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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549





Form 10-Q/A

(Amendment No. 2)







|x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ---------------------------------------------------------------------------------------

For the quarterly period ended September 30, 2009

or



| ̈ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ----------------------------------------------------------------------------------------

For the transition period from              to

Commission File Number: 001-32590





COMMUNITY BANKERS TRUST CORPORATION

(Exact name of registrant as specified in its charter)







|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Delaware                                                       |  | 20-2652949                          
|(State or other jurisdiction of
incorporation of organization) |  | (I.R.S. Employer Identification No.)



|                                                    |  |           
|--------------------------------------------------- |  | ----------
|4235 Innslake Drive, Suite 200
Glen Allen, Virginia |  | 23060     
|(Address of principal executive offices)            |  | (Zip Code)

(804) 934-9999

(Registrants telephone number, including area code)

not
applicable

(Former name, former address and former fiscal year, if changed since last report)





Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past
90 days.    Yes  x    No   ̈

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every
Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such
files).    Yes   ̈    No   ̈

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller
reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act.



|                        |  |                                                  |  |                           |  |  
|----------------------- |  | ------------------------------------------------ |  | ------------------------- |  | -
|Large accelerated filer |  |  ̈                                                |  | Accelerated filer         |  | x
|                        |  |                                                  | 
|Non-accelerated filer   |  |  ̈  (Do not check if a smaller reporting company) |  | Smaller reporting company |  |  ̈

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange
Act).    Yes   ̈    No  x

At October 1, 2009, there were 21,468,455 shares of the Companys common stock outstanding.









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EXPLANATORY NOTE

The Registrant hereby amends its Quarterly Report on Form 10-Q for the period ended September 30, 2009 (filed on November 16,
2009 with the Securities and Exchange Commission (the Commission)), as amended by its Quarterly Report on Form 10-Q/A (Amendment No. 1) (filed on January 14, 2011 with the Commission), as set forth in this Quarterly Report on
Form 10-Q/A (Amendment No. 2).

The Form 10-Q/A (Amendment No. 2) includes revisions to the financial statements, the notes
thereto and financial information in the Managements Discussion and Analysis of Financial Condition and Results of Operations section. As the Company disclosed in its Quarterly Report on Form 10-Q for the period ended September 30,
2010, these revisions are based on a restatement of certain information for the period ended September 30, 2009 to reflect the appropriate accounting treatment for the assets that the Registrant acquired in its acquisition of substantially all
assets, and assumption of all deposit and certain other liabilities, relating to seven former branch offices of Suburban Federal Savings Bank in Maryland, based on additional information obtained during the fourth quarter of 2009. This information,
which was included in the Form 10-Q for the period ended September 30, 2010, was inadvertently not updated in the Form 10-Q/A (Amendment No. 1) for the 2009 period.

As previously disclosed, and as compared to the original Form 10-Q filing, the Form 10-Q/A includes amendments to the financial statements to reflect a modified presentation of certain line items relating
to the portion of the loan portfolio that is covered under shared-loss agreements with the Federal Deposit Insurance Corporation and the Registrants non-covered loan portfolio. This Form 10-Q/A also includes, in response to comments from the
Commission, enhanced disclosure relating to goodwill and intangible assets, fair value measurements, FDIC-covered assets, asset quality and the Registrants acquisition of substantially all assets, and assumption of all deposit and certain
other liabilities, relating to the former Suburban Federal Savings Bank.

The only items that the Registrant is amending
in this Form 10-Q/A are Items 1 and 2 of Part I and Item 6 of Part II, as set forth below. The disclosures that the Registrant has presented in this Form 10-Q/A are as of the date of the original filing, and the Registrant has not undertaken to
update such disclosures for any subsequent events or developments.



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COMMUNITY BANKERS TRUST CORPORATION

TABLE OF CONTENTS

FORM 10-Q/A

September 30, 2009



| |  |                                                                                               |  |      |    | 
| |  | --------------------------------------------------------------------------------------------- |  | ---- | -- | 
| |  |                                                                                               |  | Page |   
| |  | PART I  FINANCIAL INFORMATION                                                                |  |      |    | 
| |  | Item 1. Financial Statements                                                                  |  |      | 4  | 
| |  | Consolidated Statements of Financial Condition (Unaudited)                                    |  |      | 4  | 
| |  | Consolidated Statements of Operations (Unaudited)                                             |  |      | 5  | 
| |  | Consolidated Statements of Cash Flows (Unaudited)                                             |  |      | 6  | 
| |  | Notes to Unaudited Consolidated Financial Statements                                          |  |      | 8  | 
| |  | Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations |  |      | 30 | 
| |  | Item 3. Quantitative and Qualitative Disclosures About Market Risk                            |  |      | 43 | 
| |  | Item 4. Controls and Procedures                                                               |  |      | 44 | 
| |  | PART II  OTHER INFORMATION                                                                   |  |      | 46 | 
| |  | Item 1. Legal Proceedings                                                                     |  |      | 46 | 
| |  | Item 1A. Risk Factors                                                                         |  |      | 46 | 
| |  | Item 2. Unregistered Sales of Equity Securities and Use of Proceeds                           |  |      | 46 | 
| |  | Item 3. Defaults upon Senior Securities                                                       |  |      | 46 | 
| |  | Item 4. Submission of Matters to a Vote of Security Holders                                   |  |      | 46 | 
| |  | Item 5. Other Information                                                                     |  |      | 46 | 
| |  | Item 6. Exhibits                                                                              |  |      | 46 | 
| |  | SIGNATURES                                                                                    |  |      | 48 | 



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PART I  FINANCIAL INFORMATION

|Item 1. | Financial Statements
|------- | --------------------

COMMUNITY BANKERS TRUST CORPORATION

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

AT SEPTEMBER 30, 2009 AND DECEMBER 31, 2008

(dollars in thousands)



|                                                                                                       |  |                                         |           |   |                                      |   |           |  
|------------------------------------------------------------------------------------------------------ |  | --------------------------------------- | --------- | - | ------------------------------------ | - | --------- | -
|                                                                                                       |  | September 30, 2009(Unaudited)(Restated) |           |   | December 31, 2008(Audited)(Restated) |  
|ASSETS                                                                                                 |  |                                         |           |   |                                      |   |           |  
|Cash and due from banks                                                                                |  | $                                       | 13,464    |   |                                      | $ | 10,864    |  
|Interest bearing bank deposits                                                                         |  |                                         | 10,534    |   |                                      |   | 107,376   |  
|Federal funds sold                                                                                     |  |                                         | 5,300     |   |                                      |   | 10,193    |  
|                                                                                                       |  |                                         |           |   |                                      |   |           |  
|Total cash and cash equivalents                                                                        |  |                                         | 29,298    |   |                                      |   | 128,433   |  
|                                                                                                       |  |                                        
|Securities available for sale, at fair value                                                           |  |                                         | 171,184   |   |                                      |   | 193,992   |  
|Securities held to maturity, at cost (fair value of $124,865 and $94,965, respectively)                |  |                                         | 121,023   |   |                                      |   | 94,865    |  
|Equity securities, restricted, at cost                                                                 |  |                                         | 8,355     |   |                                      |   | 3,612     |  
|                                                                                                       |  |                                         |           |   |                                      |   |           |  
|Total securities                                                                                       |  |                                         | 300,562   |   |                                      |   | 292,469   |  
|                                                                                                       |  |                                        
|Loans held for sale                                                                                    |  |                                         |          |   |                                      |   | 200       |  
|                                                                                                       |  |                                        
|Loans covered by FDIC shared-loss agreement (Note 9)                                                   |  |                                         | 166,085   |   |                                      |   |          |  
|Loans excluding covered loans                                                                          |  |                                         | 569,452   |   |                                      |   | 523,298   |  
|                                                                                                       |  |                                         |           |   |                                      |   |           |  
|Total loans                                                                                            |  |                                         | 735,537   |   |                                      |   | 523,298   |  
|Allowance for loan losses                                                                              |  |                                         | (16,211   | ) |                                      |   | (6,939    | )
|                                                                                                       |  |                                         |           |   |                                      |   |           |  
|Net loans                                                                                              |  |                                         | 719,326   |   |                                      |   | 516,359   |  
|                                                                                                       |  |                                        
|FDIC indemnification asset (Note 10)                                                                   |  |                                         | 83,909    |   |                                      |   |          |  
|Bank premises and equipment                                                                            |  |                                         | 37,328    |   |                                      |   | 24,111    |  
|Other real estate owned, covered by FDIC shared-loss agreement                                         |  |                                         | 11,105    |   |                                      |   |          |  
|Other real estate owned, non covered                                                                   |  |                                         | 1,175     |   |                                      |   | 223       |  
|Bank owned life insurance                                                                              |  |                                         | 6,475     |   |                                      |   | 6,300     |  
|FDIC receivable for expenses incurred                                                                  |  |                                         | 3,560     |   |                                      |   |          |  
|Core deposit intangibles, net                                                                          |  |                                         | 17,645    |   |                                      |   | 17,163    |  
|Goodwill (Note 5)                                                                                      |  |                                         | 13,152    |   |                                      |   | 37,184    |  
|Other assets                                                                                           |  |                                         | 8,384     |   |                                      |   | 7,798     |  
|                                                                                                       |  |                                         |           |   |                                      |   |           |  
|Total assets                                                                                           |  | $                                       | 1,231,919 |   |                                      | $ | 1,030,240 |  
|                                                                                                       |  |                                         |           |   |                                      |   |           |  
|LIABILITIES                                                                                            |  |                                         |           |   |                                      |   |           |  
|Deposits:                                                                                              |  |                                         |           |   |                                      |   |           |  
|Noninterest bearing                                                                                    |  | $                                       | 64,338    |   |                                      | $ | 59,699    |  
|Interest bearing                                                                                       |  |                                         | 963,191   |   |                                      |   | 746,649   |  
|                                                                                                       |  |                                         |           |   |                                      |   |           |  
|Total deposits                                                                                         |  |                                         | 1,027,529 |   |                                      |   | 806,348   |  
|                                                                                                       |  |                                        
|Federal funds purchased                                                                                |  |                                         | 31        |   |                                      |   |          |  
|Federal Home Loan Bank advances                                                                        |  |                                         | 37,000    |   |                                      |   | 37,900    |  
|Trust preferred capital notes                                                                          |  |                                         | 4,124     |   |                                      |   | 4,124     |  
|Other liabilities                                                                                      |  |                                         | 15,826    |   |                                      |   | 17,465    |  
|                                                                                                       |  |                                         |           |   |                                      |   |           |  
|Total liabilities                                                                                      |  | $                                       | 1,084,510 |   |                                      | $ | 865,837   |  
|                                                                                                       |  |                                         |           |   |                                      |   |           |  
|STOCKHOLDERS EQUITY                                                                                   |  |                                         |           |   |                                      |   |           |  
|Preferred stock (5,000,000 shares authorized $0.01 par value; 17,680 shares issued and
outstanding)    |  | $                                       | 17,680    |   |                                      | $ | 17,680    |  
|Discount on preferred stock                                                                            |  |                                         | (896      | ) |                                      |   | (1,031    | )
|Warrants on preferred stock                                                                            |  |                                         | 1,037     |   |                                      |   | 1,037     |  
|Common stock (200,000,000 shares authorized $0.01 par value; 21,468,455 shares issued and
outstanding) |  |                                         | 215       |   |                                      |   | 215       |  
|Additional paid in capital                                                                             |  |                                         | 143,999   |   |                                      |   | 146,076   |  
|Retained earnings                                                                                      |  |                                         | (16,743   | ) |                                      |   | 1,691     |  
|Accumulated other comprehensive income (loss)                                                          |  |                                         | 2,117     |   |                                      |   | (1,265    | )
|                                                                                                       |  |                                         |           |   |                                      |   |           |  
|Total stockholders equity                                                                             |  | $                                       | 147,409   |   |                                      | $ | 164,403   |  
|                                                                                                       |  |                                         |           |   |                                      |   |           |  
|Total liabilities and stockholders equity                                                             |  | $                                       | 1,231,919 |   |                                      | $ | 1,030,240 |  
|                                                                                                       |  |                                         |           |   |                                      |   |           |  

See accompanying notes to unaudited consolidated financial statements



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COMMUNITY BANKERS TRUST CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2009 AND 2008

(dollars
and shares in thousands, except per share data)

(unaudited)



|                                                    |                   |                            |        |                   |                           |   |                   |                                                    |  |                   |                                                    |   |          |   |        |          |  |   |       |   |  |   |        |  
|--------------------------------------------------- | ----------------- | -------------------------- | ------ | ----------------- | ------------------------- | - | ----------------- | -------------------------------------------------- |  | ----------------- | -------------------------------------------------- | - | -------- | - | ------ | -------- |  | - | ----- | - |  | - | ------ | -
|                                                    |                   | For the three months ended |        |                   | For the nine months ended |   |                   | BOEPredecessorFor the fivemonths endedMay 31, 2008 |  |                   | TFCPredecessorFor the fivemonths endedMay 31, 2008 |  
|                                                    | September 30,2009 |                            |        | September 30,2008 |                           |   | September 30,2009 |                                                    |  | September 30,2008 |                                                    |   |         
|                                                    | (Restated)        |                            |        |                   |                           |   | (Restated)        |                                                    |  |                   |                                                    |   | (Note 1) |   |        | (Note 1) | 
|Interest and dividend income                        |                   |                            |        |                   |                           |   |                   |                                                    |  |                   |                                                    |   |          |   |        |          |  |   |       |   |  |   |        |  
|Interest and fees on non covered loans              |                   | $                          | 8,820  |                   |                           | $ | 8,497             |                                                    |  | $                 | 26,236                                             |   |          | $ | 11,201 |          |  | $ | 6,737 |   |  | $ | 6,849  |  
|Interest and fees on FDIC covered loans             |                   |                            | 4,152  |                   |                           |   |                  |                                                    |  |                   | 11,380                                             |   |          |   |       |          |  |   |      |   |  |   |       |  
|Interest on federal funds sold                      |                   |                            | 10     |                   |                           |   | 22                |                                                    |  |                   | 36                                                 |   |          |   | 68     |          |  |   | 18    |   |  |   | 26     |  
|Interest on deposits in other banks                 |                   |                            | 60     |                   |                           |   | 83                |                                                    |  |                   | 262                                                |   |          |   | 83     |          |  |   |      |   |  |   |       |  
|Interest and dividends on securities                |                   |                            |        |                   |                           |   |                   |                                                    |  |                   |                                                    |   |          |   |        |          |  |   |       |   |  |   |        |  
|Taxable                                             |                   |                            | 2,081  |                   |                           |   | 539               |                                                    |  |                   | 7,580                                              |   |          |   | 1,226  |          |  |   | 465   |   |  |   | 236    |  
|Nontaxable                                          |                   |                            | 896    |                   |                           |   | 333               |                                                    |  |                   | 2,473                                              |   |          |   | 443    |          |  |   | 555   |   |  |   |       |  
|                                                    |                   |                            |        |                   |                           |   |                   |                                                    |  |                   |                                                    |   |          |   |        |          |  |   |       |   |  |   |        |  
|Total interest income                               |                   |                            | 16,019 |                   |                           |   | 9,474             |                                                    |  |                   | 47,967                                             |   |          |   | 13,021 |          |  |   | 7,775 |   |  |   | 7,111  |  
|Interest expense                                    |                   |                            |        |                   |                           |   |                   |                                                    |  |                   |                                                    |   |          |   |        |          |  |   |       |   |  |   |        |  
|Interest on deposits                                |                   |                            | 6,026  |                   |                           |   | 2,908             |                                                    |  |                   | 18,443                                             |   |          |   | 3,935  |          |  |   | 3,266 |   |  |   | 3,295  |  
|Interest on federal funds purchased                 |                   |                            | 2      |                   |                           |   | 101               |                                                    |  |                   | 6                                                  |   |          |   | 114    |          |  |   | 21    |   |  |   | 23     |  
|Interest on other borrowed funds                    |                   |                            | 338    |                   |                           |   | 277               |                                                    |  |                   | 1,071                                              |   |          |   | 357    |          |  |   | 458   |   |  |   |       |  
|                                                    |                   |                            |        |                   |                           |   |                   |                                                    |  |                   |                                                    |   |          |   |        |          |  |   |       |   |  |   |        |  
|Total interest expense                              |                   |                            | 6,366  |                   |                           |   | 3,286             |                                                    |  |                   | 19,520                                             |   |          |   | 4,406  |          |  |   | 3,745 |   |  |   | 3,318  |  
|                                                    |                   |                            |        |                   |                           |   |                   |                                                    |  |                   |                                                    |   |          |   |        |          |  |   |       |   |  |   |        |  
|Net interest income                                 |                   |                            | 9,653  |                   |                           |   | 6,188             |                                                    |  |                   | 28,447                                             |   |          |   | 8,615  |          |  |   | 4,030 |   |  |   | 3,793  |  
|Provision for loan losses                           |                   |                            | 5,231  |                   |                           |   | 1,100             |                                                    |  |                   | 11,271                                             |   |          |   | 1,334  |          |  |   | 200   |   |  |   | 1,348  |  
|                                                    |                   |                            |        |                   |                           |   |                   |                                                    |  |                   |                                                    |   |          |   |        |          |  |   |       |   |  |   |        |  
|Net interest income after provision for loan losses |                   |                            | 4,422  |                   |                           |   | 5,088             |                                                    |  |                   | 17,176                                             |   |          |   | 7,281  |          |  |   | 3,830 |   |  |   | 2,445  |  
|                                                    |                   |                            |        |                   |                           |   |                   |                                                    |  |                   |                                                    |   |          |   |        |          |  |   |       |   |  |   |        |  
|Noninterest income                                  |                   |                            |        |                   |                           |   |                   |                                                    |  |                   |                                                    |   |          |   |        |          |  |   |       |   |  |   |        |  
|Service charges on deposit accounts                 |                   |                            | 674    |                   |                           |   | 516               |                                                    |  |                   | 1,863                                              |   |          |   | 696    |          |  |   | 464   |   |  |   | 342    |  
|Gain on SFSB transaction                            |                   |                            |       |                   |                           |   |                  |                                                    |  |                   | 20,255                                             |   |          |   |       |          |  |   |      |   |  |   |       |  
|Gain on securities transactions, net                |                   |                            | 612    |                   |                           |   |                  |                                                    |  |                   | 905                                                |   |          |   |       |          |  |   | 6     |   |  |   |       |  
|Gain (loss) on sale of other real estate            |                   |                            | 500    |                   |                           |   |                  |                                                    |  |                   | 563                                                |   |          |   |       |          |  |   | (92   | ) |  |   |       |  
|Other                                               |                   |                            | 356    |                   |                           |   | 238               |                                                    |  |                   | 1,337                                              |   |          |   | 357    |          |  |   | 476   |   |  |   | 87     |  
|                                                    |                   |                            |        |                   |                           |   |                   |                                                    |  |                   |                                                    |   |          |   |        |          |  |   |       |   |  |   |        |  
|Total noninterest income                            |                   |                            | 2,142  |                   |                           |   | 754               |                                                    |  |                   | 24,923                                             |   |          |   | 1,053  |          |  |   | 854   |   |  |   | 429    |  
|                                                    |                   |                            |        |                   |                           |   |                   |                                                    |  |                   |                                                    |   |          |   |        |          |  |   |       |   |  |   |        |  
|Noninterest expense                                 |                   |                            |        |                   |                           |   |                   |                                                    |  |                   |                                                    |   |          |   |        |          |  |   |       |   |  |   |        |  
|Salaries and employee benefits                      |                   |                            | 4,840  |                   |                           |   | 2,375             |                                                    |  |                   | 14,294                                             |   |          |   | 2,949  |          |  |   | 2,493 |   |  |   | 3,708  |  
|Occupancy expenses                                  |                   |                            | 752    |                   |                           |   | 346               |                                                    |  |                   | 1,886                                              |   |          |   | 458    |          |  |   | 216   |   |  |   | 318    |  
|Equipment expenses                                  |                   |                            | 436    |                   |                           |   | 292               |                                                    |  |                   | 1,198                                              |   |          |   | 400    |          |  |   | 286   |   |  |   | 295    |  
|Legal fees                                          |                   |                            | 217    |                   |                           |   | 151               |                                                    |  |                   | 772                                                |   |          |   | 250    |          |  |   | 306   |   |  |   | 106    |  
|Professional fees                                   |                   |                            | 185    |                   |                           |   | 133               |                                                    |  |                   | 1,341                                              |   |          |   | 233    |          |  |   | 325   |   |  |   | 1,029  |  
|FDIC assessment                                     |                   |                            | 436    |                   |                           |   | 60                |                                                    |  |                   | 1,310                                              |   |          |   | 76     |          |  |   | 11    |   |  |   | 95     |  
|Data processing fees                                |                   |                            | 743    |                   |                           |   | 285               |                                                    |  |                   | 2,217                                              |   |          |   | 389    |          |  |   | 394   |   |  |   | 1,917  |  
|Amortization of intangibles                         |                   |                            | 565    |                   |                           |   | 406               |                                                    |  |                   | 1,675                                              |   |          |   | 555    |          |  |   |      |   |  |   |       |  
|Impairment of goodwill                              |                   |                            |       |                   |                           |   |                  |                                                    |  |                   | 24,032                                             |   |          |   |       |          |  |   | 52    |   |  |   |       |  
|Other operating expenses                            |                   |                            | 1,765  |                   |                           |   | 608               |                                                    |  |                   | 5,118                                              |   |          |   | 1,281  |          |  |   | 799   |   |  |   | 761    |  
|                                                    |                   |                            |        |                   |                           |   |                   |                                                    |  |                   |                                                    |   |          |   |        |          |  |   |       |   |  |   |        |  
|Total noninterest expense                           |                   |                            | 9,939  |                   |                           |   | 4,656             |                                                    |  |                   | 53,843                                             |   |          |   | 6,591  |          |  |   | 4,882 |   |  |   | 8,229  |  
|                                                    |                   |                            |        |                   |                           |   |                   |                                                    |  |                   |                                                    |   |          |   |        |          |  |   |       |   |  |   |        |  
|Income (loss) before income taxes                   |                   |                            | (3,375 | )                 |                           |   | 1,186             |                                                    |  |                   | (11,744                                            | ) |          |   | 1,743  |          |  |   | (198  | ) |  |   | (5,355 | )
|Income tax expense (benefit)                        |                   |                            | (1,473 | )                 |                           |   | 234               |                                                    |  |                   | 3,380                                              |   |          |   | 392    |          |  |   | 10    |   |  |   | 1,454  |  
|                                                    |                   |                            |        |                   |                           |   |                   |                                                    |  |                   |                                                    |   |          |   |        |          |  |   |       |   |  |   |        |  
|Net income (loss)                                   |                   | $                          | (1,902 | )                 |                           | $ | 952               |                                                    |  | $                 | (15,124                                            | ) |          | $ | 1,351  |          |  | $ | (188  | ) |  | $ | (3,901 | )
|Dividends accrued on preferred stock                |                   |                            | 223    |                   |                           |   |                  |                                                    |  |                   | 661                                                |   |          |   |       |          |  |   |      |   |  |   |       |  
|Accretion of discount on preferred stock            |                   |                            | 47     |                   |                           |   |                  |                                                    |  |                   | 135                                                |   |          |   |       |          |  |   |      |   |  |   |       |  
|                                                    |                   |                            |        |                   |                           |   |                   |                                                    |  |                   |                                                    |   |          |   |        |          |  |   |       |   |  |   |        |  
|Net income (loss) available to common stockholders  |                   | $                          | (2,172 | )                 |                           | $ | 952               |                                                    |  | $                 | (15,920                                            | ) |          | $ | 1,351  |          |  | $ | (188  | ) |  | $ | (3,901 | )
|                                                    |                   |                            |        |                   |                           |   |                   |                                                    |  |                   |                                                    |   |          |   |        |          |  |   |       |   |  |   |        |  
|Net income (loss) per share  basic                 |                   | $                          | (0.10  | )                 |                           | $ | 0.04              |                                                    |  | $                 | (0.74                                              | ) |          | $ | 0.09   |          |  | $ | (0.15 | ) |  | $ | (0.85  | )
|                                                    |                   |                            |        |                   |                           |   |                   |                                                    |  |                   |                                                    |   |          |   |        |          |  |   |       |   |  |   |        |  
|Net income (loss) per share  diluted               |                   | $                          | (0.10  | )                 |                           | $ | 0.04              |                                                    |  | $                 | (0.74                                              | ) |          | $ | 0.08   |          |  | $ | (0.15 | ) |  | $ | (0.85  | )
|                                                    |                   |                            |        |                   |                           |   |                   |                                                    |  |                   |                                                    |   |          |   |        |          |  |   |       |   |  |   |        |  
|Weighted average number of shares outstanding       |                   |                            |        |                   |                           |   |                   |                                                    |  |                   |                                                    |   |          |   |        |          |  |   |       |   |  |   |        |  
|basic                                               |                   |                            | 21,468 |                   |                           |   | 21,469            |                                                    |  |                   | 21,468                                             |   |          |   | 14,750 |          |  |   | 1,214 |   |  |   | 4,587  |  
|diluted                                             |                   |                            | 21,468 |                   |                           |   | 21,486            |                                                    |  |                   | 21,468                                             |   |          |   | 16,197 |          |  |   | 1,214 |   |  |   | 4,587  |  

See accompanying
notes to unaudited consolidated financial statements



5



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##### Table of Contents

COMMUNITY BANKERS TRUST CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(dollars in thousands)

