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

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

| Oregon                        | 93-1034484                           |
|-------------------------------|--------------------------------------|
| (State      of Incorporation) | (IRS      Employer Identification #) |

| 1100      N.W. Wall Street, Bend, Oregon      | 97701           |
|-----------------------------------------------|-----------------|
| (Address      of principal executive offices) | (Zip      Code) |

| Common      Stock, no  par value | The      NASDAQ Stock Market, LLC       |
|--------------------------------------------|-----------------------------------------|
| (Title      of Class)                      | (Name      of Exchange on Which Listed) |

----

|   | · | An      increase of $21.0 million in the provision for loan losses and the      allowance for loan losses and an increase of $749 thousand in other real      estate owned (OREO) expenses and the valuation allowance for OREO at      December 31, 2009; |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | The      Company’s net loss after tax for the year ended December 31, 2009      increased from $93.1 million to $114.8million; |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Earnings      per share for the year, previously reported to be a loss of $3.32,      increased to a loss of $4.10; |
|--------|--------|---------------------------------------------------------------------------------------------------------------------|

|   | · | The      loan loss provision increased from $113.0 million to $134.0      million; |
|--------|--------|------------------------------------------------------------------------------------|

|   | · | The      allowance for loan losses increased to $58.6 million from the previously      reported $37.6 million; and |
|--------|--------|--------------------------------------------------------------------------------------------------------------------|

|   | · | Stockholders’      equity at December 31, 2009 decreased to $23.3 million compared to the      previously reported $45.1 million. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------|

----

|          |                                                                                                                         |   | Page   |
|---------------|------------------------------------------------------------------------------------------------------------------------------|--------|--------|
|          |                                                                                                                         |   |   |
| PART I        |
|          |                                                                                                                         |   |   |
| Item      1.  | Business                                                                                                                     |   | 4      |
|          |                                                                                                                         |   |   |
| Item      1A. | Risk      Factors                                                                                                            |   | 19     |
|          |                                                                                                                         |   |   |
| Item      1B. | Unresolved      Staff Comments                                                                                               |   | 30     |
|          |                                                                                                                         |   |   |
| Item      2.  | Properties                                                                                                                   |   | 30     |
|          |                                                                                                                         |   |   |
| Item      3.  | Legal      Proceedings                                                                                                       |   | 30     |
|          |                                                                                                                         |   |   |
| PART II       |
|          |                                                                                                                         |   |   |
| Item      5.  | Market      for Registrant’s Common Equity, Related Stockholder Matters and Issuer      Purchases of Equity Securities |   | 31     |
|          |                                                                                                                         |   |   |
| Item      6.  | Selected      Financial Data                                                                                                 |   | 34     |
|          |                                                                                                                         |   |   |
| Item      7.  | Management’s      Discussion and Analysis of Financial Condition and Results of      Operations                        |   | 37     |
|          |                                                                                                                         |   |   |
| Item      7A. | Quantitative      and Qualitative Disclosures about Market Risk                                                              |   | 62     |
|          |                                                                                                                         |   |   |
| Item      8.  | Financial      Statements and Supplementary Data                                                                             |   | 65     |
|          |                                                                                                                         |   |   |
| Item      9.  | Changes      in and Disagreements with Accountants on Accounting and Financial      Disclosure                               |   | 116    |
|          |                                                                                                                         |   |   |
| Item      9A. | Controls      and Procedures                                                                                                 |   | 116    |
|          |                                                                                                                         |   |   |
| Item      9B. | Other      Information                                                                                                       |   | 116    |
|          |                                                                                                                         |   |   |
| PART III      |
|          |                                                                                                                         |   |   |
| Item      10. | Directors,      Executive Officers and Corporate Governance                                                                  |   | 119    |
|          |                                                                                                                         |   |   |
| Item      11. | Executive      Compensation                                                                                                  |   | 119    |
|          |                                                                                                                         |   |   |
| Item      12. | Security      Ownership of Certain Beneficial Owners and Management and      Related Stockholder Matters                     |   | 119    |
|          |                                                                                                                         |   |   |
| Item      13. | Certain      Relationships and Related Transactions, and Director      Independence                                          |   | 119    |
|          |                                                                                                                         |   |   |
| Item      14. | Principal      Accountant Fees and Services                                                                                  |   | 119    |
|          |                                                                                                                         |   |   |
| PART IV       |
|          |                                                                                                                         |   |   |
| Item      15. | Exhibits      and Financial Statement Schedules                                                                              |   | 120    |
|          |                                                                                                                         |   |   |
| Signatures    |                                                                                                                         | 122    |

----

|   | 1. | Strive      to execute a substantial capital raise as soon as  possible |
|--------|----|-------------------------------------------------------------------------|

|   | 2. | Proactively      work to manage credit quality risk and minimize credit and loan quality      related costs |
|--------|----|-------------------------------------------------------------------------------------------------------------|

|   | 3. | Continue      to reduce loan balances outstanding to mitigate credit risk and conserve      capital and liquidity |
|--------|----|-------------------------------------------------------------------------------------------------------------------|

|   | 4. | Focus      on retention and expansion of coredeposits |
|--------|----|-------------------------------------------------------|

|   | 5. | Maintain      ample liquidity reserves |
|--------|----|----------------------------------------|

|   | 6. | Maximize      revenue sources within the context of theplan |
|--------|----|-------------------------------------------------------------|

|   | 7. | Continue      to reduce controllable non-interestexpense |
|--------|----|----------------------------------------------------------|

|   | 8. | Retain      high performing human resources |
|--------|----|---------------------------------------------|

----

----

| Officer’s      Name |   | Age    |   | Position                                                                                                                                                                        |
|---------------------------|--------|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                      |   |   |   |                                                                                                                                                                            |
| Patricia      Moss        |   | 56     |   | President      and CEO of Cascade Bancorp since 1998.                                                                                                                           |
|                      |   |   |   | CEO      of Bank of the Cascades since 1998.                                                                                                                                    |
|                      |   |   |   |                                                                                                                                                                            |
| Michael      Delvin       |   | 61     |   | Executive      Vice President and Chief Operating Officer of Cascade Bancorp since 1998      and President and Chief Operating Officer of Bank of the Cascades since      2004. |
|                      |   |   |   |                                                                                                                                                                            |
| Gregory      Newton       |   | 58     |   | Executive      Vice President, Chief Financial Officer and Secretary of Cascade Bancorp      and Bank of the Cascades since 2002.                                               |
|                      |   |   |   |                                                                                                                                                                            |
| Peggy  Biss     |   | 52     |   | Executive      Vice President, Chief Human Resources Officer of Cascade Bancorp and Bank      of the Cascades since 2002.                                                       |
|                      |   |   |   |                                                                                                                                                                            |
| Michael      Allison      |   | 53     |   | Executive      Vice President and Chief Credit Officer of Cascade Bancorp and Bank of the      Cascades since2009.                                                              |

----

----

----

----

----

----

|   | • | Core Capital (Tier 1).        Tier 1 capital includes common equity, retained      earnings, qualifying non-cumulative perpetual preferred stock, a limited      amount of qualifying cumulative perpetual stock at the holding company      level, minority interests in equity accounts of consolidated subsidiaries,      qualifying trust preferred securities, less goodwill, most intangible      assets and certain other assets. |
|--------|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | Supplementary Capital      (Tier 2).   Tier 2 capital includes, among      other things, perpetual preferred stock and trust preferred securities not      meeting the Tier 1 definition, qualifying mandatory convertible debt      securities, qualifying subordinated debt, and allowances for possible loan      and lease losses, subject tolimitations. |
|--------|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | Market Risk Capital      (Tier 3).   Tier 3 capital includes qualifying      unsecured subordinated debt. |
|--------|---------|-------------------------------------------------------------------------------------------------------------------------------|

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| ITEM      5. | MARKET FOR REGISTRANT’S COMMON EQUITY AND RELATED      STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY      SECURITIES  |
|--------------|---------------------------------------------------------------------------------------------------------------------------------------|

| Quarter Ended |   | High   |   |   | Low    |   |   | Dividend per share |   |
|--------------------|--------|--------|--------|--------|--------|--------|--------|------------------------------|--------|
| 2009               |   |   |   |   |   |   |   |                         |   |
| December      31   |   | $      | 1.23   |   |   | $      | 0.68   |                         |   |   | N/A |   |
| September      30  |   | $      | 2.39   |   |   | $      | 1.05   |                         |   |   | N/A |   |
| June      30       |   | $      | 2.84   |   |   | $      | 1.26   |                         |   |   | N/A |   |
| March      31      |   | $      | 7.25   |   |   | $      | 0.61   |                         |   |   | N/A |   |
|               |   |   |   |   |   |   |   |                         |   |   |   |   |
| 2008               |   |   |   |   |   |   |   |                         |   |   |   |   |
| December      31   |   | $      | 10.00  |   |   | $      | 5.07   |                         |   | $ | 0.01 |   |
| September      30  |   | $      | 18.50  |   |   | $      | 6.26   |                         |   | $ | 0.01 |   |
| June      30       |   | $      | 10.35  |   |   | $      | 7.43   |                         |   | $ | 0.10 |   |
| March      31      |   | $      | 14.48  |   |   | $      | 9.01   |                         |   | $ | 0.10 |   |

----

| Plan Category                                              |   | # of securities to beissued on exercise ofoutstanding options(a) |    |   | Weighted averageexercise price ofoutstanding options(b) |   |   | # of securitiesremaining availablefor future issuanceunder plan (excludingsecurities in colum(a)(c) |   |
|-----------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------------------|---------|--------|-----------------------------------------------------------------------------|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| Equity      compensation plans approved by security holders     |   |                                                                                                     | 990,618 |   |                                                                        | $      | 12.18  |                                                                                                                                             |   |   | 1,353,217 |   |
| Equity      compensation plans not approved by security holders |   | None                                                                                                     |    |   |                                                                        | N/A    |   |                                                                                                                                             |   | N/A |   |
| Total                                                           |   |                                                                                                     | 990,618 |   |                                                                        | $      | 12.18  |                                                                                                                                             |   |   | 1,353,217 |   |

----

|                                  |   | Period Ending |   |
|---------------------------------------|--------|--------------------|--------|
| Index                                 |   | 12/31/04           |   |   | 12/31/05 |   |   | 12/31/06 |   |   | 12/31/07 |   |   | 12/31/08 |   |   | 12/31/09 |   |
| Cascade      Bancorp                  |   |               | 100.00 |   |   |   | 115.63 |   |   |   | 197.34 |   |   |   | 90.08 |   |   |   | 44.60 |   |   |   | 4.49 |   |
| NASDAQ      Composite                 |   |               | 100.00 |   |   |   | 101.37 |   |   |   | 111.03 |   |   |   | 121.92 |   |   |   | 72.49 |   |   |   | 104.31 |   |
| SNL      Bank NASDAQ                  |   |               | 100.00 |   |   |   | 96.95 |   |   |   | 108.85 |   |   |   | 85.45 |   |   |   | 62.06 |   |   |   | 50.34 |   |
| Cascade      Bancorp 2009 Peer Group* |   |               | 100.00 |   |   |   | 112.11 |   |   |   | 141.82 |   |   |   | 100.91 |   |   |   | 45.33 |   |   |   | 31.19 |   |

----

| (In      thousands, except per share data and ratios; unaudited) |   | Years ended December 31, |      |
|------------------------------------------------------------------|--------|--------------------------|-----------|
| Balance      Sheet Data (at period end)                          |   | 2009                     |      |   | 2008 |   |   | 2007 |   |   | 2006 |   |   | 2005 |   |
|                                                             |   | (Restated)               |      |   |   |   |   |   |   |   |   |   |   |   |   |
| Investment      securities                                       |   | $                        | 135,763   |   |   | $ | 109,691 |   |   | $ | 87,015 |   |   | $ | 106,923 |   |   | $ | 59,286 |   |
| Loans,      gross                                                |   |                     | 1,547,676 |   |   |   | 1,956,184 |   |   |   | 2,041,478 |   |   |   | 1,887,263 |   |   |   | 1,049,704 |   |
| Reserve      for loan losses                                     |   |                     | 58,586    |   |   |   | 47,166 |   |   |   | 33,875 |   |   |   | 23,585 |   |   |   | 14,688 |   |
| Loans,      net                                                  |   |                     | 1,489,090 |   |   |   | 1,909,018 |   |   |   | 2,007,603 |   |   |   | 1,863,678 |   |   |   | 1,035,016 |   |
| Total      assets                                                |   |                     | 2,172,128 |   |   |   | 2,278,307 |   |   |   | 2,394,492 |   |   |   | 2,249,314 |   |   |   | 1,269,671 |   |
| Total      deposits                                              |   |                     | 1,815,348 |   |   |   | 1,794,611 |   |   |   | 1,667,138 |   |   |   | 1,661,616 |   |   |   | 1,065,379 |   |
| Non-interest      bearing deposits                               |   |                     | 394,583   |   |   |   | 364,146 |   |   |   | 435,503 |   |   |   | 509,920 |   |   |   | 430,463 |   |
| Total      common shareholders' equity (book) (1)                |   |                     | 23,318    |   |   |   | 135,239 |   |   |   | 275,286 |   |   |   | 261,076 |   |   |   | 104,376 |   |
| Tangible      common shareholders' equity (tangible) (2)         |   |                     | 16,930    |   |   |   | 127,318 |   |   |   | 160,737 |   |   |   | 144,947 |   |   |   | 97,653 |   |
| Income      Statement Data                                       |   |                     |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest      income                                             |   | $                        | 106,811   |   |   | $ | 137,772 |   |   | $ | 171,228 |   |   | $ | 138,597 |   |   | $ | 72,837 |   |
| Interest      expense                                            |   |                     | 34,135    |   |   |   | 42,371 |   |   |   | 62,724 |   |   |   | 40,321 |   |   |   | 13,285 |   |
| Net      interest income                                         |   |                     | 72,676    |   |   |   | 95,401 |   |   |   | 108,504 |   |   |   | 98,276 |   |   |   | 59,552 |   |
| Loan      loss provision                                         |   |                     | 134,000   |   |   |   | 99,593 |   |   |   | 19,400 |   |   |   | 6,000 |   |   |   | 3,050 |   |
| Net      interest income (loss) after loan loss provision        |   |                     | (61,324   | ) |   |   | (4,192 | ) |   |   | 89,104 |   |   |   | 92,276 |   |   |   | 56,502 |   |
| Noninterest      income                                          |   |                     | 21,626    |   |   |   | 19,991 |   |   |   | 21,225 |   |   |   | 18,145 |   |   |   | 13,069 |   |
| Noninterest      expense (3)                                     |   |                     | 94,716    |   |   |   | 173,671 |   |   |   | 62,594 |   |   |   | 52,953 |   |   |   | 34,201 |   |
| Income      (loss) before income taxes                           |   |                     | (134,414  | ) |   |   | (157,872 | ) |   |   | 47,735 |   |   |   | 57,468 |   |   |   | 35,370 |   |
| Provision      (credit) for income taxes                         |   |                     | (19,585   | ) |   |   | (23,306 | ) |   |   | 17,756 |   |   |   | 21,791 |   |   |   | 12,934 |   |
| Net      income (loss)                                           |   |                     | (114,829  | ) |   | $ | (134,566 | ) |   | $ | 29,979 |   |   | $ | 35,677 |   |   | $ | 22,436 |   |
| Share      Data (1)                                              |   |                     |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Basic      earnings (loss) per common share                      |   | $                        | (4.10     | ) |   | $ | (4.82 | ) |   | $ | 1.06 |   |   | $ | 1.37 |   |   | $ | 1.06 |   |
| Diluted      earnings (loss) per common share                    |   | $                        | (4.10     | ) |   | $ | (4.82 | ) |   | $ | 1.05 |   |   | $ | 1.34 |   |   | $ | 1.03 |   |
| Book      value per common share                                 |   | $                        | 0.83      |   |   | $ | 4.81 |   |   | $ | 9.82 |   |   | $ | 9.22 |   |   | $ | 4.93 |   |
| Tangible      value per common share                             |   | $                        | 0.60      |   |   | $ | 4.53 |   |   | $ | 5.73 |   |   | $ | 5.11 |   |   | $ | 4.61 |   |
| Cash      dividends paid per common share                        |   | $                        | 0.00      |   |   | $ | 0.22 |   |   | $ | 0.37 |   |   | $ | 0.31 |   |   | $ | 0.26 |   |
| Ratio      of dividends declared to net income                   |   |                     | 0.00      | % |   |   | -4.56 | % |   |   | 34.86 | % |   |   | 22.65 | % |   |   | 24.79 | % |
| Basic      Average shares outstanding                            |   |                     | 28,001    |   |   |   | 27,936 |   |   |   | 28,243 |   |   |   | 26,062 |   |   |   | 21,070 |   |
| Fully      Diluted average shares outstanding                    |   |                     | 28,001    |   |   |   | 27,936 |   |   |   | 28,577 |   |   |   | 26,664 |   |   |   | 21,780 |   |
| Key      Ratios                                                  |   |                     |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Return      on average total shareholders' equity (book)         |   |                     | -102.88   | % |   |   | -47.90 | % |   |   | 10.92 | % |   |   | 17.48 | % |   |   | 24.04 | % |
| Return      on average total shareholders' equity (tangible)     |   |                     | -109.94   | % |   |   | -80.51 | % |   |   | 18.83 | % |   |   | 29.81 | % |   |   | 25.93 | % |
| Return      on average total assets                              |   |                     | -5.01     | % |   |   | -5.58 | % |   |   | 1.28 | % |   |   | 1.86 | % |   |   | 1.97 | % |
| Pre-tax      pre provision return on average assets              |   |                     | -1.49     | % |   |   | 1.94 | % |   |   | 2.87 | % |   |   | 3.31 | % |   |   | 3.37 | % |
| Net      interest spread                                         |   |                     | 3.11      | % |   |   | 3.90 | % |   |   | 4.20 | % |   |   | 4.65 | % |   |   | 4.85 | % |
| Net      interest margin                                         |   |                     | 3.43      | % |   |   | 4.44 | % |   |   | 5.21 | % |   |   | 5.73 | % |   |   | 5.67 | % |
| Total      revenue (net int inc + non int inc)                   |   | $                        | 94,302    |   |   | $ | 115,153 |   |   | $ | 129,644 |   |   | $ | 116,431 |   |   | $ | 72,621 |   |
| Efficiency      ratio (3)                                        |   |                     | 100.44    | % |   |   | 150.61 | % |   |   | 48.22 | % |   |   | 45.49 | % |   |   | 47.10 | % |

