   |   |       |   |   |   |   |   |
| Weighted      average shares outstanding |   |   | 46,991,625 |   |   |   | 45,265,723 |   |   |   | 45,009,526 |   |
| Effect      of dilutive stock options    |   |   | -          |   |   |   | 335,343    |   |   |   | 475,461 |   |
| Diluted      shares                      |   |   | 46,991,625 |   |   |   | 45,601,066 |   |   |   | 45,484,987 |   |
|                                     |   |   |       |   |   |   |       |   |   |   |   |   |
| Basic      earnings (loss) per share     |   | $      | (1.91      | )      |   | $      | 1.63       |   |   | $ | 1.53 |   |
| Diluted      earnings (loss) per share   |   | $      | (1.91      | )      |   | $      | 1.62       |   |   | $ | 1.52 |   |

|                              |   | 2008   |   |   | 2007   |   |    | 2006   |   |
|-----------------------------------|--------|--------|--------|--------|--------|--------|---------|--------|--------|
| Balance      at beginning of year |   | $      | 52,649 |   |   | $      | 85,277  |   |   | $ | 72,700 |   |
| New      loans or advances        |   |   | 6,471  |   |   |   | 10,089  |   |   |   | 23,342 |   |
| Repayments                        |   |   | (2,132 | )      |   |   | (42,717 | )      |   |   | (10,765 | ) |
| Balance      at end of year       |   | $      | 56,988 |   |   | $      | 52,649  |   |   | $ | 85,277 |   |

----

| Year      ending December 31, | 2009       |   | $      | 1,900 |   |
|-------------------------------|------------|--------|--------|-------|--------|
|                          | 2010       |   |   | 1,633 |   |
|                          | 2011       |   |   | 1,346 |   |
|                          | 2012       |   |   | 886   |   |
|                          | 2013       |   |   | 845   |   |
|                          | Thereafter |   |   | 1,064 |   |
|                          |       |   | $      | 7,674 |   |

|                                          |   | Amount |    |
|-----------------------------------------------|--------|--------|---------|
| Commitments      to extend credit             |   | $      | 484,407 |   |
| Credit      card arrangements                 |   |   | 44,537  |   |
| Standby      and commercial letters of credit |   |   | 18,133  |   |
|                                          |   | $      | 547,077 |   |

----

----

|                               |   | Fair      Value at December 31, 2008 |   |
|------------------------------------|--------|--------------------------------------|--------|
|                               |   | Level      1                         |   |   | Level      2 |   |   | Level      3 |   |   | Total |   |
| Available      for sale securities |   |                                 |   |   |   |   |   |   |   |   |   |   |
| Equities                           |   | $                                    | 1,327  |   |   | $ | 603 |   |   | $ | - |   |   | $ | 1,930 |   |
| U.S.      Treasuries               |   |                                 | -      |   |   |   | 6,457 |   |   |   | - |   |   |   | 6,457 |   |
| U.S.      Agencies                 |   |                                 | -      |   |   |   | 52,055 |   |   |   | - |   |   |   | 52,055 |   |
| Corporate      securities          |   |                                 | -      |   |   |   | 2,939 |   |   |   | 1,500 |   |   |   | 4,439 |   |
| Mortgage-backed      securities    |   |                                 | -      |   |   |   | 22,791 |   |   |   | - |   |   |   | 22,791 |   |
| Municipal      securities          |   |                                 | -      |   |   |   | 2,934 |   |   |   | - |   |   |   | 2,934 |   |
| Total                              |   | $                                    | 1,327  |   |   | $ | 87,779 |   |   | $ | 1,500 |   |   | $ | 90,606 |   |

|                                    |   | Fair      Value Measurements Using Significant Unobservable Inputs (Level      3) |   |
|-----------------------------------------|--------|-----------------------------------------------------------------------------------|--------|
| Beginning      balance                  |   | $                                                                                 | -      |   |
| Total      gains or losses recognized   |   |                                                                              | -      |   |
| Purchases                               |   |                                                                              | -      |   |
| Transfers      in and/or out of Level 3 |   |                                                                              | 1,500  |   |
| Ending      balance                     |   | $                                                                                 | 1,500  |   |