(unaudited)



|                                                                                                   |  |                           |          |   |                                                      |   |         |                                                      |  |   |          |   |  |   |         |  
|-------------------------------------------------------------------------------------------------- |  | ------------------------- | -------- | - | ---------------------------------------------------- | - | ------- | ---------------------------------------------------- |  | - | -------- | - |  | - | ------- | -
|                                                                                                   |  | For the nine months ended |          |   | BOE PredecessorFor the five months endedMay 31, 2008 |   |         | TFC PredecessorFor the five months endedMay 31, 2008 | 
|                                                                                                   |  | September 30, 2009        |          |   | September 30, 2008                                   |   |         |                                                     
|                                                                                                   |  | (Restated)                |          |   |                                                      |   |         | (Note 1)                                             |  |   | (Note 1) |  
|Operating activities:                                                                              |  |                           |          |   |                                                      |   |         |                                                      |  |   |          |   |  |   |         |  
|Net income (loss)                                                                                  |  | $                         | (15,124  | ) |                                                      | $ | 1,351   |                                                      |  | $ | (188     | ) |  | $ | (3,901  | )
|Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: |  |                           |          |   |                                                      |   |         |                                                      |  |   |          |   |  |   |         |  
|Depreciation and intangibles amortization                                                          |  |                           | 3,130    |   |                                                      |   | 750     |                                                      |  |   | 335      |   |  |   | 240     |  
|Provision for loan losses                                                                          |  |                           | 11,271   |   |                                                      |   | 1,334   |                                                      |  |   | 200      |   |  |   | 1,348   |  
|Amortization of premiums and accretion of discounts, net                                           |  |                           | 1,141    |   |                                                      |   | 54      |                                                      |  |   | 36       |   |  |   | (13     | )
|Change in loans held for sale                                                                      |  |                           | 200      |   |                                                      |   | 721     |                                                      |  |   | (119     | ) |  |   |        |  
|Net gain on SFSB transaction                                                                       |  |                           | (20,255  | ) |                                                      |   |        |                                                      |  |   |         |   |  |   |        |  
|Impairment of goodwill                                                                             |  |                           | 24,032   |   |                                                      |   |        |                                                      |  |   | 52       |   |  |   |        |  
|Stock-based compensation expense                                                                   |  |                           |         |   |                                                      |   |        |                                                      |  |   |         |   |  |   | 178     |  
|Net (gain) on sale of securities                                                                   |  |                           | (905     | ) |                                                      |   |        |                                                      |  |   | (6       | ) |  |   |        |  
|Net (gain) on sale of OREO                                                                         |  |                           | (563     | ) |                                                      |   |        |                                                      |  |   | 92       |   |  |   |        |  
|Net loss/(gain) on sale of loans                                                                   |  |                           | 13       |   |                                                      |   | (15     | )                                                    |  |   | (90      | ) |  |   |        |  
|Loss on write down of LLC membership                                                               |  |                           |         |   |                                                      |   |        |                                                      |  |   | 88       |   |  |   |        |  
|Changes in assets and liabilities:                                                                 |  |                           |          |   |                                                      |   |         |                                                      |  |   |          |   |  |   |         |  
|(Increase)/decrease in other assets                                                                |  |                           | 124      |   |                                                      |   | (3,108  | )                                                    |  |   | (409     | ) |  |   | (1,285  | )
|Increase/(decrease) in accrued expenses and other liabilities                                      |  |                           | (5,017   | ) |                                                      |   | (3,190  | )                                                    |  |   | 897      |   |  |   | 2,874   |  
|                                                                                                   |  |                           |          |   |                                                      |   |         |                                                      |  |   |          |   |  |   |         |  
|Net cash provided by (used in) by operating activities                                             |  |                           | (1,683   | ) |                                                      |   | (2,103  | )                                                    |  |   | 888      |   |  |   | (559    | )
|                                                                                                   |  |                           |          |   |                                                      |   |         |                                                      |  |   |          |   |  |   |         |  
|                                                                                                   |  |                           |          |  
|Investing activities:                                                                              |  |                           |          |   |                                                      |   |         |                                                      |  |   |          |   |  |   |         |  
|Proceeds from securities                                                                           |  |                           | 147,928  |   |                                                      |   | 65,131  |                                                      |  |   | 2,364    |   |  |   | 12,605  |  
|Purchase of securities                                                                             |  |                           | (143,244 | ) |                                                      |   | (23,489 | )                                                    |  |   | (3,350   | ) |  |   | (7,205  | )
|Cash received from SFSB transaction                                                                |  |                           | 54,717   |   |                                                      |   | 10,016  |                                                      |  |   |         |   |  |   |        |  
|Net increase in loans, excluding covered loans                                                     |  |                           | (49,105  | ) |                                                      |   | (28,641 | )                                                    |  |   | (11,870  | ) |  |   | (37,358 | )
|Net decrease in loans covered by shared loss agreement                                             |  |                           | 32,168   |   |                                                      |   |        |                                                      |  |   |         |   |  |   |        |  
|Purchase of premises and equipment, net                                                            |  |                           | (14,634  | ) |                                                      |   | (989    | )                                                    |  |   | (523     | ) |  |   | (164    | )
|                                                                                                   |  |                           |          |   |                                                      |   |         |                                                      |  |   |          |   |  |   |         |  
|Net cash provided by (used in) by investing activities                                             |  |                           | 27,830   |   |                                                      |   | 22,028  |                                                      |  |   | (13,379  | ) |  |   | (32,122 | )
|                                                                                                   |  |                           |          |   |                                                      |   |         |                                                      |  |   |          |   |  |   |         |  
|                                                                                                   |  |                           |          |  
|Financing activities:                                                                              |  |                           |          |   |                                                      |   |         |                                                      |  |   |          |   |  |   |         |  
|Net increase/ (decrease) in noninterest bearing and interest bearing demand deposits               |  |                           | (81,575  | ) |                                                      |   | (5,693  | )                                                    |  |   | 11,789   |   |  |   | 28,536  |  
|Net increase/(decrease) in federal funds purchased                                                 |  |                           | 31       |   |                                                      |   | (1,095  | )                                                    |  |   | 1,965    |   |  |   | 5,218   |  
|Issuance of common stock                                                                           |  |                           |         |   |                                                      |   |        |                                                      |  |   | 56       |   |  |   |        |  
|Cash paid to shareholders for converted shares                                                     |  |                           |         |   |                                                      |   | (10,843 | )                                                    |  |   |         |   |  |   |        |  
|Cash paid to reduce FHLB borrowings                                                                |  |                           | (38,425  | ) |                                                      |   | 20,000  |                                                      |  |   | 900      |   |  |   |        |  
|Cash paid to redeem shares related to asserted appraisal rights and retire warrants                |  |                           | (2,077   | ) |                                                      |   | (11     | )                                                    |  |   |         |   |  |   |        |  
|Cash dividends paid                                                                                |  |                           | (3,236   | ) |                                                      |   | (861    | )                                                    |  |   | (535     | ) |  |   | (1,152  | )
|                                                                                                   |  |                           |          |   |                                                      |   |         |                                                      |  |   |          |   |  |   |         |  
|Net cash (used in) provided by financing activities                                                |  |                           | (125,282 | ) |                                                      |   | 1,497   |                                                      |  |   | 14,175   |   |  |   | 32,602  |  
|                                                                                                   |  |                           |          |   |                                                      |   |         |                                                      |  |   |          |   |  |   |         |  
|                                                                                                   |  |                           |          |  
|Net (decrease) increase in cash and cash equivalents                                               |  |                           | (99,135  | ) |                                                      |   | 21,422  |                                                      |  |   | 1,684    |   |  |   | (79     | )
|                                                                                                   |  |                           |          |  
|Cash and cash equivalents:                                                                         |  |                           |          |   |                                                      |   |         |                                                      |  |   |          |   |  |   |         |  
|Beginning of the period                                                                            |  |                           | 128,433  |   |                                                      |   | 162     |                                                      |  |   | 4,100    |   |  |   | 4,311   |  
|                                                                                                   |  |                           |          |   |                                                      |   |         |                                                      |  |   |          |   |  |   |         |  
|End of the period                                                                                  |  | $                         | 29,298   |   |                                                      | $ | 21,584  |                                                      |  | $ | 5,784    |   |  | $ | 4,232   |  
|                                                                                                   |  |                           |          |   |                                                      |   |         |                                                      |  |   |          |   |  |   |         |  
|Supplemental disclosures of cash flow information:                                                 |  |                           |          |   |                                                      |   |         |                                                      |  |   |          |   |  |   |         |  
|Interest paid                                                                                      |  | $                         | 20,686   |   |                                                      | $ | 4,689   |                                                      |  | $ | 3,902    |   |  | $ | 3,195   |  
|Income taxes paid                                                                                  |  |                           | 296      |   |                                                      |   |        |                                                      |  |   | 127      |   |  |   |        |  
|Transfers of OREO property                                                                         |  |                           | 952      |   |                                                      |   | 224     |                                                      |  |   |          |   |  |   |         |  
|Transactions related to acquisition                                                                |  |                           |          |   |                                                      |   |         |                                                      |  |   |          |   |  |   |         |  
|Increase in assets and liabilities:                                                                |  |                           |          |   |                                                      |   |         |                                                      |  |   |          |   |  |   |         |  
|Loans, net                                                                                         |  | $                         | 198,253  |   |                                                      | $ | 471,864 |                                                      |  |   |          |   |  |   |         |  
|Other real estate owned                                                                            |  |                           | 9,416    |   |                                                      |   |        |                                                      |  |   |          |   |  |   |         |  
|Securities                                                                                         |  |                           | 4,954    |   |                                                      |   | 71,123  |                                                      |  |   |          |   |  |   |         |  
|FDIC indemnification asset                                                                         |  |                           | 84,584   |   |                                                      |   |        |                                                      |  |   |          |   |  |   |         |  
|Fixed assets, net                                                                                  |  |                           | 37       |   |                                                      |   |        |                                                      |  |   |          |   |  |   |         |  
|Other assets                                                                                       |  |                           | 10,332   |   |                                                      |   | 83,769  |                                                      |  |   |          |   |  |   |         |  
|Deposits                                                                                           |  |                           | 302,756  |   |                                                      |   | 491,462 |                                                      |  |   |          |   |  |   |         |  
|Borrowings                                                                                         |  |                           | 37,525   |   |                                                      |   | 32,359  |                                                      |  |   |          |   |  |   |         |  
|Other liabilities                                                                                  |  |                           | 1,757    |   |                                                      |   | 8,861   |                                                      |  |   |          |   |  |   |         |  

See accompanying notes to unaudited consolidated financial statements



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##### Table of Contents

COMMUNITY BANKERS TRUST CORPORATION

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

1. ORGANIZATION

General

Community Bankers Trust Corporation (the Company) is a bank holding company that was incorporated under Delaware law on
April 6, 2005. The Company is headquartered in Glen Allen, Virginia and is the holding company for Essex Bank (the Bank), a Virginia state bank with 25 full-service offices in Virginia, Maryland and Georgia. Bank of Essex changed
its name to Essex Bank on April 20, 2009.

The Company was initially formed as a special purpose acquisition company to
effect a merger, capital stock exchange, asset acquisition or other similar business combination with an operating business in the banking industry. Prior to its acquisition of two bank holding companies in 2008, the Companys activities were
limited to organizational matters, completing its initial public offering and seeking and evaluating possible business combination opportunities. On May 31, 2008, the Company acquired each of TransCommunity Financial Corporation, a Virginia
corporation (TFC), and BOE Financial Services of Virginia, Inc., a Virginia corporation (BOE). The Company changed its corporate name in connection with the acquisitions. On November 21, 2008, the Bank acquired certain
assets and assumed all deposit liabilities relating to four former branch offices of The Community Bank (TCB), a Georgia state-chartered bank. On January 30, 2009, the Bank acquired certain assets and assumed all deposit liabilities
relating to seven former branch offices of Suburban Federal Savings Bank, Crofton, Maryland (SFSB).

The Bank was
established in 1926 and is headquartered in Tappahannock, Virginia. The Bank engages in a general commercial banking business and provides a wide range of financial services primarily to individuals and small businesses, including individual and
commercial demand and time deposit accounts, commercial and consumer loans, travelers checks, safe deposit box facilities, investment services and fixed rate residential mortgages. Fourteen offices are located in Virginia, primarily from the
Chesapeake Bay to just west of Richmond, seven are located in Maryland along the Baltimore-Washington corridor and four are located in the Atlanta, Georgia metropolitan market.

The consolidated statements presented include accounts of the Company and its wholly-owned subsidiary. All significant intercompany
accounts have been eliminated. In the opinion of management, the accompanying financial statements contain all adjustments necessary to fairly present the financial position of the Company at each of September 30, 2009 and December 31,
2008. The statements should be read in conjunction with the Companys consolidated financial statements and the accompanying notes to consolidated financial statements included in the Companys Annual Report on Form 10-K/A (Amendment
No. 3) for the year ended December 31, 2008. In the opinion of management, all adjustments (consisting of normal accruals) were made that are necessary to present fairly the financial position of the Company at September 30, 2009, and
the results of its operations and its cash flows for the three and nine months ended September 30, 2009 and 2008.

The
statements and related notes have been prepared pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (SEC). Accordingly, certain information and footnote disclosures normally included in financial statements
prepared in accordance with accounting principles generally accepted in the United States (GAAP) are not presented pursuant to such rules and regulations, because the periods reported are not comparable.

Predecessors

From its inception until consummation of the acquisitions of TFC and BOE on May 31, 2008, the Company was a special purpose
acquisition company, as described above, and had no substantial operations. Accordingly, since the Companys operating activities prior to the acquisitions were insignificant relative to those of TFC and BOE, management believes that both TFC
and BOE are the Companys predecessors. Management has reached this conclusion based upon an evaluation of facts and circumstances, including the historical life of each of TFC and BOE, the historical level of operations of each of TFC and BOE,
the purchase price paid for each of TFC and BOE and the fact that the consolidated Companys operations, revenues and expenses after the acquisitions are most similar in all respects to those of BOEs and TFCs historical periods.
Accordingly, the historical statements of operations for the five months ended May 31, 2008 and statements of cash flows for the five months ended May 31, 2008 of each of TFC and BOE have been presented.



7



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##### Table of Contents

2. ACCOUNTING POLICIES

The accounting and reporting policies of the Company conform to GAAP and to the general practices within the banking industry. The interim financial statements have not been audited; however, in the
opinion of management, all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the consolidated financial statements have been included. Operating results for the three and nine month period ended
September 30, 2009, are not necessarily indicative of the results that may be expected for the year ending December 31, 2009.

During 2008, management discovered that there was an error in the fair value of stock options issued by the Company in settlement of the TFC and BOE stock options outstanding as of the respective merger
dates. When correcting this valuation error, the adjustment was inadvertently recorded twice. The result was an understatement of Goodwill and Deferred Taxes Liabilities of approximately $2.9 million and $1.5 million, respectively. An adjustment has
been made to correct this error and the financial statements for the year ended December 31, 2008 have been restated.

The
September 30, 2009 consolidated financial statements and accompanying notes have been restated for amendments to the original estimated values related to the acquisition of the Maryland operations.

Certain reclassifications have been made to prior period balances to conform to the current period presentation.

The Companys financial statements are prepared in accordance with GAAP. The financial information contained within the statements
is, to a significant extent, financial information that is based on measures of the financial effects of transactions and events that have already occurred. A variety of factors could affect the ultimate value that is obtained either when earning
income, recognizing an expense, recovering an asset or relieving a liability. The Company uses historical loss factors as one factor in determining the inherent loss that may be present in its loan portfolio. Actual losses could differ significantly
from the historical factors that the Company uses. In addition, GAAP itself may change from one previously acceptable method to another method. Although the economics of the Companys transactions would be the same, the timing of events that
would impact its transactions could change. In preparing the financial statements, the Company has evaluated events and transactions occurring subsequent to the financial statement date through the filing date of November 16, 2009 for potential
recognition or disclosure.

3. RECENT ACCOUNTING PRONOUNCEMENTS

The Financial Accounting Standards Boards (FASB) Accounting Standards Codification (ASC) became effective on July 1, 2009. At
that date, the ASC became FASBs officially recognized source of authoritative GAAP applicable to all public and non-public non-governmental entities, superseding existing FASB, American Institute of Certified Public Accountants (AICPA),
Emerging Issues Task Force (EITF) and related literature. Rules and interpretive releases of the SEC under the authority of federal securities laws are also sources of authoritative GAAP for SEC registrants. All other accounting literature is
considered non-authoritative. The switch to the ASC affects the way companies refer to U.S. GAAP in financial statements and accounting policies. Citing particular content in the ASC involves specifying the unique numeric path to the content through
the Topic, Subtopic, Section and Paragraph structure. The adoption of FASB ASC had no impact on the Companys consolidated financial statements.

In September 2006, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 157, Fair Value Measurements(SFAS 157) (ASC 820 Fair
Value Measurements and Disclosures). SFAS 157 defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. SFAS 157 does not
require any new fair value measurements, but rather, provides enhanced guidance to other pronouncements that require or permit assets or liabilities to be measured at fair value. The Company adopted SFAS 157 on January 1, 2008. The FASB
approved a one-year deferral for the implementation of the Statement for nonfinancial assets and liabilities that are recognized or disclosed at fair value in the financial statements on a nonrecurring basis. The Company adopted the provisions of
SFAS 157 for nonfinancial assets and liabilities as of January 1, 2009 without a material impact on the consolidated financial statements.

In December 2007, the FASB issued Statement of Financial Accounting Standards No. 141(R), Business Combinations(SFAS 141(R)) (ASC 805 Business Combinations). The
Standard significantly changed the financial accounting and reporting of business combination transactions. SFAS 141(R) establishes principles for how an acquirer recognizes and measures the identifiable assets acquired, liabilities assumed, and any
noncontrolling interest in the acquiree; recognizes and measures the goodwill acquired in the business combination or a gain from a bargain purchase; and determines what information to disclose to enable users of the financial statements to evaluate
the nature and financial effects of the business combination. SFAS 141(R) is effective for acquisition dates on or after the beginning of an entitys first year that begins after December 15, 2008. The Company adopted the provisions of
SFAS 141(R) with respect to the SFSB acquisition.

In April 2009, the FASB issued FASB Staff Position (FSP) on
Statement No. 141(R)-1 (FSP FAS 141(R)-1), Accounting for Assets Acquired and Liabilities Assumed in a Business Combination That Arise from Contingencies(ASC 805 Business Combinations). FSP FAS 141(R)-1 amends and
clarifies SFAS 141(R) to address application issues on initial recognition and measurement, subsequent measurement and accounting, and disclosure of assets and liabilities arising from contingencies in a business combination. The FSP is effective
for assets and liabilities arising from contingencies in business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. The Company adopted the
provisions of SFAS 141(R) with respect to the SFSB acquisition.



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In April 2009, the FASB issued FSP FAS 157-4, Determining Fair Value When the
Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly (ASC 820 Fair Value Measurements and Disclosures). FSP FAS 157-4 provides additional guidance for
estimating fair value in accordance with SFAS 157 when the volume and level of activity for the asset or liability have significantly decreased. The FSP also includes guidance on identifying circumstances that indicate a transaction is not orderly.
FSP FAS 157-4 is effective for interim and annual periods ending after June 15, 2009, and shall be applied prospectively. Earlier adoption is permitted for periods ending after March 15, 2009. The Company does not expect the adoption of
FSP FAS 157-4 to have a material impact on its consolidated financial statements.

In April 2009, the FASB issued FSP FAS
107-1 and APB 28-1, Interim Disclosures about Fair Value of Financial Instruments (ASC 825 Financial Instruments and ASC 270 Interim Reporting). FSP FAS 107-1 and APB 28-1 amends SFAS No. 107, Disclosures about
Fair Value of Financial Instruments, to require disclosures about fair value of financial instruments for interim reporting periods of publicly traded companies as well as in annual financial statements. In addition, the FSP amends APB Opinion
No. 28, Interim Financial Reporting,to require those disclosures in summarized financial information at interim reporting periods. The FSP is effective for interim periods ending after June 15, 2009, with earlier
adoption permitted for periods ending after March 15, 2009. The Company does not expect the adoption of FSP FAS 107-1 and APB 28-1 to have a material impact on its consolidated financial statements.

In April 2009, the FASB issued FSP FAS 115-2 and FAS 124-2, Recognition and Presentation of Other-Than-Temporary
Impairments(ASC 320 Investments  Debt and Equity Securities). FSP FAS 115-2 and FAS 124-2 amend other-than-temporary impairment guidance for debt securities to make guidance more operational and to improve the presentation
and disclosure of other-than-temporary impairments on debt and equity securities. The FSP does not amend existing recognition and measurement guidance related to other-than-temporary impairments of equity securities. FSP FAS 115-2 and FAS 124-2 are
effective for interim and annual periods ending after June 15, 2009, with earlier adoption permitted for periods ending after March 15, 2009. The Company does not expect the adoption of FSP FAS 115-2 and FAS 124-2 to have a material impact
on its consolidated financial statements.

In April 2009, the Securities and Exchange Commission issued Staff Accounting
Bulletin No. 111 (SAB 111). SAB 111 amends and replaces SAB Topic 5.M. in the SAB Series entitled Other Than Temporary Impairment of Certain Investments in Debt and Equity Securities. SAB 111 maintains the SEC Staffs
previous views related to equity securities and amends Topic 5.M. to exclude debt securities from its scope. The Company does not expect the implementation of SAB 111 to have a material impact on its consolidated financial statements.

In May 2009, the FASB issued Statement of Financial Accounting Standards No. 165, Subsequent Events (ASC 855
Subsequent Events). SFAS 165 establishes general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or are available to be issued. SFAS 165 is effective for
interim and annual periods ending after June 15, 2009. The Company does not expect the adoption of SFAS 165 to have a material impact on its consolidated financial statements.

In June 2009, the FASB issued Statement of Financial Accounting Standards No. 166, Accounting for Transfers of Financial
Assets  an amendment of FASB Statement No. 140(ASC 860 Transfers and Servicing). SFAS 166 provides guidance to improve the relevance, representational faithfulness, and comparability of the information that a report
entity provides in its financial statements about a transfer of financial assets; the effects of a transfer on its financial position, financial performance, and cash flows; and a transferors continuing involvement, if any, in transferred
financial assets. SFAS 166 is effective for interim and annual periods ending after November 15, 2009. The Company does not expect the adoption of SFAS 166 to have a material impact on its consolidated financial statements.

In June 2009, the FASB issued Statement of Financial Accounting Standards No. 167, Amendments to FASB Interpretation
No. 46(R)(ASC 810 Consolidation). SFAS 167 improves financial reporting by enterprises involved with variable interest entities. SFAS 167 is effective for interim and annual periods ending after November 15, 2009. Early
adoption is prohibited. The Company does not expect the adoption of SFAS 167 to have a material impact on its consolidated financial statements.

In June 2009, the FASB issued Statement of Financial Accounting Standards No. 168, The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles
 replacement of FASB Statement No. 162 (ASC 105 Generally Accepted Accounting Principles). SFAS 168 establishes the FASB Accounting Standards Codification which will become the source of authoritative U.S. generally
accepted accounting principles (GAAP) recognized by the FASB to be applied by nongovernmental entities. SFAS 168 is effective immediately. The Company does not expect the adoption of SFAS 168 to have a material impact on its consolidated financial
statements.



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##### Table of Contents

In June 2009, the FASB issued EITF Issue No. 09-1, Accounting for
Own-Share Lending Arrangements in Contemplation of Convertible Debt Issuance or Other Financing (ASC 470 Debt). EITF Issue No. 09-1 clarifies how an entity should account for an own-share lending arrangement that is entered
into in contemplation of a convertible debt offering. EITF Issue No. 09-1 is effective for arrangements entered into on or after June 15, 2009. Early adoption is prohibited. The Company does not expect the adoption of EITF Issue
No. 09-1 to have a material impact on its consolidated financial statements.

In June 2009, the Securities and
Exchange Commission issued Staff Accounting Bulletin No. 112 (SAB 112). SAB 112 revises or rescinds portions of the interpretative guidance included in the codification of SABs in order to make the interpretive guidance consistent with current
U.S. GAAP. The Company does not expect the adoption of SAB 112 to have a material impact on its consolidated financial statements.

In August 2009, the FASB issued Accounting Standards Update No. 2009-05 (ASU 2009-05), Fair Value Measurements and Disclosures (Topic 820)  Measuring Liabilities at Fair
Value. ASU 2009-05 amends Subtopic 820-10, Fair Value Measurements and Disclosures  Overall, and provides clarification for the fair value measurement of liabilities. ASU 2009-05 is effective for the first
reporting period including interim period beginning after issuance. The Company does not expect the adoption of ASU 2009-05 to have a material impact on its consolidated financial statements.

In September 2009, the FASB issued Accounting Standards Update No. 2009-12 (ASU 2009-12), Fair Value Measurements and
Disclosures (Topic 820): Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent).ASU 2009-12 provides guidance on estimating the fair value of alternative investments. ASU 2009-12 is effective for
interim and annual periods ending after December 15, 2009. The Company does not expect the adoption of ASU 2009-12 to have a material impact on its consolidated financial statements.

In October 2009, the FASB issued Accounting Standards Update No. 2009-15 (ASU 2009-15), Accounting for Own-Share Lending
Arrangements in Contemplation of Convertible Debt Issuance or Other Financing.ASU 2009-15 amends Subtopic 470-20 to expand accounting and reporting guidance for own-share lending arrangements issued in contemplation of convertible debt
issuance. ASU 2009-15 is effective for fiscal years beginning on or after December 15, 2009 and interim periods within those fiscal years for arrangements outstanding as of the beginning of those fiscal years. The Company does not expect the
adoption of ASU 2009-15 to have a material impact on its consolidated financial statements.

4. MERGERS AND ACQUISITIONS

Business Combinations

On May 31, 2008, the Company acquired each of TFC and BOE. The transaction with TFC was valued at $53.0 million. Total consideration paid to TFC shareholders consisted of 6,544,840 shares
of the Companys common stock issued. The transaction resulted in total assets acquired at May 31, 2008 of $268.8 million, including $241.9 million of loans, and liabilities assumed were $241.7 million, including
$232.1 million of deposits. The transaction with BOE was valued at $53.9 million. Total consideration paid to BOE shareholders consisted of 6,957,405 shares of the Companys common stock issued. This transaction resulted in total
assets acquired at May 31, 2008 of $317.6 million, including $233.3 million of loans, and liabilities assumed were $288.0 million, including $256.4 million of deposits. Due to the mergers with each of TFC and BOE, the
Company recorded approximately $37.2 million in goodwill and $15.0 million in core deposit intangibles as of May 31, 2008.