----

| (In      thousands, except per share data and ratios; unaudited) |   | Years ended December 31, |    |
|------------------------------------------------------------------|--------|--------------------------|---------|
|                                                             |   | 2009                     |    |   | 2008 |   |   | 2007 |   |   | 2006 |   |   | 2005 |   |
|                                                             |   | (Restated)               |    |   |   |   |   |   |   |   |   |   |   |   |   |
| Credit      Quality Ratios                                       |   |                     |    |   |   |   |   |   |   |   |   |   |   |   |   |
| Reserve      for credit losses                                   |   | $                        | 59,290  |   |   | $ | 48,205 |   |   | $ | 37,038 |   |   | $ | 26,798 |   |   | $ | 14,688 |   |
| Reserve      to ending total loans                               |   |                     | 3.83    | % |   |   | 2.46 | % |   |   | 1.81 | % |   |   | 1.42 | % |   |   | 1.40 | % |
| Non-performing      assets (4)                                   |   | $                        | 160,970 |   |   | $ | 173,200 |   |   | $ | 55,681 |   |   | $ | 3,005 |   |   | $ | 40 |   |
| Non-performing      assets to total gross loans and OREO         |   |                     | 10.21   | % |   |   | 7.94 | % |   |   | 2.71 | % |   |   | 0.16 | % |   |   | 0.00 | % |
| Non-performing      assets to total assets                       |   |                     | 7.41    | % |   |   | 7.00 | % |   |   | 2.33 | % |   |   | 0.13 | % |   |   | 0.00 | % |
| Delinquent      loans >30 days                                |   | $                        | 10,085  |   |   | $ | 6,249 |   |   | $ | 9,622 |   |   | $ | 3,397 |   |   | $ | 205 |   |
| Delinquent      >30 days to total loans                       |   |                     | 0.65    | % |   |   | 0.33 | % |   |   | 0.47 | % |   |   | 0.18 | % |   |   | 0.02 | % |
| Net      Charge off's (NCOs)                                     |   | $                        | 122,580 |   |   | $ | 86,302 |   |   | $ | 9,110 |   |   | $ | 1,282 |   |   | $ | 773 |   |
| Net      loan charge-offs (annualized)                           |   |                     | 6.81    | % |   |   | 4.20 | % |   |   | 0.46 | % |   |   | 0.08 | % |   |   | 0.08 | % |
| Provision      for loan losses to NCOs                           |   |                     | 109     | % |   |   | 115 | % |   |   | 213 | % |   |   | 468 | % |   |   | 395 | % |
| Mortgage      Activity                                           |   |                     |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Mortgage      Originations                                       |   | $                        | 177,206 |   |   | $ | 121,663 |   |   | $ | 170,095 |   |   | $ | 176,558 |   |   | $ | 158,775 |   |
| Total      Servicing Portfolio (sold loans)                      |   | $                        | 542,905 |   |   | $ | 512,163 |   |   | $ | 493,969 |   |   | $ | 494,882 |   |   | $ | 498,668 |   |
| Capitalized      Mortgage Servicing Rights (MSR's)               |   | $                        | 3,947   |   |   | $ | 3,605 |   |   | $ | 3,756 |   |   | $ | 4,096 |   |   | $ | 4,439 |   |
| Capital      Ratios                                              |   |                     |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Bancorp                                                          |   |                     |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Shareholders'      equity to ending assets                       |   |                     | 1.07    | % |   |   | 5.94 | % |   |   | 11.50 | % |   |   | 11.61 | % |   |   | 8.22 | % |
| Leverage      ratio (4)                                          |   |                     | 1.11    | % |   |   | 8.19 | % |   |   | 9.90 | % |   |   | 9.82 | % |   |   | 9.30 | % |
| Tier      1 risk-based capital (4)                               |   |                     | 1.48    | % |   |   | 8.94 | % |   |   | 10.00 | % |   |   | 9.99 | % |   |   | 9.83 | % |
| Total      risk-based capital (4)                                |   |                     | 2.95    | % |   |   | 10.22 | % |   |   | 11.27 | % |   |   | 11.26 | % |   |   | 10.72 | % |
| Bank                                                             |   |                     |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Shareholders'      equity to ending assets                       |   |                     | 4.18    | % |   |   | 8.80 | % |   |   | 14.11 | % |   |   | 14.42 | % |   |   | 9.60 | % |
| Leverage      ratio (4)                                          |   |                     | 3.75    | % |   |   | 8.09 | % |   |   | 9.74 | % |   |   | 9.67 | % |   |   | 9.17 | % |
| Tier      1 risk-based capital (4)                               |   |                     | 4.97    | % |   |   | 8.83 | % |   |   | 9.82 | % |   |   | 9.82 | % |   |   | 9.69 | % |
| Total      risk-based capital (4)                                |   |                     | 6.25    | % |   |   | 10.09 | % |   |   | 11.08 | % |   |   | 11.07 | % |   |   | 10.93 | % |

----

|                                                      |   | 2009          |     |
|-----------------------------------------------------------|--------|---------------|----------|
|                                                      |   | FourthQuarter |     |   | ThirdQuarter |   |   | SecondQuarter |   |   | FirstQuarter |   |
|                                                      |   | (Restated)    |     |   |   |   |   |   |   |   |   |   |
| Interest      income                                      |   | $             | 24,722   |   |   | $ | 26,091 |   |   | $ | 27,663 |   |   | $ | 28,335 |   |
| Interest      expense                                     |   |          | 7,895    |   |   |   | 8,817 |   |   |   | 8,812 |   |   |   | 8,611 |   |
| Net      interest income                                  |   |          | 16,827   |   |   |   | 17,274 |   |   |   | 18,851 |   |   |   | 19,724 |   |
| Loan      loss provision                                  |   |          | 49,000   |   |   |   | 22,000 |   |   |   | 48,000 |   |   |   | 15,000 |   |
| Net      interest income (loss) after loan loss provision |   |          | (32,173  | ) |   |   | (4,726 | ) |   |   | (29,149 | ) |   |   | 4,724 |   |
| Noninterest      income                                   |   |          | 3,536    |   |   |   | 8,077 |   |   |   | 4,956 |   |   |   | 5,057 |   |
| Noninterest      expenses                                 |   |          | 29,782   |   |   |   | 25,739 |   |   |   | 22,625 |   |   |   | 16,570 |   |
| Loss      before income taxes                             |   |          | (58,419  | ) |   |   | (22,388 | ) |   |   | (46,818 | ) |   |   | (6,789 | ) |
| Provision      (credit) for income taxes                  |   |          | 11,782   |   |   |   | (9,744 | ) |   |   | (18,750 | ) |   |   | (2,873 | ) |
| Net      loss                                             |   | $             | (70,201  | ) |   | $ | (12,644 | ) |   | $ | (28,068 | ) |   | $ | (3,916 | ) |
| Basic      net loss per common share                      |   | $             | (2.50    | ) |   | $ | (0.45 | ) |   | $ | (1.00 | ) |   | $ | (0.14 | ) |
| Diluted      net loss per common share                    |   | $             | (2.50    | ) |   | $ | (0.45 | ) |   | $ | (1.00 | ) |   | $ | (0.14 | ) |
|                                                      |   |          |     |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                      |   | 2008          |     |
|                                                      |   | FourthQuarter |     |   | ThirdQuarter |   |   | SecondQuarter |   |   | First Quarter |   |
| Interest      income                                      |   | $             | 31,260   |   |   | $ | 34,111 |   |   | $ | 34,260 |   |   | $ | 38,141 |   |
| Interest      expense                                     |   |          | 9,130    |   |   |   | 10,146 |   |   |   | 10,014 |   |   |   | 13,081 |   |
| Net      interest income                                  |   |          | 22,130   |   |   |   | 23,965 |   |   |   | 24,246 |   |   |   | 25,060 |   |
| Loan      loss provision                                  |   |          | 61,339   | (1) |   |   | 15,390 |   |   |   | 18,364 |   |   |   | 4,500 |   |
| Net      interest income (loss) after loan loss provision |   |          | (39,209  | ) |   |   | 8,575 |   |   |   | 5,882 |   |   |   | 20,560 |   |
| Noninterest      income                                   |   |          | 3,951    |   |   |   | 5,530 |   |   |   | 5,008 |   |   |   | 5,502 |   |
| Noninterest      expenses                                 |   |          | 125,724  | (2) |   |   | 13,809 |   |   |   | 16,763 |   |   |   | 17,375 |   |
| Income      (loss) before income taxes                    |   |          | (160,982 | ) |   |   | 296 |   |   |   | (5,873 | ) |   |   | 8,687 |   |
| Provision      (credit) for income taxes                  |   |          | (23,422  | ) |   |   | (51 | ) |   |   | (2,480 | ) |   |   | 2,647 |   |
| Net      income (loss)                                    |   | $             | (137,560 | ) |   | $ | 347 |   |   | $ | (3,393 | ) |   | $ | 6,040 |   |
| Basic      net income (loss) per common share             |   | $             | (4.92    | ) |   | $ | 0.01 |   |   | $ | (0.12 | ) |   | $ | 0.22 |   |
| Diluted      net income (loss) per common share           |   | $             | (4.92    | ) |   | $ | 0.01 |   |   | $ | (0.12 | ) |   | $ | 0.22 |   |

----

----

----

----

----

----

----

| (dollars in thousands)                     |   | Year ended             |      |   | Year ended             |   |    | Year ended             |   |
|------------------------------------------------------|--------|-----------------------------|-----------|--------|-----------------------------|--------|---------|-----------------------------|--------|
|                                                 |   | December 31, 2009 |      |   | December 31, 2008 |   |    | December 31, 2007 |   |
|                                                 |   |                        |      |   | Interest                    |   |    | Average                     |   |   |   |   |   | Interest |   |   | Average |   |   |   |   |   | Interest |   |   | Average |   |
|                                                 |   | Average                     |      |   | Income/                     |   |    | Yield or               |   |   | Average |   |   | Income/ |   |   | Yield or |   |   | Average |   |   | Income/ |   |   | Yield or |   |
|                                                 |   | Balance                     |      |   | Expense                     |   |    | Rates                       |   |   | Balance |   |   | Expense |   |   | Rates |   |   | Balance |   |   | Expense |   |   | Rates |   |
|                                                 |   | (Restated)                  |      |   |                        |   |    |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Assets                                               |   |                        |      |   |                        |   |    |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Taxable      securities                              |   | $                           | 101,033   |   |                        | $      | 5,085   |                        |   |   | 5.03 | % |   | $ | 85,034 |   |   | $ | 4,462 |   |   |   | 5.25 | % |   | $ | 93,793 |   |   | $ | 5,259 |   |   |   | 5.61 | % |
| Non-taxable      securities (1)                      |   |                        | 3,643     |   |                        |   | 186     |                        |   |   | 5.11 | % |   |   | 5,211 |   |   |   | 255 |   |   |   | 4.89 | % |   |   | 7,952 |   |   |   | 283 |   |   |   | 3.56 | % |
| Interest      bearing balances due from FRB and FHLB |   |                        | 209,451   |   |                        |   | 486     |                        |   |   | 0.23 | % |   |   | 13 |   |   |   | - |   |   |   | 0.00 | % |   |   | 3,735 |   |   |   | 195 |   |   |   | 5.22 | % |
| Federal      funds sold                              |   |                        | 7,454     |   |                        |   | 17      |                        |   |   | 0.23 | % |   |   | 2,026 |   |   |   | 31 |   |   |   | 1.53 | % |   |   | 3,910 |   |   |   | 187 |   |   |   | 4.78 | % |
| Federal      Home Loan Bank stock                    |   |                        | 10,472    |   |                        |   | -       |                        |   |   | 0.00 | % |   |   | 11,458 |   |   |   | 111 |   |   |   | 0.97 | % |   |   | 6,991 |   |   |   | 42 |   |   |   | 0.60 | % |
| Loans      (1)(2)(3)(4)                              |   |                        | 1,798,723 |   |                        |   | 101,507 |                        |   |   | 5.64 | % |   |   | 2,054,199 |   |   |   | 133,346 |   |   |   | 6.49 | % |   |   | 1,974,435 |   |   |   | 165,690 |   |   |   | 8.39 | % |
| Total      earning assets                            |   |                        | 2,130,776 |   |                        |   | 107,281 |                        |   |   | 5.03 | % |   |   | 2,157,941 |   |   |   | 138,205 |   |   |   | 6.40 | % |   |   | 2,090,816 |   |   |   | 171,656 |   |   |   | 8.21 | % |
| Reserve      for loan losses                         |   |                        | (57,268   | )      |                        |   |    |                        |   |   |   |   |   |   | (38,827 | ) |   |   |   |   |   |   |   |   |   |   | (24,498 | ) |   |   |   |   |   |   |   |   |
| Cash      and due from banks                         |   |                        | 37,836    |   |                        |   |    |                        |   |   |   |   |   |   | 48,341 |   |   |   |   |   |   |   |   |   |   |   | 55,427 |   |   |   |   |   |   |   |   |   |
| Premises      and equipment, net                     |   |                        | 38,805    |   |                        |   |    |                        |   |   |   |   |   |   | 37,273 |   |   |   |   |   |   |   |   |   |   |   | 38,307 |   |   |   |   |   |   |   |   |   |
| Other      Assets                                    |   |                        | 145,440   |   |                        |   |    |                        |   |   |   |   |   |   | 207,094 |   |   |   |   |   |   |   |   |   |   |   | 178,682 |   |   |   |   |   |   |   |   |   |
| Total      assets                                    |   | $                           | 2,295,589 |   |                        |   |    |                        |   |   |   |   |   | $ | 2,411,822 |   |   |   |   |   |   |   |   |   |   | $ | 2,338,734 |   |   |   |   |   |   |   |   |   |
|                                                 |   |                        |      |   |                        |   |    |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Liabilities and Stockholders'      Equity            |   |                        |      |   |                        |   |    |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Int.      bearing demand deposits                    |   | $                           | 735,667   |   |                        |   | 7,267   |                        |   |   | 0.99 | % |   | $ | 844,136 |   |   |   | 15,540 |   |   |   | 1.84 | % |   | $ | 889,069 |   |   |   | 30,727 |   |   |   | 3.46 | % |
| Savings      deposits                                |   |                        | 33,275    |   |                        |   | 73      |                        |   |   | 0.22 | % |   |   | 36,761 |   |   |   | 135 |   |   |   | 0.37 | % |   |   | 41,327 |   |   |   | 202 |   |   |   | 0.49 | % |
| Time      deposits                                   |   |                        | 688,430   |   |                        |   | 17,915  |                        |   |   | 2.60 | % |   |   | 386,990 |   |   |   | 12,850 |   |   |   | 3.32 | % |   |   | 340,324 |   |   |   | 15,804 |   |   |   | 4.64 | % |
| Other      borrowings                                |   |                        | 312,301   |   |                        |   | 8,880   |                        |   |   | 2.84 | % |   |   | 434,112 |   |   |   | 13,846 |   |   |   | 3.19 | % |   |   | 294,854 |   |   |   | 15,991 |   |   |   | 5.42 | % |
| Total      interest bearing liabilities              |   |                        | 1,769,673 |   |                        |   | 34,135  |                        |   |   | 1.93 | % |   |   | 1,701,999 |   |   |   | 42,371 |   |   |   | 2.49 | % |   |   | 1,565,574 |   |   |   | 62,724 |   |   |   | 4.01 | % |
| Demand      deposits                                 |   |                        | 407,344   |   |                        |   |    |                        |   |   |   |   |   |   | 407,980 |   |   |   |   |   |   |   |   |   |   |   | 469,015 |   |   |   |   |   |   |   |   |   |
| Other      liabilities                               |   |                        | 8,659     |   |                        |   |    |                        |   |   |   |   |   |   | 20,904 |   |   |   |   |   |   |   |   |   |   |   | 29,590 |   |   |   |   |   |   |   |   |   |
| Total      liabilities                               |   |                        | 2,185,676 |   |                        |   |    |                        |   |   |   |   |   |   | 2,130,883 |   |   |   |   |   |   |   |   |   |   |   | 2,064,179 |   |   |   |   |   |   |   |   |   |
| Stockholders'      equity                            |   |                        | 109,913   |   |                        |   |    |                        |   |   |   |   |   |   | 280,939 |   |   |   |   |   |   |   |   |   |   |   | 274,555 |   |   |   |   |   |   |   |   |   |
| Total      liabilities & equity                  |   | $                           | 2,295,589 |   |                        |   |    |                        |   |   |   |   |   | $ | 2,411,822 |   |   |   |   |   |   |   |   |   |   | $ | 2,338,734 |   |   |   |   |   |   |   |   |   |
|                                                 |   |                        |      |   |                        |   |    |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      interest income                             |   |                        |      |   |                        | $      | 73,146  |                        |   |   |   |   |   |   |   |   |   | $ | 95,834 |   |   |   |   |   |   |   |   |   |   | $ | 108,932 |   |   |   |   |   |
|                                                 |   |                        |      |   |                        |   |    |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      interest spread                             |   |                        |      |   |                        |   |    |                        |   |   | 3.11 | % |   |   |   |   |   |   |   |   |   |   | 3.92 | % |   |   |   |   |   |   |   |   |   |   | 4.20 | % |
|                                                 |   |                        |      |   |                        |   |    |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      interest income to earning assets           |   |                        |      |   |                        |   |    |                        |   |   | 3.43 | % |   |   |   |   |   |   |   |   |   |   | 4.44 | % |   |   |   |   |   |   |   |   |   |   | 5.23 | % |