----

|                    |   | Fair      Value at December 31, 2008 |   |   | For      the Year Ended December 31, 2008 |   |
|-------------------------|--------|--------------------------------------|--------|--------|-------------------------------------------|--------|
|                    |   | Level      1                         |   |   | Level      2                              |   |   | Level      3 |   |   | Total |   |   | Total      Losses |   |
| Impaired      loans (1) |   | $                                    | -      |   |                                      | $      | - |   |   | $ | 268,193 |   |   | $ | 268,193 |   |   | $ | 60,828 |   |
| OREO      (2)           |   |                                 | -      |   |                                      |   | - |   |   |   | 10,803 |   |   |   | 10,803 |   |   |   | 3,880 |   |
|                    |   | $                                    | -      |   |                                      | $      | - |   |   | $ | 278,996 |   |   | $ | 278,996 |   |   | $ | 64,708 |   |

| (1)   | The      loss represents charge offs or impairments on collateral dependent loans      for fair value adjustments based on the fair value of the      collateral. |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2)   | The      loss represents charge offs or impairments on other real estate owned for      fair value adjustments based on the fair value of the real      estate. |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                        |   | 2008     |      |   | 2007   |   |
|---------------------------------------------|--------|----------|-----------|--------|--------|--------|
|                                        |   | Carrying |      |   | Fair   |   |   | Carrying |   |   | Fair |   |
|                                        |   | Value    |      |   | Value  |   |   | Value |   |   | Value |   |
| Assets                                      |   |     |      |   |   |   |   |   |   |   |   |   |
| Cash      and due from banks                |   | $        | 52,022    |   |   | $      | 52,022 |   |   | $ | 99,102 |   |   | $ | 99,102 |   |
| Federal      funds sold                     |   |     | 117,740   |   |   |   | 117,740 |   |   |   | 5 |   |   |   | 5 |   |
| Securities                                  |   |     |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Available      for sale                     |   |     | 90,606    |   |   |   | 90,606 |   |   |   | 131,378 |   |   |   | 131,378 |   |
| Held      to maturity                       |   |     | 3,085     |   |   |   | 3,340 |   |   |   | 3,743 |   |   |   | 3,766 |   |
| Loans      held for resale                  |   |     | 6,678     |   |   |   | 6,678 |   |   |   | 6,227 |   |   |   | 6,227 |   |
| Loans,      net                             |   |     | 3,666,177 |   |   |   | 3,714,492 |   |   |   | 3,558,127 |   |   |   | 3,639,120 |   |
| Bank      owned life insurance              |   |     | 24,321    |   |   |   | 24,321 |   |   |   | 23,734 |   |   |   | 23,734 |   |
|                                        |   |     |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Liabilities                                 |   |     |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Noninterest      bearing deposits           |   |     | 395,451   |   |   |   | 395,451 |   |   |   | 390,526 |   |   |   | 390,526 |   |
| Interest      bearing deposits              |   |     | 2,879,714 |   |   |   | 2,909,730 |   |   |   | 2,552,710 |   |   |   | 2,574,268 |   |
| Federal      funds purchased and securities |   |     |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| sold      under agreements to repurchase    |   |     | 21,616    |   |   |   | 21,616 |   |   |   | 258,145 |   |   |   | 258,145 |   |
| FHLB      Advances                          |   |     | 429,417   |   |   |   | 444,441 |   |   |   | 298,636 |   |   |   | 298,105 |   |
| Junior      subordinated debentures         |   |     | 5,156     |   |   |   | 1,676 |   |   |   | 5,156 |   |   |   | 4,976 |   |

|                                                    |   | 2008   |    |   | 2007   |   |
|---------------------------------------------------------|--------|--------|---------|--------|--------|--------|
| ASSETS                                                  |   |   |    |   |   |   |
| Cash                                                    |   | $      | 5,702   |   |   | $      | - |   |
| Investment      in subsidiaries                         |   |   |    |   |   |   |   |   |
| Bank                                                    |   |   | 346,336 |   |   |   | 350,717 |   |
| Nonbank                                                 |   |   | -       |   |   |   | 16,539 |   |
| Available      for sale securities, at fair value       |   |   | 2,847   |   |   |   | 32,315 |   |
| Other      assets                                       |   |   | 2,343   |   |   |   | 73,754 |   |
| Total      assets                                       |   | $      | 357,228 |   |   | $      | 473,325 |   |
|                                                    |   |   |    |   |   |   |   |   |
| LIABILITIES                                             |   |   |    |   |   |   |   |   |
| Other      liabilities                                  |   | $      | 5,185   |   |   | $      | 13,713 |   |
|                                                    |   |   |    |   |   |   |   |   |
| SHAREHOLDERS'      EQUITY                               |   |   |    |   |   |   |   |   |
| Common      stock                                       |   |   | 256,137 |   |   |   | 252,292 |   |
| Retained      earnings                                  |   |   | 98,020  |   |   |   | 202,453 |   |
| Accumulated      other comprehensive income, net of tax |   |   | (2,114  | )      |   |   | 4,867 |   |
| Total      shareholders' equity                         |   |   | 352,043 |   |   |   | 459,612 |   |
| Total      liabilities and shareholders' equity         |   | $      | 357,228 |   |   | $      | 473,325 |   |