Immediately following the mergers with TFC and BOE, the Company operated TransCommunity Bank and the Bank as separate banking
subsidiaries. TransCommunity Banks offices operated under the Bank of Goochland, Bank of Powhatan, Bank of Louisa and Bank of Rockbridge division names. Effective July 31, 2008, TransCommunity Bank was consolidated into the Bank under the
Banks state charter. As a result, the Company was a one-bank holding company at the September 30, 2008 reporting date.

Acquisition of Georgia Operations

On November 21, 2008, the Bank acquired certain assets and assumed all deposit liabilities relating to four former branch offices of The Community Bank (TCB), a Georgia state-chartered
bank. The transaction was consummated pursuant to a Purchase and Assumption Agreement, dated November 21, 2008, by and among the Federal Deposit Insurance Corporation (FDIC), as Receiver for The Community Bank, Bank of Essex and the
FDIC. Management evaluated the applicability of Statement of Financial Accounting Standards (SFAS) No. 141, Business Combinations, as well as EITF 98-3 Determining Whether a Nonmonetary Transaction
Involves Receipt of Productive Assets or of a Business in determining the accounting for this transaction. Based upon an assessment of the transaction, management determined that there were significant limitations on the resources
transferred and, therefore, concluded that the net assets acquired did not meet the definition of a Business as required by these authoritative standards. Accordingly, the transaction was accounted for as an asset purchase.



10



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##### Table of Contents

Pursuant to the terms of the Purchase and Assumption Agreement, the Bank assumed
approximately $619.0 million in deposits, approximately $233.9 million of which were deemed to be core deposits, and paid the FDIC a premium of 1.36% on the core deposits amounting to approximately $3.2 million. All deposits insured prior
to the closing of the transaction maintained their current insurance coverage.

The Company also acquired assets of $87.5
million as follows (dollars in thousands):



|                           |  |   |        | 
|-------------------------- |  | - | ------ | 
|Cash and cash equivalents  |  | $ | 54,439 | 
|Investment securities      |  |   | 31,304 | 
|Loans and accrued interest |  |   | 1,593  | 
|Other assets               |  |   | 135    | 
|Total assets               |  | $ | 87,471 | 

The loans acquired
were those fully secured by deposit accounts. The Bank did not purchase any additional loans as of December 31, 2008.

The Bank had 60 days to evaluate and, at its sole option, purchase any of the remaining TCB loans. As a result, the Bank purchased
175 loans totaling approximately $21 million on January 9, 2009. Also, the Bank had 90 days to evaluate and, at its sole option, purchase the premises and equipment. The Bank agreed to purchase all four former banking premises of TCB for
$6.4 million on February 19, 2009.

Acquisition of Maryland Operations

On January 30, 2009, the Bank acquired certain assets and assumed all deposit liabilities relating to seven former branch offices of
Suburban Federal Savings Bank, Crofton, Maryland. The transaction was consummated pursuant to a Purchase and Assumption Agreement, dated January 30, 2009, by and among the FDIC, as Receiver for SFSB, the Bank and the FDIC.

Pursuant to the terms of the Purchase and Assumption Agreement, the Bank assumed approximately $303 million in deposits, all of
which were deemed to be core deposits and maintain their current insurance coverage. The Bank also acquired approximately $362 million in loans and other assets and agreed to provide loan servicing to SFSBs existing loan customers. The
Bank bid a negative $45 million for the net assets acquired.

The Bank has entered into shared-loss agreements with
the FDIC with respect to certain covered assets acquired. See Notes 9 and 10 for additional information related to certain assets covered under the FDIC shared-loss agreements.

In relation to this acquisition, the Company followed the acquisition method of accounting as outlined in SFAS 141(R), Business
Combinations. Management relied on external analyses by appraisers in determining the fair value of assets acquired and liabilities assumed. The following table provides the allocation of the negative bid in the financial statements, based
on those analyses (dollars in thousands):



|                                                        |  |      |          |  
|------------------------------------------------------- |  | ---- | -------- | -
|                                                        |  | SFSB |         
|                                                        | 
|Negative bid on SFSB transaction                        |  | $    | 45,000   |  
|                                                        | 
|Adjustments to assets acquired and liabilities assumed: |  |      |          |  
|Fair value adjustments:                                 |  |      |          |  
|Loans                                                   |  |      | (102,011 | )
|Foreclosed real estate                                  |  |      | (10,428  | )
|FDIC indemnification                                    |  |      | 84,584   |  
|Deposits                                                |  |      | (1,455   | )
|Core deposit intangible                                 |  |      | 2,158    |  
|Other adjustments                                       |  |      | (2,407   | )
|                                                        |  |      |          |  
|Net assets acquired, pre-tax                            |  |      | 20,255   |  
|Deferred tax liability                                  |  |      | (6,886   | )
|                                                        |  |      |          |  
|Net assets acquired, net of tax                         |  | $    | 13,369   |  
|                                                        |  |      |          |  





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##### Table of Contents

|                                  |  |   |         | 
|--------------------------------- |  | - | ------- | 
|Fair value of assets acquired     |  |   |         | 
|Cash and cash equivalents         |  | $ | 54,717  | 
|Investment securities             |  |   | 4,954   | 
|Loans receivable                  |  |   | 198,253 | 
|Foreclosed real estate            |  |   | 9,416   | 
|FDIC indemnification asset        |  |   | 84,584  | 
|Other assets                      |  |   | 10,369  | 
|                                  |  |   |         | 
|Fair value of assets acquired     |  | $ | 362,293 | 
|                                  |  |   |         | 
|                                  | 
|Fair value of liabilities assumed |  |   |         | 
|Deposits                          |  | $ | 302,756 | 
|FHLB advances                     |  |   | 37,525  | 
|Deferred taxes                    |  |   | 6,886   | 
|Other liabilities                 |  |   | 1,757   | 
|                                  |  |   |         | 
|Fair value of liabilities assumed |  | $ | 348,924 | 
|                                  |  |   |         | 
|                                  | 
|Net assets acquired at fair value |  | $ | 13,369  | 
|                                  |  |   |         | 

As a result of the acquisition of the operations of SFSB, the Company recorded a one-time gain of
$20.3 million in the first quarter of 2009.

The Company engaged two external firms to assess credit quality and fair
market value of the loan portfolio. An external firm performed a 100% credit review on the entire portfolio and classified each of the loans into several homogenous pools of credit risk and levels of impairment. An external firm specializing in fair
market valuations then used the credit review results to determine the current fair market as defined in SFAS No. 157, Fair Value Measurements (ASC 820 Fair Value Measurements and Disclosures). The fair value
assessment was based on several measures, including asset quality, contractual interest rates, current market interest rates, and other underlying factors and the analysis divided the portfolio into the following segments:



| |  |  | Acquisition, development, and construction loans
| | - |  | ------------------------------------------------



| |  |  | Residential first mortgage loans
| | - |  | --------------------------------



| |  |  | Consumer real estate loans
| | - |  | --------------------------



| |  |  | Commercial real estate loans
| | - |  | ----------------------------

The following three general approaches were used in the valuation analyses  the asset-based approach, the market approach, and the income approach.

Certificate of deposits (CDs) and the core deposit intangible (premium paid to acquire the core deposits of SFSB) were marked to market
using a third-party analysis of cash flow, interest rate, maturity dates or weighted average life, balances, attrition rates, and current market rates.

The Company reviewed certain contracts between SFSB and its vendors in order to identify any efficiencies from the merger through contract cancellation. The costs of cancelling certain contracts were not
material enough to change the amount of the gain recorded.

Supplemental pro forma information reflecting the revenue and
earnings of the combined entity for the current reporting period as though the acquisition date for the business combination had occurred at the beginning of the annual reporting period, and similar comparative information for the prior year, has
not been disclosed. Management has determined that it is impracticable to provide this information due to a lack of reliability of financial information produced by SFSB prior to the acquisition and the costs that would be incurred to reproduce the
information with an appropriate level of reliability.

5. GOODWILL AND INTANGIBLE ASSETS

The Company follows SFAS 142, Goodwill and Other Intangible Assets, which prescribes the accounting for goodwill and
intangible assets subsequent to initial recognition. Provisions within SFAS 142 discontinue any amortization of goodwill and intangible assets with indefinite lives, and require at least an annual impairment review or more often if certain
impairment conditions exist. With the TFC and BOE mergers consummated May 31, 2008, there were significant amounts of goodwill and other intangible assets recorded. Goodwill was assessed for potential impairment as of May 31, 2009, the
anniversary date of the mergers.



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##### Table of Contents

Since the mergers in 2008, there has been further decline in economic conditions, which has
significantly affected the banking sector and the Companys financial condition and results. The Companys average closing stock price during the second quarter of 2008 and 2009 was $6.64 per share and $3.67 per share, respectively, which
represented a 44.73% decline. On the last business day prior to May 31, 2009, the closing stock price was $3.10 per share. The average closing stock price for the third quarter of 2009 was $3.41.

The initial step in identifying potential impairment involves comparing the current fair value of such goodwill to its recorded or
carrying amount. If the carrying value exceeds such fair value, there is possible impairment. Next, a second step is performed to determine the amount of the impairment, if any. This step requires a comparison of the Companys book value to the
fair value of its assets, liabilities, and intangibles. If the carrying amount of goodwill exceeds the fair value, an impairment charge must be recorded in an amount equal to the excess. Management retained a business valuation expert to assist in
determining the level and extent to which goodwill was impaired. The Company determined that goodwill was impaired as of May 31, 2009, and a $24.0 million impairment charge was recorded during the second quarter of 2009. Because the
acquisitions were considered tax-free exchanges, the goodwill impairment charge cannot be deducted for tax purposes, and as such, an income tax benefit cannot be recorded. Due to this tax treatment, the goodwill impairment charge will be reflected
as a permanent difference in the deferred tax calculation.

In determining the goodwill impairment charge, the reporting unit
was defined as Community Bankers Trust Corporation, as the Company has determined that it has no reportable segments or components of a segment, as defined in SFAS No. 142, Goodwill and Other Intangible
Assets (ASC 350 Intangibles  Goodwill and Other).

The Company used and weighted two valuation methods in
determining the fair value of the reporting unit  the guideline transaction method and the discounted cash flow method. The guideline transaction method uses actual change-of-control transactions involving entities similar to the reporting
unit. These transactions consist of merger and acquisition transactions involving financial institutions, and the Company derived the fair value of the reporting unit based on the price/tangible book value multiples and core deposit premiums
reported in these transactions. The Company used this method as it reflects the guidance in SFAS No. 142, which is consistent with SFAS No. 157, that the estimate of fair value shall be based on the best information available,
including prices for similar assets and liabilities . . . .

The discounted cash flow analysis relies upon a projection
of future cash flows, the present value of which represents the value of the reporting unit. Management supplied projections of the reporting units future balance sheets and income statements, which were used in the analysis. Under the
discounted cash flow method, the value of the reporting unit is the sum of the distributable cash flows generated by the reporting unit and a terminal value in 2013 representing the value of all future cash flows. The Company used the discounted
cash flow method because market participants commonly use discounted cash flow analyses in acquisitions of financial institutions, as the value of an enterprise is equal to its future cash flows. Further, SFAS No. 142 indicates that, A
present value technique is often the best available technique with which to estimate the fair value of a group of net assets (such as a reporting unit) . . . .

The Company then compared the conclusion of value indicated by the preceding valuation methods to the Companys market capitalization and the valuation multiples for a group of comparable publicly
traded banks to the Company.

In determining a conclusion of value for the reporting unit, the guideline transactions method
received two-thirds of the total weight (split equally between the indications of value based on tangible book value and core deposits), and the discounted cash flow method received one-third of the total weighting. This weighting methodology
reflects that actual transactions involving enterprises with similar characteristics to the subject reporting unit provide the most meaningful indication of value. The Company weighted the discounted cash flow method as it is commonly employed in
the financial services industry and represents a value based on the future cash flows generated by the reporting unit.

The
material assumptions used and the sensitivity in them for the two valuation methods used are as follows:



| |  | The guideline transactions method derives the fair value of the reporting unit using (a) the reporting units tangible book value and core deposits at
May 31, 2009 and (b) multiples of tangible book value and core deposits derived from marketplace transactions, as reported by SNL Financial. The multiples were derived from two groups of transactions  (a) transactions announced
between June 1, 2008 and May 31, 2009 involving banks located nationwide with assets greater than $250 million and (b) transactions announced between June 1, 2008 and May 31, 2009 involving banks and thrifts located in the
Mid-Atlantic region. A change in the price/tangible book value multiple by 10% would affect the value by a like amount. A change in the core deposit premium by 10% would affect the value by approximately 2%.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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##### Table of Contents

| |  | The discounted cash flow method relies upon a projection of the reporting units future financial performance, including assumptions as to its future balance sheet
growth, asset composition, funding mix, asset quality, capital levels, net interest income, non-interest income, non-interest expenses, loan loss provision, income taxes, and distributable cash flows. In addition, the discounted cash flow method
requires a terminal value, which reflects the value of the reporting unit after the end of the finite forecast period. The terminal value is a function of the reporting units projected 2013 net income and tangible book value, and multiples of
net income and tangible book value. The Company then discounts the projected future cash flows and terminal value to the present at a discount rate derived from marketplace assumptions as to returns demanded on equity investments.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Particularly significant assumptions in the discounted cash flow method include (a) the reporting units future net income and distributable cash flows,
(b) the terminal multiple of earnings or tangible book value, and (c) the discount rate.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Goodwill
will be next assessed for potential impairment as of December 31, 2009, as management determined that goodwill will be evaluated in the future on an annual basis coinciding with the end of the fiscal year, unless economic or other circumstances
warrant evaluations at additional times.

During 2008, management discovered that there was an error in the fair value of
stock options issued by the Company in settlement of the TFC and BOE stock options outstanding as of the respective merger dates. When correcting this valuation error, the adjustment was inadvertently recorded twice. The result was understatement of
Goodwill and Deferred Taxes Liabilities of approximately $2.9 million and $1.5 million, respectively. An adjustment has been made to correct this error and the financial statements for the year ended December 31, 2008 have been restated.

Core deposit intangible assets are amortized over the period of expected benefit, ranging from 2.6 to 9 years. Core deposit
intangibles are recognized, amortized and evaluated for impairment as required by SFAS No. 142, Goodwill and Other Intangible Assets (ASC 350 Intangibles  Goodwill and Other). Due to the mergers with TFC and BOE on
May 31, 2008, the Company recorded approximately $15.0 million in core deposit intangible assets. Core deposit intangibles related to the Georgia and Maryland transactions equaled $3.1 million and $2.2 million, respectively, and
will be amortized over approximately 9 years.

Goodwill and core deposit intangible assets are presented in the following
table:



|                         |  |                  |        |  |                         |   |       |            |  |   |                   |  |  |   |        | 
|------------------------ |  | ---------------- | ------ |  | ----------------------- | - | ----- | ---------- |  | - | ----------------- |  |  | - | ------ | 
|                         |  | GrossAmountValue |        |  | AccumulatedAmortization |   |       | Impairment |  |   | Net CarryingValue | 
|                         |  |                  |        |  | (dollars in thousands)  |   |       |            | 
|December 31, 2008        |  |                  |        |  |                         |   |       |            |  |   |                   |  |  |   |        | 
|Goodwill (restated)      |  | $                | 37,184 |  |                         |   |      |            |  |   |                  |  |  | $ | 37,184 | 
|Core deposit intangibles |  | $                | 18,132 |  |                         | $ | 969   |            |  |   |                  |  |  | $ | 17,163 | 
|                         |  |                  |        | 
|September 30, 2009       |  |                  |        |  |                         |   |       |            |  |   |                   |  |  |   |        | 
|Goodwill                 |  | $                | 37,184 |  |                         |   |      |            |  | $ | 24,032            |  |  | $ | 13,152 | 
|Core deposit intangibles |  | $                | 20,290 |  |                         | $ | 2,645 |            |  |   |                  |  |  | $ | 17,645 | 

6. FAIR VALUE MEASUREMENTS

The Company utilizes fair value measurements to record fair value adjustments to certain assets and liabilities and to
determine fair value disclosures. Securities available-for-sale, trading securities and derivatives, if present, are recorded at fair value on a recurring basis. Additionally, from time to time, the Company may be required to record at fair value
other assets on a nonrecurring basis, such as loans held for sale, loans held for investment and certain other assets. These nonrecurring fair value adjustments typically involve application of lower of cost or market accounting or write-downs of
individual assets.



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##### Table of Contents

Fair Value Hierarchy

Under FASB ASC 820, Fair Value Measurements and Disclosures, the Company groups assets and liabilities at fair value in three levels, based on the markets in which the assets and
liabilities are traded and the reliability of the assumptions used to determine fair value. These levels are:

Level 1  Valuation is based upon quoted prices for identical instruments traded in active markets.

Level 2  Valuation is based upon quoted prices for similar instruments in active markets, quoted prices for identical or
similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market.

Level 3  Valuation is generated from model-based techniques that use at least one significant assumption not observable in the market. These unobservable assumptions reflect estimates of
assumptions that market participants would use in pricing the asset or liability. Valuation techniques include use of option pricing models, discounted cash flow models and similar techniques.

Following is a description of valuation methodologies used for assets and liabilities recorded at fair value.

Investment Securities Available-for-Sale

Investment securities available-for-sale are recorded at fair value each reporting period. Fair value measurement is based upon quoted prices, if available. If quoted prices are not available, fair values
are measured using independent pricing models or other model-based valuation techniques such as the present value of future cash flows, adjusted for the securitys credit rating, prepayment assumptions and other factors such as credit loss
assumptions. The Company only utilizes third party vendors to provide fair value data for purposes of recording amounts related to the fair value measurements of its securities available for sale portfolio. An AICPA Statement on Auditing Standard
Number 70 (SAS 70) report is obtained from the third party vendor on an annual basis. The third party vendor also utilizes a reputable pricing company for security market data. The third party vendor has controls and edits in place for month-to
month market checks and zero pricing. The Company makes no adjustments to the pricing service data received for its securities available for sale.

Level 1 securities include those traded on an active exchange, such as the New York Stock Exchange, U.S. Treasury securities that are traded by dealers or brokers in active over-the-counter
markets and money market funds. Level 2 securities include mortgage-backed securities issued by government sponsored entities, municipal bonds and corporate debt securities. Securities classified as Level 3 would include asset-backed
securities in less liquid markets.

Loans held for sale

Loans held for sale are recorded at the lower of cost or fair value each reporting period, and are comprised of residential mortgages. These loans are held for a short period of time with the intention of
being sold on the secondary market. Therefore, the fair value is determined on rates currently offered using observable market information, which does not deviate materially from the cost value. If there are any adjustments to record the loan at the
lower of cost of market value, it would be reflected in the consolidated statements of income. It was determined that the cost value recorded at September 30, 2009 was similar to the fair value, and therefore no adjustment was necessary. Due to
the observable market data available in pricing these loans held for sale, they were considered as Level 2.

Loans, excluding covered
loans (noncovered)

Except for loans that the Company acquired in the SFSB transaction, the Company does not record
unimpaired loans held for investment at fair value each reporting period. However, from time to time, a loan is considered impaired and an allowance for loan losses is established. Loans for which it is probable that payment of interest and
principal will not be made in accordance with the contractual terms of the loan agreement are considered impaired. The fair value of impaired loans is estimated using one of several methods, including collateral value, market value of similar debt,
enterprise value, liquidation value and discounted cash flows. Those impaired loans not requiring an allowance represent loans for which the fair value of the expected repayments or collateral exceed the recorded investments in such loans.



In accordance with SFAS 157, impaired loans where
an allowance is established based on the fair value of collateral require classification in the fair value hierarchy. The Bank frequently obtains appraisals prepared by external professional appraisers for classified loans greater than $250,000 when
the most recent appraisal is greater than 12 months old. The appraisal, based on the date of preparation, becomes only a part of the determination of the amount of any loan write-off, with current market conditions and the collaterals location
being other determinants. When the fair value of the collateral is based on an observable market price or a current appraised value, the Company records the impaired loan as nonrecurring Level 2.

The Bank may also identify collateral deterioration based on current market sales data, including price and absorption, as well as input
from real estate sales professionals and developers, county or city tax assessments, market data and on-site inspections by Bank personnel. Internally prepared estimates generally result from current market data and actual sales data related to the
Banks collateral or where the collateral is located. When management determines the fair value of the collateral is further impaired below the appraised value and there is no observable market price, the Company records the impaired loan as
nonrecurring Level 3. In instances where an appraisal received subsequent to an internally prepared estimate reflects a higher collateral value, management does not revise the carrying amount.

Reviews of classified loans are performed by management on a quarterly basis. At September 30, 2009, substantially all of the
impaired loans were evaluated based on the fair value of the collateral.

Loans covered by FDIC shared-loss agreement (covered)

Fair values for loans were based on a discounted cash flow methodology that considered various factors including the type
of loan and related collateral, classification status, fixed or variable interest rate, term of loan and whether or not the loan was amortizing. Loans were pooled together according to similar characteristics and were treated in the aggregate when
applying various valuation techniques. The discount rate used for loans are based on the rates used at acquisition (which were based on market rates for new originations of comparable loans) and have been adjusted since acquisition based on how
changes in expected cash flows have changed future accretable yield. The discount rate does not include a factor for credit losses as that has been included in the estimated cash flows.

Other real estate owned (non covered)

Other real estate owned (OREO),
including foreclosed assets, is adjusted to fair value upon transfer of the loans to foreclosed assets. Subsequently, OREO is carried at the lower of carrying value or fair value. Fair value is based upon independent market prices, appraised values
of the collateral or managements estimation of the value of the collateral. When the fair value of the collateral is based on an observable market price or a current appraised value, the Company records the OREO as a nonrecurring Level 2.
When an appraised value is not available or management determines the fair value of the collateral is further impaired below the appraised value and there is no observable market price, the Company records the foreclosed asset as nonrecurring
Level 3.

Other real estate owned, covered by FDIC shared-loss agreement

Other real estate owned (OREO), covered by FDIC shared-loss agreement (covered) is adjusted to fair value upon transfer of the loans to
foreclosed assets. Subsequently, it is carried at the lower of carrying value or fair value. Fair value is based upon independent market prices, appraised values of the collateral or managements estimation of the value of the collateral. When
the fair value of the collateral is based on an observable market price or a current appraised value, the Company records the OREO as a nonrecurring Level 2. When an appraised value is not available or management determines the fair value of
the collateral is further impaired below the appraised value and there is no observable market price, the Company records the foreclosed asset as nonrecurring Level 3.

FDIC indemnification asset

These loss sharing assets are measured
separately from the related covered assets as they not contractually embedded in the assets and are not transferable with the assets should the Company choose to dispose of them. Fair value was estimated using projected cash flows related to the
loss sharing agreements based on the expected reimbursements for losses and the applicable loss sharing percentages. These expected reimbursements do not include reimbursable amounts related to future covered expenditures. These cash flows were
discounted to reflect the uncertainty of the timing and receipt of the loss haring reimbursement from the FDIC.

Goodwill

See Note 5 for a description of valuation methodologies for goodwill.



15



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##### Table of Contents

Assets and Liabilities Recorded at Fair Value on a Recurring Basis

The table below presents the recorded amount of assets and liabilities measured at fair value on a recurring basis.



|                                                 |  |                        |         |  |         |   |       |         |  |   |         |  |  |   |         | 
|------------------------------------------------ |  | ---------------------- | ------- |  | ------- | - | ----- | ------- |  | - | ------- |  |  | - | ------- | 
|                                                 |  | September 30, 2009     |        
|                                                 |  | Total                  |         |  | Level 1 |   |       | Level 2 |  |   | Level 3 | 
|                                                 |  | (dollars in thousands) |        
|Investment securities available-for-sale:        |  |                        |         |  |         |   |       |         |  |   |         |  |  |   |         | 
|                                                 |  |                        |         | 
|U.S. Treasury issue and U.S. government agencies |  | $                      | 16,103  |  |         | $ |      |         |  | $ | 16,103  |  |  | $ |        | 
|State, county, and municipal                     |  |                        | 94,034  |  |         |   |      |         |  |   | 94,034  |  |  |   |        | 
|Corporates and other bonds                       |  |                        | 2,834   |  |         |   |      |         |  |   | 2,834   |  |  |   |        | 
|Mortgage backed securities                       |  |                        | 56,857  |  |         |   |      |         |  |   | 56,857  |  |  |   |        | 
|Financial stocks                                 |  |                        | 1,356   |  |         |   | 1,356 |         |  |   |        |  |  |   |        | 
|                                                 |  |                        |         |  |         |   |       |         |  |   |         |  |  |   |         | 
|Total securities available-for-sale              |  |                        | 171,184 |  |         |   | 1,356 |         |  |   | 169,828 |  |  |   |        | 
|Loans covered by FDIC shared-loss agreement      |  |                        | 166,085 |  |         |   |      |         |  |   |        |  |  |   | 166,085 | 
|FDIC indemnification asset                       |  |                        | 83,909  |  |         |   |      |         |  |   |        |  |  |   | 83,909  | 
|                                                 |  |                        |         |  |         |   |       |         |  |   |         |  |  |   |         | 
|Total assets at fair value                       |  | $                      | 421,178 |  |         | $ | 1,356 |         |  | $ | 169,828 |  |  | $ | 249,994 | 
|                                                 |  |                        |         |  |         |   |       |         |  |   |         |  |  |   |         | 
|Total liabilities at fair value                  |  | $                      |        |  |         | $ |      |         |  | $ |        |  |  | $ |        | 
|                                                 |  |                        |         |  |         |   |       |         |  |   |         |  |  |   |         | 

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

The Company may be required, from time to time, to measure certain assets at fair value on a nonrecurring basis in accordance with GAAP.
These assets include assets that are measured at the lower of cost value or market value that were recognized at fair value below cost at the end of the period. The table below presents the recorded amount of assets and liabilities measured at fair
value on a nonrecurring basis.



|                                                                      |  |                        |        |  |         |   |   |         |  |   |         |  |  |   |        | 
|--------------------------------------------------------------------- |  | ---------------------- | ------ |  | ------- | - | - | ------- |  | - | ------- |  |  | - | ------ | 
|                                                                      |  | September 30, 2009     |       
|                                                                      |  | Total                  |        |  | Level 1 |   |   | Level 2 |  |   | Level 3 | 
|                                                                      |  | (dollars in thousands) |       
|Loans  impaired loans with a valuation allowance                     |  | $                      | 26,776 |  |         | $ |  |         |  | $ | 24,202  |  |  | $ | 2,574  | 
|Other real estate owned (OREO), covered by FDIC shared-loss agreement |  |                        | 11,105 |  |         |   |  |         |  |   | 2,620   |  |  |   | 8,485  | 
|Other real estate owned (OREO), non covered                           |  |                        | 1,175  |  |         |   |  |         |  |   | 1,175   |  |  |   |       | 
|Goodwill                                                              |  |                        | 13,152 |  |         |   |  |         |  |   |        |  |  |   | 13,152 | 
|                                                                      |  |                        |        |  |         |   |   |         |  |   |         |  |  |   |        | 
|Total assets at fair value                                            |  | $                      | 52,208 |  |         | $ |  |         |  | $ | 27,997  |  |  | $ | 24,211 | 
|                                                                      |  |                        |        |  |         |   |   |         |  |   |         |  |  |   |        | 
|Total liabilities at fair value                                       |  | $                      |       |  |         | $ |  |         |  | $ |        |  |  | $ |       | 
|                                                                      |  |                        |        |  |         |   |   |         |  |   |         |  |  |   |        | 

The Company had no Level 1 assets measured at fair value on a nonrecurring basis at
September 30, 2009.