----

| (1) | Tax-exempt      income has been adjusted to a tax-equivalent basis at a rate of      35%. |
|-----|-------------------------------------------------------------------------------------------|

| (2) | Average      non-accrual loans included in the computation of average loans for 2009      was $156.9 million, $86.3 million for 2008 and $5.8 million in      2007. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3) | Loan      related fees recognized during the period and included in the yield      calculation were $3.2 million in 2009, $4.6 million in 2008 and $5.8      million in 2007. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (4) | Includes      mortgage loans held for sale. |
|-----|---------------------------------------------|

----

| (dollars in thousands)                     |   | Year ended December 31, |    |
|------------------------------------------------------|--------|----------------------------------------|---------|
|                                                 |   | 2009 over 2008               |    |   | 2008 over 2007 |   |
|                                                 |   | Total                                  |    |   | Amount of Change |   |   | Total |   |   | Amount of Change |   |
|                                                 |   | Increase                               |    |   | Attributed to |   |   | Increase |   |   | Attributed to |   |
|                                                 |   | (Decrease)                             |    |   | Volume |   |   | Rate |   |   | (Decrease) |   |   | Volume |   |   | Rate |   |
| Interest      income:                                |   |                                   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest      and fees on loans                      |   | $                                      | (31,839 | ) |   | $ | (16,584 | ) |   | $ | (15,255 | ) |   | $ | (32,344 | ) |   | $ | 6,694 |   |   | $ | (39,038 | ) |
| Taxable      securities                              |   |                                   | 627     |   |   |   | 840 |   |   |   | (213 | ) |   |   | (797 | ) |   |   | (491 | ) |   |   | (306 | ) |
| Non-taxable      securities                          |   |                                   | (69     | ) |   |   | (77 | ) |   |   | 8 |   |   |   | (28 | ) |   |   | (98 | ) |   |   | 70 |   |
| Interest      bearing balances due from FRB and FHLB |   |                                   | 482     |   |   |   | 0 |   |   |   | 482 |   |   |   | (195 | ) |   |   | (194 | ) |   |   | (1 | ) |
| Federal      Home Loan Bank stock                    |   |                                   | (111    | ) |   |   | (10 | ) |   |   | (101 | ) |   |   | 69 |   |   |   | 27 |   |   |   | 42 |   |
| Federal      funds sold                              |   |                                   | (14     | ) |   |   | 83 |   |   |   | (97 | ) |   |   | (156 | ) |   |   | (90 | ) |   |   | (66 | ) |
| Total      interest income                           |   |                                   | (30,924 | ) |   |   | (15,748 | ) |   |   | (15,176 | ) |   |   | (33,451 | ) |   |   | 5,848 |   |   |   | (39,299 | ) |
|                                                 |   |                                   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest      expense:                               |   |                                   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest      on deposits:                           |   |                                   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest      bearing demand                         |   |                                   | (8,273  | ) |   |   | (1,997 | ) |   |   | (6,276 | ) |   |   | (15,187 | ) |   |   | (1,553 | ) |   |   | (13,634 | ) |
| Savings                                              |   |                                   | (62     | ) |   |   | (13 | ) |   |   | (49 | ) |   |   | (67 | ) |   |   | (22 | ) |   |   | (45 | ) |
| Time                                                 |   |                                   | 5,065   |   |   |   | 10,009 |   |   |   | (4,944 | ) |   |   | (2,954 | ) |   |   | 2,167 |   |   |   | (5,121 | ) |
| Other      borrowings                                |   |                                   | (4,966  | ) |   |   | (3,885 | ) |   |   | (1,081 | ) |   |   | (2,145 | ) |   |   | 7,552 |   |   |   | (9,697 | ) |
| Total      interest expense                          |   |                                   | (8,236  | ) |   |   | 4,114 |   |   |   | (12,350 | ) |   |   | (20,353 | ) |   |   | 8,144 |   |   |   | (28,497 | ) |
|                                                 |   |                                   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      interest income                             |   | $                                      | (22,688 | ) |   | $ | (19,862 | ) |   | $ | (2,826 | ) |   | $ | (13,098 | ) |   | $ | (2,296 | ) |   | $ | (10,802 | ) |

----

----

|                                                             |   | December 31, |    |
|------------------------------------------------------------------|--------|-------------------|---------|
| (dollars      in thousands)                                      |   | 2009              |    |   | 2008 |   |   | 2007 |   |
|                                                             |   |              |    |   |   |   |   |   |   |
| U.S.      Agency and non-agency mortgage-backed securities (MBS) |   | $                 | 116,639 |   |   | $ | 93,534 |   |   | $ | 65,202 |   |
| U.S.      Government and agency securities                       |   |              | 7,481   |   |   |   | 8,726 |   |   |   | 10,497 |   |
| Obligations      of state and political subdivisions             |   |              | 3,606   |   |   |   | 3,741 |   |   |   | 6,917 |   |
| U.S.      Agency asset-backed securities                         |   |              | 7,586   |   |   |   | 3,260 |   |   |   | 3,538 |   |
| Total      debt securities                                       |   |              | 135,312 |   |   |   | 109,261 |   |   |   | 86,154 |   |
| Mutual      fund                                                 |   |              | 451     |   |   |   | 430 |   |   |   | 412 |   |
| Equity      securities                                           |   |              | -       |   |   |   | - |   |   |   | 449 |   |
| Total      investment securities                                 |   | $                 | 135,763 |   |   | $ | 109,691 |   |   | $ | 87,015 |   |

----

| (dollars      in thousands)                                |   |     |    |   | Weighted       |   |
|------------------------------------------------------------|--------|----------|---------|--------|----------------|--------|
|                                                       |   | Carrying |    |   | Average        |   |
| Type and maturity                                          |   | Value    |    |   | Yield (1) |   |
| U.S.      Agency and non-agency mortgage-backed securities |   |     |    |   |           |   |
| Due      after 5 but within 10 years                       |   | $        | 875     |   |           |   | 5.19 | % |
| Due      after 10 years                                    |   |     | 115,764 |   |           |   | 4.49 | % |
| Total      U.S. Agency mortgage-backed securities          |   |     | 116,639 |   |           |   | 4.49 | % |
|                                                       |   |     |    |   |           |   |   |   |
| U.S.      Government and Agency Securities                 |   |     |    |   |           |   |   |   |
| Due      after 5 but within 10 years                       |   |     | 7,481   |   |           |   | 2.25 | % |
| Total      U.S. Government and Agency Securities           |   |     | 7,481   |   |           |   | 2.25 | % |
|                                                       |   |     |    |   |           |   |   |   |
| State      and Political Subdivisions (1)                  |   |     |    |   |           |   |   |   |
| Due      within 1 year                                     |   |     | 200     |   |           |   | 3.25 | % |
| Due      after 1 but within 5 years                        |   |     | 2,202   |   |           |   | 3.87 | % |
| Due      after 5 but within 10 years                       |   |     | 1,204   |   |           |   | 4.04 | % |
| Total      State and Political Subdivisions                |   |     | 3,606   |   |           |   | 3.89 | % |
|                                                       |   |     |    |   |           |   |   |   |
| U.S.      Agency asset-backed securities                   |   |     |    |   |           |   |   |   |
| Due      within 1 year                                     |   |     | 1,336   |   |           |   | 5.24 | % |
| Due      after 1 but within 5 years                        |   |     | 677     |   |           |   | 5.39 | % |
| Due      after 10 years                                    |   |     | 5,573   |   |           |   | 6.50 | % |
| Total      U.S. Agency asset-backed securities             |   |     | 7,586   |   |           |   | 6.18 | % |
|                                                       |   |     |    |   |           |   |   |   |
| Total      debt securities                                 |   |     | 135,312 |   |           |   | 4.45 | % |
|                                                       |   |     |    |   |           |   |   |   |
| Mutual      fund                                           |   |     | 451     |   |           |   | 4.57 | % |
|                                                       |   |     |    |   |           |   |   |   |
| Total      Securities                                      |   | $        | 135,763 |   |           |   | 4.45 | % |

----

| (dollars in thousands) |   | 2009       |      |   | % ofgrossloans |   |   | 2008   |   |   | % ofgrossloans |   |   | 2007   |   |   | % ofgrossloans |   |      | 2006   |   |   | % ofgrossloans |   |   | 2005   |      |   | % ofgrossloans |   |
|----------------------------------|--------|------------|-----------|--------|---------------------|--------|--------|--------|--------|--------|---------------------|--------|--------|--------|--------|--------|---------------------|--------|-----------|--------|--------|--------|---------------------|--------|--------|--------|-----------|--------|---------------------|--------|
|                             |   | (Restated) |      |   |                |   |   |   |   |   |                |   |   |   |   |   |                |   |      |   |   |   |                |   |   |   |      |   |                |   |
| Commercial                       |   | $          | 420,155   |   |                |   | 27     | %      |   | $      | 582,831             |   |   |   | 30     | %      |                | $      | 606,408   |   |   |   | 30                  | %      |   | $      | 560,728   |   |                |   | 30 | % |   | $ | 320,619 |   |   |   | 31 | % |
| Real      Estate:                |   |       |      |   |                |   |   |   |   |   |                |   |   |   |   |   |                |   |      |   |   |   |                |   |   |   |      |   |                |   |   |   |   |   |   |   |   |   |   |   |
| Construction/lot:                |   |       | 308,346   |   |                |   | 20     | %      |   |   | 517,721             |   |   |   | 26     | %      |                |   | 686,829   |   |   |   | 34                  | %      |   |   | 588,251   |   |                |   | 31 | % |   |   | 220,230 |   |   |   | 21 | % |
| Mortgage                         |   |       | 93,465    |   |                |   | 6      | %      |   |   | 96,248              |   |   |   | 5      | %      |                |   | 88,509    |   |   |   | 4                   | %      |   |   | 80,860    |   |                |   | 4 | % |   |   | 56,724 |   |   |   | 5 | % |
| Commercial                       |   |       | 675,728   |   |                |   | 44     | %      |   |   | 703,149             |   |   |   | 36     | %      |                |   | 612,694   |   |   |   | 30                  | %      |   |   | 606,340   |   |                |   | 32 | % |   |   | 417,580 |   |   |   | 40 | % |
| Consumer                         |   |       | 49,982    |   |                |   | 3      | %      |   |   | 56,235              |   |   |   | 3      | %      |                |   | 47,038    |   |   |   | 2                   | %      |   |   | 51,083    |   |                |   | 3 | % |   |   | 34,551 |   |   |   | 3 | % |
| Total      loans                 |   |       | 1,547,676 |   |                |   | 100    | %      |   |   | 1,956,184           |   |   |   | 100    | %      |                |   | 2,041,478 |   |   |   | 100                 | %      |   |   | 1,887,262 |   |                |   | 100 | % |   |   | 1,049,704 |   |   |   | 100 | % |
| Less:                            |   |       |      |   |                |   |   |   |   |   |                |   |   |   |   |   |                |   |      |   |   |   |                |   |   |   |      |   |                |   |   |   |   |   |   |   |   |   |   |   |
| Reserve      for loan losses     |   |       | 58,586    |   |                |   |   |   |   |   | 47,166              |   |   |   |   |   |                |   | 33,875    |   |   |   |                |   |   |   | 23,585    |   |                |   |   |   |   |   | 14,688 |   |   |   |   |   |
| Total      loans, net            |   | $          | 1,489,090 |   |                |   |   |   |   | $      | 1,909,018           |   |   |   |   |   |                | $      | 2,007,603 |   |   |   |                |   |   | $      | 1,863,677 |   |                |   |   |   |   | $ | 1,035,016 |   |   |   |   |   |

| (dollars in thousands) |   | CentralOregon |    |   | % ofgrossloans |   |   | NorthwestOregon |   |   | % ofgrossloans |   |   | SouthernOregon |   |   | % ofgrossloans |   |    | Idaho  |   |   | % ofgrossloans |   |   | Total  |    |   | % ofgrossloans |   |
|----------------------------------|--------|---------------|---------|--------|---------------------|--------|--------|-----------------|--------|--------|---------------------|--------|--------|----------------|--------|--------|---------------------|--------|---------|--------|--------|--------|---------------------|--------|--------|--------|---------|--------|---------------------|--------|
| Commercial                       |   | $             | 146,640 |   |                |   | 26     | %               |   | $      | 108,635             |   |   |           | 30     | %      |                | $      | 42,811  |   |   |   | 20                  | %      |   | $      | 122,069 |   |                |   | 30 | % |   | $ | 420,155 |   |   |   | 27 | % |
| Real      Estate:                |   |          |    |   |                |   |   |            |   |   |                |   |   |           |   |   |                |   |    |   |   |   |                |   |   |   |    |   |                |   |   |   |   |   |   |   |   |   |   |   |
| Construction/lot                 |   |          | 97,496  |   |                |   | 17     | %               |   |   | 93,192              |   |   |           | 25     | %      |                |   | 41,982  |   |   |   | 19                  | %      |   |   | 75,676  |   |                |   | 19 | % |   |   | 308,346 |   |   |   | 20 | % |
| Mortgage                         |   |          | 39,018  |   |                |   | 7      | %               |   |   | 8,874               |   |   |           | 2      | %      |                |   | 8,318   |   |   |   | 4                   | %      |   |   | 37,255  |   |                |   | 9 | % |   |   | 93,465 |   |   |   | 6 | % |
| Commercial                       |   |          | 255,286 |   |                |   | 46     | %               |   |   | 151,683             |   |   |           | 41     | %      |                |   | 118,476 |   |   |   | 55                  | %      |   |   | 150,283 |   |                |   | 38 | % |   |   | 675,728 |   |   |   | 44 | % |
| Consumer                         |   |          | 23,119  |   |                |   | 4      | %               |   |   | 5,853               |   |   |           | 2      | %      |                |   | 3,915   |   |   |   | 2                   | %      |   |   | 17,095  |   |                |   | 4 | % |   |   | 49,982 |   |   |   | 3 | % |
| Total      loans                 |   | $             | 561,559 |   |                |   | 100    | %               |   | $      | 368,237             |   |   |           | 100    | %      |                | $      | 215,502 |   |   |   | 100                 | %      |   | $      | 402,378 |   |                |   | 100 | % |   | $ | 1,547,676 |   |   |   | 100 | % |

| (dollars in thousands)  Loan  Category |   | Due withinone year |    |   | Due after oneyear, but withinfive years |   |    | Due after fiveyears |   |   | Total   |   |
|-----------------------------------------------------------------|--------|------------------------------|---------|--------|------------------------------------------------------------------|--------|---------|-------------------------------|--------|--------|---------|--------|
| Commercial                                                      |   | $                            | 195,145 |   |                                                             | $      | 174,265 |                          |   | $      | 50,745  |   |   | $ | 420,155 |   |
| Real      Estate:                                               |   |                         |    |   |                                                             |   |    |                          |   |   |    |   |   |   |   |   |
| Construction/Lot                                                |   |                         | 225,224 |   |                                                             |   | 57,273  |                          |   |   | 25,849  |   |   |   | 308,346 |   |
| Mortgage                                                        |   |                         | 5,344   |   |                                                             |   | 29,634  |                          |   |   | 58,487  |   |   |   | 93,465 |   |
| Commercial                                                      |   |                         | 16,610  |   |                                                             |   | 202,561 |                          |   |   | 456,557 |   |   |   | 675,728 |   |
| Consumer                                                        |   |                         | 2,807   |   |                                                             |   | 20,989  |                          |   |   | 26,186  |   |   |   | 49,982 |   |
|                                                            |   | $                            | 445,130 |   |                                                             | $      | 484,722 |                          |   | $      | 617,824 |   |   | $ | 1,547,676 |   |