----

|                                                           |   | 2008   |    |   | 2007   |   |    | 2006   |   |
|----------------------------------------------------------------|--------|--------|---------|--------|--------|--------|---------|--------|--------|
| Income                                                         |   |   |    |   |   |   |    |   |   |
| Dividends      from Bank                                       |   | $      | 9,471   |   |   | $      | 70,769  |   |   | $ | 23,846 |   |
| Dividends      from FFP                                        |   |   | 414     |   |   |   | 800     |   |   |   | 1,100 |   |
| Other      dividends                                           |   |   | 332     |   |   |   | 819     |   |   |   | 526 |   |
| Interest                                                       |   |   | 174     |   |   |   | 177     |   |   |   | 186 |   |
| Provision      for loss on  impairment of securities |   |   | (460    | )      |   |   |  - |   |   |   |  - |   |
| Gain      on sale of securities                                |   |   | 4,575   |   |   |   | -       |   |   |   | - |   |
| Other      income                                              |   |   | -       |   |   |   | 21      |   |   |   | 32 |   |
| Total      income                                              |   |   | 14,506  |   |   |   | 72,586  |   |   |   | 25,690 |   |
| Expenses                                                       |   |   |    |   |   |   |    |   |   |   |   |   |
| Personnel                                                      |   |   | 3,399   |   |   |   | 2,523   |   |   |   | 677 |   |
| Depreciation      and amortization                             |   |   | 238     |   |   |   | 260     |   |   |   | 267 |   |
| Goodwill      impairment                                       |   |   | 77,073  |   |   |   | -       |   |   |   | - |   |
| Other                                                          |   |   | 1,881   |   |   |   | 2,457   |   |   |   | 1,934 |   |
| Total      expenses                                            |   |   | 82,591  |   |   |   | 5,240   |   |   |   | 2,878 |   |
| Income      (loss) before equity in undistributed income       |   |   |    |   |   |   |    |   |   |   |   |   |
| of      subsidiaries and benefit equivalent to income tax      |   |   | (68,085 | )      |   |   | 67,346  |   |   |   | 22,812 |   |
| Income      tax benefit                                        |   |   | 342     |   |   |   | 1,566   |   |   |   | 800 |   |
| Income      (loss) before equity in undistributed income       |   |   |    |   |   |   |    |   |   |   |   |   |
| of      subsidiaries                                           |   |   | (67,743 | )      |   |   | 68,912  |   |   |   | 23,612 |   |
| Equity      in undistributed income (loss) of subsidiaries     |   |   | (21,994 | )      |   |   | 5,026   |   |   |   | 45,298 |   |
| Net      income (loss)                                         |   | $      | (89,737 | )      |   | $      | 73,938  |   |   | $ | 68,910 |   |