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ASC 820, Fair Value Measurements and Disclosures, requires disclosure of
the fair value of financial assets and financial liabilities, including those financial assets and financial liabilities that are not measured and reported at fair value on a recurring basis or non-recurring basis.

The fair value of a financial instrument is the current amount that would be exchanged between willing parties, other than in a forced
liquidation. Fair value is best determined based upon quoted market prices. However, in many instances, there are no quoted market prices for the Corporations various financial instruments. In cases where quoted market prices are not
available, fair values are based on estimates using present value or other valuation techniques. Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. Accordingly, the
fair value estimates may not be realized in an immediate settlement of the instrument. ASC 820 excludes certain financial instruments and all nonfinancial instruments from its disclosure requirements. Accordingly, the aggregate fair value amounts
presented may not necessarily represent the underlying fair value of the Corporation.

The following methods and assumptions
were used to estimate the fair value of each class of financial instruments for which it is practicable to estimate that value:

Cash and Short-Term Investments

For those short-term instruments, the carrying amount is a reasonable estimate of fair value.

Securities

For securities held for investment purposes, fair values
are based on quoted market prices or dealer quotes.

Restricted Securities

The carrying value of restricted securities approximates their fair value based on the redemption provisions of the respective entity.

Loans Receivable

For certain homogeneous categories of loans, such as some residential mortgages, and other consumer loans, fair value is estimated using the quoted market prices for securities backed by similar loans,
adjusted for differences in loan characteristics. The fair value of other types of loans is estimated by discounting the future cash flows using the current rates at which similar loans would be made to borrowers with similar credit ratings and for
the same remaining maturities.

Deposit Liabilities

The fair value of demand deposits, savings accounts, and certain money market deposits is the amount payable on demand at the reporting
date. The fair value of fixed-maturity certificates of deposit is estimated using the rates currently offered for deposits of similar remaining maturities.

Long-Term Borrowings

The fair values of the Corporations
long-term borrowings are estimated using discounted cash flow analyses based on the Corporations current incremental borrowing rates for similar types of borrowing arrangements.

Accrued Interest

The carrying amounts of accrued interest approximate fair value.

Off-Balance Sheet Financial Instruments

The fair value of commitments to extend credit is estimated using the fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the present
creditworthiness of the counterparties. For fixed-rate loan commitments, fair value also considers the difference between current levels of interest rates and the committed rates.

The fair value of stand-by letters of credit is based on fees currently charged for similar agreements or on the estimated cost to
terminate them or otherwise settle the obligations with the counterparties at the reporting date.

At September 30, 2009,
the fair values of loan commitments and stand-by letters of credit were deemed to be immaterial.



17



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##### Table of Contents

The fair values and carrying values are as follows:



|                                            |  |                    |           |  |           |   |           | 
|------------------------------------------- |  | ------------------ | --------- |  | --------- | - | --------- | 
|                                            |  | September 30, 2009 |          
|(dollars in thousands)                      |  | CarryingValue      |           |  | FairValue |  
|Financial assets:                           |  |                    |           |  |           |   |           | 
|Cash and cash equivalents                   |  | $                  | 29,298    |  |           | $ | 29,315    | 
|Securities available for sale               |  |                    | 171,184   |  |           |   | 171,184   | 
|Securities held to maturity                 |  |                    | 121,023   |  |           |   | 124,883   | 
|Equity securities                           |  |                    | 8,355     |  |           |   | 8,355     | 
|Loans, non covered, net                     |  |                    | 553,241   |  |           |   | 546,242   | 
|Loans covered by FDIC shared-loss agreement |  |                    | 166,085   |  |           |   | 166,085   | 
|FDIC indemnification asset                  |  |                    | 83,909    |  |           |   | 83,909    | 
|Accrued interest receivable                 |  |                    | 5,401     |  |           |   | 5,401     | 
|                                            |  |                   
|Financial liabilities:                      |  |                    |           |  |           |   |           | 
|Deposits                                    |  |                    | 1,027,529 |  |           |   | 1,033,024 | 
|Borrowings                                  |  |                    | 41,155    |  |           |   | 46,035    | 
|Accrued interest payable                    |  |                    | 3,159     |  |           |   | 3,159     | 

The Corporation
assumes interest rate risk (the risk that general interest rate levels will change) as a result of its normal operations. As a result, the fair values of the Corporations financial instruments will change when interest rate levels change and
that change may be either favorable or unfavorable to the Corporation. Management attempts to match maturities of assets and liabilities to the extent believed necessary to minimize interest rate risk. However, borrowers with fixed rate obligations
are less likely to prepay in a rising rate environment and more likely to prepay in a falling rate environment. Conversely, depositors who are receiving fixed rates are more likely to withdraw funds before maturity in a rising rate environment and
less likely to do so in a falling rate environment. Management monitors rates and maturities of assets and liabilities and attempts to minimize interest rate risk by adjusting terms of new loans and deposits and by investing in securities with terms
that mitigate the Corporations overall interest rate risk.

7. SECURITIES

Amortized costs and fair values of securities available for sale at September 30, 2009 were as follows:



|                                                       |  |               |         |  |                  |   |       |            |  |   |      |   |  |   |         | 
|------------------------------------------------------ |  | ------------- | ------- |  | ---------------- | - | ----- | ---------- |  | - | ---- | - |  | - | ------- | 
|(dollars in thousands)                                 |  | AmortizedCost |         |  | Gross Unrealized |   |       | Fair Value | 
|                                                       |  | Gains         |         |  | Losses           |   |      
|U.S. Treasury issue and other U.S. Government agencies |  | $             | 15,589  |  |                  | $ | 514   |            |  | $ |     |   |  | $ | 16,103  | 
|State, county and municipal                            |  |               | 90,976  |  |                  |   | 3,275 |            |  |   | (217 | ) |  |   | 94,034  | 
|Corporates and other bonds                             |  |               | 2,761   |  |                  |   | 73    |            |  |   |     |   |  |   | 2,834   | 
|Mortgage backed securities                             |  |               | 55,392  |  |                  |   | 1,469 |            |  |   | (4   | ) |  |   | 56,857  | 
|Other securities                                       |  |               | 1,293   |  |                  |   | 165   |            |  |   | (102 | ) |  |   | 1,356   | 
|                                                       |  |               |         |  |                  |   |       |            |  |   |      |   |  |   |         | 
|Total securities available for sale                    |  | $             | 166,011 |  |                  | $ | 5,496 |            |  | $ | (323 | ) |  | $ | 171,184 | 
|                                                       |  |               |         |  |                  |   |       |            |  |   |      |   |  |   |         | 



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##### Table of Contents

The fair value and gross unrealized losses for securities available for sale, totaled by the
length of time that individual securities have been in a continuous gross unrealized loss position, at September 30, 2009 were as follows:



|                                    |  |                     |       |  |                   |   |      |            |  |   |                |  |  |            |     |   |                |   |       |  |  |   |      |  
|----------------------------------- |  | ------------------- | ----- |  | ----------------- | - | ---- | ---------- |  | - | -------------- |  |  | ---------- | --- | - | -------------- | - | ----- |  |  | - | ---- | -
|(dollars in thousands)              |  | Less than 12 months |       |  | 12 months or more |   |      | Total      | 
|                                    |  | Fair Value          |       |  | UnrealizedLoss    |   |      | Fair Value |  |   | UnrealizedLoss |  |  | Fair Value |     |   | UnrealizedLoss |  
|State, county and municipal         |  | $                   | 2,075 |  |                   | $ | (193 | )          |  | $ | 2,204          |  |  | $          | (24 | ) |                | $ | 4,279 |  |  | $ | (217 | )
|Mortgage backed securities          |  |                     | 710   |  |                   |   | (4   | )          |  |   |               |  |  |            |    |   |                |   | 710   |  |  |   | (4   | )
|Other securities                    |  |                     | 1,092 |  |                   |   | (96  | )          |  |   | 12             |  |  |            | (6  | ) |                |   | 1,104 |  |  |   | (102 | )
|                                    |  |                     |       |  |                   |   |      |            |  |   |                |  |  |            |     |   |                |   |       |  |  |   |      |  
|Total securities available for sale |  | $                   | 3,877 |  |                   | $ | (293 | )          |  | $ | 2,216          |  |  | $          | (30 | ) |                | $ | 6,093 |  |  | $ | (323 | )
|                                    |  |                     |       |  |                   |   |      |            |  |   |                |  |  |            |     |   |                |   |       |  |  |   |      |  

At September 30, 2009, there were $2.2 million of securities available for sale that were in a
continuous loss position for more than twelve months with unrealized losses of $30,000 and consisted primarily of municipal obligations. Management continually monitors the fair value and credit quality of the Companys investment portfolio.
Furthermore, a third party vendor prepares a report for other than temporarily impaired evaluations. Management reviews this report monthly, and there were no investments considered other than temporarily impaired at September 30, 2009.

Amortized costs and fair values of securities held to maturity at September 30, 2009 were as follows:



|                                                       |  |               |         |  |                  |   |       |            |  |   |      |   |  |   |         | 
|------------------------------------------------------ |  | ------------- | ------- |  | ---------------- | - | ----- | ---------- |  | - | ---- | - |  | - | ------- | 
|(dollars in thousands)                                 |  | AmortizedCost |         |  | Gross Unrealized |   |       | Fair Value | 
|                                                       |  | Gains         |         |  | Losses           |   |      
|U.S. Treasury issue and other U.S. Government agencies |  | $             | 748     |  |                  | $ |      |            |  | $ | (1   | ) |  | $ | 747     | 
|State, county and municipal                            |  |               | 13,104  |  |                  |   | 859   |            |  |   |     |   |  |   | 13,963  | 
|Corporates and other bonds                             |  |               | 1,030   |  |                  |   | 26    |            |  |   |     |   |  |   | 1,056   | 
|Mortgage backed securities                             |  |               | 106,141 |  |                  |   | 3,078 |            |  |   | (102 | ) |  |   | 109,117 | 
|                                                       |  |               |         |  |                  |   |       |            |  |   |      |   |  |   |         | 
|Total securities held to maturity                      |  | $             | 121,023 |  |                  | $ | 3,963 |            |  | $ | (103 | ) |  | $ | 124,883 | 
|                                                       |  |               |         |  |                  |   |       |            |  |   |      |   |  |   |         | 

The fair value and gross unrealized losses for securities held to maturity, totaled by the length of time
that individual securities have been in a continuous gross unrealized loss position, at September 30, 2009 were as follows:



|                                                       |  |                     |        |  |                   |   |      |            |  |   |                |  |  |            |   |  |                |   |        |  |  |   |      |  
|------------------------------------------------------ |  | ------------------- | ------ |  | ----------------- | - | ---- | ---------- |  | - | -------------- |  |  | ---------- | - |  | -------------- | - | ------ |  |  | - | ---- | -
|(dollars in thousands)                                 |  | Less than 12 months |        |  | 12 months or more |   |      | Total      | 
|                                                       |  | Fair Value          |        |  | UnrealizedLoss    |   |      | Fair Value |  |   | UnrealizedLoss |  |  | Fair Value |   |  | UnrealizedLoss |  
|U.S. Treasury issue and other U.S. Government agencies |  | $                   | 748    |  |                   | $ | (1   | )          |  | $ |               |  |  | $          |  |  |                | $ | 748    |  |  | $ | (1   | )
|Mortgage backed securities                             |  |                     | 10,501 |  |                   |   | (102 | )          |  |   |               |  |  |            |  |  |                |   | 10,501 |  |  |   | (102 | )
|                                                       |  |                     |        |  |                   |   |      |            |  |   |                |  |  |            |   |  |                |   |        |  |  |   |      |  
|Total securities held to maturity                      |  | $                   | 11,249 |  |                   | $ | (103 | )          |  | $ |               |  |  | $          |  |  |                | $ | 11,249 |  |  | $ | (103 | )
|                                                       |  |                     |        |  |                   |   |      |            |  |   |                |  |  |            |   |  |                |   |        |  |  |   |      |  

Management continually monitors the fair value and credit quality of the Companys investment
portfolio. At September 30, 2009, all impairments of securities held to maturity are considered temporary as the unrealized losses are related to market risk and not credit risk. The Company does not intend to sell the securities and it is not
likely that the company will be required to sell the security before recovery of its amortized cost. Issuers of the securities held to maturity and available for sale are of suitable credit quality and all of the securities are of investment grade.

The Companys investment in Federal Home Loan Bank (FHLB) stock totaled $3.6 million at September 30,
2009. FHLB stock is restricted since it is not actively traded on an exchange, and is owned solely by the FHLB and its member institutions. The Company records FHLB stock on a cost basis. When evaluating FHLB stock for impairment, its value is based
on recovery of the par value rather than by recognizing temporary decline in value. While the FHLB temporarily suspended dividend payments on its stock and repurchases of excess capital stock during 2009, it declared an annualized dividend rate of
0.41% for the third quarter of 2009, which is scheduled for payment in November 2009.



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##### Table of Contents

8. LOANS EXCLUDING COVERED LOANS

The Companys loan portfolio, segregated by loans covered by the FDIC shared-loss agreement (Covered Loans) and loans not covered by
this agreement (Non-covered Loans), at September 30, 2009 and December 31, 2008, was comprised of the following (dollars in thousands):



|                                          |  |                                     |         |   |                              |  |        |   |  |   |         |   |  |  |        |  
|----------------------------------------- |  | ----------------------------------- | ------- | - | ---------------------------- |  | ------ | - |  | - | ------- | - |  |  | ------ | -
|                                          |  | September 30, 2009Non-covered loans |         |   | December 31, 2008Total Loans | 
|Open End 1-4 Family Loans                 |  | $                                   | 31,008  |   |                              |  | 5.44   | % |  | $ | 30,323  |   |  |  | 5.80   | %
|1-4 Family First Liens                    |  |                                     | 107,882 |   |                              |  | 18.94  | % |  |   | 99,284  |   |  |  | 18.98  | %
|                                          |  |                                     |         |   |                              |  |        |   |  |   |         |   |  |  |        |  
|Total residential 1-4 family              |  |                                     | 138,890 |   |                              |  | 24.38  | % |  |   | 129,607 |   |  |  | 24.78  | %
|                                          |  |                                     |         |   |                              |  |        |   |  |   |         |   |  |  |        |  
|                                          |  |                                     |         |  
|Owner occupied nonfarm nonresidential     |  |                                     | 81,810  |   |                              |  | 14.36  | % |  |   | 63,218  |   |  |  | 12.09  | %
|Non owner occupied nonfarm nonresidential |  |                                     | 105,182 |   |                              |  | 18.47  | % |  |   | 93,872  |   |  |  | 17.95  | %
|                                          |  |                                     |         |   |                              |  |        |   |  |   |         |   |  |  |        |  
|Total commercial                          |  |                                     | 186,992 |   |                              |  | 32.83  | % |  |   | 157,090 |   |  |  | 30.03  | %
|                                          |  |                                     |         |   |                              |  |        |   |  |   |         |   |  |  |        |  
|                                          |  |                                     |         |  
|1-4 Family Construction                   |  |                                     | 28,811  |   |                              |  | 5.06   | % |  |   | 36,277  |   |  |  | 6.93   | %
|Other construction and land development   |  |                                     | 111,708 |   |                              |  | 19.61  | % |  |   | 103,238 |   |  |  | 19.74  | %
|                                          |  |                                     |         |   |                              |  |        |   |  |   |         |   |  |  |        |  
|Total construction                        |  |                                     | 140,519 |   |                              |  | 24.67  | % |  |   | 139,515 |   |  |  | 26.67  | %
|                                          |  |                                     |         |   |                              |  |        |   |  |   |         |   |  |  |        |  
|                                          |  |                                     |         |  
|Second mortgages                          |  |                                     | 14,124  |   |                              |  | 2.48   | % |  |   | 15,599  |   |  |  | 2.98   | %
|Multifamily                               |  |                                     | 10,757  |   |                              |  | 1.89   | % |  |   | 9,370   |   |  |  | 1.79   | %
|Agriculture                               |  |                                     | 3,907   |   |                              |  | 0.69   | % |  |   | 5,143   |   |  |  | 0.98   | %
|                                          |  |                                     |         |   |                              |  |        |   |  |   |         |   |  |  |        |  
|Total real estate loans                   |  |                                     | 495,189 |   |                              |  | 86.94  | % |  |   | 456,324 |   |  |  | 87.23  | %
|                                          |  |                                     |         |   |                              |  |        |   |  |   |         |   |  |  |        |  
|                                          |  |                                     |         |  
|Agriculture loans                         |  |                                     | 1,407   |   |                              |  | 0.25   | % |  |   | 988     |   |  |  | 0.19   | %
|Commercial and industrial loans           |  |                                     | 45,348  |   |                              |  | 7.96   | % |  |   | 44,332  |   |  |  | 8.48   | %
|                                          |  |                                     |         |   |                              |  |        |   |  |   |         |   |  |  |        |  
|Total commercial loans                    |  |                                     | 46,755  |   |                              |  | 8.21   | % |  |   | 45,320  |   |  |  | 8.67   | %
|                                          |  |                                     |         |   |                              |  |        |   |  |   |         |   |  |  |        |  
|                                          |  |                                     |         |  
|Total revolving credit and other consumer |  |                                     | 15,927  |   |                              |  | 2.79   | % |  |   | 14,457  |   |  |  | 2.76   | %
|                                          |  |                                     |         |  
|All other loans                           |  |                                     | 11,706  |   |                              |  | 2.06   | % |  |   | 7,005   |   |  |  | 1.34   | %
|                                          |  |                                     |         |   |                              |  |        |   |  |   |         |   |  |  |        |  
|                                          |  |                                     |         |  
|Gross loans                               |  |                                     | 569,577 |   |                              |  | 100.00 | % |  |   | 523,106 |   |  |  | 100.00 | %
|Unearned income on loans                  |  |                                     | (785    | ) |                              |  |        |   |  |   | (780    | ) |  |  |        |  
|Merger related fair value adjustment      |  |                                     | 660     |   |                              |  |        |   |  |   | 972     |   |  |  |        |  
|                                          |  |                                     |         |   |                              |  |        |   |  |   |         |   |  |  |        |  
|Total non-covered loans                   |  | $                                   | 569,452 |   |                              |  |        |   |  | $ | 523,298 |   |  |  |        |  
|                                          |  |                                     |         |   |                              |  |        |   |  |   |         |   |  |  |        |  

The following is a summary of information for impaired and nonaccrual loans at September 30,
2009, excluding FDIC covered assets (dollars in thousands):



|                                                                                      |  |        |        | 
|------------------------------------------------------------------------------------- |  | ------ | ------ | 
|                                                                                      |  | Amount |       
|Impaired loans without a valuation allowance                                          |  | $      | 27,728 | 
|Impaired loans with a valuation allowance                                             |  |        | 26,776 | 
|                                                                                      |  |        |        | 
|Total impaired loans                                                                  |  | $      | 54,504 | 
|                                                                                      |  |        |        | 
|Valuation allowance related to impaired loans                                         |  | $      | 9,454  | 
|Total nonaccrual loans                                                                |  | $      | 20,572 | 
|Total loans 90 days or more past due and still accruing                               |  | $      | 1,462  | 
|Average investment in impaired loans during the nine months ending September 30, 2009 |  | $      | 43,001 | 
|                                                                                      |  |        |        | 
|Interest income recognized on impaired loans                                          |  | $      | 919    | 
|                                                                                      |  |        |        | 
|Interest income recognized on a cash basis on impaired loans                          |  | $      | 919    | 
|                                                                                      |  |        |        | 

See Managements Discussion and Analysis of Financial Condition and Results of Operations  Asset Quality
for additional information regarding impaired loans.



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##### Table of Contents

9. COVERED ASSETS

The Company is applying the provisions of FASB ASC 310 to all loans acquired in the SFSB acquisition (the covered loans).

The following table reflects the contractual cash flows, cash flows expected at acquisition, and fair value of loans as of the
acquisition date. These amounts were determined based upon the estimated remaining life of the covered loans, which includes the effects of prepayments.



|                                                                                       |  |             |         | 
|-------------------------------------------------------------------------------------- |  | ----------- | ------- | 
|(In Thousands)                                                                         |  | Total Loans |        
|Contractually required principal and interest at acquisition                           |  | $           | 431,081 | 
|Nonaccretable difference (expected losses of $99,648 and foregone interest of $72,157) |  |             | 171,805 | 
|                                                                                       |  |             |         | 
|                                                                                       | 
|Cash flows expected to be collected at acquisition                                     |  | $           | 259,276 | 
|Accretable yield (interest component of expected cash flows)                           |  |             | 61,023  | 
|                                                                                       |  |             |         | 
|                                                                                       | 
|Basis in acquired loans at acquisition                                                 |  | $           | 198,253 | 
|                                                                                       |  |             |         | 

As of January 1, 2009 there were no covered loans. As of September 30, 2009, the outstanding
balance of the covered loans accounted for under FASB ASC 31-30 is $262,379. The carrying amount as of September 30, 2009 is comprised of the following.



|                                          |  |                                 |         |  |  |  |        |  
|----------------------------------------- |  | ------------------------------- | ------- |  |  |  | ------ | -
|(Dollars in Thousands)                    |  | September 30, 2009Covered Loans |        
|Open End 1-4 Family Loans                 |  | $                               | 8,131   |  |  |  | 4.90   | %
|1-4 Family First Liens                    |  |                                 | 117,472 |  |  |  | 70.73  | %
|                                          |  |                                 |         |  |  |  |        |  
|Total residential 1-4 family              |  |                                 | 125,603 |  |  |  | 75.63  | %
|                                          |  |                                 |         |  |  |  |        |  
|                                          |  |                                
|Owner occupied nonfarm nonresidential     |  |                                 |        |  |  |  | 0.00   | %
|Non owner occupied nonfarm nonresidential |  |                                 | 6,566   |  |  |  | 3.95   | %
|                                          |  |                                 |         |  |  |  |        |  
|Total commercial                          |  |                                 | 6,566   |  |  |  | 3.95   | %
|                                          |  |                                 |         |  |  |  |        |  
|                                          |  |                                
|1-4 Family Construction                   |  |                                 | 7,309   |  |  |  | 4.40   | %
|Other construction and land dev.          |  |                                 | 17,178  |  |  |  | 10.34  | %
|                                          |  |                                 |         |  |  |  |        |  
|Total construction                        |  |                                 | 24,487  |  |  |  | 14.74  | %
|                                          |  |                                 |         |  |  |  |        |  
|                                          |  |                                
|Second mortgages                          |  |                                 | 8,957   |  |  |  | 5.40   | %
|Multifamily                               |  |                                 |        |  |  |  | 0.00   | %
|Agriculture                               |  |                                 | 240     |  |  |  | 0.14   | %
|                                          |  |                                 |         |  |  |  |        |  
|Total real estate loans                   |  |                                 | 165,853 |  |  |  | 99.86  | %
|                                          |  |                                 |         |  |  |  |        |  
|                                          |  |                                
|Agriculture loans                         |  |                                 |         |  |  |  | 0.00   | %
|Commercial and industrial loans           |  |                                 |        |  |  |  | 0.00   | %
|                                          |  |                                 |         |  |  |  |        |  
|Total commercial loans                    |  |                                 |        |  |  |  | 0.00   | %
|                                          |  |                                 |         |  |  |  |        |  
|                                          |  |                                
|Total revolving credit and other consumer |  |                                 | 232     |  |  |  | 0.14   | %
|                                          |  |                                 |         |  |  |  |        |  
|                                          |  |                                
|Total covered loans                       |  | $                               | 166,085 |  |  |  | 100.00 | %
|                                          |  |                                 |         |  |  |  |        |  



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The change in the accretable yield balance since January 1, 2009 is as follows:



|                                               |  |                  |         |  
|---------------------------------------------- |  | ---------------- | ------- | -
|                                               |  | Accretable Yield |        
|Balance at January 1, 2009                     |  | $                |        |  
|Additions                                      |  |                  | 61,023  |  
|Less Accretion                                 |  |                  | (11,380 | )
|Reclassification from (to) Nonaccretable Yield |  |                  |        |  
|                                               |  |                  |         |  
|                                               | 
|Balance at September 30, 2009                  |  | $                | 49,643  |  
|                                               |  |                  |         |  

These loans are not classified as nonperforming assets at September 30, 2009 as the loans are accounted for on a pooled
basis and the pools are considered to be performing. Therefore, interest income, through accretion of the difference between the carrying amount of the loans and the expected cash flows, is being recognized on all purchased loans. There was no
allowance for loan losses recorded on covered loans at December 31, 2009.