----

| (dollars in thousands)        |   | 2009   |   |   | % ofcategory |   |   | % ofConstr /lotportfolio |   |   | % ofgrossloans |   |   | 2008   |   |
|-----------------------------------------|--------|--------|--------|--------|-------------------|--------|--------|------------------------------------|--------|--------|---------------------|--------|--------|--------|--------|
|                                    |   |   |   |   |              |   |   |                               |   |   |                |   |   |   |   |
| Residential      Land Development:      |   |   |   |   |              |   |   |                               |   |   |                |   |   |   |   |
| Raw      Land                           |   | $      | 35,258 |   |              |   | 37     | %                                  |   |   | 11                  | %      |   |   | 2      | % |   | $ | 72,329 |   |
| Land      Development                   |   |   | 51,240 |   |              |   | 54     | %                                  |   |   | 16                  | %      |   |   | 3      | % |   |   | 112,234 |   |
| Speculative      Lots                   |   |   | 7,981  |   |              |   | 9      | %                                  |   |   | 3                   | %      |   |   | 1      | % |   |   | 14,855 |   |
|                                    |   | $      | 94,479 |   |              |   | 100    | %                                  |   |   | 30                  | %      |   |   | 6      | % |   | $ | 199,418 |   |
|                                    |   |   |   |   |              |   |   |                               |   |   |                |   |   |   |   |   |   |   |   |   |
| Geographic      distribution by region: |   |   |   |   |              |   |   |                               |   |   |                |   |   |   |   |   |   |   |   |   |
| Central      Oregon                     |   | $      | 48,176 |   |              |   | 51     | %                                  |   |   | 15                  | %      |   |   | 3      | % |   | $ | 74,209 |   |
| Northwest      Oregon                   |   |   | 4,095  |   |              |   | 4      | %                                  |   |   | 1                   | %      |   |   | 0      | % |   |   | 4,670 |   |
| Southern      Oregon                    |   |   | 8,437  |   |              |   | 9      | %                                  |   |   | 3                   | %      |   |   | 1      | % |   |   | 12,723 |   |
| Total      Oregon                       |   |   | 60,708 |   |              |   | 64     | %                                  |   |   | 19                  | %      |   |   | 4      | % |   |   | 91,602 |   |
| Idaho                                   |   |   | 33,771 |   |              |   | 36     | %                                  |   |   | 11                  | %      |   |   | 2      | % |   |   | 107,816 |   |
| Grand      total                        |   | $      | 94,479 |   |              |   | 100    | %                                  |   |   | 30                  | %      |   |   | 6      | % |   | $ | 199,418 |   |

|   | (b) | Residential construction      category.  This category is included in the      construction/lot portfolio balances above, and represents financing of      homeowner or builder construction of new residences and condominiums where      the obligor generally intends to own the home upon construction      (pre-sold), or builder construction of homes for resale (speculative      construction). |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| (dollars in thousands)        |   | 2009   |   |   | % ofcategory |   |   | % ofConstr /lotportfolio |   |   | % ofgrossloans |   |   | 2008   |   |
|-----------------------------------------|--------|--------|--------|--------|-------------------|--------|--------|------------------------------------|--------|--------|---------------------|--------|--------|--------|--------|
| Residential      Construction           |   |   |   |   |              |   |   |                               |   |   |                |   |   |   |   |
| Pre      sold                           |   | $      | 10,115 |   |              |   | 21     | %                                  |   |   | 3                   | %      |   |   | 0      | % |   | $ | 62,153 |   |
| Lots                                    |   |   | 11,493 |   |              |   | 24     | %                                  |   |   | 4                   | %      |   |   | 1      | % |   |   | 17,331 |   |
| Speculative      Construction           |   |   | 26,819 |   |              |   | 55     | %                                  |   |   | 9                   | %      |   |   | 2      | % |   |   | 28,461 |   |
|                                    |   | $      | 48,427 |   |              |   | 100    | %                                  |   |   | 16                  | %      |   |   | 3      | % |   | $ | 107,945 |   |
|                                    |   |   |   |   |              |   |   |                               |   |   |                |   |   |   |   |   |   |   |   |   |
| Geographic      distribution by region: |   |   |   |   |              |   |   |                               |   |   |                |   |   |   |   |   |   |   |   |   |
| Central      Oregon                     |   | $      | 24,304 |   |              |   | 50     | %                                  |   |   | 8                   | %      |   |   | 2      | % |   | $ | 43,593 |   |
| Northwest      Oregon                   |   |   | 7,246  |   |              |   | 15     | %                                  |   |   | 2                   | %      |   |   | 0      | % |   |   | 30,445 |   |
| Southern      Oregon                    |   |   | 3,124  |   |              |   | 6      | %                                  |   |   | 1                   | %      |   |   | 0      | % |   |   | 5,798 |   |
| Total      Oregon                       |   |   | 34,674 |   |              |   | 72     | %                                  |   |   | 11                  | %      |   |   | 2      | % |   |   | 79,836 |   |
| Idaho                                   |   |   | 13,753 |   |              |   | 28     | %                                  |   |   | 4                   | %      |   |   | 1      | % |   |   | 28,109 |   |
| Grand      total                        |   | $      | 48,427 |   |              |   | 100    | %                                  |   |   | 16                  | %      |   |   | 3      | % |   | $ | 107,945 |   |

| (dollars      in thousands)             |   | 2009   |    |   | % ofcategory |   |   | % ofConstr /lotportfolio |   |   | % ofgrossloans |   |   | 2008   |   |
|-----------------------------------------|--------|--------|---------|--------|--------------|--------|--------|-------------------------------|--------|--------|----------------|--------|--------|--------|--------|
|                                    |   |   |    |   |         |   |   |                          |   |   |           |   |   |   |   |
| Commercial      Construction:           |   |   |    |   |         |   |   |                          |   |   |           |   |   |   |   |
| Pre      sold                           |   | $      | 29,080  |   |         |   | 18     | %                             |   |   | 9              | %      |   |   | 2      | % |   | $ | 27,826 |   |
| Lots                                    |   |   | 9,822   |   |         |   | 6      | %                             |   |   | 3              | %      |   |   | 1      | % |   |   | 16,404 |   |
| Speculative                             |   |   | 99,957  |   |         |   | 60     | %                             |   |   | 33             | %      |   |   | 6      | % |   |   | 143,719 |   |
| Speculative      Lots                   |   |   | 26,581  |   |         |   | 16     | %                             |   |   | 9              | %      |   |   | 2      | % |   |   | 22,409 |   |
|                                    |   | $      | 165,440 |   |         |   | 100    | %                             |   |   | 54             | %      |   |   | 11     | % |   | $ | 210,358 |   |
|                                    |   |   |    |   |         |   |   |                          |   |   |           |   |   |   |   |   |   |   |   |   |
| Geographic      distribution by region: |   |   |    |   |         |   |   |                          |   |   |           |   |   |   |   |   |   |   |   |   |
| Central      Oregon                     |   | $      | 24,674  |   |         |   | 15     | %                             |   |   | 8              | %      |   |   | 2      | % |   | $ | 49,817 |   |
| Northwest      Oregon                   |   |   | 82,059  |   |         |   | 50     | %                             |   |   | 27             | %      |   |   | 5      | % |   |   | 83,720 |   |
| Southern      Oregon                    |   |   | 30,467  |   |         |   | 18     | %                             |   |   | 10             | %      |   |   | 2      | % |   |   | 33,837 |   |
| Total      Oregon                       |   |   | 137,200 |   |         |   | 83     | %                             |   |   | 45             | %      |   |   | 9      | % |   |   | 167,374 |   |
| Idaho                                   |   |   | 28,240  |   |         |   | 17     | %                             |   |   | 9              | %      |   |   | 2      | % |   |   | 42,984 |   |
| Grand      total                        |   | $      | 165,440 |   |         |   | 100    | %                             |   |   | 54             | %      |   |   | 11     | % |   | $ | 210,358 |   |

----

| Commercial      Real Estate: |   | 2009   |    |   | % oftotalCRE |   |   | % ofgrossloans |   |   | 2008 |   |
|------------------------------|--------|--------|---------|--------|--------------|--------|--------|----------------|--------|--------|------|--------|
| Owner      occupied          |   | $      | 348,732 |   |         |   | 52     | %              |   |   | 22   | %      |   | $ | 358,232 |   |
| Non-owner      occupied      |   |   | 326,996 |   |         |   | 48     | %              |   |   | 21   | %      |   |   | 344,917 |   |
|                         |   | $      | 675,728 |   |         |   | 100    | %              |   |   | 44   | %      |   | $ | 703,149 |   |

| Commercial Real Estate: |   | CentralOregon |    |   | % oftotalCREloans |   |   | NorthwestOregon |   |   | % oftotalCREloans |   |   | SouthernOregon |   |   | % oftotalCREloans |   |    | Idaho  |   |   | % oftotalCREloans |   |   | Total  |    |
|-----------------------------------|--------|---------------|---------|--------|------------------------|--------|--------|-----------------|--------|--------|------------------------|--------|--------|----------------|--------|--------|------------------------|--------|---------|--------|--------|--------|------------------------|--------|--------|--------|---------|
| Owner      occupied               |   | $             | 148,993 |   |                   |   | 10     | %               |   | $      | 42,290                 |   |   |           | 3      | %      |                   | $      | 71,006  |   |   |   | 5                      | %      |   | $      | 86,443  |   |   |   | 6 | % |   | $ | 348,732 |   |
| Non-owner      occupied           |   |          | 105,122 |   |                   |   | 7      | %               |   |   | 109,911                |   |   |           | 7      | %      |                   |   | 47,654  |   |   |   | 3                      | %      |   |   | 64,309  |   |   |   | 4 | % |   | $ | 326,996 |   |
| Total      loans                  |   | $             | 254,115 |   |                   |   | 17     | %               |   | $      | 152,201                |   |   |           | 10     | %      |                   | $      | 118,660 |   |   |   | 8                      | %      |   | $      | 150,752 |   |   |   | 10 | % |   | $ | 675,728 |   |

----

----

----

|                                 |   | 2009                                          |   |   | 2008                                                       |   |
|--------------------------------------|--------|-----------------------------------------------|--------|--------|------------------------------------------------------------|--------|
| (dollars in thousands)     |   | Reserve forloan andcommitmentlosses |   |   | Allocatedreserve as a% of loancategory |   |   | Loancategory asa % of totalloans |   |   | Reserve forloan andcommitmentlosses |   |   | Allocatedreserve as a% of loancategory |   |   | Loancategory asa % of totalloans |   |
|                                 |   | (Restated)                                    |   |   |                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commercial                           |   | $                                             | 18,339 |   |                                                       |   | 4.33 | % |   |   | 27.14 | % |   | $ | 11,614 |   |   |   | 1.99 | % |   |   | 29.79 | % |
| Real      Estate:                    |   |                                          |   |   |                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Construction/lot                     |   |                                          | 14,480 |   |                                                       |   | 4.70 | % |   |   | 19.95 | % |   |   | 18,722 |   |   |   | 3.62 | % |   |   | 26.47 | % |
| Mortgage                             |   |                                          | 3,092  |   |                                                       |   | 3.31 | % |   |   | 6.03 | % |   |   | 1,696 |   |   |   | 1.76 | % |   |   | 4.92 | % |
| Commercial                           |   |                                          | 10,662 |   |                                                       |   | 1.60 | % |   |   | 43.58 | % |   |   | 7,064 |   |   |   | 1.00 | % |   |   | 35.95 | % |
| Consumer                             |   |                                          | 2,807  |   |                                                       |   | 5.62 | % |   |   | 3.30 | % |   |   | 1,893 |   |   |   | 3.37 | % |   |   | 2.87 | % |
| Committed/unfunded                   |   |                                          | 423    |   |                                                       |   | - |   |   |   | - |   |   |   | 735 |   |   |   | - |   |   |   | - |   |
| Unallocated                          |   |                                          | 9,487  |   |                                                       |   | - |   |   |   | - |   |   |   | 6,481 |   |   |   | - |   |   |   | - |   |
| Total      reserve for credit losses |   | $                                             | 59,290 |   |                                                       |   | 3.83 | % |   |   | 100.00 | % |   | $ | 48,205 |   |   |   | 2.46 | % |   |   | 100.00 | % |

|                                 |   | 2007                                          |   |   | 2006                                                       |   |
|--------------------------------------|--------|-----------------------------------------------|--------|--------|------------------------------------------------------------|--------|
|                                 |   | Reserve forloan andcommitmentlosses |   |   | Allocatedreserve as a% of loancategory |   |   | Loancategory asa % of totalloans |   |   | Reserve forloan andcommitmentlosses |   |   | Allocatedreserve as a% of loancategory |   |   | Loancategory asa % of totalloans |   |
| Commercial                           |   | $                                             | 10,388 |   |                                                       |   | 1.71 | % |   |   | 29.70 | % |   | $ | 7,818 |   |   |   | 1.39 | % |   |   | 29.71 | % |
| Real      Estate:                    |   |                                          |   |   |                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Construction/lot                     |   |                                          | 13,433 |   |                                                       |   | 1.96 | % |   |   | 33.64 | % |   |   | 6,328 |   |   |   | 1.08 | % |   |   | 31.17 | % |
| Mortgage                             |   |                                          | 1,521  |   |                                                       |   | 1.72 | % |   |   | 4.34 | % |   |   | 1,112 |   |   |   | 1.38 | % |   |   | 4.28 | % |
| Commercial                           |   |                                          | 3,901  |   |                                                       |   | 0.64 | % |   |   | 30.02 | % |   |   | 3,986 |   |   |   | 0.66 | % |   |   | 32.13 | % |
| Consumer                             |   |                                          | 1,684  |   |                                                       |   | 3.58 | % |   |   | 2.30 | % |   |   | 2,050 |   |   |   | 4.01 | % |   |   | 2.71 | % |
| Committed/unfunded                   |   |                                          | 2,414  |   |                                                       |   | - |   |   |   | - |   |   |   | 3,213 |   |   |   | - |   |   |   | - |   |
| Unallocated                          |   |                                          | 3,697  |   |                                                       |   | - |   |   |   | - |   |   |   | 2,291 |   |   |   | - |   |   |   | - |   |
| Total      reserve for credit losses |   | $                                             | 37,038 |   |                                                       |   | 1.81 | % |   |   | 100.00 | % |   | $ | 26,798 |   |   |   | 1.42 | % |   |   | 100.00 | % |

|                                 |                     | 2005                                          |   |
|--------------------------------------|--------------------------|-----------------------------------------------|--------|
|                                 |                     | Reserve forloan andcommitmentlosses |   |   | Allocatedreserve as a% of loancategory |   |   | Loancategory asa % of totalloans |   |
| Commercial                           |      | $                                             | 3,526  |   |      |   | 1.10 | % |      |   | 30.51 | % |
| Real      Estate:                    |                     |                                          |   |   |   |   |   |   |   |   |   |   |
| Construction/lot                     |                     |                                          | 2,445  |   |   |   | 1.11 | % |   |   | 21.01 | % |
| Mortgage                             |                     |                                          | 567    |   |   |   | 1.00 | % |   |   | 5.39 | % |
| Commercial                           |                     |                                          | 821    |   |   |   | 0.68 | % |   |   | 39.81 | % |
| Consumer                             |                     |                                          | 1,281  |   |   |   | 3.71 | % |   |   | 3.28 | % |
| Committed/unfunded                   |                     |                                          | 2,753  |   |   |   | - |   |   |   | - |   |
| Unallocated                          |                     |                                          | 1,295  |   |   |   | - |   |   |   | - |   |
| Total      reserve for credit losses |                     | $                                             | 12,688 |   |   |   | 1.40 | % |   |   | 100.00 | % |