----

|                                                         |   | 2008   |    |   | 2007   |   |    | 2006   |   |
|--------------------------------------------------------------|--------|--------|---------|--------|--------|--------|---------|--------|--------|
|                                                         |   |   |    |   |   |   |    |   |   |
| Cash      flows from operating activities                    |   |   |    |   |   |   |    |   |   |
| Net      income (loss)                                       |   | $      | (89,737 | )      |   | $      | 73,938  |   |   | $ | 68,910 |   |
| Adjustments      to reconcile net income (loss) to net cash  |   |   |    |   |   |   |    |   |   |   |   |   |
| provided      by operating activities                        |   |   |    |   |   |   |    |   |   |   |   |   |
| Equity      in undistributed (income) loss of subsidiaries   |   |   | 21,994  |   |   |   | (5,026  | )      |   |   | (45,298 | ) |
| Depreciation      and amortization                           |   |   | 238     |   |   |   | 260     |   |   |   | 267 |   |
| Provision      for loss on impairment of securities          |   |   | 460     |   |   |   | -       |   |   |   | - |   |
| Gain      on sale of available for sale securities           |   |   | (4,575  | )      |   |   | -       |   |   |   | - |   |
| Stock      option expense                                    |   |   | 2,707   |   |   |   | 1,691   |   |   |   | 73 |   |
| Stock      award plan compensation                           |   |   | 700     |   |   |   | 892     |   |   |   | 1,156 |   |
| Excess      tax benefits associated with stock-based         |   |   |    |   |   |   |    |   |   |   |   |   |
|   compensation                                     |   |   | (49     | )      |   |   | (237    | )      |   |   | (1,205 | ) |
| Goodwill      impairment                                     |   |   | 77,073  |   |   |   | -       |   |   |   | - |   |
| Other      operating activities                              |   |   | 229     |   |   |   | (1,940  | )      |   |   | (743 | ) |
| Net      cash flows provided by operating activities         |   |   | 9,040   |   |   |   | 69,578  |   |   |   | 23,160 |   |
|                                                         |   |   |    |   |   |   |    |   |   |   |   |   |
| Cash      flows from investing activities                    |   |   |    |   |   |   |    |   |   |   |   |   |
| Purchase      of available for sale securities               |   |   | -       |   |   |   | -       |   |   |   | (5,496 | ) |
| Proceeds      from sale of available for sale securities     |   |   | 20,941  |   |   |   | -       |   |   |   | - |   |
| Proceeds      from maturity of available for sale securities |   |   | -       |   |   |   | 460     |   |   |   | - |   |
| Other      investment activities                             |   |   | (2,214  | )      |   |   | (139    | )      |   |   | (390 | ) |
| Net      cash flows provided by (used in)                    |   |   |    |   |   |   |    |   |   |   |   |   |
| investing      activities                                    |   |   | 18,727  |   |   |   | 321     |   |   |   | (5,886 | ) |
|                                                         |   |   |    |   |   |   |    |   |   |   |   |   |
| Cash      flows from financing activities                    |   |   |    |   |   |   |    |   |   |   |   |   |
| Stock      options exercised                                 |   |   | 391     |   |   |   | 1,861   |   |   |   | 4,218 |   |
| Cash      dividends paid to shareholders                     |   |   | (22,433 | )      |   |   | (29,045 | )      |   |   | (22,358 | ) |
| Repurchase      of common stock                              |   |   | -       |   |   |   | (44,384 | )      |   |   | - |   |
| Excess      tax benefits associated with stock-based         |   |   |    |   |   |   |    |   |   |   |   |   |
|   compensation                                     |   |   | 49      |   |   |   | 237     |   |   |   | 1,205 |   |
| Other      financing activities                              |   |   | (72     | )      |   |   | 75      |   |   |   | 712 |   |
| Net      cash flows used in financing activities             |   | $      | (22,065 | )      |   | $      | (71,256 | )      |   | $ | (16,223 | ) |
|                                                         |   |   |    |   |   |   |    |   |   |   |   |   |
| Increase      (decrease) in cash                             |   | $      | 5,702   |   |   | $      | (1,357  | )      |   | $ | 1,051 |   |
| Cash      at beginning of year                               |   |   | -       |   |   |   | 1,357   |   |   |   | 306 |   |
| Cash      at end of year                                     |   | $      | 5,702   |   |   | $      | -       |   |   | $ | 1,357 |   |