10. SHARED-LOSS AGREEMENTS AND FDIC INDEMNIFICATION
ASSET

On January 30, 2009, the Company entered into a purchase and assumption agreement with shared-loss with the
FDIC to assume all of the deposits and acquire certain assets of Suburban Federal Savings Bank. Under the shared-loss agreements, the FDIC will reimburse the Bank for 80% of losses arising from covered loans and foreclosed real estate assets,
on the first $118 million of such covered loans and foreclosed real estate assets, and for 95% of losses on covered loans and foreclosed real estate assets thereafter. Under the shared-loss agreements, a loss on a covered loan or
foreclosed real estate is defined generally as a realized loss incurred through a permitted disposition, foreclosure, short-sale or restructuring of the covered loan or foreclosed real estate. The reimbursements for losses on single family
one-to-four residential mortgage loans are to be made monthly until the end of the month in which the tenth anniversary of the closing of the transaction occurs, and the reimbursements for losses on other covered assets are to be made quarterly
until the end of the quarter in which the eighth anniversary of the closing of the transaction occurs. The shared-loss agreements provide for indemnification from the first dollar of losses without any threshold requirement. The reimbursable losses
from the FDIC are based on the book value of the relevant loan as determined by the FDIC at the date of the transaction, January 30, 2009. New loans made after that date are not covered by the shared-loss agreements. The fair value of this loss
sharing agreement is detailed below.

The Company is accounting for the shared-loss agreements as an indemnification asset
pursuant to the guidance in FASB ASC 805 Business Combinations. The FDIC indemnification asset is measured separately from the covered loans and other real estate owned assets because it is not contractually embedded in the covered loan and
other real estate owned assets and is not transferable should the Company choose to dispose of them. Fair value was estimated using projected cash flows available for loss sharing based on the credit adjustments estimated for each loan pool and OREO
and the loss sharing percentages outlined in the Purchase and Assumption Agreements with the FDIC. These cash flows were discounted to reflect the uncertainty of the timing and receipt of the loss sharing reimbursement from the FDIC.

Because the acquired loans are subject to a FDIC loss sharing agreement and a corresponding Indemnification Asset exists to represent the
value of expected payments from the FDIC, increases and decreases in loan accretable yield due to loss expectations will also have an impact to the accretable yield for the FDIC indemnification asset. Improvement in loss expectations will typically
increase loan accretable yield and decrease the yield on the FDIC indemnification asset, and in some instances, result in an amortizable premium on the FDIC indemnification asset. Increases in loss expectations will typically be recognized as
impairment in the current period through allowance for loan losses while resulting in additional non-interest income for the amount of the increase in the FDIC indemnification asset.



22



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The following tables present the balances of the FDIC indemnification asset related to the
Suburban Federal Savings Bank transaction at January 30, 2009 (the transaction date) and September 30, 2009:



|                                         |  |                    |                  |  
|---------------------------------------- |  | ------------------ | ---------------- | -
|(In Thousands)                           |  | January 30, 2009   |                 
|Anticipated realizable loss              |  | $                  | 108,756          |  
|Assumed loss sharing recovery percentage |  |                    | approximately 80 | %
|                                         |  |                    |                  |  
|                                         | 
|Estimated loss sharing value             |  |                    | 86,988           |  
|Premium (discount)                       |  |                    | (2,404           | )
|                                         |  |                    |                  |  
|FDIC indemnification asset               |  | $                  | 84,584           |  
|                                         |  |                    |                  |  
|                                         | 
|                                         |  | September 30, 2009 |                 
|Anticipated realizable loss remaining    |  |                    | 107,289          |  
|Assumed loss sharing recovery percentage |  |                    | approximately 80 | %
|                                         |  |                    |                  |  
|                                         | 
|Estimated loss sharing value             |  |                    | 85,831           |  
|Premium (discount)                       |  |                    | (1,922           | )
|                                         |  |                    |                  |  
|FDIC indemnification asset               |  | $                  | 83,909           |  
|                                         |  |                    |                  |  



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##### Table of Contents

11. ALLOWANCE FOR LOAN LOSSES

Activity in the allowance for loan losses, for the three and nine months ended September 30, 2009; the four months ended
September 30, 2008 and the five months ended May 31, 2008 Predecessor period was comprised of the following:



|                                |  |                                       |        |   |                                      |   |        |                                     |  |   |                                              |   |  |                                              |       |   |  |   |       |  
|------------------------------- |  | ------------------------------------- | ------ | - | ------------------------------------ | - | ------ | ----------------------------------- |  | - | -------------------------------------------- | - |  | -------------------------------------------- | ----- | - |  | - | ----- | -
|(dollars in thousands)          |  | Three months 
endedSeptember 30, 2009 |        |   | Nine Months 
endedSeptember 30, 2009 |   |        | Four Months endedSeptember 30, 2008 |  |   | BOE PredecessorFive Months endedMay 31, 2008 |   |  | TFC PredecessorFive Months endedMay 31, 2008 |      
|Beginning allowance             |  | $                                     | 12,185 |   |                                      | $ | 6,939  |                                     |  | $ | 5,305                                        |   |  | $                                            | 2,595 |   |  | $ | 3,036 |  
|Provision for loan losses       |  |                                       | 5,231  |   |                                      |   | 11,271 |                                     |  |   | 1,334                                        |   |  |                                              | 200   |   |  |   | 1,348 |  
|Recoveries of loans charged off |  |                                       | 224    |   |                                      |   | 306    |                                     |  |   | 36                                           |   |  |                                              | 25    |   |  |   |      |  
|Loans charged off               |  |                                       | (1,429 | ) |                                      |   | (2,305 | )                                   |  |   | (128                                         | ) |  |                                              | (91   | ) |  |   | (958  | )
|                                |  |                                       |        |   |                                      |   |        |                                     |  |   |                                              |   |  |                                              |       |   |  |   |       |  
|Allowance at end of period      |  | $                                     | 16,211 |   |                                      | $ | 16,211 |                                     |  | $ | 6,547                                        |   |  | $                                            | 2,729 |   |  | $ | 3,426 |  
|                                |  |                                       |        |   |                                      |   |        |                                     |  |   |                                              |   |  |                                              |       |   |  |   |       |  

For information reported for September 30, 2008, the figures presented are solely for the months of
June 2008 through September 2008, as the Company did not have banking operations prior to its merger with each of TFC and BOE at May 31, 2008 and, as such, did not have an allowance for loan losses. Predecessor periods for the five months ended
May 31, 2008 are shown above.

At September 30, 2009, total impaired loans equaled $54.5 million, excluding FDIC
covered assets. As required by the fair value accounting rules for the SFSB transaction in the first quarter of 2009, no allowance for loan losses was recorded on loans acquired since the loans were recorded at fair value and adjusted for expected
credit losses, less amounts to be reimbursed by the FDIC. For additional information regarding the accounting entries, see the Companys Current Report on Form 8-K/A (Amendment No. 1) filed on April 17, 2009, under
Note 2  Description of the Pro Forma Purchase Accounting Adjustments.

Significant provisions were made to the
loan loss reserve during the nine months ended September 30, 2009, as economic conditions deteriorated. In addition, net-charge off activity increased as certain loans were deemed uncollectible.



24



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##### Table of Contents

The following table presents charge-offs and recoveries by loan category for the three and
nine months ended September 30, 2009, the four months ended September 30, 2008, and for Predecessor companies for the five months ended May 31, 2008.



|                                          |  |                                              |       |  |                                             |   |     |                                             |  |   |                                       |   |  |                                       |       |  |                |   |     |             |  |   |            |   |  |                |     |  |             |   |    |            |  |   |                |  |  |             |    |  |            |   |    |                |  |   |    |   |  |   |     |  |  |   |   |  |  |   |     | 
|----------------------------------------- |  | -------------------------------------------- | ----- |  | ------------------------------------------- | - | --- | ------------------------------------------- |  | - | ------------------------------------- | - |  | ------------------------------------- | ----- |  | -------------- | - | --- | ----------- |  | - | ---------- | - |  | -------------- | --- |  | ----------- | - | -- | ---------- |  | - | -------------- |  |  | ----------- | -- |  | ---------- | - | -- | -------------- |  | - | -- | - |  | - | --- |  |  | - | - |  |  | - | --- | 
|                                          |  |                                              |       |  |                                             |   |     |                                             |  |   | BOE Predecessor                       |   |  | TFC Predecessor                       |      
|                                          |  | For the three months endedSeptember
30, 2009 |       |  | For the nine months endedSeptember 30,
2009 |   |     | For the four months endedSeptember 30,
2008 |  |   | For the five months endedMay 31,
2008 |   |  | For the five months endedMay 31,
2008 |      
|(dollars inthousands)                     |  | Charge-offs                                  |       |  | Recoveries                                  |   |     | NetCharge-offs                              |  |   | Charge-offs                           |   |  | Recoveries                            |       |  | NetCharge-offs |   |     | Charge-offs |  |   | Recoveries |   |  | NetCharge-offs |     |  | Charge-offs |   |    | Recoveries |  |   | NetCharge-offs |  |  | Charge-offs |    |  | Recoveries |   |    | NetCharge-offs | 
|Open End 1-4 Family loans                 |  | $                                            |      |  |                                             | $ |    |                                             |  | $ |                                      |   |  | $                                     | 168   |  |                | $ |    |             |  | $ | 168        |   |  | $              |    |  |             | $ |   |            |  | $ |               |  |  | $           |   |  |            | $ |   |                |  | $ |   |   |  | $ |    |  |  | $ |  |  |  | $ |    | 
|1-4 Family First Liens                    |  |                                              |      |  |                                             |   |    |                                             |  |   |                                      |   |  |                                       | 108   |  |                |   |    |             |  |   | 108        |   |  |                |    |  |             |   |   |            |  |   |               |  |  |             |   |  |            |   |   |                |  |   |   |   |  |   |    |  |  |   |  |  |  |   |    | 
|                                          |  |                                              |       |  |                                             |   |     |                                             |  |   |                                       |   |  |                                       |       |  |                |   |     |             |  |   |            |   |  |                |     |  |             |   |    |            |  |   |                |  |  |             |    |  |            |   |    |                |  |   |    |   |  |   |     |  |  |   |   |  |  |   |     | 
|Total residential 1-4 family              |  |                                              |      |  |                                             |   |    |                                             |  |   |                                      |   |  |                                       | 276   |  |                |   |    |             |  |   | 276        |   |  |                |    |  |             |   |   |            |  |   |               |  |  |             |   |  |            |   |   |                |  |   |   |   |  |   |    |  |  |   |  |  |  |   |    | 
|                                          |  |                                              |       |  |                                             |   |     |                                             |  |   |                                       |   |  |                                       |       |  |                |   |     |             |  |   |            |   |  |                |     |  |             |   |    |            |  |   |                |  |  |             |    |  |            |   |    |                |  |   |    |   |  |   |     |  |  |   |   |  |  |   |     | 
|                                          |  |                                              |       |  |                                             |   |     |                                             |  |   |                                       |   |  |                                       |      
|Owner occupied nonfarm nonresidential     |  |                                              | 814   |  |                                             |   |    |                                             |  |   | 814                                   |   |  |                                       | 814   |  |                |   |    |             |  |   | 814        |   |  |                |    |  |             |   |   |            |  |   |               |  |  |             |   |  |            |   |   |                |  |   |   |   |  |   |    |  |  |   |  |  |  |   |    | 
|Non owner occupied nonfarm nonresidential |  |                                              |      |  |                                             |   |    |                                             |  |   |                                      |   |  |                                       |      |  |                |   |    |             |  |   |           |   |  |                |    |  |             |   |   |            |  |   |               |  |  |             |   |  |            |   |   |                |  |   |   |   |  |   |    |  |  |   |  |  |  |   |    | 
|                                          |  |                                              |       |  |                                             |   |     |                                             |  |   |                                       |   |  |                                       |       |  |                |   |     |             |  |   |            |   |  |                |     |  |             |   |    |            |  |   |                |  |  |             |    |  |            |   |    |                |  |   |    |   |  |   |     |  |  |   |   |  |  |   |     | 
|Total commercial                          |  |                                              | 814   |  |                                             |   |    |                                             |  |   | 814                                   |   |  |                                       | 814   |  |                |   |    |             |  |   | 814        |   |  |                |    |  |             |   |   |            |  |   |               |  |  |             |   |  |            |   |   |                |  |   |   |   |  |   |    |  |  |   |  |  |  |   |    | 
|                                          |  |                                              |       |  |                                             |   |     |                                             |  |   |                                       |   |  |                                       |       |  |                |   |     |             |  |   |            |   |  |                |     |  |             |   |    |            |  |   |                |  |  |             |    |  |            |   |    |                |  |   |    |   |  |   |     |  |  |   |   |  |  |   |     | 
|                                          |  |                                              |       |  |                                             |   |     |                                             |  |   |                                       |   |  |                                       |      
|1-4 Family Construction                   |  |                                              |      |  |                                             |   | 183 |                                             |  |   | (183                                  | ) |  |                                       | 61    |  |                |   | 199 |             |  |   | (138       | ) |  |                |    |  |             |   |   |            |  |   |               |  |  |             |   |  |            |   |   |                |  |   |   |   |  |   |    |  |  |   |  |  |  |   |    | 
|Other construction and land development   |  |                                              | 583   |  |                                             |   |    |                                             |  |   | 583                                   |   |  |                                       | 591   |  |                |   |    |             |  |   | 591        |   |  |                |    |  |             |   |   |            |  |   |               |  |  |             |   |  |            |   |   |                |  |   |   |   |  |   | 70  |  |  |   |  |  |  |   | 70  | 
|                                          |  |                                              |       |  |                                             |   |     |                                             |  |   |                                       |   |  |                                       |       |  |                |   |     |             |  |   |            |   |  |                |     |  |             |   |    |            |  |   |                |  |  |             |    |  |            |   |    |                |  |   |    |   |  |   |     |  |  |   |   |  |  |   |     | 
|Total construction                        |  |                                              | 583   |  |                                             |   | 183 |                                             |  |   | 400                                   |   |  |                                       | 652   |  |                |   |    |             |  |   | 453        |   |  |                |    |  |             |   |   |            |  |   |               |  |  |             |   |  |            |   |   |                |  |   |   |   |  |   | 70  |  |  |   |  |  |  |   | 70  | 
|                                          |  |                                              |       |  |                                             |   |     |                                             |  |   |                                       |   |  |                                       |       |  |                |   |     |             |  |   |            |   |  |                |     |  |             |   |    |            |  |   |                |  |  |             |    |  |            |   |    |                |  |   |    |   |  |   |     |  |  |   |   |  |  |   |     | 
|                                          |  |                                              |       |  |                                             |   |     |                                             |  |   |                                       |   |  |                                       |      
|Second mortgages                          |  |                                              |      |  |                                             |   |    |                                             |  |   |                                      |   |  |                                       | 34    |  |                |   |    |             |  |   | 34         |   |  |                |    |  |             |   |   |            |  |   |               |  |  |             |   |  |            |   |   |                |  |   |   |   |  |   |    |  |  |   |  |  |  |   |    | 
|Multifamily                               |  |                                              |      |  |                                             |   |    |                                             |  |   |                                      |   |  |                                       |      |  |                |   |    |             |  |   |           |   |  |                |    |  |             |   |   |            |  |   |               |  |  |             |   |  |            |   |   |                |  |   |   |   |  |   |    |  |  |   |  |  |  |   |    | 
|Agriculture                               |  |                                              |      |  |                                             |   |    |                                             |  |   |                                      |   |  |                                       | 13    |  |                |   |    |             |  |   | 13         |   |  |                |    |  |             |   |   |            |  |   |               |  |  |             |   |  |            |   |   |                |  |   |   |   |  |   |    |  |  |   |  |  |  |   |    | 
|                                          |  |                                              |       |  |                                             |   |     |                                             |  |   |                                       |   |  |                                       |       |  |                |   |     |             |  |   |            |   |  |                |     |  |             |   |    |            |  |   |                |  |  |             |    |  |            |   |    |                |  |   |    |   |  |   |     |  |  |   |   |  |  |   |     | 
|Total real estate loans                   |  |                                              | 1,397 |  |                                             |   | 183 |                                             |  |   | 1,214                                 |   |  |                                       | 1,789 |  |                |   | 199 |             |  |   | 1,590      |   |  |                |    |  |             |   |   |            |  |   |               |  |  |             |   |  |            |   |   |                |  |   |   |   |  |   | 70  |  |  |   |  |  |  |   | 70  | 
|                                          |  |                                              |       |  |                                             |   |     |                                             |  |   |                                       |   |  |                                       |       |  |                |   |     |             |  |   |            |   |  |                |     |  |             |   |    |            |  |   |                |  |  |             |    |  |            |   |    |                |  |   |    |   |  |   |     |  |  |   |   |  |  |   |     | 
|                                          |  |                                              |       |  |                                             |   |     |                                             |  |   |                                       |   |  |                                       |      
|Agriculture loans                         |  |                                              |      |  |                                             |   |    |                                             |  |   |                                      |   |  |                                       |      |  |                |   |    |             |  |   |           |   |  |                |    |  |             |   |   |            |  |   |               |  |  |             |   |  |            |   |   |                |  |   |   |   |  |   |    |  |  |   |  |  |  |   |    | 
|Commercial and industrial loans           |  |                                              |      |  |                                             |   | 17  |                                             |  |   | (17                                   | ) |  |                                       | 318   |  |                |   | 20  |             |  |   | 298        |   |  |                |    |  |             |   |   |            |  |   |               |  |  |             |   |  |            |   | 5  |                |  |   | (5 | ) |  |   | 835 |  |  |   |  |  |  |   | 835 | 
|                                          |  |                                              |       |  |                                             |   |     |                                             |  |   |                                       |   |  |                                       |       |  |                |   |     |             |  |   |            |   |  |                |     |  |             |   |    |            |  |   |                |  |  |             |    |  |            |   |    |                |  |   |    |   |  |   |     |  |  |   |   |  |  |   |     | 
|Total commercial loans                    |  |                                              |      |  |                                             |   | 17  |                                             |  |   | (17                                   | ) |  |                                       | 318   |  |                |   | 20  |             |  |   | 298        |   |  |                |    |  |             |   |   |            |  |   |               |  |  |             |   |  |            |   | 5  |                |  |   | (5 | ) |  |   | 835 |  |  |   |  |  |  |   | 835 | 
|                                          |  |                                              |       |  |                                             |   |     |                                             |  |   |                                       |   |  |                                       |       |  |                |   |     |             |  |   |            |   |  |                |     |  |             |   |    |            |  |   |                |  |  |             |    |  |            |   |    |                |  |   |    |   |  |   |     |  |  |   |   |  |  |   |     | 
|Total revolving credit and other consumer |  |                                              | 4     |  |                                             |   | 11  |                                             |  |   | (7                                    | ) |  |                                       | 170   |  |                |   | 74  |             |  |   | 96         |   |  |                | 128 |  |             |   | 36 |            |  |   | 92             |  |  |             | 91 |  |            |   | 20 |                |  |   | 71 |   |  |   | 53  |  |  |   |  |  |  |   | 53  | 
|All other loans                           |  |                                              | 28    |  |                                             |   | 13  |                                             |  |   | 15                                    |   |  |                                       | 28    |  |                |   | 13  |             |  |   | 15         |   |  |                |    |  |             |   |   |            |  |   |               |  |  |             |   |  |            |   |   |                |  |   |   |   |  |   |    |  |  |   |  |  |  |   |    | 
|                                          |  |                                              |       |  |                                             |   |     |                                             |  |   |                                       |   |  |                                       |       |  |                |   |     |             |  |   |            |   |  |                |     |  |             |   |    |            |  |   |                |  |  |             |    |  |            |   |    |                |  |   |    |   |  |   |     |  |  |   |   |  |  |   |     | 
|                                          |  |                                              |       |  |                                             |   |     |                                             |  |   |                                       |   |  |                                       |      
|Total non-covered loans                   |  | $                                            | 1,429 |  |                                             | $ | 224 |                                             |  | $ | 1,205                                 |   |  | $                                     | 2,305 |  |                | $ | 306 |             |  | $ | 1,999      |   |  | $              | 128 |  |             | $ | 36 |            |  | $ | 92             |  |  | $           | 91 |  |            | $ | 25 |                |  | $ | 66 |   |  | $ | 958 |  |  | $ |  |  |  | $ | 958 | 
|                                          |  |                                              |       |  |                                             |   |     |                                             |  |   |                                       |   |  |                                       |       |  |                |   |     |             |  |   |            |   |  |                |     |  |             |   |    |            |  |   |                |  |  |             |    |  |            |   |    |                |  |   |    |   |  |   |     |  |  |   |   |  |  |   |     | 



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12. DEPOSITS

The following table provides interest-bearing deposit information by category for the dates indicated:



|                                    |  |                        |         |  |                   |   |         | 
|----------------------------------- |  | ---------------------- | ------- |  | ----------------- | - | ------- | 
|Balance by deposit type             |  | September 30, 2009     |         |  | December 31, 2008 |  
|                                    |  | (dollars in thousands) |        
|NOW                                 |  | $                      | 88,045  |  |                   | $ | 76,575  | 
|MMDA                                |  |                        | 110,353 |  |                   |   | 55,200  | 
|Savings                             |  |                        | 58,495  |  |                   |   | 34,688  | 
|Time deposits less than $100,000    |  |                        | 450,273 |  |                   |   | 303,424 | 
|Time deposits greater than $100,000 |  |                        | 256,025 |  |                   |   | 276,762 | 
|                                    |  |                        |         |  |                   |   |         | 
|                                    |  |                       
|Total interest-bearing deposits     |  | $                      | 963,191 |  |                   | $ | 746,649 | 
|                                    |  |                        |         |  |                   |   |         | 

13. (LOSS) EARNINGS PER SHARE

Basic (loss) earnings per share (EPS) is computed by dividing net income or loss available to common stockholders by the weighted average number of shares outstanding during the period.
Diluted EPS is computed using the weighted average number of common shares outstanding during the period, including the effect of all potentially dilutive potential common shares outstanding attributable to stock instruments.



|                                                         |  |                          |         |   |                                    |  |        |                 |  |   |       |  
|-------------------------------------------------------- |  | ------------------------ | ------- | - | ---------------------------------- |  | ------ | --------------- |  | - | ----- | -
|(dollars and shares in thousands, except per share data) |  | (Loss)/Income(Numerator) |         |   | WeightedAverageShares(Denominator) |  |        | Per ShareAmount | 
|For the Three Months ended September 30, 2009            |  |                          |         |   |                                    |  |        |                 |  |   |       |  
|Basic EPS                                                |  | $                        | (2,172  | ) |                                    |  | 21,468 |                 |  | $ | (0.10 | )
|Effect of dilutive stock awards and options              |  |                          |        |   |                                    |  |       |                 |  |   |      |  
|                                                         |  |                          |         |   |                                    |  |        |                 |  |   |       |  
|Diluted EPS                                              |  | $                        | (2,172  | ) |                                    |  | 21,468 |                 |  | $ | (0.10 | )
|                                                         |  |                          |         |   |                                    |  |        |                 |  |   |       |  
|                                                         |  |                          |        
|For the Three Months ended September 30, 2008            |  |                          |         |   |                                    |  |        |                 |  |   |       |  
|Basic EPS                                                |  | $                        | 952     |   |                                    |  | 21,469 |                 |  | $ | 0.04  |  
|Effect of dilutive stock awards and options              |  |                          |        |   |                                    |  | 17     |                 |  |   |      |  
|                                                         |  |                          |         |   |                                    |  |        |                 |  |   |       |  
|Diluted EPS                                              |  | $                        | 952     |   |                                    |  | 21,486 |                 |  | $ | 0.04  |  
|                                                         |  |                          |         |   |                                    |  |        |                 |  |   |       |  
|                                                         |  |                          |        
|For the Nine Months ended September 30, 2009             |  |                          |         |   |                                    |  |        |                 |  |   |       |  
|Basic EPS                                                |  | $                        | (15,920 | ) |                                    |  | 21,468 |                 |  | $ | (0.87 | )
|Effect of dilutive stock awards and options              |  |                          |        |   |                                    |  |       |                 |  |   |      |  
|                                                         |  |                          |         |   |                                    |  |        |                 |  |   |       |  
|Diluted EPS                                              |  | $                        | (15,920 | ) |                                    |  | 21,468 |                 |  | $ | (0.87 | )
|                                                         |  |                          |         |   |                                    |  |        |                 |  |   |       |  
|                                                         |  |                          |        
|For the Nine Months ended September 30, 2008             |  |                          |         |   |                                    |  |        |                 |  |   |       |  
|Basic EPS                                                |  | $                        | 1,351   |   |                                    |  | 14,750 |                 |  | $ | 0.09  |  
|Effect of dilutive stock awards and options              |  |                          |        |   |                                    |  | 1,447  |                 |  |   | (0.01 | )
|                                                         |  |                          |         |   |                                    |  |        |                 |  |   |       |  
|Diluted EPS                                              |  | $                        | 1,351   |   |                                    |  | 16,197 |                 |  | $ | 0.08  |  
|                                                         |  |                          |         |   |                                    |  |        |                 |  |   |       |  

There were 5,249,256 shares in the Company available through options and warrants that were
considered anti-dilutive at September 30, 2009.