----

| (dollars in thousands)                                 |   | Year ended December 31, |      |
|------------------------------------------------------------------|--------|----------------------------------------|-----------|
|                                                             |   | 2009                                   |      |   | 2008 |   |   | 2007 |   |   | 2006 |   |   | 2005 |   |
| Loans      outstanding at end of period                          |   | $                                      | 1,547,676 |   |   | $ | 1,956,184 |   |   | $ | 2,041,478 |   |   | $ | 1,887,262 |   |   | $ | 1,049,705 |   |
| Average      loans outstanding during the period                 |   | $                                      | 1,798,723 |   |   | $ | 2,054,199 |   |   | $ | 1,974,435 |   |   | $ | 1,590,315 |   |   | $ | 962,514 |   |
| Reserve      for loan losses, balance beginning of period        |   | $                                      | 47,166    |   |   | $ | 33,875 |   |   | $ | 23,585 |   |   | $ | 14,688 |   |   | $ | 12,412 |   |
|                                                             |   |                                   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Recoveries:                                                      |   |                                   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commercial                                                       |   |                                   | 1,033     |   |   |   | 800 |   |   |   | 378 |   |   |   | 122 |   |   |   | 241 |   |
| Real      Estate:                                                |   |                                   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Construction                                                     |   |                                   | 1,110     |   |   |   | 581 |   |   |   | 12 |   |   |   | - |   |   |   | - |   |
| Mortgage                                                         |   |                                   | 113       |   |   |   | 50 |   |   |   | 288 |   |   |   | 4 |   |   |   | 25 |   |
| Commercial                                                       |   |                                   | 949       |   |   |   | 62 |   |   |   | - |   |   |   | 37 |   |   |   | - |   |
| Consumer                                                         |   |                                   | 540       |   |   |   | 487 |   |   |   | 612 |   |   |   | 527 |   |   |   | 227 |   |
|                                                             |   |                                   | 3,745     |   |   |   | 1,980 |   |   |   | 1,290 |   |   |   | 690 |   |   |   | 493 |   |
| Loans      charged off:                                          |   |                                   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commercial                                                       |   |                                   | (18,403   | ) |   |   | (10,411 | ) |   |   | (4,634 | ) |   |   | (529 | ) |   |   | (405 | ) |
| Real      Estate:                                                |   |                                   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Construction                                                     |   |                                   | (92,449   | ) |   |   | (71,833 | ) |   |   | (2,986 | ) |   |   | - |   |   |   | - |   |
| Mortgage                                                         |   |                                   | (2,560    | ) |   |   | (650 | ) |   |   | (941 | ) |   |   | (45 | ) |   |   | - |   |
| Commercial                                                       |   |                                   | (7,875    | ) |   |   | (2,139 | ) |   |   | - |   |   |   | (7 | ) |   |   | - |   |
| Consumer                                                         |   |                                   | (5,038    | ) |   |   | (3,249 | ) |   |   | (1,839 | ) |   |   | (1,391 | ) |   |   | (861 | ) |
|                                                             |   |                                   | (126,325  | ) |   |   | (88,282 | ) |   |   | (10,400 | ) |   |   | (1,972 | ) |   |   | (1,266 | ) |
|                                                             |   |                                   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      loans charged-off                                       |   |                                   | (122,580  | ) |   |   | (86,302 | ) |   |   | (9,110 | ) |   |   | (1,282 | ) |   |   | (773 | ) |
| Provision      charged to operations                             |   |                                   | 134,000   |   |   |   | 99,593 |   |   |   | 19,400 |   |   |   | 6,000 |   |   |   | 3,050 |   |
| Reserve      for unfunded commitments                            |   |                                   | -         |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| reclassified      to other liabilities                           |   |                                   | -         |   |   |   | - |   |   |   | - |   |   |   | (3,213 | ) |   |   | - |   |
| Reserves      acquired from F&M                              |   |                                   | -         |   |   |   | - |   |   |   | - |   |   |   | 7,392 |   |   |   | - |   |
| Reserve      balance, end of period                              |   | $                                      | 58,586    |   |   | $ | 47,166 |   |   | $ | 33,875 |   |   | $ | 23,585 |   |   | $ | 14,688 |   |
|                                                             |   |                                   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Ratio      of net loans charged-off to average loans outstanding |   |                                   | 6.81      | % |   |   | 4.20 | % |   |   | .46 | % |   |   | .08 | % |   |   | .08 | % |
| Ratio      of reserve for loan losses to loans at end of period  |   |                                   | 3.79      | % |   |   | 2.41 | % |   |   | 1.66 | % |   |   | 1.25 | % |   |   | 1.40 | % |

----

| (dollars      in thousands)                                      |   | December 31, |    |
|------------------------------------------------------------------|--------|--------------|---------|
|                                                             |   | 2009         |    |   | 2008 |   |   | 2007 |   |   | 2006 |   |   | 2005 |   |
|                                                             |   | (Restated)   |    |   |   |   |   |   |   |   |   |   |   |   |   |
| Loans      on nonaccrual status                                  |   | $            | 132,110 |   |   | $ | 120,468 |   |   | $ | 45,865 |   |   | $ | 2,679 |   |   | $ | 40 |   |
| Loans      past due 90 days or more but not on nonaccrual status |   |         | -       |   |   |   | 5 |   |   |   | 51 |   |   |   | - |   |   |   | - |   |
| OREO                                                             |   |         | 28,860  |   |   |   | 52,727 |   |   |   | 9,765 |   |   |   | 326 |   |   |   | - |   |
| Total      non-performing assets                                 |   | $            | 160,970 |   |   | $ | 173,200 |   |   | $ | 55,681 |   |   | $ | 3,005 |   |   | $ | 40 |   |
|                                                             |   |         |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Selected      ratios:                                            |   |         |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| NPLs      to total gross loans                                   |   |         | 8.54    | % |   |   | 6.16 | % |   |   | 2.25 | % |   |   | 0.14 | % |   |   | 0.00 | % |
| NPAs      to total gross loans and OREO                          |   |         | 10.21   | % |   |   | 8.85 | % |   |   | 2.73 | % |   |   | 0.16 | % |   |   | 0.00 | % |
| NPAs      to total assets                                        |   |         | 7.41    | % |   |   | 7.60 | % |   |   | 2.33 | % |   |   | 0.13 | % |   |   | 0.00 | % |

|                             |   | 2009       |    |   | 2008   |   |    | 2007   |   |   | 2006   |   |   | 2005   |   |
|----------------------------------|--------|------------|---------|--------|--------|--------|---------|--------|--------|--------|--------|--------|--------|--------|--------|
|                             |   | (Restated) |    |   |   |   |    |   |   |   |   |   |   |   |   |
| Commercial                       |   | $          | 28,964  |   |   | $      | 16,877  |   |   | $      | 8,306  |   |   | $      | 645    |   |   | $ | 40 |   |
| Real      Estate:                |   |       |    |   |   |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Construction/lot                 |   |       | 106,752 |   |   |   | 128,053 |   |   |   | 42,251 |   |   |   | 1,958  |   |   |   | - |   |
| Commercial                       |   |       | 24,749  |   |   |   | 25,799  |   |   |   | 4,135  |   |   |   | 389    |   |   |   | - |   |
| Consumer/other                   |   |       | 505     |   |   |   | 2,471   |   |   |   | 989    |   |   |   | 13     |   |   |   | - |   |
| Total      non-performing assets |   | $          | 160,970 |   |   | $      | 173,200 |   |   | $      | 55,681 |   |   | $      | 3,005  |   |   | $ | 40 |   |

----

----

| (dollars in thousands) |   | Years ended December 31, |      |
|----------------------------------|--------|-----------------------------------------|-----------|
|                             |   | 2009                                    |      |   | 2008 |   |   | 2007 |   |
| Deposit Liabilities         |   | Average                                 |      |   | Average |   |   | Average |   |
|                             |   |                                    |      |   | Rate |   |   |   |   |   | Rate |   |   |   |   |   | Rate |   |
|                             |   | Amount                                  |      |   | Paid |   |   | Amount |   |   | Paid |   |   | Amount |   |   | Paid |   |
| Demand                           |   | $                                       | 407,344   |   |   |   | N/A |   |   | $ | 407,980 |   |   |   | N/A |   |   | $ | 469,015 |   |   |   | N/A |   |
| Interest-bearing      demand     |   |                                    | 735,677   |   |   |   | 0.99 | % |   |   | 844,136 |   |   |   | 1.84 | % |   |   | 889,069 |   |   |   | 3.46 | % |
| Savings                          |   |                                    | 33,275    |   |   |   | 0.22 | % |   |   | 36,761 |   |   |   | 0.37 | % |   |   | 41,327 |   |   |   | 0.49 | % |
| Time                             |   |                                    | 688,430   |   |   |   | 2.60 | % |   |   | 386,990 |   |   |   | 3.32 | % |   |   | 340,324 |   |   |   | 4.64 | % |
| Total      Deposits              |   | $                                       | 1,864,726 |   |   |   |   |   |   | $ | 1,675,867 |   |   |   |   |   |   | $ | 1,739,735 |   |   |   |   |   |

| (dollars in thousands)                                   |   | Time deposits of$100,000 or more (1) |    |   | All other Time deposits (2) |   |
|--------------------------------------------------------------------|--------|---------------------------------------------------------------|---------|--------|-------------------------------------------------|--------|
| Remaining time to maturity                          |   | Amount                                                        |    |   | Percent                                         |   |   | Amount |   |   | Percent |   |
|                                                               |   |                                                          |    |   |                                            |   |   |   |   |   |   |   |
| 3 months or less                                    |   | $                                                             | 22,151  |   |                                            |   | 8.98 | % |   | $ | 121,850 |   |   |   | 38.73 | % |
| Due after 3 months through      6 months  |   |                                                          | 55,094  |   |                                            |   | 19.66 | % |   |   | 72,246 |   |   |   | 22.97 | % |
| Due after 6 months through      12 months |   |                                                          | 77,539  |   |                                            |   | 27.68 | % |   |   | 67,605 |   |   |   | 21.49 | % |
| Due after 12 months                                 |   |                                                          | 122,383 |   |                                            |   | 43.68 | % |   |   | 52,889 |   |   |   | 16.81 | % |
| Total                                                              |   | $                                                             | 280,167 |   |                                            |   | 100.00 | % |   | $ | 314,590 |   |   |   | 100.00 | % |

----

----

| (dollars      in thousands)             |   | Payments Due by Period |    |
|-----------------------------------------|--------|------------------------|---------|
|                                    |   | Total                  |    |   | Less Than1 Year |   |   | 1 to 3 Years |   |   | 3 to 5Years |   |   | More      Than5 Years |   |
| Time      deposits of $100,000 and over |   | $                      | 280,167 |   |   | $ | 157,784 |   |   | $ | 122,383 |   |   | $ | - |   |   | $ | - |   |
| Federal      Home Loan Bank advances    |   |                   | 195,000 |   |   |   | - |   |   |   | 135,000 |   |   |   | 10,000 |   |   |   | 50,000 |   |
| Junior      subordinated debentures     |   |                   | 68,558  |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 68,558 |   |
| Operating      leases                   |   |                   | 13,734  |   |   |   | 1,813 |   |   |   | 3,301 |   |   |   | 2,534 |   |   |   | 6,086 |   |
|                                    |   |                   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total      contractual obligations      |   | $                      | 557,459 |   |   | $ | 159,597 |   |   | $ | 260,684 |   |   | $ | 12,534 |   |   | $ | 124,644 |   |

| Commitments      to extend credit                  |   | $      | 253,362 |   |
|----------------------------------------------------|--------|--------|---------|--------|
| Commitments      under credit card lines of credit |   |   | 28,455  |   |
| Standby      letters of credit                     |   |   | 6,932   |   |
| Total      off-balance sheet commitments           |   | $      | 288,749 |   |

----

----

----

|                                                    |   | Actual MarketRates atDecember 2009 |   |   | Estimated Rates atDecember2010 |   |   | Declining Rates atDecember 2010 |   |   | Alt. RisingRatesat December2010 |   |   | Rising Rates atDecember2010 |   |
|---------------------------------------------------------|--------|---------------------------------------------------|--------|--------|------------------------------------------|--------|--------|------------------------------------------------|--------|--------|-------------------------------------------|--------|--------|---------------------------------------|--------|
|                                                    |   |                                              |   |   |                                     |   |   |                                           |   |   |                                      |   |   |                                  |   |
| Federal      Funds Rate                                 |   |                                              | 0.25   | %      |                                     |   | 0.75   | %                                              |   |   | .063                                      | %      |   |                                  | 1.50   | % |   |   | 3.25 | % |
|                                                    |   |                                              |   |   |                                     |   |   |                                           |   |   |                                      |   |   |                                  |   |   |   |   |   |   |
| Prime      Rate                                         |   |                                              | 3.25   | %      |                                     |   | 3.75   | %                                              |   |   | 3.063                                     | %      |   |                                  | 4.50   | % |   |   | 6.50 | % |
|                                                    |   |                                              |   |   |                                     |   |   |                                           |   |   |                                      |   |   |                                  |   |   |   |   |   |   |
| Yield      Curve SpreadFed      Funds to 10-year Treas. |   |                                              | 3.78   | %      |                                     |   | 1.90   | %                                              |   |   | 1.94                                      | %      |   |                                  | 1.25   | % |   |   | 0.55 | % |

----

| Estimated Rate Scenariocompared to: |   | First Twelve Month Average% Change in Pro-formaNet Interest Income |   |   | Second Twelve MonthAverage % Change in Pro-forma Net Interest Income |   |   | 24th Month annualized %Change in Pro-forma NetInterest Income |   |
|----------------------------------------------------|--------|------------------------------------------------------------------------------------------------------------|--------|--------|-------------------------------------------------------------------------------------------------------------------|--------|--------|--------------------------------------------------------------------------------------------------|--------|
|                                               |   |                                                                                                       |   |   |                                                                                                              |   |   |                                                                                             |   |
| Declining      Rate Scenario                       |   |                                                                                                       | (2.83  | )%     |                                                                                                              |   | (8.04  | )%                                                                                               |   |   | (10.44 | )% |
|                                               |   |                                                                                                       |   |   |                                                                                                              |   |   |                                                                                             |   |   |   |   |
| Alternate      Rising Rate Scenario                |   |                                                                                                       | 0.00   | %      |                                                                                                              |   | (0.01  | )%                                                                                               |   |   | 0.00 | % |
|                                               |   |                                                                                                       |   |   |                                                                                                              |   |   |                                                                                             |   |   |   |   |
| Rising      Rate Scenario                          |   |                                                                                                       | 0.00   | %      |                                                                                                              |   | (0.00  | )%                                                                                               |   |   | 2.53 | % |