----

| (In      thousands)                              |   | 2008      Quarter Ended |       |
|--------------------------------------------------|--------|-------------------------|------------|
|                                             |   | (Unaudited)             |       |
|                                             |   | December      31        |       |   | September      30 |   |   | June      30 |   |   | March      31 |   |
| Interest      income                             |   | $                       | 60,392     |   |   | $ | 68,821 |   |   | $ | 72,342 |   |   | $ | 77,500 |   |
| Interest      expense                            |   |                    | 26,537     |   |   |   | 28,095 |   |   |   | 27,451 |   |   |   | 30,102 |   |
|   Net      interest income             |   |                    | 33,855     |   |   |   | 40,726 |   |   |   | 44,891 |   |   |   | 47,398 |   |
| Provision      for loan losses                   |   |                    | 44,400     |   |   |   | 42,100 |   |   |   | 24,500 |   |   |   | 9,000 |   |
| Net      interest income (loss) after provision  |   |                    |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    for      loan losses           |   |                    | (10,545    | ) |   |   | (1,374 | ) |   |   | 20,391 |   |   |   | 38,398 |   |
| Non      interest income                         |   |                    | 7,502      |   |   |   | (3,173 | ) |   |   | 4,198 |   |   |   | 6,303 |   |
| Non      interest expense                        |   |                    | 94,937     |   |   |   | 22,057 |   |   |   | 21,533 |   |   |   | 21,545 |   |
| Income      (loss) before income tax             |   |                    | (97,980    | ) |   |   | (26,604 | ) |   |   | 3,056 |   |   |   | 23,156 |   |
| Provision      (benefit) for income tax          |   |                    | (8,464     | ) |   |   | (8,808 | ) |   |   | 982 |   |   |   | 7,655 |   |
| Net      income (loss)                           |   | $                       | (89,516    | ) |   | $ | (17,796 | ) |   | $ | 2,074 |   |   | $ | 15,501 |   |
| Basic      earnings (losses) per share           |   | $                       | (1.90      | ) |   | $ | (0.38 | ) |   | $ | 0.04 |   |   | $ | 0.33 |   |
| Diluted      earnings (losses) per share         |   | $                       | (1.90      | ) |   | $ | (0.38 | ) |   | $ | 0.04 |   |   | $ | 0.33 |   |
| Weighted      average basic shares outstanding   |   |                    | 47,038,400 |   |   |   | 47,010,944 |   |   |   | 47,006,729 |   |   |   | 46,985,320 |   |
| Weighted      average diluted shares outstanding |   |                    | 47,038,400 |   |   |   | 47,010,944 |   |   |   | 47,069,136 |   |   |   | 47,098,645 |   |

|                                             |   | 2007      Quarter Ended |       |
|--------------------------------------------------|--------|-------------------------|------------|
|                                             |   | (Unaudited)             |       |
|                                             |   | December      31        |       |   | September      30 |   |   | June      30 |   |   | March      31 |   |
| Interest      income                             |   | $                       | 79,404     |   |   | $ | 77,748 |   |   | $ | 73,997 |   |   | $ | 68,523 |   |
| Interest      expense                            |   |                    | 29,883     |   |   |   | 29,566 |   |   |   | 27,788 |   |   |   | 25,804 |   |
|   Net      interest income             |   |                    | 49,521     |   |   |   | 48,182 |   |   |   | 46,209 |   |   |   | 42,719 |   |
| Provision      for loan losses                   |   |                    | 6,000      |   |   |   | 2,100 |   |   |   | 1,850 |   |   |   | 1,450 |   |
| Net      interest income after provision         |   |                    |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    for      loan losses           |   |                    | 43,521     |   |   |   | 46,082 |   |   |   | 44,359 |   |   |   | 41,269 |   |
| Non      interest income                         |   |                    | 3,802      |   |   |   | 3,538 |   |   |   | 2,562 |   |   |   | 3,407 |   |
| Non      interest expense                        |   |                    | 20,226     |   |   |   | 19,137 |   |   |   | 19,506 |   |   |   | 18,147 |   |
| Income      before income tax                    |   |                    | 27,097     |   |   |   | 30,483 |   |   |   | 27,415 |   |   |   | 26,529 |   |
| Provision      for income tax                    |   |                    | 9,080      |   |   |   | 10,256 |   |   |   | 9,244 |   |   |   | 9,006 |   |
| Net      income                                  |   | $                       | 18,017     |   |   | $ | 20,227 |   |   | $ | 18,171 |   |   | $ | 17,523 |   |
| Basic      earnings per share                    |   | $                       | 0.40       |   |   | $ | 0.46 |   |   | $ | 0.41 |   |   | $ | 0.39 |   |
| Diluted      earnings per share                  |   | $                       | 0.40       |   |   | $ | 0.46 |   |   | $ | 0.40 |   |   | $ | 0.38 |   |
| Weighted      average basic shares outstanding   |   |                    | 44,645,895 |   |   |   | 44,033,951 |   |   |   | 44,635,972 |   |   |   | 45,176,326 |   |
| Weighted      average diluted shares outstanding |   |                    | 44,871,141 |   |   |   | 44,332,276 |   |   |   | 44,991,139 |   |   |   | 45,624,490 |   |

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