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|                                                                         |  |                           |      |   |                                    |  |       |                 |  |   |       |  
|------------------------------------------------------------------------ |  | ------------------------- | ---- | - | ---------------------------------- |  | ----- | --------------- |  | - | ----- | -
|BOE Predecessor
(Dollars and shares in thousands, except per share data) |  | (Loss) 
Income(Numerator) |      |   | WeightedAverageShares(Denominator) |  |       | Per ShareAmount | 
|For the five months ended May 31, 2008                                   |  |                           |      |   |                                    |  |       |                 |  |   |       |  
|Basic EPS                                                                |  | $                         | (188 | ) |                                    |  | 1,214 |                 |  | $ | (0.15 | )
|Effect of dilutive stock awards                                          |  |                           |     |   |                                    |  |      |                 |  |   |      |  
|                                                                         |  |                           |      |   |                                    |  |       |                 |  |   |       |  
|Diluted EPS                                                              |  | $                         | (188 | ) |                                    |  | 1,214 |                 |  | $ | (0.15 | )
|                                                                         |  |                           |      |   |                                    |  |       |                 |  |   |       |  



|                                                                         |  |                           |        |   |                                    |  |       |                 |  |   |       |  
|------------------------------------------------------------------------ |  | ------------------------- | ------ | - | ---------------------------------- |  | ----- | --------------- |  | - | ----- | -
|TFC Predecessor
(Dollars and shares in thousands, except per share data) |  | (Loss) 
Income(Numerator) |        |   | WeightedAverageShares(Denominator) |  |       | Per ShareAmount | 
|For the five months ended May 31, 2008                                   |  |                           |        |   |                                    |  |       |                 |  |   |       |  
|Basic EPS                                                                |  | $                         | (3,901 | ) |                                    |  | 4,587 |                 |  | $ | (0.85 | )
|Effect of dilutive stock awards                                          |  |                           |       |   |                                    |  |      |                 |  |   |      |  
|                                                                         |  |                           |        |   |                                    |  |       |                 |  |   |       |  
|Diluted EPS                                                              |  | $                         | (3,901 | ) |                                    |  | 4,587 |                 |  | $ | (0.85 | )
|                                                                         |  |                           |        |   |                                    |  |       |                 |  |   |       |  

14. DEFINED BENEFIT PLAN

The Company adopted the Bank noncontributory, defined benefit pension plan for all full-time, pre-merger Bank employees over 21 years of age at May 31, 2008. Benefits are generally based upon
years of service and the employees compensation. The Company funds pension costs in accordance with the funding provisions of the Employee Retirement Income Security Act.

Components of Net Periodic Benefit Cost:



|                                             |  |                                     |      |   |                                     |   |      |                                              |  |   |                                              |   |  |  |                | 
|-------------------------------------------- |  | ----------------------------------- | ---- | - | ----------------------------------- | - | ---- | -------------------------------------------- |  | - | -------------------------------------------- | - |  |  | -------------- | 
|                                             |  | Nine Months EndedSeptember 30, 2009 |      |   | Nine Months EndedSeptember 30, 2008 |   |      | BOE PredecessorFive Months EndedMay 31, 2008 |  |   | TFC PredecessorFive Months EndedMay 31, 2008 |  
|                                             |  | (In thousands)                      |      |   | (In thousands)                      |   |      |                                              |  |   |                                              |  
|Service cost                                 |  | $                                   | 276  |   |                                     | $ | 164  |                                              |  | $ | 155                                          |   |  |  | Not applicable | 
|Interest cost                                |  |                                     | 243  |   |                                     |   | 135  |                                              |  |   | 128                                          |   |  |  |                | 
|Expected return on plan assets               |  |                                     | (159 | ) |                                     |   | (140 | )                                            |  |   | (133                                         | ) |  |  |                | 
|Amortization of prior service cost           |  |                                     | 3    |   |                                     |   | 2    |                                              |  |   | 2                                            |   |  |  |                | 
|Amortization of net obligation at transition |  |                                     | (3   | ) |                                     |   | (2   | )                                            |  |   | (2                                           | ) |  |  |                | 
|Amortization of net loss                     |  |                                     | 66   |   |                                     |   | 8    |                                              |  |   | 7                                            |   |  |  |                | 
|                                             |  |                                     |      |   |                                     |   |      |                                              |  |   |                                              |   |  |  |                | 
|Net periodic benefit cost                    |  | $                                   | 426  |   |                                     | $ | 166  |                                              |  | $ | 157                                          |   |  |  |                | 
|                                             |  |                                     |      |   |                                     |   |      |                                              |  |   |                                              |   |  |  |                | 

At September 30, 2009, employer contributions totaled $264,000 for the plan year. The Company
is currently analyzing the Defined Benefit Plan as well as other alternatives, such as enhancing its Defined Contribution Plan (401(k)). The plan was frozen to new entrants prior to BOEs merger with the Company.

15. SUBSEQUENT EVENTS

On October 29, 2009, the Companys Board of Directors declared a quarterly dividend of $0.04 per share with respect to the
Companys outstanding common stock. The dividend will be payable on November 20, 2009, to stockholders of record at the close of business on November 13, 2009.



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|Item 2. | Managements Discussion and Analysis of Financial Condition and Results of Operations.
|------- | --------------------------------------------------------------------------------------

The following discussion and analysis of the financial condition at September 30, 2009 and results of operations of the Company for
the three and nine months ended September 30, 2009 should be read in conjunction with the Companys consolidated financial statements and the accompanying notes to consolidated financial statements included in this report and in the
Companys Annual Report on Form 10-K/A (Amendment No. 3) for the year ended December 31, 2008.

Overview

Community Bankers Trust Corporation (the Company) is a bank holding company that was incorporated under
Delaware law on April 6, 2005. The Company is headquartered in Glen Allen, Virginia and is the holding company for Essex Bank, a Virginia state bank with 25 full-service offices in Virginia, Maryland and Georgia.

The Bank was established in 1926 and is headquartered in Tappahannock, Virginia. The Bank engages in a general commercial banking
business and provides a wide range of financial services primarily to individuals and small businesses, including individual and commercial demand and time deposit accounts, commercial and consumer loans, travelers checks, safe deposit box
facilities, investment services and fixed rate residential mortgages. Fourteen branches are located in Virginia, primarily from the Chesapeake Bay to just west of Richmond, seven are located in Maryland along the Baltimore-Washington corridor and
four are located in the Atlanta, Georgia metropolitan market. The Bank also operates two loan production offices, one in Fairfax, Virginia, and one in Cumming, Georgia.

The Company generates a significant amount of its income from the net interest income earned by the Bank. Net interest income is the difference between interest income and interest expense. Interest
income depends on the amount of interest-earning assets outstanding during the period and the interest rates earned thereon. The Companys cost of funds is a function of the average amount of interest-bearing deposits and borrowed money
outstanding during the period and the interest rates paid thereon. The quality of the assets further influences the amount of interest income lost on non-accrual loans and the amount of additions to the allowance for loan losses. Additionally, the
Bank earns non-interest income from service charges on deposit accounts and other fee or commission-based services and products. Other sources of non-interest income can include gains or losses on securities transactions, gains from loans sales,
transactions involving bank-owned property, and income from Bank Owned Life Insurance (BOLI) policies. The Companys income is offset by non-interest expense, which consists of goodwill impairment and other charges, salaries and
benefits, occupancy and equipment costs, professional fees, and other operational expenses. The provision for loan losses and income taxes materially affect income.

Caution About Forward-Looking Statements

The Company makes certain
forward-looking statements in this Form 10-Q that are subject to risks and uncertainties. These forward-looking statements include statements regarding our profitability, liquidity, allowance for loan losses, interest rate sensitivity, market
risk, growth strategy, and financial and other goals. These forward-looking statements are generally identified by phrases such as the Company expects, the Company believes or words of similar import.

These forward-looking statements are subject to significant uncertainties because they are based upon or are affected by factors,
including, without limitation, the effects of and changes in the following:



| |  |  | general economic and market conditions, either nationally or locally;
| | - |  | ---------------------------------------------------------------------



| |  |  | the interest rate environment;
| | - |  | ------------------------------



| |  |  | competitive pressures among banks and financial institutions or from companies outside the banking industry;
| | - |  | ------------------------------------------------------------------------------------------------------------



| |  |  | real estate values;
| | - |  | -------------------



| |  |  | the quality or composition of the Companys loan or investment portfolios;
| | - |  | --------------------------------------------------------------------------



| |  |  | the demand for deposit, loan, and investment products and other financial services;
| | - |  | -----------------------------------------------------------------------------------



| |  |  | the demand, development and acceptance of new products and services;
| | - |  | --------------------------------------------------------------------



| |  |  | the timing of future reimbursements from the FDIC to the Company under the shared-loss agreements;
| | - |  | --------------------------------------------------------------------------------------------------



| |  |  | consumer profiles and spending and savings habits;
| | - |  | --------------------------------------------------



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| |  |  | the securities and credit markets;
| | - |  | ----------------------------------



| |  |  | the integration of banking and other internal operations, and associated costs
| | - |  | ------------------------------------------------------------------------------



| |  |  | managements evaluation of goodwill and other assets on a periodic basis, and any resulting impairment charges, under applicable accounting
standards;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the soundness of other financial institutions with which the Company does business;
| | - |  | -----------------------------------------------------------------------------------



| |  |  | inflation;
| | - |  | ----------



| |  |  | technology; and
| | - |  | ---------------



| |  |  | legislative and regulatory requirements.
| | - |  | ----------------------------------------

These factors and additional risks and uncertainties are described in the Risk Factors discussion in Part II, Item 1A, of this report.

Although the Company believes that its expectations with respect to the forward-looking statements are based upon reliable assumptions
within the bounds of its knowledge of its business and operations, there can be no assurance that actual results, performance or achievements of the Company will not differ materially from any future results, performance or achievements expressed or
implied by such forward-looking statements.

Critical Accounting Policies

The following is a summary of the Companys critical accounting policies that are highly dependent on estimates, assumptions and
judgments.

Allowance for Loan and Lease Losses

The allowance for loan and lease losses (ALLL) is maintained at a level that is appropriate to cover estimated credit losses
on individually evaluated loans determined to be impaired, as well as estimated credit losses inherent in the remainder of the loan and lease portfolio. Since arriving at an appropriate ALLL involves a high degree of management judgment, an ongoing
quarterly analysis to develop a range of estimated losses is utilized. In accordance with accounting principles generally accepted in the United States, best estimates within the range of potential credit loss to determine the appropriate ALLL is
utilized. Credit losses are charged and recoveries are credited to the ALLL.

The Company utilizes an internal risk rating
system for its loans. Those larger credits that exhibit probable or well defined credit weaknesses are subject to individual review. The borrowers cash flow, adequacy of collateral coverage, and other options available to the Company,
including legal remedies, are evaluated. The review of individual loans includes those loans that are impaired as defined by SFAS 114, Accounting by Creditors for Impairment of a Loan. Collectability of both principal and interest when
assessing the need for loss provision is considered. Historical loss rates are applied to other loans not subject to specific allocations. The loss rates are determined from historical net charge offs experienced by the Bank.

Historical loss rates for commercial and retail loans are adjusted for significant factors that, in managements judgment, reflect
the impact of any current conditions on loss recognition. Factors that are considered include delinquency trends, current economic conditions and trends, strength of supervision and administration of the loan portfolio, levels of underperforming
loans, level of recoveries to prior years charge offs, trend in loan losses, industry concentrations and their relative strengths, amount of unsecured loans and underwriting exceptions. These factors are reviewed quarterly and a weighted score
is assigned depending on the level and extent of the risk. The total of each of these weighted factors is then applied against the applicable portion of the portfolio and the ALLL is adjusted to ensure an appropriate level.

The Companys financial statements are prepared in accordance with accounting principles generally accepted in the United States
(GAAP). The financial information contained within the statements is, to a significant extent, financial information that is based on measures of the financial effects of transactions and events that have already occurred. A variety of
factors could affect the ultimate value that is obtained either when earning income, recognizing an expense, recovering an asset or relieving a liability. The Company uses historical loss factors as one factor in determining the inherent loss that
may be present in its loan portfolio. Actual losses could differ significantly from the historical factors that the Company uses. In addition, GAAP itself may change from one previously acceptable method to another method. Although the economics of
the Companys transactions would be the same, the timing of events that would impact its transactions could change.



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Loans Acquired in a Transfer

The Companys acquired loans from the SFSB acquisition (the covered loans), subject to FASB ASC Topic 805, Business
Combinations(formerly SFAS 141(R)), are recorded at fair value and no separate valuation allowance is recorded at the date of acquisition. FASB ASC 310-30, Loans and Debt Securities Acquired with Deteriorated Credit Quality (formerly SOP
03-3) applies to loans acquired with evidence of deterioration of credit quality since origination acquired by completion of transfer for which it is probable, at acquisition, that the investor will be unable to collect all contractually required
payments receivable. The Company is applying the provisions of FASB ASC 310-30 to all loans acquired in the Suburban Federal Savings Bank acquisition, not just the loans acquired with evidence of deterioration of credit quality since origination
acquired by completion of transfer for which it is probable, at acquisition, that the investor will be unable to collect all contractually required payments receivable. The Company has grouped loans together based on common risk characteristics
including product type, delinquency status and loan documentation requirements among others.

The Company makes an estimate of
the total cash flows it expects to collect from a pool of loans, which includes undiscounted expected principal and interest. The excess of that amount over the fair value of the pool is referred to as accretable yield. Accretable yield is
recognized as interest income on a constant yield basis over the life of the pool. The Company also determines each pools contractual principal and contractual interest payments. The excess of that amount over the total cash flows it expects
to collect from the pool is referred to as nonaccretable difference, which is not accreted into income. Judgmental prepayment assumptions are applied to both contractually required payments and cash flows expected to be collected at acquisition.
Over the life of the loan or pool, the Company continues to estimate cash flows expected to be collected. Subsequent increases in expected or actual cash flows are first used to reverse any existing valuation allowance for that loan or pool. Any
remaining increase in cash flows expected to be collected is recognized as an adjustment to the accretable yield with the amount of periodic accretion adjusted over the remaining life of the pool. Subsequent decreases in cash flows expected to be
collected over the life of the pool are recognized as impairment in the current period through allowance for loan loss.

Income Taxes

The Company follows tax guidance, including the Financial Accounting Standards Boards (FASB) Interpretation No. 48, Accounting for Uncertainty in Income Taxes- an interpretation of FASB
Statement No. 109(FIN 48). FIN 48 clarifies the accounting for uncertainty in income taxes recognized in an enterprises financial statements in accordance with FASB Statement No. 109, Accounting for Income Taxes(SFAS 109). In determining the appropriate level of income taxes to be recorded each reporting, management assesses the potential tax effects and records those amounts in both current and deferred tax accounts, whether may be an asset or
liability. In addition, an income tax expense or benefit is determined, which is recorded on the consolidated income statement.

Goodwill and Other Intangible Assets

The Company adopted SFAS 142, Goodwill and Other Intangible Assets. Accordingly, goodwill is no longer subject to amortization over its estimated useful life, but is subject to at least an
annual assessment for impairment by applying a fair value-based test. As a result of the mergers with each of TFC and BOE at May 31, 2008, goodwill was initially recorded for $39.5 million. Subsequently, adjustments were recorded to properly
reflect goodwill on the financial statements. The Company assessed goodwill for impairment as of the one year anniversary date of the mergers, at May 31, 2009.

During 2008, management discovered that there was an error in the fair value of stock options issued by the Company in settlement of the TFC and BOE stock options outstanding as of the respective merger
dates. When correcting this valuation error, the adjustment was inadvertently recorded twice. The result was an understatement of Goodwill and Deferred Taxes Liabilities of approximately $2.9 million and $1.5 million, respectively. An adjustment has
been made to correct this error and the financial statements for the year ended December 31, 2008 have been restated.

The
initial step in identifying potential impairment involves comparing the current fair value of such goodwill to its recorded or carrying amount. If the carrying value exceeds such fair value, there is possible impairment. Next, a second step is
performed to determine the amount of the impairment, if any. This requires a comparison of the Companys book value to the fair value of its assets, liabilities, and intangibles. If the carrying amount of goodwill exceeds the fair value, an
impairment charge must be recorded in an amount equal to the excess. The Company determined that goodwill was impaired as of May 31, 2009, and a $24.0 million impairment charge was recorded during the second quarter of 2009. The goodwill
impairment charge was due to an overall decline in general economic conditions, rapid change in the market valuations of financial institutions and the discount that shares of the Companys common stock have traded to their tangible book value
for an extended period of time.



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Additionally, under SFAS 142, acquired intangible assets (such as core deposit
intangibles) are separately recognized if the benefit of the assets can be sold, transferred, licensed, rented, or exchanged, and amortized over their useful lives. Branch acquisition transactions were outside the scope of SFAS 142 and,
accordingly, intangible assets related to such transactions continued to amortize upon the adoption of SFAS 142. The costs of purchased deposit relationships and other intangible assets, based on independent valuation by a qualified third
party, are being amortized over their estimated lives. Core deposit intangible amortization expense charged to operations was $565,000 and $1.7 million for the three and six months ended September 30, 2009, respectively. The Company did not
record any goodwill or other intangible prior to the TFC and BOE mergers. As a result of the TCB and SFSB transactions, core deposit intangibles were recorded of $3.2 million and $2.2 million, respectively. Also related to the SFSB
transaction during the first quarter of 2009 was a gain of $16.2 million ($10.7 million, net of taxes), which was recorded as a one-time gain within the income statement.

Financial Condition

At September 30, 2009, the Company had total
assets of $1.232 billion, an increase of $201.7 million or 19.58% from December 31, 2008. Total loans, excluding FDIC covered assets, equaled $569.5 million at September 30, 2009, increasing $46.2 million, or 8.82% from
December 31, 2008. Securities totaled $300.6 million and increased $8.1 million, or 2.77% during the first nine months of 2009. The Company had federal funds sold of $5.3 million at September 30, 2009, versus $10.2 million
at year-end 2008, a decrease of $4.9 million or 48.00%. The shift in the earning asset mix as evidenced above is the direct result of managements intention of replacing relatively lower yielding overnight funds with higher yielding assets
of loans and securities.

The increase in the total asset size of the Company was primarily due to the SFSB transaction in
Maryland. At September 30, 2009, FDIC covered loans equaled $166.1 million, FDIC covered other real estate owned equaled $11.1 million, the FDIC indemnification asset was $83.9 million and the FDIC receivable equaled
$3.6 million. Securities from SFSB were incorporated into the Companys securities portfolio at fair value at the effective time of the transaction, and are not considered covered assets under the terms of the FDIC shared-loss agreements.

The Company is required to account for the effect of market changes in the value of securities available-for-sale
(AFS) under SFAS 115. The market value of the September 30, 2009 AFS portfolio was $171.2 million at September 30, 2009, and the net unrealized gain on the AFS portfolio was $3.9 million, net of taxes, and included as part
of the Companys accumulated other comprehensive income of $2.1 million. Since December 31, 2008, the AFS portfolio shifted from a net unrealized loss of $700,000 to a net unrealized gain of $5.2 million, exclusive of taxes over
the first nine months of 2009. The Company deems the investment portfolio as a viable source of liquidity given the dollar volume of securities designated available for sale.

Total deposits at September 30, 2009 were $1.028 billion, which increased $221.2 million or 27.43% from December 31,
2008. Deposit growth was attributed to the SFSB transaction, which was concentrated in certificates of deposit. At September 30, 2009, total deposits in our Maryland branches aggregated $279.3 million of which $208.8 million were time
deposits. Interest-bearing deposits increased $216.5 million from December 31, 2008 to September 30, 2009. Noninterest-bearing deposits, in the form of demand deposit accounts, were $64.3 million at September 30, 2009, an
increase of $4.6 million since December 31, 2008. The Companys total loans-to-deposits ratio, excluding FDIC covered loans, was 55.42% at September 30, 2009 and 64.90% at December 31, 2008.

Stockholders equity at September 30, 2009 was $147.4 million and represented 11.96% of total assets. Stockholders
equity was $164.4 million, or 15.97% of total assets at December 31, 2008.

Results of Operations

Net Income

For
the three months ended September 30, 2009, net loss before dividends and accretion on preferred stock was $1.9 million, compared with net income of $952,000 for the same period in 2008. Net loss available to common stockholders was
$2.2 million, which represented $0.10 per share on a fully diluted basis, versus net income available to common stockholders of $952,000, or $0.04 per share on a fully diluted basis for the same period in 2008. The loss incurred during the
third quarter of 2009 was primarily the result of a $5.2 million provision for loan losses, compared to $1.1 million in provisions during the same period in 2008.

For the nine months ended September 30, 2009, net loss before dividends and accretion on preferred stock was $15.1 million,
compared with net income $1.4 million for the same period in 2008. Net loss available to common stockholders was $15.9 million, which represented $0.74 per share on a fully diluted basis, versus net income available to common stockholders
of $1.4 million, or $0.08 per share on a fully diluted basis for the same period in 2008. Net loss for the nine months ended September 30, 2009, was driven by the goodwill impairment charge of $24.0 million and loan loss provisions of
$11.3 million. While the $20.3 million gain recorded on the SFSB transaction in the first quarter partially offset these large expenses, the goodwill impairment charge does not reduce taxable income and permit an income tax benefit.



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##### Table of Contents

Net Interest Income

The Companys results of operations are significantly affected by its ability to manage effectively the interest rate sensitivity and
maturity of its interest-earning assets and interest-bearing liabilities. At September 30, 2009, the Companys interest-earning assets exceeded its interest-bearing liabilities by approximately $47.6 million, compared with a
$144.7 million excess at December 31, 2008.

Net interest income was $9.7 million for the three months ended
September 30, 2009, compared with $6.2 million for the same period in 2008. For the three months ended September 30, 2009, the net interest margin was 3.78% compared to 4.26% for the same period in 2008. For the three months ended
September 30, 2009, the net interest spread was 3.67% versus 3.70% for the same period in 2008. The decline in the margin compared with the same period in 2008 was driven by several factors. First, loan rates declined in the fourth quarter of
2008 due to a prime rate drop. There was also a large influx of deposits related to TCB transaction in the fourth quarter of 2008 which were subsequently invested in securities versus higher yielding loans. In addition, the SFSB transaction resulted
in further margin compression during 2009 as the Bank inherited a large volume of FDIC covered non-accruing loans that are included in the margin calculation.

With the acquisitions of TFC and BOE in May 2008, fair market value adjustments were recorded for assets and liabilities, including interest bearing loans and interest bearing deposits. However, the
amortization of the fair value adjustments for those deposits significantly reduced interest expense during the third quarter of 2008, far in excess of reductions in interest income associated with the amortization of the fair value adjustments for
loans. As a result, the net interest margin for the third quarter of 2008 was more positively influenced when compared with the third quarter of 2009.

For the nine months ended September 30, 2009, net interest income aggregated $28.4 million, which generated a net interest margin of 3.64%. The net interest spread for the nine months ended
September 30, 2009 equaled 3.50%. A net interest margin analysis is not provided for the nine months ended September 30, 2008, since there were no banking operations for the Company for the first five months of 2008.