----

| (Dollars in thousands)                                          |   | Within 90Days |      |   | After 90days withinone year |   |     | After oneyear withinfive years |   |   | After fiveyears |   |   | Total  |    |
|---------------------------------------------------------------------------|--------|--------------------|-----------|--------|--------------------------------------------|--------|----------|-----------------------------------------------|--------|--------|----------------------|--------|--------|--------|---------|
| INTEREST      EARNING ASSETS:                                             |   |               |      |   |                                       |   |     |                                          |   |   |                 |   |   |   |    |
| Investments      & fed funds sold                                     |   | $                  | 24,190    |   |                                       | $      | 13,682   |                                          |   | $      | 42,201               |   |   | $      | 56,626  |   |   | $ | 136,699 |   |
| Interest      bearing balances with FRB                                   |   |               | 319,627   |   |                                       |   | -        |                                          |   |   | -                    |   |   |   | -       |   |   |   | 319,627 |   |
| Loans                                                                     |   |               | 646,932   |   |                                       |   | 148,440  |                                          |   |   | 646,901              |   |   |   | 105,403 |   |   |   | 1,547,676 |   |
| Total      interest earning assets                                        |   | $                  | 990,749   |   |                                       | $      | 162,122  |                                          |   | $      | 689,102              |   |   | $      | 162,029 |   |   | $ | 2,004,002 |   |
|                                                                      |   |               |      |   |                                       |   |     |                                          |   |   |                 |   |   |   |    |   |   |   |   |   |
| INTEREST      BEARING LIABILITIES:                                        |   |               |      |   |                                       |   |     |                                          |   |   |                 |   |   |   |    |   |   |   |   |   |
|                                                                      |   |               |      |   |                                       |   |     |                                          |   |   |                 |   |   |   |    |   |   |   |   |   |
| Interest-bearing      demand deposits                                     |   | $                  | 796,628   |   |                                       | $      | -        |                                          |   | $      | -                    |   |   | $      | -       |   |   | $ | 796,628 |   |
| Savings      deposits                                                     |   |               | 29,380    |   |                                       |   | -        |                                          |   |   | -                    |   |   |   | -       |   |   |   | 29,380 |   |
| Time      deposits                                                        |   |               | 147,019   |   |                                       |   | 272,484  |                                          |   |   | 160,173              |   |   |   | 15,081  |   |   |   | 594,757 |   |
| Total      interest bearing deposits                                      |   |               | 973,027   |   |                                       |   | 272,484  |                                          |   |   | 160,173              |   |   |   | 15,081  |   |   |   | 1,420,765 |   |
| Junior      subordinated debentures                                       |   |               | 54,898    |   |                                       |   | -        |                                          |   |   | -                    |   |   |   | 13,660  |   |   |   | 68,558 |   |
| Other      borrowings                                                     |   |               | 130,207   |   |                                       |   | -        |                                          |   |   | 66,000               |   |   |   | 40,000  |   |   |   | 236,207 |   |
| Total      interest bearing liabilities                                   |   | $                  | 1,158,132 |   |                                       | $      | 272,484  |                                          |   | $      | 226,173              |   |   | $      | 68,741  |   |   | $ | 1,725,530 |   |
|                                                                      |   |               |      |   |                                       |   |     |                                          |   |   |                 |   |   |   |    |   |   |   |   |   |
| Interest      rate sensitivity gap                                        |   | $                  | (167,383  | )      |                                       | $      | (110,362 | )                                             |   | $      | 462,929              |   |   | $      | 93,288  |   |   | $ | 278,472 |   |
| Cumulative      interest rate sensitivity gap                             |   | $                  | (167,383  | )      |                                       | $      | (277,745 | )                                             |   | $      | 185,184              |   |   | $      | 278,472 |   |   | $ | 278,472 |   |
|                                                                      |   |               |      |   |                                       |   |     |                                          |   |   |                 |   |   |   |    |   |   |   |   |   |
| Interest      rate gap as a percentage of total interest earning assets   |   |               | -8.35     | %      |                                       |   | -5.51    | %                                             |   |   | 23.10                | %      |   |   | 4.66    | % |   |   | 13.90 | % |
| Cumulative      interest rate gap as a percentage of total earning assets |   |               | -8.35     | %      |                                       |   | -13.86   | %                                             |   |   | 9.24                 | %      |   |   | 13.90   | % |   |   | 13.90 | % |

----

|                                                            |   | Page   |
|-----------------------------------------------------------------|--------|--------|
|                                                            |   |   |
| Report      of Independent Registered Public Accounting Firm    |   | 66     |
|                                                            |   |   |
| Consolidated      Balance Sheets at December 31, 2009 and 2008  |   | 67     |
|                                                            |   |   |
| For      the Years Ended December 31, 2009, 2008 and 2007:      |   |   |
|                                                            |   |   |
| Consolidated      Statements of Operation                       |   | 68     |
|                                                            |   |   |
| Consolidated      Statements of Changes in Stockholders' Equity |   | 69     |
|                                                            |   |   |
| Consolidated      Statements of Cash Flows                      |   | 72     |
|                                                            |   |   |
| Notes      to Consolidated Financial Statements                 |   | 73     |

----

10, except for Note 23 and the effects of the restatementdescribed therein,

----

|                                                                                                                              |   | 2009       |      |   | 2008   |   |
|-----------------------------------------------------------------------------------------------------------------------------------|--------|------------|-----------|--------|--------|--------|
|                                                                                                                              |   | (Restated) |      |   |   |   |
| ASSETS                                                                                                                            |   |       |      |   |   |   |
| Cash      and cash equivalents:                                                                                                   |   |       |      |   |   |   |
| Cash      and due from banks                                                                                                      |   | $          | 38,759    |   |   | $      | 46,554 |   |
| Interest      bearing deposits                                                                                                    |   |       | 319,627   |   |   |   | 162 |   |
| Federal      funds sold                                                                                                           |   |       | 936       |   |   |   | 2,230 |   |
| Total      cash and cash equivalents                                                                                              |   |       | 359,322   |   |   |   | 48,946 |   |
| Investment      securities available-for-sale                                                                                     |   |       | 133,755   |   |   |   | 107,480 |   |
| Investment      securities held-to-maturity, estimated fair value of $2,143 ($2,247 in      2008)                                 |   |       | 2,008     |   |   |   | 2,211 |   |
| Federal      Home Loan Bank (FHLB) stock                                                                                          |   |       | 10,472    |   |   |   | 10,472 |   |
| Loans,      net                                                                                                                   |   |       | 1,489,090 |   |   |   | 1,909,018 |   |
| Premises      and equipment, net                                                                                                  |   |       | 37,367    |   |   |   | 39,763 |   |
| Core      deposit intangibles                                                                                                     |   |       | 6,388     |   |   |   | 7,921 |   |
| Bank-owned      life insurance (BOLI)                                                                                             |   |       | 33,635    |   |   |   | 33,568 |   |
| Other      real estate owned (OREO), net                                                                                          |   |       | 28,860    |   |   |   | 52,727 |   |
| Income      taxes receivable                                                                                                      |   |       | 43,256    |   |   |   | 21,230 |   |
| Accrued      interest and other assets                                                                                            |   |       | 27,975    |   |   |   | 44,971 |   |
| Total      assets                                                                                                                 |   | $          | 2,172,128 |   |   | $      | 2,278,307 |   |
|                                                                                                                              |   |       |      |   |   |   |   |   |
| LIABILITIES      AND STOCKHOLDERS' EQUITY                                                                                         |   |       |      |   |   |   |   |   |
| Liabilities:                                                                                                                      |   |       |      |   |   |   |   |   |
| Deposits:                                                                                                                         |   |       |      |   |   |   |   |   |
| Demand                                                                                                                            |   | $          | 394,583   |   |   | $      | 364,146 |   |
| Interest      bearing demand                                                                                                      |   |       | 796,628   |   |   |   | 816,693 |   |
| Savings                                                                                                                           |   |       | 29,380    |   |   |   | 33,203 |   |
| Time                                                                                                                              |   |       | 594,757   |   |   |   | 580,569 |   |
| Total      deposits                                                                                                               |   |       | 1,815,348 |   |   |   | 1,794,611 |   |
| Junior      subordinated debentures                                                                                               |   |       | 68,558    |   |   |   | 68,558 |   |
| Other      borrowings                                                                                                             |   |       | 195,207   |   |   |   | 248,975 |   |
| Temporary      Liquidity Guarantee Program (TLGP) senior unsecured debt                                                           |   |       | 41,000    |   |   |   | - |   |
| Customer      repurchase agreements                                                                                               |   |       | -         |   |   |   | 9,871 |   |
| Accrued      interest and other liabilities                                                                                       |   |       | 28,697    |   |   |   | 21,053 |   |
| Total      liabilities                                                                                                            |   |       | 2,148,810 |   |   |   | 2,143,068 |   |
| Stockholders'      equity:                                                                                                        |   |       |      |   |   |   |   |   |
| Preferred      stock, no par value; 5,000,000 shares authorized; none issued or      outstanding                                  |   |       | -         |   |   |   | - |   |
| Common      stock, no par value; 45,000,000 shares authorized; 28,174,163 shares      issued and outstanding (28,088,110 in 2008) |   |       | 159,617   |   |   |   | 158,489 |   |
| Accumulated      deficit                                                                                                          |   |       | (137,953  | )      |   |   | (23,124 | ) |
| Accumulated      other comprehensive income (loss)                                                                                |   |       | 1,654     |   |   |   | (126 | ) |
| Total      stockholders' equity                                                                                                   |   |       | 23,318    |   |   |   | 135,239 |   |
| Total      liabilities and stockholders' equity                                                                                   |   | $          | 2,172,128 |   |   | $      | 2,278,307 |   |

----

|                                                                                       |   | 2009       |     |   | 2008   |   |     | 2007   |   |
|--------------------------------------------------------------------------------------------|--------|------------|----------|--------|--------|--------|----------|--------|--------|
|                                                                                       |   | (Restated) |     |   |   |   |     |   |   |
| Interest      and dividend income:                                                         |   |       |     |   |   |   |     |   |   |
| Interest      and fees on loans                                                            |   | $          | 101,081  |   |   | $      | 132,979  |   |   | $ | 165,361 |   |
| Taxable      interest on investment securities                                             |   |       | 5,089    |   |   |   | 4,451    |   |   |   | 5,160 |   |
| Nontaxable      interest on investment securities                                          |   |       | 138      |   |   |   | 189      |   |   |   | 283 |   |
| Interest      on interest bearing deposits                                                 |   |       | 486      |   |   |   | 11       |   |   |   | 195 |   |
| Interest      on federal funds sold                                                        |   |       | 17       |   |   |   | 31       |   |   |   | 187 |   |
| Dividends      on FHLB stock                                                               |   |       | -        |   |   |   | 111      |   |   |   | 42 |   |
| Total      interest and dividend income                                                    |   |       | 106,811  |   |   |   | 137,772  |   |   |   | 171,228 |   |
| Interest      expense:                                                                     |   |       |     |   |   |   |     |   |   |   |   |   |
| Deposits:                                                                                  |   |       |     |   |   |   |     |   |   |   |   |   |
| Interest      bearing demand                                                               |   |       | 7,267    |   |   |   | 15,541   |   |   |   | 30,727 |   |
| Savings                                                                                    |   |       | 73       |   |   |   | 135      |   |   |   | 202 |   |
| Time                                                                                       |   |       | 17,915   |   |   |   | 12,850   |   |   |   | 15,804 |   |
| Junior      subordinated debentures, other borrowings, and TLGP senior unsecured      debt |   |       | 8,880    |   |   |   | 13,845   |   |   |   | 15,991 |   |
| Total      interest expense                                                                |   |       | 34,135   |   |   |   | 42,371   |   |   |   | 62,724 |   |
| Net      interest income                                                                   |   |       | 72,676   |   |   |   | 95,401   |   |   |   | 108,504 |   |
| Loan      loss provision                                                                   |   |       | 134,000  |   |   |   | 99,593   |   |   |   | 19,400 |   |
| Net      interest income (loss) after loan loss provision                                  |   |       | (61,324  | )      |   |   | (4,192   | )      |   |   | 89,104 |   |
| Noninterest      income:                                                                   |   |       |     |   |   |   |     |   |   |   |   |   |
| Service      charges on deposit accounts, net                                              |   |       | 8,582    |   |   |   | 9,894    |   |   |   | 9,710 |   |
| Mortgage      banking income, net                                                          |   |       | 2,827    |   |   |   | 2,100    |   |   |   | 2,730 |   |
| Card      issuer and merchant service fees, net                                            |   |       | 3,027    |   |   |   | 3,705    |   |   |   | 3,930 |   |
| Earnings      on BOLI                                                                      |   |       | 68       |   |   |   | 264      |   |   |   | 1,574 |   |
| Gains      on sales of investment securities available-for sale                            |   |       | 648      |   |   |   | 436      |   |   |   | 260 |   |
| Gain      on sale of merchant card processing business                                     |   |       | 3,247    |   |   |   | -        |   |   |   | - |   |
| Other      income                                                                          |   |       | 3,227    |   |   |   | 3,592    |   |   |   | 3,021 |   |
| Total      noninterest income                                                              |   |       | 21,626   |   |   |   | 19,991   |   |   |   | 21,225 |   |
| Noninterest      expenses:                                                                 |   |       |     |   |   |   |     |   |   |   |   |   |
| Salaries      and employee benefits                                                        |   |       | 33,149   |   |   |   | 33,708   |   |   |   | 36,344 |   |
| Equipment                                                                                  |   |       | 2,153    |   |   |   | 2,156    |   |   |   | 2,250 |   |
| Occupancy                                                                                  |   |       | 4,682    |   |   |   | 4,767    |   |   |   | 4,438 |   |
| Communications                                                                             |   |       | 1,982    |   |   |   | 2,038    |   |   |   | 1,988 |   |
| FDIC      insurance                                                                        |   |       | 6,933    |   |   |   | 1,709    |   |   |   | 777 |   |
| OREO                                                                                       |   |       | 23,140   |   |   |   | 8,442    |   |   |   | 123 |   |
| Professional      services                                                                 |   |       | 7,362    |   |   |   | 2,896    |   |   |   | 2,296 |   |
| Prepayment      penalties on FHLB borrowings                                               |   |       | 2,081    |   |   |   | -        |   |   |   | - |   |
| Reduction      in reserve for unfunded loan commitments                                    |   |       | (335     | )      |   |   | (2,124   | )      |   |   | (50 | ) |
| Goodwill      impairment                                                                   |   |       | -        |   |   |   | 105,047  |   |   |   | - |   |
| Other      expenses                                                                        |   |       | 13,569   |   |   |   | 15,032   |   |   |   | 14,428 |   |
| Total      noninterest expenses                                                            |   |       | 94,716   |   |   |   | 173,671  |   |   |   | 62,594 |   |
| Income      (loss) before income taxes                                                     |   |       | (134,414 | )      |   |   | (157,872 | )      |   |   | 47,735 |   |
| Provision      (credit) for income taxes                                                   |   |       | (19,585  | )      |   |   | (23,306  | )      |   |   | 17,756 |   |
| Net      income (loss)                                                                     |   | $          | (114,829 | )      |   | $      | (134,566 | )      |   | $ | 29,979 |   |
| Basic      earnings (loss) per common share                                                |   | $          | (4.10    | )      |   | $      | (4.82    | )      |   | $ | 1.06 |   |
| Diluted      earnings (loss) per common share                                              |   | $          | (4.10    | )      |   | $      | (4.82    | )      |   | $ | 1.05 |   |