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##### Table of Contents

Components used in determining the net interest spread and the net interest margin,
including yields on assets and costs of funds by category, are depicted in the following table:

COMMUNITY BANKERS TRUST
CORPORATION

NET INTEREST MARGIN ANALYSIS

AVERAGE BALANCE SHEETS



|                                           |  |                                 |           |   |                        |   |        |                         |  |  |                     |   |  |                        |         |   |                         |   |       |  |  |  |      |  
|------------------------------------------ |  | ------------------------------- | --------- | - | ---------------------- | - | ------ | ----------------------- |  |  | ------------------- | - |  | ---------------------- | ------- | - | ----------------------- | - | ----- |  |  |  | ---- | -
|                                           |  | Three months ended September 30 |          
|                                           |  | 2009                            |           |   | 2008                   |  
|                                           |  | AverageBalanceSheet             |           |   | InterestIncome/Expense |   |        | AverageRatesEarned/Paid |  |  | AverageBalanceSheet |   |  | InterestIncome/Expense |         |   | AverageRatesEarned/Paid |  
|ASSETS:                                    |  |                                 |           |   |                        |   |        |                         |  |  |                     |   |  |                        |         |   |                         |   |       |  |  |  |      |  
|FDIC covered loans, including fees         |  | $                               | 172,050   |   |                        | $ | 4,152  |                         |  |  | 9.65                | % |  | $                      | 496,803 |   |                         | $ | 8,497 |  |  |  | 6.84 | %
|Loans non covered, including fees          |  |                                 | 559,547   |   |                        |   | 8,820  |                         |  |  | 6.31                | % |  |                        |         |   |                         |   |       |  |  |  |      |  
|                                           |  |                                 |           |   |                        |   |        |                         |  |  |                     |   |  |                        |         |   |                         |   |       |  |  |  |      |  
|Total loans                                |  |                                 | 731,597   |   |                        |   | 12,972 |                         |  |  | 7.09                | % |  |                        | 496,803 |   |                         |   | 8,497 |  |  |  | 6.84 | %
|                                           |  |                                 |           |   |                        |  
|Interest bearing bank balances             |  |                                 | 11,061    |   |                        |   | 60     |                         |  |  | 2.17                | % |  |                        | 9,384   |   |                         |   | 83    |  |  |  | 3.54 | %
|Federal funds sold                         |  |                                 | 20,905    |   |                        |   | 10     |                         |  |  | 0.19                | % |  |                        | 5,034   |   |                         |   | 22    |  |  |  | 1.75 | %
|Investments (taxable)                      |  |                                 | 216,277   |   |                        |   | 2,081  |                         |  |  | 3.85                | % |  |                        | 50,809  |   |                         |   | 539   |  |  |  | 4.24 | %
|Investments (tax exempt)(1)                |  |                                 | 91,927    |   |                        |   | 1,358  |                         |  |  | 5.91                | % |  |                        | 35,068  |   |                         |   | 505   |  |  |  | 5.76 | %
|                                           |  |                                 |           |   |                        |   |        |                         |  |  |                     |   |  |                        |         |   |                         |   |       |  |  |  |      |  
|                                           |  |                                 |           |   |                        |  
|Total earning assets                       |  |                                 | 1,071,767 |   |                        |   | 16,481 |                         |  |  | 6.15                | % |  |                        | 597,098 |   |                         |   | 9,646 |  |  |  | 6.46 | %
|                                           |  |                                 |           |   |                        |  
|Allowance for loan losses                  |  |                                 | (13,290   | ) |                        |   |        |                         |  |  |                     |   |  |                        | (5,380  | ) |                         |   |       |  |  |  |      |  
|Non-earning assets                         |  |                                 | 193,267   |   |                        |   |        |                         |  |  |                     |   |  |                        | 90,098  |   |                         |   |       |  |  |  |      |  
|                                           |  |                                 |           |   |                        |   |        |                         |  |  |                     |   |  |                        |         |   |                         |   |       |  |  |  |      |  
|                                           |  |                                 |           |   |                        |  
|Total assets                               |  | $                               | 1,251,744 |   |                        |   |        |                         |  |  |                     |   |  | $                      | 681,816 |   |                         |   |       |  |  |  |      |  
|                                           |  |                                 |           |   |                        |   |        |                         |  |  |                     |   |  |                        |         |   |                         |   |       |  |  |  |      |  
|                                           |  |                                 |           |   |                        |  
|LIABILITIES AND STOCKHOLDERS EQUITY       |  |                                 |           |   |                        |   |        |                         |  |  |                     |   |  |                        |         |   |                         |   |       |  |  |  |      |  
|                                           |  |                                 |           |   |                        |  
|Deposits:                                  |  |                                 |           |   |                        |   |        |                         |  |  |                     |   |  |                        |         |   |                         |   |       |  |  |  |      |  
|Demand -                                   |  |                                 |           |   |                        |   |        |                         |  |  |                     |   |  |                        |         |   |                         |   |       |  |  |  |      |  
|Interest bearing                           |  | $                               | 200,965   |   |                        | $ | 381    |                         |  |  | 0.76                | % |  | $                      | 84,032  |   |                         | $ | 328   |  |  |  | 1.56 | %
|Savings                                    |  |                                 | 58,438    |   |                        |   | 100    |                         |  |  | 0.68                | % |  |                        | 31,126  |   |                         |   | 84    |  |  |  | 1.08 | %
|Time deposits                              |  |                                 | 724,191   |   |                        |   | 5,545  |                         |  |  | 3.06                | % |  |                        | 314,585 |   |                         |   | 2,495 |  |  |  | 3.17 | %
|                                           |  |                                 |           |   |                        |   |        |                         |  |  |                     |   |  |                        |         |   |                         |   |       |  |  |  |      |  
|Total deposits                             |  |                                 | 983,594   |   |                        |   | 6,026  |                         |  |  | 2.45                | % |  |                        | 429,743 |   |                         |   | 2,907 |  |  |  | 2.71 | %
|                                           |  |                                 |           |   |                        |  
|Fed funds purchased                        |  |                                 | 1,126     |   |                        |   | 2      |                         |  |  | 0.71                | % |  |                        | 17,408  |   |                         |   | 101   |  |  |  | 2.32 | %
|FHLB and other borrowings                  |  |                                 | 40,005    |   |                        |   | 338    |                         |  |  | 3.38                | % |  |                        | 28,974  |   |                         |   | 277   |  |  |  | 3.82 | %
|                                           |  |                                 |           |   |                        |   |        |                         |  |  |                     |   |  |                        |         |   |                         |   |       |  |  |  |      |  
|                                           |  |                                 |           |   |                        |  
|Total interest-bearing liabilities         |  |                                 | 1,024,725 |   |                        |   | 6,366  |                         |  |  | 2.48                | % |  |                        | 476,125 |   |                         |   | 3,285 |  |  |  | 2.76 | %
|                                           |  |                                 |           |   |                        |  
|Non-interest bearing deposits              |  |                                 | 61,269    |   |                        |   |        |                         |  |  |                     |   |  |                        | 54,060  |   |                         |   |       |  |  |  |      |  
|Other liabilities                          |  |                                 | 19,000    |   |                        |   |        |                         |  |  |                     |   |  |                        | 7,410   |   |                         |   |       |  |  |  |      |  
|                                           |  |                                 |           |   |                        |   |        |                         |  |  |                     |   |  |                        |         |   |                         |   |       |  |  |  |      |  
|                                           |  |                                 |           |   |                        |  
|Total liabilities                          |  |                                 | 1,104,994 |   |                        |   |        |                         |  |  |                     |   |  |                        | 537,595 |   |                         |   |       |  |  |  |      |  
|                                           |  |                                 |           |   |                        |  
|Stockholders equity                       |  |                                 | 146,750   |   |                        |   |        |                         |  |  |                     |   |  |                        | 144,221 |   |                         |   |       |  |  |  |      |  
|                                           |  |                                 |           |   |                        |   |        |                         |  |  |                     |   |  |                        |         |   |                         |   |       |  |  |  |      |  
|                                           |  |                                 |           |   |                        |  
|Total liabilities and stockholders equity |  | $                               | 1,251,744 |   |                        |   |        |                         |  |  |                     |   |  | $                      | 681,816 |   |                         |   |       |  |  |  |      |  
|                                           |  |                                 |           |   |                        |   |        |                         |  |  |                     |   |  |                        |         |   |                         |   |       |  |  |  |      |  
|                                           |  |                                 |           |   |                        |  
|Net interest earnings                      |  |                                 |           |   |                        | $ | 10,115 |                         |  |  |                     |   |  |                        |         |   |                         | $ | 6,361 |  |  |  |      |  
|                                           |  |                                 |           |   |                        |   |        |                         |  |  |                     |   |  |                        |         |   |                         |   |       |  |  |  |      |  
|                                           |  |                                 |           |   |                        |  
|Interest spread                            |  |                                 |           |   |                        |   |        |                         |  |  | 3.67                | % |  |                        |         |   |                         |   |       |  |  |  | 3.70 | %
|                                           |  |                                 |           |   |                        |   |        |                         |  |  |                     |   |  |                        |         |   |                         |   |       |  |  |  |      |  
|                                           |  |                                 |           |   |                        |  
|Net interest margin                        |  |                                 |           |   |                        |   |        |                         |  |  | 3.78                | % |  |                        |         |   |                         |   |       |  |  |  | 4.26 | %
|                                           |  |                                 |           |   |                        |   |        |                         |  |  |                     |   |  |                        |         |   |                         |   |       |  |  |  |      |  



|(1) | Income and yields
are reported on a tax equivalent basis assuming a federal tax rate of 34%.
|--- | --------------------------------------------------------------------------------------------



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##### Table of Contents

COMMUNITY BANKERS TRUST CORPORATION

NET INTEREST MARGIN ANALYSIS

AVERAGE BALANCE SHEETS



|                                           |  |                                      |           |   |                        |   |        |                         |  |  |      |  
|------------------------------------------ |  | ------------------------------------ | --------- | - | ---------------------- | - | ------ | ----------------------- |  |  | ---- | -
|                                           |  | Nine months ended September 30, 2009 |          
|                                           |  | AverageBalanceSheet                  |           |   | InterestIncome/Expense |   |        | AverageRatesEarned/Paid | 
|ASSETS:                                    |  |                                      |           |   |                        |   |        |                         |  |  |      |  
|                                           |  |                                      |          
|FDIC covered loans, including fees         |  | $                                    | 162,476   |   |                        | $ | 11,380 |                         |  |  | 9.34 | %
|Loans non covered, including fees          |  |                                      | 547,578   |   |                        |   | 26,236 |                         |  |  | 6.39 | %
|                                           |  |                                      |           |   |                        |   |        |                         |  |  |      |  
|Total loans                                |  |                                      | 710,054   |   |                        |   | 37,616 |                         |  |  | 7.06 | %
|                                           |  |                                      |          
|Interest bearing bank balances             |  |                                      | 23,332    |   |                        |   | 262    |                         |  |  | 1.50 | %
|Federal funds sold                         |  |                                      | 20,914    |   |                        |   | 36     |                         |  |  | 0.23 | %
|Investments (taxable)                      |  |                                      | 250,738   |   |                        |   | 7,580  |                         |  |  | 4.03 | %
|Investments (tax exempt)(1)                |  |                                      | 84,255    |   |                        |   | 3,747  |                         |  |  | 5.93 | %
|                                           |  |                                      |           |   |                        |   |        |                         |  |  |      |  
|                                           |  |                                      |          
|Total earning assets                       |  |                                      | 1,089,293 |   |                        |   | 49,241 |                         |  |  | 6.03 | %
|                                           |  |                                      |          
|Allowance for loan losses                  |  |                                      | (10,484   | ) |                        |   |        |                         |  |  |      |  
|Non-earning assets                         |  |                                      | 194,924   |   |                        |   |        |                         |  |  |      |  
|                                           |  |                                      |           |   |                        |   |        |                         |  |  |      |  
|                                           |  |                                      |          
|Total assets                               |  | $                                    | 1,273,733 |   |                        |   |        |                         |  |  |      |  
|                                           |  |                                      |           |   |                        |   |        |                         |  |  |      |  
|                                           |  |                                      |          
|LIABILITIES AND STOCKHOLDERS EQUITY       |  |                                      |           |   |                        |   |        |                         |  |  |      |  
|                                           |  |                                      |          
|Deposits:                                  |  |                                      |           |   |                        |   |        |                         |  |  |      |  
|Demand -                                   |  |                                      |           |   |                        |   |        |                         |  |  |      |  
|Interest bearing                           |  | $                                    | 193,998   |   |                        | $ | 1,556  |                         |  |  | 1.07 | %
|Savings                                    |  |                                      | 54,733    |   |                        |   | 374    |                         |  |  | 0.91 | %
|Time deposits                              |  |                                      | 734,653   |   |                        |   | 16,513 |                         |  |  | 3.00 | %
|                                           |  |                                      |           |   |                        |   |        |                         |  |  |      |  
|Total deposits                             |  |                                      | 983,384   |   |                        |   | 18,443 |                         |  |  | 2.50 | %
|                                           |  |                                      |          
|Fed funds purchased                        |  |                                      | 1,085     |   |                        |   | 6      |                         |  |  | 0.74 | %
|FHLB and other borrowings                  |  |                                      | 43,415    |   |                        |   | 1,071  |                         |  |  | 3.29 | %
|                                           |  |                                      |           |   |                        |   |        |                         |  |  |      |  
|                                           |  |                                      |          
|Total interest-bearing liabilities         |  |                                      | 1,027,884 |   |                        |   | 19,520 |                         |  |  | 2.53 | %
|                                           |  |                                      |          
|Non-interest bearing deposits              |  |                                      | 61,313    |   |                        |   |        |                         |  |  |      |  
|Other liabilities                          |  |                                      | 26,041    |   |                        |   |        |                         |  |  |      |  
|                                           |  |                                      |           |   |                        |   |        |                         |  |  |      |  
|                                           |  |                                      |          
|Total liabilities                          |  |                                      | 1,115,238 |   |                        |   |        |                         |  |  |      |  
|                                           |  |                                      |          
|Stockholders equity                       |  |                                      | 158,495   |   |                        |   |        |                         |  |  |      |  
|                                           |  |                                      |           |   |                        |   |        |                         |  |  |      |  
|                                           |  |                                      |          
|Total liabilities and stockholders equity |  | $                                    | 1,273,733 |   |                        |   |        |                         |  |  |      |  
|                                           |  |                                      |           |   |                        |   |        |                         |  |  |      |  
|                                           |  |                                      |          
|Net interest earnings                      |  |                                      |           |   |                        | $ | 29,721 |                         |  |  |      |  
|                                           |  |                                      |           |   |                        |   |        |                         |  |  |      |  
|                                           |  |                                      |          
|Interest spread                            |  |                                      |           |   |                        |   |        |                         |  |  | 3.50 | %
|                                           |  |                                      |           |   |                        |   |        |                         |  |  |      |  
|                                           |  |                                      |          
|Net interest margin                        |  |                                      |           |   |                        |   |        |                         |  |  | 3.64 | %
|                                           |  |                                      |           |   |                        |   |        |                         |  |  |      |  



|(1) | Income and yields are reported on a tax equivalent basis assuming a federal tax rate of 34%.
|--- | --------------------------------------------------------------------------------------------



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Provision for Credit Losses

For the three months ended September 30, 2009, the Companys provision for loan losses was $5.2 million compared with
$1.1 million in the same period of 2008. For the nine months ended September 30, 2009, provisions were $11.3 million compared with $1.3 million in the same period of 2008.

Significant increases were made to the loan loss reserve during the third quarter of 2009 as economic conditions continued to show signs
of deterioration, which necessitated further provisions for impairments of classified assets. The most notable impetus for the provision was evidenced in one borrowing relationship which was previously impaired and on the Banks watch list.
Current information related to unwinding the credit necessitated further impairment which amounted to nearly 50% of the provision for the quarter. This loan was commercial/residential land development and was originated approximately 10 years ago
with real estate as collateral. The amount outstanding was $7.2 million at both June 30, 2009 and September 30, 2009. The allowance allocated to this loan was $650 at June 30, 2009 and $3.0 million at September 30, 2009. There
were no charge-offs during these quarters related to this loan. The loan was placed on non-accrual statues during June of 2009. The last appraisal was in April of 2009 for $9 million. Other evaluation procedures included discussions with
professionals knowledgeable with similar developments and potential buyers and sellers. The remaining balance of the provision during the third quarter was attributable to downgraded credits and further insulation from the economic downturn.
Management continues to monitor the loan portfolio closely and make appropriate adjustments using the Companys internal risk rating system.

While the Maryland loan portfolio contains significant risk, it was considered in determining the initial fair value, which was reflected in adjustments recorded at the time of the SFSB transaction, less
the FDIC guaranteed portion of losses on covered assets. Net-charge off activity has increased during recent quarters, a trend that is expected to continue until weakening economic conditions begin to subside. Please refer to the Asset Qualitydiscussion below for further analysis.

Noninterest Income

For the three months ended September 30, 2009, noninterest income was $2.1 million, compared with $754,000 in the same period of
2008. This increase of $1.4 million or 184.08% is primarily attributable to gains on securities transactions of $612,000 and gains on the sale of other real estate of $500,000 versus no gains in either category in the same period of 2008. Increased
service charges on deposit accounts of $158,000 and an increase in other noninterest income of $118,000 over the same period in 2008 accounted for the remainder of the increase.

For the nine months ended September 30, 2009, noninterest income was $24.9 million. Excluding the first quarter gain on the
SFSB transaction of $20.3 million, noninterest income would have been $4.7 million, compared with $1.1 million during the same period of 2008. Service charges on deposit accounts aggregated $1.9 million compared with $696,000 for
the same period in 2008. This increase of $1.2 million or 167.67% was the result of no banking operations reported for the first five months of 2008 and an increase in the number of deposit accounts subject to fees and charges through
September 30, 2009. Likewise, other noninterest income equaled $1.3 million for the nine months ended September 30, 2009, versus $357,000 for the same period in 2008. The Company has recorded net securities gains of $905,000 and gains on
the sale of other real estate of $563,000 through the first nine months of 2009 versus none in the same period in 2008.

Noninterest Expenses

For the three month period ended September 30, 2009, noninterest expenses were $9.9 million compared with $4.7 million for the same period in 2008. Salaries and employee benefits were $4.8
million and represented 48.70% of all noninterest expenses for the quarter. Salaries and wages increased $2.5 million or 103.79% from the same quarter in 2008. The increases in salaries and wages are the direct result of increased staffing
levels from the prior year period related to the acquisitions of TCB and SFSB coupled with corporate staff hires for positions required in a now significantly larger financial institution.

Other overhead costs included other operating expenses of $1.8 million, amortization of intangibles of $565,000, occupancy expenses
of $752,000, equipment expense of $436,000, data processing fees of $743,000, legal fees of $217,000, and other professional fees of $185,000. FDIC assessments for the quarter equaled $436,000.

For the nine month period ended September 30, 2009, noninterest expenses were $53.8 million, which includes the aforementioned
$24.0 million goodwill impairment charge. Salaries and employee benefits were $14.3 million and represented 47.95% of overhead exclusive of the goodwill impairment charge. Throughout the first nine months of 2009, the Company hired
additional personnel in



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key functional areas. Other overhead costs included other operating expenses of $5.1 million, amortization of intangibles of $1.7 million, occupancy expenses of $1.9 million,
equipment expense of $1.2 million, data processing fees of $2.2 million, professional fees of $1.3 million, and legal fees of $772,000.

Income Taxes

An income tax benefit of $1.5 million was recorded
for the three months ended September 30, 2009, and there was an income tax expense of $3.4 million for the nine months ended September 30, 2009. Income tax expenses were $234,000 and $392,000 for the same respective periods in 2008. This
substantial difference is directly attributable to the goodwill impairment charge recorded during the second quarter of 2009, as this impairment charge did not reduce taxable income. The Company had a deferred tax liability at September 30,
2009.

Supplemental Results of Operations Information on Predecessors

The following information represents a discussion and analysis of the results of operations of each of the Companys predecessors for
the five months ended May 31, 2008.

TransCommunity Financial Corporation (TFC)

Results of Operations

For the five months ended May 31, 2008, net losses were $3.9 million or $(.85) per share. The loss incurred was primarily the result of one-time noninterest expenses related to the May 31,
2008 acquisition by the Company as well as an increase in the provision for loan losses.

Net interest income
was $3.8 million for the five months ended May 31, 2008. Net interest margin was 3.86%

For the five
months ended May 31, 2008, the Companys provision for loan losses was $1.3 million. The increase in loan loss reserves was due to a combination of the provisions required to support loan growth, plus downgraded loans and seasoning of the
loan portfolio.

For the five months ended May 31, 2008, noninterest income was $429,000.

For the five months ended May 31, 2008, noninterest expenses were $8.2 million. Salaries and employee benefits
were $3.7 million and represented 45.06% of all noninterest expenses for the period. Additionally, the Company incurred occupancy expenses of $318,000, equipment expense of $295,000, and other noninterest expenses of $3.9 million, which were
comprised of data processing fees of $1.9 million, professional fees of $1.0 million, legal and accounting fees of $260,000, and other expenses totaling $702,000.

One-time noninterest expenses related to the May 31, 2008 acquisition by the Company included $1.3 million in
salaries and benefits related to severance and bonuses, $1.7 million in data processing resulting from the termination of a data processing contract and $1.0 million in professional fees.

An income tax benefit of $1.5 million was recorded for the five months ended May 31, 2008.

BOE Financial Services of Virginia, Inc. (BOE)

Results of Operations

For the five months ended
May 31, 2008, net losses were $188,000 or $(0.15) per share. The loss incurred was primarily the result of one-time noninterest expenses related to the May 31, 2008 acquisition by the Company.

Net interest income was $4.0 million for the five months ended May 31, 2008. Net interest margin was 3.62%

For the five months ended May 31, 2008, the Companys provision for loan losses was $200,000.
Increases were made to the loan loss reserve due to general seasoning of the portfolio.

For the five months
ended May 31, 2008, noninterest income was $854,000. Comprising this amount, service charge income was $464,000 and other income was $390,000. Included in other income for the five months ended May 31, 2008 is a $92,000 loss on sale of
other real estate.



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For the five months ended May 31, 2008, noninterest expenses were
$4.9 million. Salaries and employee benefits were $2.5 million and represented 51.07% of all noninterest expenses for the period. Additionally the Company incurred data processing fees of $394,000, legal fees of $306,000, equipment expense
of $286,000, professional fees of $258,000, and occupancy expenses of $216,000.

One-time noninterest expenses
related to the May 31, 2008 acquisition by the Company included $375,000 in salaries and benefits, $160,000 in professional fees, $84,000 in legal fees, $54,000 in equipment expenses, and $167,000 in data processing expenses.

An income tax benefit of $10,000 was recorded for the five months ended May 31, 2008.

Asset Quality

The allowance for loan losses represents managements estimate of the amount appropriate to provide for probable losses inherent in
the non-FDIC covered loan portfolio. Probable losses in the covered loans are incorporated in the fair market value analysis for the covered loans, and accordingly impact the covered loans balance and the FDIC indemnification asset balance, and not
the allowance for loan losses. As such, the following asset quality information separates the covered loans from the non covered loans.

Total Loans Excluding Covered Loans

The Companys asset quality is
continually monitored, and the Companys management has established an allowance for loan losses that it believes is appropriate for the risk of loss inherent in the loan portfolio. Among other factors, management considers the Companys
historical loss experience, the size and composition of the loan portfolio, the value and adequacy of collateral and guarantors, non-performing credits and current and anticipated economic conditions. There are additional risks of future loan
losses, which cannot be precisely quantified nor attributed to particular loans or classes of loans. Because those risks include general economic trends, as well as conditions affecting individual borrowers, the allowance for loan losses is an
estimate. The allowance is also subject to regulatory examinations and determination as to adequacy, which may take into account such factors as the methodology used to calculate the allowance and size of the allowance in comparison to peer
companies identified by regulatory agencies.

The Company maintains a list of loans that have potential weaknesses that may
need special attention. This nonperforming loan list is used to monitor such loans and is used in the determination of the appropriateness of the Companys allowance for loan losses. At September 30, 2009, nonperforming assets, excluding
FDIC covered assets, totaled $23.2 million compared with $25.9 million and $5.2 million at June 30, 2009, and December 31, 2008, respectively. The $20.7 million increase in nonperforming loans during the first two quarters of 2009, was
primarily attributable to eight credit relationships aggregating approximately $18.6 million being placed in nonaccrual status. These credit relationships accounted for nearly 90% of the increase during the first two quarter of 2009 and ranged in
size from $7.2 million to $0.8 million. These borrowers are commercial/ residential land developers and their loans are secured by real estate. As of September 30, 2009, credit exposure for these eight borrowers was $17.2 million, with
approximately $5.0 million allowance allocated. The remaining $2.1 million increase in nonperforming assets during the first two quarters of 2009, were all smaller credit relationships. These creditors were primarily commercial/residential land
developers with loans secured by real estate. During the third quarter of 2009, nonperforming assets declined $2.7 million. Loan charge-offs represented $1.4 million of this decline, and the remaining portion was attributable to the disposition of
other real estate owned (OREO) during the quarter. Excluding FDIC covered loans, net charge-offs were $1.2 million and $2.0 million for the three and nine months ended September 30, 2009, respectively.

At September 30, 2009, nonapccrual loans, excluding FDIC covered assets, were $20.6 million or 3.61% of total loans. OREO
equaled $1.2 million, excluding OREO in the Maryland operations.

Nationally, industry concerns over asset quality have
increased due in large part to issues related to subprime mortgage lending, declining real estate activity and general economic concerns. While the Company has experienced reduced residential real estate activity, the markets in which the Company
operates indicate a weakened economic condition. While the Company incurred appropriate provisions for loan losses and thus an adequate level of allowance for loan losses, there has been continued deterioration in the quality of the loan portfolio.
Residential loan demand has moderated somewhat, but the Company is still experiencing continued loan demand, particularly in commercial real estate. Management will continue to monitor delinquencies, risk rating changes, charge-offs, market trends
and other indicators of risk in the Companys portfolio, particularly those tied to residential real estate, and adjust the allowance for loan losses accordingly.



37



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##### Table of Contents

The following table sets forth selected asset quality data, excluding FDIC covered assets,
and ratios for the dates indicated:



|                                                         |  |                    |         |   |                   |   |         |  
|-------------------------------------------------------- |  | ------------------ | ------- | - | ----------------- | - | ------- | -
|(dollars in thousands)                                   |  | September 30, 2009 |         |   | December 31, 2008 |  
|Nonaccrual loans                                         |  | $                  | 20,572  |   |                   | $ | 4,534   |  
|Loans past due over 90 days                              |  |                    | 1,462   |   |                   |   | 397     |  
|Other real estate owned                                  |  |                    | 1,175   |   |                   |   | 223     |  
|                                                         |  |                    |         |   |                   |   |         |  
|Total nonperforming assets                               |  | $                  | 23,209  |   |                   | $ | 5,154   |  
|                                                         |  |                    |         |   |                   |   |         |  
|                                                         |  |                   
|Balances                                                 |  |                    |         |   |                   |   |         |  
|Allowance for loan losses                                |  | $                  | 16,211  |   |                   | $ | 6,939   |  
|Average loans during quarter, net of unearned income     |  | $                  | 559,547 |   |                   | $ | 511,042 |  
|Loans, net of unearned income                            |  | $                  | 569,452 |   |                   | $ | 523,298 |  
|                                                         |  |                   
|Ratios                                                   |  |                    |         |   |                   |   |         |  
|Allowance for loan losses to loans                       |  |                    | 2.85    | % |                   |   | 1.33    | %
|Allowance for loan losses to nonperforming assets        |  |                    | 69.85   | % |                   |   | 134.63  | %
|Nonperforming assets to loans & other real estate        |  |                    | 4.07    | % |                   |   | 0.98    | %
|Net charge-offs for quarter to average loans, annualized |  |                    | 0.86    | % |                   |   | 0.32    | %



38



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##### Table of Contents

A further breakout of nonaccrual loans, excluding covered loans, at September 30, 2009
and December 31, 2008 is below:



|                                          |  |                     |        |  |                   |   |         |                               |  |  |                     |   |  |                  |       |  |                               |   |         |  |  |  |      |  
|----------------------------------------- |  | ------------------- | ------ |  | ----------------- | - | ------- | ----------------------------- |  |  | ------------------- | - |  | ---------------- | ----- |  | ----------------------------- | - | ------- |  |  |  | ---- | -
|(Dollars in Thousands)                    |  | September 30, 2009  |        |  | December 31, 2008 |  
|                                          |  | Amountof NonAccrual |        |  | NonCoveredLoans   |   |         | Percentage ofNon CoveredLoans |  |  | Amountof NonAccrual |   |  | Non CoveredLoans |       |  | Percentage ofNon CoveredLoans |  
|Open End 1-4 Family Loans                 |  | $                   |       |  |                   | $ | 20,075  |                               |  |  | 0.00                | % |  | $                | 276   |  |                               | $ | 30,323  |  |  |  | 0.91 | %
|1-4 Family First Liens                    |  |                     | 2,020  |  |                   |   | 108,380 |                               |  |  | 1.86                | % |  |                  | 318   |  |                               |   | 99,284  |  |  |  | 0.32 | %
|                                          |  |                     |        |  |                   |   |         |                               |  |  |                     |   |  |                  |       |  |                               |   |         |  |  |  |      |  
|Total residential 1-4 family              |  |                     | 2,020  |  |                   |   | 128,455 |                               |  |  | 1.57                | % |  |                  | 594   |  |                               |   | 129,607 |  |  |  | 0.46 | %
|                                          |  |                     |        |  |                   |   |         |                               |  |  |                     |   |  |                  |       |  |                               |   |         |  |  |  |      |  
|                                          |  |                     |        |  |                   |  
|Owner occupied nonfarm nonresidential     |  |                     |       |  |                   |   | 43,423  |                               |  |  | 0.00                | % |  |                  | 200   |  |                               |   | 63,218  |  |  |  | 0.32 | %
|Non owner occupied nonfarm nonresidential |  |                     | 4,413  |  |                   |   | 111,768 |                               |  |  | 3.95                | % |  |                  | 582   |  |                               |   | 93,872  |  |  |  | 0.62 | %
|                                          |  |                     |        |  |                   |   |         |                               |  |  |                     |   |  |                  |       |  |                               |   |         |  |  |  |      |  
|Total commercial                          |  |                     | 4,413  |  |                   |   | 155,191 |                               |  |  | 2.84                | % |  |                  | 782   |  |                               |   | 157,090 |  |  |  | 0.50 | %
|                                          |  |                     |        |  |                   |   |         |                               |  |  |                     |   |  |                  |       |  |                               |   |         |  |  |  |      |  
|                                          |  |                     |        |  |                   |  
|1-4 Family Construction                   |  |                     | 855    |  |                   |   | 50,842  |                               |  |  | 1.68                | % |  |                  | 1,194 |  |                               |   | 36,277  |  |  |  | 3.29 | %
|Other construction and land dev.          |  |                     | 12,687 |  |                   |   | 131,902 |                               |  |  | 9.62                | % |  |                  | 461   |  |                               |   | 103,238 |  |  |  | 0.45 | %
|                                          |  |                     |        |  |                   |   |         |                               |  |  |                     |   |  |                  |       |  |                               |   |         |  |  |  |      |  
|Total construction                        |  |                     | 13,542 |  |                   |   | 182,744 |                               |  |  | 7.41                | % |  |                  | 1,655 |  |                               |   | 139,515 |  |  |  | 1.19 | %
|                                          |  |                     |        |  |                   |   |         |                               |  |  |                     |   |  |                  |       |  |                               |   |         |  |  |  |      |  
|                                          |  |                     |        |  |                   |  
|Second mortgages                          |  |                     | 199    |  |                   |   | 14,051  |                               |  |  | 1.42                | % |  |                  | 497   |  |                               |   | 15,599  |  |  |  | 3.19 | %
|Multifamily                               |  |                     |       |  |                   |   | 10,757  |                               |  |  | 0.00                | % |  |                  |      |  |                               |   | 9,370   |  |  |  | 0.00 | %
|Agriculture                               |  |                     |       |  |                   |   | 3,907   |                               |  |  | 0.00                | % |  |                  | 433   |  |                               |   | 5,143   |  |  |  | 8.42 | %
|                                          |  |                     |        |  |                   |   |         |                               |  |  |                     |   |  |                  |       |  |                               |   |         |  |  |  |      |  
|Total real estate loans                   |  |                     | 20,174 |  |                   |   | 495,105 |                               |  |  | 4.07                | % |  |                  | 3,961 |  |                               |   | 456,324 |  |  |  | 0.87 | %
|                                          |  |                     |        |  |                   |  
|Agriculture loans                         |  |                     |       |  |                   |   | 1,407   |                               |  |  | 0.00                | % |  |                  |      |  |                               |   | 988     |  |  |  | 0.00 | %
|Commercial and industrial loans           |  |                     | 194    |  |                   |   | 45,348  |                               |  |  | 0.43                | % |  |                  | 224   |  |                               |   | 44,332  |  |  |  | 0.51 | %
|                                          |  |                     |        |  |                   |   |         |                               |  |  |                     |   |  |                  |       |  |                               |   |         |  |  |  |      |  
|Total commercial loans                    |  |                     | 194    |  |                   |   | 46,755  |                               |  |  | 0.41                | % |  |                  | 224   |  |                               |   | 45,320  |  |  |  | 0.49 | %
|                                          |  |                     |        |  |                   |   |         |                               |  |  |                     |   |  |                  |       |  |                               |   |         |  |  |  |      |  
|Total revolving credit and other consumer |  |                     | 204    |  |                   |   | 15,977  |                               |  |  | 1.28                | % |  |                  | 25    |  |                               |   | 14,457  |  |  |  | 0.17 | %
|All other loans                           |  |                     |       |  |                   |   | 11,700  |                               |  |  | 0.00                | % |  |                  | 324   |  |                               |   | 7,005   |  |  |  | 4.63 | %
|                                          |  |                     |        |  |                   |   |         |                               |  |  |                     |   |  |                  |       |  |                               |   |         |  |  |  |      |  
|Gross loans                               |  | $                   | 20,572 |  |                   | $ | 569,537 |                               |  |  | 3.61                | % |  | $                | 4,534 |  |                               | $ | 523,106 |  |  |  | 0.87 | %
|                                          |  |                     |        |  |                   |   |         |                               |  |  |                     |   |  |                  |       |  |                               |   |         |  |  |  |      |  

Total Delinquencies

The following table presents a summary of non covered loans, greater than 30 days and less than 90 days past due at the dates indicated (dollars in thousands):



|                       |  |                   |       |   |                  |   |        |  
|---------------------- |  | ----------------- | ----- | - | ---------------- | - | ------ | -
|                       |  | September 30,2009 |       |   | December 31,2008 |  
|30-89 Days Past Due    |  | $                 | 9,178 |   |                  | $ | 15,191 |  
|                       |  |                  
|% of Non Covered Loans |  |                   | 1.61  | % |                  |   | 2.90   | %

Covered Loans

Covered loans are not classified as nonperforming assets at September 30, 2009 as the loans are accounted for on a pooled basis and
the pools are considered to be performing. Therefore, interest income, through accretion of the difference between the carrying amount of the loans and the expected cash flows, is being recognized on all purchased loans. There was no allowance for
loan losses recorded on covered loans at September 30, 2009.

As of January 1, 2009, there were no covered loans.
Covered assets that would normally be considered non-performing except for the accounting requirements regarding purchased impaired loans and other real estate owned covered by the FDIC shared-loss agreements at September 30, 2009 are as follows:



|                                         |  |                   |         |  
|---------------------------------------- |  | ----------------- | ------- | -
|(dollars in thousands)                   |  |                   |        
|                                         |  | September 30,2009 |        
|Nonaccrual covered loans(1)              |  | $                 | 66,020  |  
|Fair value adjustment                    |  |                   | (32,872 | )
|                                         |  |                   |         |  
|Nonaccrual covered loans at fair value   |  |                   | 33,148  |  
|Other real estate owned (OREO) - covered |  |                   | 11,105  |  
|                                         |  |                   |         |  
|Total nonperforming covered assets       |  | $                 | 44,253  |  
|                                         |  |                   |         |  



| | (1) | Amount is based on contractual book value. Contractual book value of total covered loans is $262.4 million at September 30, 2009. In accordance with
ASC 310, covered loans are recorded at fair market value of $166.1 million at September 30, 2009.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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##### Table of Contents

Impairments

See Note 11 to the unaudited consolidated financial statements for information related to the allowance for loan losses. At September 30, 2009, total impaired loans equaled $54.5 million,
excluding FDIC covered assets.

Impaired loans, by definition, are loans where management believes that it is more likely than
not that the borrower will not be able to fully meet its contractual obligations, including all principal and interest payments. Under our current internal loan grading system, this would include all loans adversely classified
substandard or worse. These impaired loans have been determined through analysis, appraisals, or other methods used by management.

During the recent review of impaired loans, it was determined that loans risk graded as watch/special mention were included along with the listing of substandard or
doubtful loans reported as impaired loans. Watch/special mention loans, by definition within the Banks credit policy, are loans where management expects to be repaid under the contractual terms. Therefore,
watch/special mention loans do not meet the definition of impaired loans.

In the original Form 10-Qs filed by the
Company for 2009, management included all watch/special mention loans in addition to those deemed substandard and doubtful as impaired loans. Those loans internally rated watch or special
mention, by definition within the Banks credit policy, are loans that are expected to be repaid under the contractual terms and are not considered impaired. As a result, loans previously classified as impaired would have more accurately
been reflected as detailed in the following table.

As previously reported:



|                                       |  |                    |         | 
|-------------------------------------- |  | ------------------ | ------- | 
|(dollars in thousands)                 |  |                    |        
|                                       |  | September 30, 2009 |        
|Impaired with a valuation allowance    |  | $                  | 26,776  | 
|Impaired without a valuation allowance |  |                    | 96,684  | 
|                                       |  |                    |         | 
|Total impaired loans                   |  | $                  | 123,460 | 
|                                       |  |                    |         | 

Under the Companys new loan grading system:



|                                       |  |                    |        | 
|-------------------------------------- |  | ------------------ | ------ | 
|(dollars in thousands)                 |  |                    |       
|                                       |  | September 30, 2009 |       
|Impaired with a valuation allowance    |  | $                  | 26,776 | 
|Impaired without a valuation allowance |  |                    | 27,728 | 
|                                       |  |                    |        | 
|Total impaired loans                   |  | $                  | 54,504 | 
|                                       |  |                    |        | 

The Company has restated its reporting of impaired loans in this report, and intends to consistently apply
its internal loan risk rating system under the prescribed format in future reporting periods. The Company has determined that this application will not have, or would have had, a material impact on its financial statements.

Capital Requirements

The determination of capital adequacy depends upon a number of factors, such as asset quality, liquidity, earnings, growth trends and economic conditions. The Company seeks to maintain a strong capital
base to support its growth and expansion plans, provide stability to current operations and promote public confidence in the Company.

The federal banking regulators have defined three tests for assessing the capital strength and adequacy of banks, based on two definitions of capital. Tier 1 Capital is defined as a
combination of common and qualifying preferred stockholders equity less goodwill. Tier 2 Capital is defined as qualifying subordinated debt and a portion of the allowance for loan losses. Total Capital is defined as
Tier 1 Capital plus Tier 2 Capital.



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##### Table of Contents

Three risk-based capital ratios are computed using the above capital definitions, total
assets and risk-weighted assets and are measured against regulatory minimums to ascertain adequacy. All assets and off-balance sheet risk items are grouped into categories according to degree of risk and assigned a risk-weighting and the resulting
total is risk-weighted assets. Tier 1 Risk-based Capital is Tier 1 Capital divided by risk-weighted assets. Total Risk-based Capital is Total Capital divided by risk-weighted assets. The Leverage ratio is Tier 1 Capital
divided by total average assets.

At September 30, 2009, the Companys ratio of total capital to risk-weighted
assets was 18.49%. The ratio of Tier 1 capital to risk-weighted assets was 17.28%, and the leverage ratio (Tier 1 capital to average adjusted total assets) was 9.31%. All three ratios exceed capital adequacy guidelines outlined by its regulator, and
the Company is considered well-capitalized. At December 31, 2008, the Companys ratio of total capital to risk-weighted assets was 20.00%. The ratio of Tier 1 Capital to risk-weighted assets was 18.92%, and the leverage ratio
(Tier 1 capital to average adjusted total assets) was 12.54%. The Company has trust preferred subordinated debt that qualifies as regulatory capital. This trust preferred debt has a 30-year maturity with a 5-year call option, and was issued at a
rate of three month LIBOR plus 3.00%, and was priced at 3.60% in the third quarter of 2009.

Liquidity

Liquidity represents the Companys ability to meet present and future financial obligations through either the sale or maturity of
existing assets or the acquisition of additional funds through liability management. Liquid assets include cash, interest-bearing deposits with banks, federal funds sold, and certain investment securities. As a result of the Companys
management of liquid assets and the ability to generate liquidity through liability funding, management believes that the Company maintains overall liquidity sufficient to satisfy its depositors requirements and meet its customers credit
needs.

Off-Balance Sheet Arrangements and Contractual Obligations

The Company is a party to financial instruments with off-balance-sheet risk in the normal course of business to meet the financing needs
of its clients and to reduce its own exposure to fluctuations in interest rates. These financial instruments include commitments to extend credit and standby letters of credit. Those instruments involve, to varying degrees, elements of credit and
interest rate risk in excess of the amount recognized in the balance sheet. The contract or notional amounts of those instruments reflect the extent of involvement the Company has in particular classes of financial instruments.

The Companys exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments
to extend credit and standby letters of credit is represented by the contractual amount of those instruments. The Bank uses the same credit policies in making commitments and conditional obligations as it does for on-balance-sheet instruments.



|Item 3. | Quantitative and Qualitative Disclosures About Market Risk
|------- | ----------------------------------------------------------

Market risk is the risk of loss in a financial instrument arising from adverse changes in market rates or prices such as interest rates, foreign currency exchange rates, commodity prices and equity
prices. The Companys primary market risk exposure is interest rate risk. The ongoing monitoring and management of interest rate risk is an important component of the Companys asset/liability management process, which is governed by
policies established by its Board of Directors that are reviewed and approved annually. The Board of Directors delegates responsibility for carrying out asset/liability management policies to the Asset/Liability Committee (ALCO) of the
Bank. In this capacity, ALCO develops guidelines and strategies that govern the Companys asset/liability management related activities, based upon estimated market risk sensitivity, policy limits and overall market interest rate levels and
trends.

Interest rate risk represents the sensitivity of earnings to changes in market interest rates. As interest rates
change, the interest income and expense streams associated with the Companys financial instruments also change, affecting net interest income, the primary component of the Companys earnings. ALCO uses the results of a detailed and
dynamic simulation model to quantify the estimated exposure of net interest income to sustained interest rate changes. While ALCO routinely monitors simulated net interest income sensitivity over various periods, it also employs additional tools to
monitor potential longer-term interest rate risk.

The simulation model captures the impact of changing interest rates on the
interest income received and interest expense paid on all assets and liabilities reflected on the Companys balance sheet. The simulation model is prepared and updated monthly. This sensitivity analysis is compared to ALCO policy limits, which
specify a maximum tolerance level for net interest income exposure over a one-year horizon, assuming no balance sheet growth, given a 200 basis point upward shift and a 200 basis point downward shift in interest rates. A parallel shift in rates over
a 12-month period is assumed. The following table represents the change to net interest income given interest rate shocks up and down 100 and 200 basis points at September 30, 2009:



|                       |  |                               |       |   |   |  |        |  
|---------------------- |  | ----------------------------- | ----- | - | - |  | ------ | -
|                       |  | Change In Net Interest Income |      
|(dollars in thousands) |  | %                             |       |   | $ | 
|Interest Rate Shock:   |  |                               |       |   |   |  |        |  
|                       |  |                              
|+200 basis points      |  |                               | -2.74 | % |   |  | (1,186 | )
|+100 basis points      |  |                               | -1.95 | % |   |  | (842   | )
|No change              |  |                               | 0.00  | % |   |  |       |  
|-100 basis points      |  |                               | 3.31  | % |   |  | 1,431  |  
|-200 basis points      |  |                               | 7.69  | % |   |  | 3,325  |  



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##### Table of Contents

At September 30, 2009, the Companys interest rate risk model indicated that, in a
rising rate environment of 200 basis points over a 12 month period, net interest income could decrease by 2.74%. For the same time period, the interest rate risk model indicated that in a declining rate environment of 200 basis points, net interest
income could increase by 7.69%. While these percentages are subjective based upon assumptions used within the model, management believes the balance sheet is appropriately balanced with acceptable risk to changes in interest rates.

The preceding sensitivity analysis does not represent a forecast and should not be relied upon as being indicative of expected operating
results. These hypothetical estimates are based upon numerous assumptions, including the nature and timing of interest rate levels such as yield curve shape, prepayments on loans and securities, deposit decay rates, pricing decisions on loans and
deposits, reinvestment or replacement of asset and liability cash flows. While assumptions are developed based upon current economic and local market conditions, the Company cannot make any assurances about the predictive nature of these
assumptions, including how customer preferences or competitor influences might change.

Also, as market conditions vary from
those assumed in the sensitivity analysis, actual results will also differ due to factors such as prepayment and refinancing levels likely deviating from those assumed, the varying impact of interest rate change, caps or floors on adjustable rate
assets, the potential effect of changing debt service levels on customers with adjustable rate loans, depositor early withdrawals and product preference changes, and other internal and external variables. Furthermore, the sensitivity analysis does
not reflect actions that ALCO might take in response to, or in anticipation of, changes in interest rates.



|Item 4. | Controls and Procedures
|------- | -----------------------

Disclosure Controls and Procedures

At the end of the period covered by
this Form 10-Q, the Companys management, with the participation of the Companys chief executive officer and chief financial officer, conducted an evaluation of the Companys disclosure controls and procedures. As defined under
Section 13a-15(e) of the Securities Exchange Act of 1934, as amended (the Exchange Act), the term disclosure controls and procedures means controls and other procedures of an issuer that are designed to ensure that
information required to be disclosed by the issuer in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Commissions rules and forms. Disclosure
controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to
the issuers management to allow timely decisions regarding required disclosures.

Based on this evaluation, the
Companys chief executive officer and chief financial officer have concluded that the Companys disclosure controls and procedures were not effective to ensure that material information is recorded, processed, summarized and reported by
management of the Company on a timely basis in order to comply with the Companys disclosure obligations under the Exchange Act and the rules and regulations promulgated thereunder. Two issues that these officers have identified in making this
conclusion at the end of the third quarter of 2009 are the determination that the Companys financial and accounting department has not effectively documented and assessed accounting issues related to non-routine transactions, such as mergers
and non-recurring items that the Company has had to evaluate since May 2008, and the determination that the Companys financial and accounting department is understaffed. This conclusion is the same conclusion that these officers made as
of June 30, 2009, as disclosed in its Quarterly Report on Form 10-Q for the period ended June 30, 2009.

Additional
information with respect to these issues is included in the discussion below.



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##### Table of Contents

Internal Control over Financial Reporting

The management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting. The
Companys internal control over financial reporting is a process designed under the supervision of the Companys chief executive officer and chief financial officer to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of the Companys financial statements for external purposes in accordance with generally accepted accounting principles. In the Annual Report on Form 10-K for the year ended December 31, 2008,
managements assessment of the effectiveness of the Companys internal control over financial reporting cited a material weakness regarding the accounting for non-routine transactions, as described below. While management is not required
to re-assess the effectiveness of internal control over financial reporting during the fiscal year, the Company has concluded that this material weakness continues to exist as of September 30, 2009. Specifically, the Companys financial
and accounting department has lacked sufficient resources and expertise to properly account for certain non-routine transactions, the Companys policies and procedures have not provided for timely review of significant non-routine transactions
and related accounting entries and the Company has not maintained sufficient documentation related to the application of GAAP to significant non-routine transactions.

A material weakness is a significant deficiency (as defined in the Public Company Accounting Oversight Boards Auditing Standard No. 5), or combination of deficiencies, such that there is a
reasonable possibility that a material misstatement in the annual or interim financial statements will not be prevented or detected on a timely basis by employees in the normal course of their work. The Company believes that a material weakness
regarding the accounting for non-routine transactions remains as of September 30, 2009, in light of the uncertainty with respect to accounting issues related to the Companys accounting for subsidiary costs that were applied in the
Companys mergers with TFC and BOE, the public correction of the Companys preliminary earnings release for the second quarter of 2009 to make certain adjustments relating to the tax effect of its goodwill impairment charge, and the need
to amend past periodic reports to include financial statements and related information with respect to each of the Companys predecessors (TFC and BOE) and otherwise enhance disclosure relating to goodwill and intangible assets, fair value
measurements, FDIC-covered assets and asset quality in response to a comment letter from the staff of the Commission.

As of
the date of the filing of this report, the Company has not identified any specific issues that could result in a restatement of past financial information, notwithstanding the amended filings that the Company will file in response to the
Commissions comments to include additional and enhanced financial disclosures, as described above. The Company acknowledges, however, that its financial and accounting documentation for non-routine transactions is less than satisfactory for
the criteria required for the framework for effective internal control over financial reporting.

In addition, the
Companys financial and accounting department is currently understaffed for the responsibilities that it has had in recent fiscal quarters. While the Company has a chief financial officer and a chief accounting officer, the Bank has not had a
controller since April 2009. The Companys financial and accounting department has also had to evaluate numerous non-routine accounting issues in addition to focusing on the day-to-day fiscal operations of the Company and periodic filings with
the Commission. For example, the Company acquired the operations of SFSB in January 2009, and the on-going consolidation of those operations and analysis of unprecedented accounting issues relating to shared-loss agreements with the FDIC have
strained the resources presently available at the Company.

While acknowledging the existence of a material weakness and the
specific issues associated with it, the Company believes that the Companys financial and accounting department performs its responsibilities with respect to the completion of accurate financial information in its periodic filings with the
Commission.

In addition, the Company, formerly a special purpose acquisition company, and its wholly-owned operating
subsidiary, Essex Bank (the Bank), have grown substantially over the past 18 months. In May 2008, the Company merged with each of BOE, the holding company for the Bank, and TFC, the holding company for TransCommunity Bank, and,
in July 2008, TransCommunity Bank merged into the Bank. In November 2008, the Bank acquired certain assets and assumed all deposit liabilities of TCB and, in January 2009, the Bank acquired certain assets and assumed all deposit
liabilities of SFSB. This significant growth has put considerable strain on the Companys organizational structure and the effectiveness of risk management programs that are appropriate for the various functions of an organization of the
Companys size and complexity. Furthermore, this growth has strained the Companys control structure, including the structure that supports the effective application of policies and the execution of procedures within the operation of
financial reporting controls.

The Company believes that it has identified the risk management and related issues that it
needs to address, including the items described above that have impacted the effectiveness of the Companys internal control over financial reporting.

Remediation Steps to Address Material Weakness

To address the issues
described above, the Company continues to take appropriate remediation steps. The Company is evaluating its financial accounting staff levels and expertise and is implementing appropriate oversight and review procedures. The Company also has put in
place internal remediation plans that address concerns that have arisen in maintaining the effectiveness of the Companys risk management programs.



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The Company engaged a public accounting firm to serve as its internal auditing firm
beginning in April 2009. The Company created a new chief internal auditor position and hired in June 2009 a chief internal auditor who reports directly to the Companys Audit Committee, and the Company continues to recruit actively a
bank controller. The Company has also hired additional key members of management, including a chief administrative officer, a chief credit officer and a general counsel, during the first six months of 2009, and these individuals are actively
assisting the Company in reviewing, assessing and implementing, as appropriate, numerous policies and procedures applicable to the Company and its operations.

During the third quarter of 2009, the Company engaged an independent consulting firm to support the Company in its assessment of the Companys quarterly post-closing process, its assessment of the
internal control processes in the Companys financial and accounting department to ensure that all key controls are identified and that the controls and process are appropriately documented and provide qualified resources to support the
Companys chief financial officer and chief accounting officer. In addition, the Company engaged an independent accounting firm to support the Company with the accounting for the loan portfolio in its Maryland market subject to the FDIC
shared-loss agreements.

Also during the third quarter, under the oversight of its Board of Directors and its various
committees, the Company established comprehensive internal remediation plans for issues that it has identified with respect to its internal audit and Sarbanes-Oxley controls, and each plan has detailed corrective actions, identifies members of
management as responsible parties and sets completion dates for addressing issues. These plans include the review, adoption and implementation of numerous formal policies and procedures appropriate for controls of an organization of the
Companys size and complexity. The Company believes that these actions have positively affected the Companys internal control over financial reporting in the limited time that they have been implemented and that they will continue to
positively affect such controls in the future.

The Company believes that it is taking all of the necessary corrective actions
to the material weaknesses and other issues described above. As of the date of this filing, the Company anticipates that it will complete all of its material corrective actions by March 31, 2010.

PART II. OTHER INFORMATION



|Item 1. | Legal Proceedings
|------- | -----------------

There are no material pending legal proceedings, other than ordinary routine litigation incidental to the Companys business, to which the Company, including its subsidiaries, is a party or of which
the property of the Company is subject.



|Item 1A. | Risk Factors
|-------- | ------------

The Companys operations are subject to many risks that could adversely affect its future financial condition and performance and,
therefore, the market value of its common stock. See Exhibit 99.1 for information on risk factors that could affect the Companys future financial condition and performance, and such information is incorporated by reference into this
Item 1A.



|Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds
|------- | -----------------------------------------------------------

None.



|Item 3. | Defaults upon Senior Securities
|------- | -------------------------------

None.



|Item 4. | Submission of Matters to a Vote of Security Holders
|------- | ---------------------------------------------------

None.



|Item 5. | Other Information
|------- | -----------------

None



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|Item 6. | Exhibits
|------- | --------



|            |  |                                                                                       
|----------- |  | --------------------------------------------------------------------------------------
|Exhibit No. |  | Description                                                                           
|            | 
|31.1        |  | Rule 13a-14(a)/15d-14(a) Certification for Chief Executive Officer*                   
|            | 
|31.2        |  | Rule 13a-14(a)/15d-14(a) Certification for Chief Financial Officer*                   
|            | 
|31.3        |  | Rule 13a-14(a)/15d-14(a) Certification for Chief Executive Officer (Amendment No. 1)* 
|            | 
|31.4        |  | Rule 13a-14(a)/15d-14(a) Certification for Chief Financial Officer (Amendment No. 1)* 
|            | 
|31.5        |  | Rule 13a-14(a)/15d-14(a) Certification for Chief Executive Officer (Amendment No. 2)**
|            | 
|31.6        |  | Rule 13a-14(a)/15d-14(a) Certification for Chief Financial Officer (Amendment No. 2)**
|            | 
|32.1        |  | Section 1350 Certifications**                                                         
|            | 
|99.1        |  | Risk Factors*                                                                         





|* | Previously filed.
|- | -----------------

|**  Filed | herewith.
|--------- | ---------



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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.



COMMUNITY BANKERS TRUST CORPORATION(Registrant)/s/ Bruce E. ThomasBruce E. ThomasExecutive Vice President and Chief Financial Officer


Date: March 3, 2011



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