----

|                                                                     |   | Number ofshares |       |   | Comprehensiveincome (loss) |   |   | Commonstock |   |   | Retainedearnings |   |   | Accumulatedothercomprehensiveincome (loss) |    |   | Totalstockholders'equity |   |
|--------------------------------------------------------------------------|--------|----------------------|------------|--------|---------------------------------|--------|--------|-------------|--------|--------|------------------|--------|--------|-------------------------------------------------|---------|--------|--------------------------|--------|
| Balances      at December 31, 2006                                       |   |                 | 28,330,259 |   |                            | $      | -      |        |   | $      | 162,199          |   |   | $                                               | 98,112  |   |                     | $      | 765 |   |   | $ | 261,076 |   |
| Comprehensive      income:                                               |   |                 |       |   |                            |   |   |        |   |   |             |   |   |                                            |    |   |                     |   |   |   |   |   |   |   |
| Net      income                                                          |   |                 | -          |   |                            |   | 29,979 |        |   |   | -                |   |   |                                            | 29,979  |   |                     |   | - |   |   |   | 29,979 |   |
| Other      comprehensive loss -                                          |   |                 |       |   |                            |   |   |        |   |   |             |   |   |                                            |    |   |                     |   |   |   |   |   |   |   |
| unrealized      losses on investment securities                          |   |                 |       |   |                            |   |   |        |   |   |             |   |   |                                            |    |   |                     |   |   |   |   |   |   |   |
| available-for-sale      of approximately $70 (net of                     |   |                 |       |   |                            |   |   |        |   |   |             |   |   |                                            |    |   |                     |   |   |   |   |   |   |   |
| income      taxes of approximately $43), net of                          |   |                 |       |   |                            |   |   |        |   |   |             |   |   |                                            |    |   |                     |   |   |   |   |   |   |   |
| reclassification      adjustment for net gains                           |   |                 |       |   |                            |   |   |        |   |   |             |   |   |                                            |    |   |                     |   |   |   |   |   |   |   |
| on      sales of investment securities                                   |   |                 |       |   |                            |   |   |        |   |   |             |   |   |                                            |    |   |                     |   |   |   |   |   |   |   |
| available-for-sale      included in net income of                        |   |                 |       |   |                            |   |   |        |   |   |             |   |   |                                            |    |   |                     |   |   |   |   |   |   |   |
| approximately      $162 (net of income taxes                             |   |                 |       |   |                            |   |   |        |   |   |             |   |   |                                            |    |   |                     |   |   |   |   |   |   |   |
| of      approximately $98)                                               |   |                 | -          |   |                            |   | (232   | )           |   |   | -                |   |   |                                            | -       |   |                     |   | (232 | ) |   |   | (232 | ) |
|       Total      comprehensive income, net |   |                 | -          |   |                            | $      | 29,747 |        |   |   | -                |   |   |                                            | -       |   |                     |   | - |   |   |   | - |   |
|                                                                     |   |                 |       |   |                            |   |   |        |   |   |             |   |   |                                            |    |   |                     |   |   |   |   |   |   |   |
| Nonvested      restricted stock grants, net                              |   |                 | 40,904     |   |                            |   |   |        |   |   | -                |   |   |                                            | -       |   |                     |   | - |   |   |   | - |   |
| Stock-based      compensation expense                                    |   |                 | -          |   |                            |   |   |        |   |   | 1,632            |   |   |                                            | -       |   |                     |   | - |   |   |   | 1,632 |   |
| Cash      dividends paid (aggregating $.37 per share)                    |   |                 | -          |   |                            |   |   |        |   |   | -                |   |   |                                            | (10,491 | )      |                     |   | - |   |   |   | (10,491 | ) |
| Stock      options exercised                                             |   |                 | 146,109    |   |                            |   |   |        |   |   | 1,979            |   |   |                                            | -       |   |                     |   | - |   |   |   | 1,979 |   |
| Tax      effect from non-qualified stock options exercised               |   |                 | -          |   |                            |   |   |        |   |   | 548              |   |   |                                            | -       |   |                     |   | - |   |   |   | 548 |   |
| Repurchases      of common stock                                         |   |                 | (483,100   | )      |                            |   |   |        |   |   | (9,205           | )      |   |                                            | -       |   |                     |   | - |   |   |   | (9,205 | ) |
| Balances      at December 31, 2007                                       |   |                 | 28,034,172 |   |                            |   |   |        |   |   | 157,153          |   |   |                                            | 117,600 |   |                     |   | 533 |   |   |   | 275,286 |   |

----

|                                                       |   | Number ofshares |       |   | Comprehensiveincome (loss) |   |     | Commonstock |   |   | Retainedearnings(accumulateddeficit) |   |   | Accumulatedothercomprehensiveincome (loss) |     |   | Totalstockholders'equity |   |
|------------------------------------------------------------|--------|----------------------|------------|--------|---------------------------------|--------|----------|-------------|--------|--------|--------------------------------------|--------|--------|-------------------------------------------------|----------|--------|--------------------------|--------|
| Balances      at December 31, 2007                         |   |                 | 28,034,172 |   |                            | $      | -        |        |   | $      | 157,153                              |   |   | $                                               | 117,600  |   |                     | $      | 533 |   |   | $ | 275,286 |   |
| Comprehensive      loss:                                   |   |                 |       |   |                            |   |     |        |   |   |                                 |   |   |                                            |     |   |                     |   |   |   |   |   |   |   |
| Net      loss                                              |   |                 | -          |   |                            |   | (134,566 | )           |   |   | -                                    |   |   |                                            | (134,566 | )      |                     |   | - |   |   |   | (134,566 | ) |
| Other      comprehensive loss -                            |   |                 |       |   |                            |   |     |        |   |   |                                 |   |   |                                            |     |   |                     |   |   |   |   |   |   |   |
| unrealized      losses on investment securities            |   |                 |       |   |                            |   |     |        |   |   |                                 |   |   |                                            |     |   |                     |   |   |   |   |   |   |   |
| available-for-sale      of approximately $385 (net of      |   |                 |       |   |                            |   |     |        |   |   |                                 |   |   |                                            |     |   |                     |   |   |   |   |   |   |   |
| income      taxes of approximately $242), net of           |   |                 |       |   |                            |   |     |        |   |   |                                 |   |   |                                            |     |   |                     |   |   |   |   |   |   |   |
| reclassification      adjustment for net gains             |   |                 |       |   |                            |   |     |        |   |   |                                 |   |   |                                            |     |   |                     |   |   |   |   |   |   |   |
| on      sales of investment securities                     |   |                 |       |   |                            |   |     |        |   |   |                                 |   |   |                                            |     |   |                     |   |   |   |   |   |   |   |
| available-for-sale      included in net loss of            |   |                 |       |   |                            |   |     |        |   |   |                                 |   |   |                                            |     |   |                     |   |   |   |   |   |   |   |
| approximately      $274 (net of income taxes               |   |                 |       |   |                            |   |     |        |   |   |                                 |   |   |                                            |     |   |                     |   |   |   |   |   |   |   |
| of      approximately $162)                                |   |                 | -          |   |                            |   | (659     | )           |   |   | -                                    |   |   |                                            | -        |   |                     |   | (659 | ) |   |   | (659 | ) |
| Total      comprehensive loss                              |   |                 | -          |   |                            | $      | (135,225 | )           |   |   | -                                    |   |   |                                            | -        |   |                     |   | - |   |   |   | - |   |
|                                                       |   |                 |       |   |                            |   |     |        |   |   |                                 |   |   |                                            |     |   |                     |   |   |   |   |   |   |   |
| Nonvested      restricted stock grants, net                |   |                 | 42,433     |   |                            |   |     |        |   |   | -                                    |   |   |                                            | -        |   |                     |   | - |   |   |   | - |   |
| Stock-based      compensation expense                      |   |                 | -          |   |                            |   |     |        |   |   | 1,566                                |   |   |                                            | -        |   |                     |   | - |   |   |   | 1,566 |   |
| Cash      dividends paid (aggregating $0.22 per share)     |   |                 | -          |   |                            |   |     |        |   |   | -                                    |   |   |                                            | (6,158   | )      |                     |   | - |   |   |   | (6,158 | ) |
| Stock      options exercised                               |   |                 | 11,505     |   |                            |   |     |        |   |   | 67                                   |   |   |                                            | -        |   |                     |   | - |   |   |   | 67 |   |
| Tax      effect from non-qualified stock options exercised |   |                 | -          |   |                            |   |     |        |   |   | (297                                 | )      |   |                                            | -        |   |                     |   | - |   |   |   | (297 | ) |
| Balances      at December 31, 2008                         |   |                 | 28,088,110 |   |                            |   |     |        |   |   | 158,489                              |   |   |                                            | (23,124  | )      |                     |   | (126 | ) |   |   | 135,239 |   |

----

|                                                    |   | Number ofshares |       |   | Comprehensiveincome (loss) |   |     | Commonstock |   |   | Retainedearnings(accumulateddeficit) |   |   | Accumulatedothercomprehensiveincome (loss) |     |   | Totalstockholders'equity |   |
|---------------------------------------------------------|--------|----------------------|------------|--------|---------------------------------|--------|----------|-------------|--------|--------|--------------------------------------|--------|--------|-------------------------------------------------|----------|--------|--------------------------|--------|
|                                                    |   |                 |       |   | (Restated)                      |   |     |        |   |   | (Restated)                           |   |   |                                            |     |   | (Restated)               |   |
| Balances      at December 31, 2008                      |   |                 | 28,088,110 |   |                            | $      | -        |        |   | $      | 158,489                              |   |   | $                                               | (23,124  | )      |                     | $      | (126 | ) |   | $ | 135,239 |   |
| Comprehensive      loss:                                |   |                 |       |   |                            |   |     |        |   |   |                                 |   |   |                                            |     |   |                     |   |   |   |   |   |   |   |
| Net      loss                                           |   |                 | -          |   |                            |   | (114,829 | )           |   |   | -                                    |   |   |                                            | (114,829 | )      |                     |   | - |   |   |   | (114,829 | ) |
| Other      comprehensive income -                       |   |                 |       |   |                            |   |     |        |   |   |                                 |   |   |                                            |     |   |                     |   |   |   |   |   |   |   |
| unrealized      gains on investment securities          |   |                 |       |   |                            |   |     |        |   |   |                                 |   |   |                                            |     |   |                     |   |   |   |   |   |   |   |
| available-for-sale      of approximately $2,183 (net of |   |                 |       |   |                            |   |     |        |   |   |                                 |   |   |                                            |     |   |                     |   |   |   |   |   |   |   |
| income      taxes of approximately $1,337), net of      |   |                 |       |   |                            |   |     |        |   |   |                                 |   |   |                                            |     |   |                     |   |   |   |   |   |   |   |
| reclassification      adjustment for net gains          |   |                 |       |   |                            |   |     |        |   |   |                                 |   |   |                                            |     |   |                     |   |   |   |   |   |   |   |
| on      sales of investment securities                  |   |                 |       |   |                            |   |     |        |   |   |                                 |   |   |                                            |     |   |                     |   |   |   |   |   |   |   |
| available-for-sale      included in net loss of         |   |                 |       |   |                            |   |     |        |   |   |                                 |   |   |                                            |     |   |                     |   |   |   |   |   |   |   |
| approximately      $402 (net of income taxes            |   |                 |       |   |                            |   |     |        |   |   |                                 |   |   |                                            |     |   |                     |   |   |   |   |   |   |   |
| of      approximately $246)                             |   |                 | -          |   |                            |   | 1,780    |        |   |   | -                                    |   |   |                                            | -        |   |                     |   | 1,780 |   |   |   | 1,780 |   |
| Total      comprehensive loss, net                      |   |                 | -          |   |                            | $      | (113,049 | )           |   |   | -                                    |   |   |                                            | -        |   |                     |   | - |   |   |   | - |   |
|                                                    |   |                 |       |   |                            |   |     |        |   |   |                                 |   |   |                                            |     |   |                     |   |   |   |   |   |   |   |
| Nonvested      restricted stock grants, net             |   |                 | 86,053     |   |                            |   |     |        |   |   | -                                    |   |   |                                            | -        |   |                     |   | - |   |   |   | - |   |
| Stock-based      compensation expense                   |   |                 | -          |   |                            |   |     |        |   |   | 1,258                                |   |   |                                            | -        |   |                     |   | - |   |   |   | 1,258 |   |
| Income      taxes withheld on vested restricted stock   |   |                 | -          |   |                            |   |     |        |   |   | (130                                 | )      |   |                                            | -        |   |                     |   | - |   |   |   | (130 | ) |
| Balances      at December 31, 2009                      |   |                 | 28,174,163 |   |                            |   |     |        |   | $      | 159,617                              |   |   | $                                               | (137,953 | )      |                     | $      | 1,654 |   |   | $ | 23,318 |   |

----

|                                                                                                  |   | 2009       |     |   | 2008   |   |       | 2007   |   |
|-------------------------------------------------------------------------------------------------------|--------|------------|----------|--------|--------|--------|------------|--------|--------|
| Cash      flows from operating activities:                                                            |   | (Restated) |     |   |   |   |       |   |   |
| Net      income (loss)                                                                                |   | $          | (114,829 | )      |   | $      | (134,566   | )      |   | $ | 29,979 |   |
| Adjustments      to reconcile net income (loss) to net cash provided by operating      activities:    |   |       |     |   |   |   |       |   |   |   |   |   |
| Depreciation      and amortization                                                                    |   |       | 6,185    |   |   |   | 5,443      |   |   |   | 4,541 |   |
| Goodwill      impairment                                                                              |   |       | -        |   |   |   | 105,047    |   |   |   | - |   |
| Loan      loss provision                                                                              |   |       | 134,000  |   |   |   | 99,593     |   |   |   | 19,400 |   |
| Writedown      of OREO                                                                                |   |       | 17,981   |   |   |   | 5,460      |   |   |   | - |   |
| Provision      (credit) for deferred income taxes                                                     |   |       | 22,168   |   |   |   | (11,870    | )      |   |   | (6,841 | ) |
| Discounts      (gains) on sales of mortgage loans, net                                                |   |       | (737     | )      |   |   | 367        |   |   |   | (102 | ) |
| Gains      on sales of investment securities available-for-sale                                       |   |       | (648     | )      |   |   | (436       | )      |   |   | (260 | ) |
| Deferred      benefit plan expenses                                                                   |   |       | 1,744    |   |   |   | 1,762      |   |   |   | 2,690 |   |
| Stock-based      compensation expense                                                                 |   |       | 1,258    |   |   |   | 1,566      |   |   |   | 1,632 |   |
| Gains      on sales of premises and equipment, net                                                    |   |       | (270     | )      |   |   | (574       | )      |   |   | (342 | ) |
| Losses      on sales of OREO                                                                          |   |       | 3,504    |   |   |   | 662        |   |   |   | - |   |
| Increase      in accrued interest and other assets                                                    |   |       | (29,099  | )      |   |   | (21,625    | )      |   |   | (2,569 | ) |
| Increase      (decrease) in accrued interest and other liabilities                                    |   |       | 4,809    |   |   |   | (2,796     | )      |   |   | (7,900 | ) |
| Originations      of mortgage loans                                                                   |   |       | (177,206 | )      |   |   | (121,663   | )      |   |   | (170,095 | ) |
| Proceeds      from sales of mortgage loans                                                            |   |       | 178,948  |   |   |   | 124,186    |   |   |   | 168,917 |   |
| Net      cash provided by operating activities                                                        |   |       | 47,808   |   |   |   | 50,556     |   |   |   | 39,050 |   |
| Cash      flows from investing activities:                                                            |   |       |     |   |   |   |       |   |   |   |   |   |
| Purchases      of investment securities available-for-sale                                            |   |       | (54,956  | )      |   |   | (48,100    | )      |   |   | (14,859 | ) |
| Proceeds      from maturities, calls and prepayments of investment securities      available-for-sale |   |       | 21,670   |   |   |   | 23,329     |   |   |   | 34,137 |   |
| Proceeds      from sales of investment securities available-for-sale                                  |   |       | 10,137   |   |   |   | 425        |   |   |   | 525 |   |
| Proceeds      from maturities and calls of investment securities      held-to-maturity                |   |       | 200      |   |   |   | 965        |   |   |   | 505 |   |
| Purchases      of FHLB stock                                                                          |   |       | -        |   |   |   | (3,481     | )      |   |   | - |   |
| Loan      reductions (originations), net                                                              |   |       | 258,864  |   |   |   | (59,658    | )      |   |   | (173,712 | ) |
| Purchases      of premises and equipment, net                                                         |   |       | 244      |   |   |   | (3,555     | )      |   |   | 458 |   |
| Proceeds      from sales of OREO                                                                      |   |       | 28,441   |   |   |   | 6,676      |   |   |   | 2,227 |   |
| Net      cash provided by (used in) investing activities                                              |   |       | 264,600  |   |   |   | (83,399    | )      |   |   | (150,719 | ) |
| Cash      flows from financing activities:                                                            |   |       |     |   |   |   |       |   |   |   |   |   |
| Net      increase in deposits                                                                         |   |       | 20,737   |   |   |   | 127,473    |   |   |   | 5,522 |   |
| Increase      in TLGP senior unsecured debt                                                           |   |       | 41,000   |   |   |   | -          |   |   |   | - |   |
| Net      decrease in customer repurchase agreements                                                   |   |       | (9,871   | )      |   |   | (8,743     | )      |   |   | (25,404 | ) |
| Net      decrease in federal funds purchased                                                          |   |       | -        |   |   |   | (14,802    | )      |   |   | (375 | ) |
| Proceeds      from FHLB advances                                                                      |   |       | 140,000  |   |   |   | 1,353,477  |   |   |   | 505,000 |   |
| Repayment      of FHLB advances                                                                       |   |       | (73,457  | )      |   |   | (1,412,449 | )      |   |   | (437,947 | ) |
| Net      increase (decrease) in other borrowings                                                      |   |       | (120,311 | )      |   |   | (19,920    | )      |   |   | 89,524 |   |
| Cash      dividends paid                                                                              |   |       | -        |   |   |   | (6,158     | )      |   |   | (10,491 | ) |
| Proceeds      from stock options exercised                                                            |   |       | -        |   |   |   | 67         |   |   |   | 1,979 |   |
| Repurchases      of common stock                                                                      |   |       | -        |   |   |   | -          |   |   |   | (9,205 | ) |
| Tax      benefit (cost) from non-qualified stock options exercised                                    |   |       | -        |   |   |   | (297       | )      |   |   | 548 |   |
| Income      taxes withheld on vested restricted stock                                                 |   |       | (130     | )      |   |   | -          |   |   |   | - |   |
| Net      cash provided by financing activities                                                        |   |       | (2,032   | )      |   |   | 18,648     |   |   |   | 119,151 |   |
| Net      increase (decrease) in cash and cash equivalents                                             |   |       | 310,376  |   |   |   | (14,195    | )      |   |   | 7,482 |   |
| Cash      and cash equivalents at beginning of year                                                   |   |       | 48,946   |   |   |   | 63,141     |   |   |   | 55,659 |   |
| Cash      and cash equivalents at end of year                                                         |   | $          | 359,322  |   |   | $      | 48,946     |   |   | $ | 63,141 |   |

----

|   | Basis of      presentation |
|--------|----------------------------|

|   | Description of      business |
|--------|------------------------------|

----

|   | During      2009, 2008 and 2007, the Company paid approximately $32,279, $42,521 and      $62,902, respectively, in interestexpense. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------|

|   | During      2009, the Company did not make any income tax payments, and received      income tax refunds of approximately $19,951. During 2008 and 2007, the      Company made income tax payments of approximately $7,338 and $24,940,      respectively. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | Gains      and losses on the sales of available-for-sale securities are determined      using the specific-identification method.  Premiums and      discounts on available-for-sale securities are recognized in interest      income using the interest method generally over the period to      maturity. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Declines      in the fair value of individual held-to-maturity and available-for-sale      securities below their cost that are deemed to be other-than-temporary      impairment (OTTI) would result in write-downs of the individual securities      to their fair value.  In estimating other-than-temporary      impairment losses, management considers, among other things, (i) the      length of time and the extent to which the fair value has been less than      cost, (ii) the financial condition and near term prospects of the issuer,      and (iii) the intent and ability of the Company to retain its investment      in the issuer for a period of time sufficient to allow for any anticipated      recovery of fair value.  The related write-downs would be      included in earnings as realized losses.  Management believes      that all unrealized losses on investment securities at December 31, 2009      and 2008 are temporary (see Note4). |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

----

|   | MSRs      are measured by allocating the carrying value of loans between the assets      sold and interest retained, based upon the relative estimated fair value      at date of sale.  MSRs are capitalized at their allocated      carrying value and amortized in proportion to, and over the period of,      estimated future net servicing revenue.  Impairment of MSRs is      assessed based on the estimated fair value of servicing      rights.  Fair value is estimated using discounted cash flows of      servicing revenue less servicing costs taking into consideration market      estimates of prepayments as applied to underlying loan type, note rate and      term (see also Note 7).  Impairment adjustments, if any, are      recorded through a valuationallowance. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Premises      and equipment are stated at cost, less accumulated depreciation and      amortization.  Depreciation and amortization are computed on the      straight-line method over the shorter of the estimated useful lives of the      assets or terms of the leases.  Amortization of leasehold      improvements is included in depreciation and amortization expense in the      accompanying consolidated financialstatements. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | OREO |
|--------|------|

|   | Advertising |
|--------|-------------|

|   | Advertising      costs are generally charged to expense during the year in which they are      incurred. |
|--------|----------------------------------------------------------------------------------------------------------|

----

As previously discussed, on July1, 2009, the ASC became FASB’s officially recognized source of authoritativeGAAP applicable to all public and non-public non-governmental entities,superseding existing FASB, AICPA and related literature.  Rules andinterpretive releases of the SEC under the authority of federal securities lawsare also sources of authoritative GAAP for SEC registrants. All other accountingliterature is considered non-authoritative. The switch to the ASC affects theway companies refer to GAAP in financial statements and accounting policies.Citing particular content in the ASC involves specifying the unique numeric pathto the content through the Topic, Subtopic, Section and Paragraphstructure.

----

----

----

----

3.         Cash and due frombanks

|   | By      regulation, the Bank must meet reserve requirements as established by the      FRB (approximately $5,066 and $9,993 at December 31, 2009 and 2008,      respectively).  Accordingly, the Bank complies with such      requirements by holding cash and maintaining average reserve balances with      the FRB in accordance with suchregulations. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 4. | Investment      securities |
|----|----------------------------|

|   | Investment      securities at December 31, 2009 and 2008 consisted of the      following: |
|--------|-------------------------------------------------------------------------------------------|

----

|                                                      |   |      |    |   | Gross      |   |   | Gross      |   |   |            |   |
|-----------------------------------------------------------|--------|-----------|---------|--------|------------|--------|--------|------------|--------|--------|-----------------|--------|
|                                                      |   | Amortized |    |   | unrealized |   |   | unrealized |   |   | Estimated       |   |
|                                                      |   | cost      |    |   | gains      |   |   | losses     |   |   | fair value |   |
| 2009                                                      |   |      |    |   |       |   |   |       |   |   |            |   |
| Available-for-sale                                        |   |      |    |   |       |   |   |       |   |   |            |   |
| U.S.      Agency and non-agency mortgage-backed           |   |      |    |   |       |   |   |       |   |   |            |   |
|       securities      (MBS) |   | $         | 114,560 |   |       | $      | 2,793  |       |   | $      | 714             |   |   | $ | 116,639 |   |
| U.S.      Government and agency securities                |   |      | 7,500   |   |       |   | -      |       |   |   | 19              |   |   |   | 7,481 |   |
| Obligations      of state and political subdivisions      |   |      | 1,478   |   |       |   | 120    |       |   |   | -               |   |   |   | 1,598 |   |
| U.S.      Agency asset-backed securities                  |   |      | 7,108   |   |       |   | 478    |       |   |   | -               |   |   |   | 7,586 |   |
| Mutual      fund                                          |   |      | 440     |   |       |   | 11     |       |   |   | -               |   |   |   | 451 |   |
|                                                      |   | $         | 131,086 |   |       | $      | 3,402  |       |   | $      | 733             |   |   | $ | 133,755 |   |
| Held-to-maturity                                          |   |      |    |   |       |   |   |       |   |   |            |   |   |   |   |   |
| Obligations      of state and political subdivisions      |   | $         | 2,008   |   |       | $      | 135    |       |   | $      | -               |   |   | $ | 2,143 |   |

|                                                 |   |      |    |   | Gross      |   |   | Gross      |   |   |            |   |
|------------------------------------------------------|--------|-----------|---------|--------|------------|--------|--------|------------|--------|--------|-----------------|--------|
|                                                 |   | Amortized |    |   | unrealized |   |   | unrealized |   |   | Estimated       |   |
|                                                 |   | cost      |    |   | gains      |   |   | losses     |   |   | fair value |   |
| 2008                                                 |   |      |    |   |       |   |   |       |   |   |            |   |
| Available-for-sale                                   |   |      |    |   |       |   |   |       |   |   |            |   |
| U.S.      Agency and non-agency MBS                  |   | $         | 94,292  |   |       | $      | 607    |       |   | $      | 1,365           |   |   | $ | 93,534 |   |
| U.S.      Government and agency securities           |   |      | 8,273   |   |       |   | 453    |       |   |   | -               |   |   |   | 8,726 |   |
| Obligations      of state and political subdivisions |   |      | 1,503   |   |       |   | 32     |       |   |   | 5               |   |   |   | 1,530 |   |
| U.S.      Agency asset-backed securities             |   |      | 3,193   |   |       |   | 67     |       |   |   | -               |   |   |   | 3,260 |   |
| Mutual      fund                                     |   |      | 423     |   |       |   | 7      |       |   |   | -               |   |   |   | 430 |   |
|                                                 |   | $         | 107,684 |   |       | $      | 1,166  |       |   | $      | 1,370           |   |   | $ | 107,480 |   |
| Held-to-maturity                                     |   |      |    |   |       |   |   |       |   |   |            |   |   |   |   |   |
| Obligations      of state and political subdivisions |   | $         | 2,211   |   |       | $      | 36     |       |   | $      | -               |   |   | $ | 2,247 |   |

----

|                                |   | Less than 12 months |   |   | 12 months or more |   |   | Total                          |   |
|-------------------------------------|--------|------------------------------------|--------|--------|----------------------------------|--------|--------|--------------------------------|--------|
|                                |   | Estimated fair value     |   |   | Unrealizedlosses                 |   |   | Estimated fair value |   |   | Unrealizedlosses |   |   | Estimated fair value |   |   | Unrealizedlosses |   |
| 2009                                |   |                               |   |   |                             |   |   |                           |   |   |   |   |   |   |   |   |   |   |
| U.S.      Agency and non-agency MBS |   | $                                  | 22,931 |   |                             | $      | 690    |                           |   | $ | 2,581 |   |   | $ | 24 |   |   | $ | 25,512 |   |   | $ | 714 |   |
| U.S.      Government and            |   |                               |   |   |                             |   |   |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| agency      securities              |   |                               | 7,481  |   |                             |   | 19     |                           |   |   | - |   |   |   | - |   |   |   | 7,481 |   |   |   | 19 |   |
|                                |   | $                                  | 30,412 |   |                             | $      | 709    |                           |   | $ | 2,581 |   |   | $ | 24 |   |   | $ | 32,993 |   |   | $ | 733 |   |
|                                |   |                               |   |   |                             |   |   |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 2008                                |   |                               |   |   |                             |   |   |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| U.S.      Agency and non-agency MBS |   | $                                  | 56,029 |   |                             | $      | 1,362  |                           |   | $ | 183 |   |   | $ | 3 |   |   | $ | 56,212 |   |   | $ | 1,365 |   |
| Obligations      of state and       |   |                               |   |   |                             |   |   |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| political      subdivisions         |   |                               | 295    |   |                             |   | 5      |                           |   |   | - |   |   |   | - |   |   |   | 295 |   |   |   | 5 |   |
|                                |   | $                                  | 56,324 |   |                             | $      | 1,367  |                           |   | $ | 183 |   |   | $ | 3 |   |   | $ | 56,507 |   |   | $ | 1,370 |   |

|   | Management      of the Company has the intent and ability to hold the investment      securities classified as held-to-maturity until they mature, at which time      the Company will receive full amortized cost value for such investment      securities.  Furthermore, as of December 31, 2009, management      does not have the intent to sell any of the securities classified as      available-for-sale in the table above and believes that it is more likely      than not that the Company will not have to sell any such securities before      a recovery of cost. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The      amortized cost and estimated fair value of investment securities at      December 31, 2009, by contractual maturity, are shown      below.  Expected maturities will differ from contractual      maturities, because borrowers may have the right to call or prepay      obligations with or without call or prepayment  penalties. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                        |   |      |    |   | Estimated |   |
|---------------------------------------------|--------|-----------|---------|--------|-----------|--------|
|                                        |   | Amortized |    |   | fair      |   |
| Available-for-sale                          |   | cost      |    |   | value     |   |
| Due      one year or less                   |   | $         | 1,308   |   |      | $      | 1,336 |   |
| Due      after one year through five years  |   |      | 1,195   |   |      |   | 1,267 |   |
| Due      after five years through ten years |   |      | 9,257   |   |      |   | 9,358 |   |
| Due      after ten years                    |   |      | 118,886 |   |      |   | 121,343 |   |
| Mutual      fund                            |   |      | 440     |   |      |   | 451 |   |
|                                        |   |      |    |   |      |   |   |   |
|                                        |   | $         | 131,086 |   |      | $      | 133,755 |   |
| Held-to-maturity                            |   |      |    |   |      |   |   |   |
| Due      one year or less                   |   | $         | 200     |   |      | $      | 202 |   |
| Due      after one year through five years  |   |      | 1,611   |   |      |   | 1,726 |   |
| Due      after five years through ten years |   |      | 197     |   |      |   | 215 |   |
|                                        |   |      |    |   |      |   |   |   |
|                                        |   | $         | 2,008   |   |      | $      | 2,143 |   |

|   | Investment      securities with a carrying value of approximately $85,457 and $109,293 at      December 31, 2009 and 2008, respectively, were pledged to secure      public deposits, customer repurchase agreements (at December 31, 2008      only) and for other purposes as required or permitted by    law. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The      Company had no gross realized losses on sales of investment securities      during the years ended December 31, 2009, 2008 and 2007. Gross realized      gains on sales of investment securities during the years ended December      31, 2009, 2008 and 2007 are as disclosed in the accompanying consolidated      statements of operations. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 5. | Loans |
|----|-------|

|   | Loans      at December 31, 2009 and 2008 consisted of the    following: |
|--------|------------------------------------------------------------------------------|

|                              |   | 2009       |      |   | 2008   |   |
|-----------------------------------|--------|------------|-----------|--------|--------|--------|
|                              |   | (Restated) |      |   |   |   |
| Commercial                        |   | $          | 420,155   |   |   | $      | 582,831 |   |
| Real      Estate:                 |   |       |      |   |   |   |   |   |
| Construction/lot                  |   |       | 308,346   |   |   |   | 517,721 |   |
| Mortgage                          |   |       | 93,465    |   |   |   | 96,248 |   |
| Commercial                        |   |       | 675,728   |   |   |   | 703,149 |   |
| Consumer                          |   |       | 49,982    |   |   |   | 56,235 |   |
|                              |   |       |      |   |   |   |   |   |
| Total      loans                  |   |       | 1,547,676 |   |   |   | 1,956,184 |   |
| Less      reserve for loan losses |   |       | 58,586    |   |   |   | 47,166 |   |
|                              |   |       |      |   |   |   |   |   |
| Loans,      net                   |   | $          | 1,489,090 |   |   | $      | 1,909,018 |   |

----

| 6. | Reserve for credit      losses |
|----|--------------------------------|

|   | Transactions      in the reserve for loan losses and unfunded loan commitments for the years      ended December 31, 2009, 2008 and 2007 were as  follows: |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Reserve for loan losses                    |   | 2009       |     |   | 2008   |   |    | 2007   |   |
|--------------------------------------------|--------|------------|----------|--------|--------|--------|---------|--------|--------|
|                                       |   | (Restated) |     |   |   |   |    |   |   |
| Balance      at beginning of year          |   | $          | 47,166   |   |   | $      | 33,875  |   |   | $ | 23,585 |   |
| Loan      loss provision                   |   |       | 134,000  |   |   |   | 99,593  |   |   |   | 19,400 |   |
| Recoveries                                 |   |       | 3,745    |   |   |   | 1,980   |   |   |   | 1,290 |   |
| Loans      charged off                     |   |       | (126,325 | )      |   |   | (88,282 | )      |   |   | (10,400 | ) |
| Balance      at end of year                |   | $          | 58,586   |   |   | $      | 47,166  |   |   | $ | 33,875 |   |
|                                       |   |       |     |   |   |   |    |   |   |   |   |   |
| Reserve      for unfunded loan commitments |   |       |     |   |   |   |    |   |   |   |   |   |
| Balance      at beginning of year          |   | $          | 1,039    |   |   | $      | 3,163   |   |   | $ | 3,213 |   |
| Credit      for unfunded loan commitments  |   |       | (335     | )      |   |   | (2,124  | )      |   |   | (50 | ) |
| Balance      at end of year                |   | $          | 704      |   |   | $      | 1,039   |   |   | $ | 3,163 |   |
|                                       |   |       |     |   |   |   |    |   |   |   |   |   |
| Reserve      for credit losses             |   |       |     |   |   |   |    |   |   |   |   |   |
| Reserve      for loan losses               |   | $          | 58,586   |   |   | $      | 47,166  |   |   | $ | 33,875 |   |
| Reserve      for unfunded loan commitments |   |       | 704      |   |   |   | 1,039   |   |   |   | 3,163 |   |
| Total      reserve for credit losses       |   | $          | 59,290   |   |   | $      | 48,205  |   |   | $ | 37,038 |   |

----

|                                                                   |   | 2009   |    |   | 2008   |   |
|------------------------------------------------------------------------|--------|--------|---------|--------|--------|--------|
| Impaired      loans with an associated allowance                       |   | $      | 114,039 |   |   | $      | 120,468 |   |
| Impaired      loans without an associated allowance                    |   |   | 33,543  |   |   |   | - |   |
| Total      recorded investment in impaired loans                       |   | $      | 147,582 |   |   | $      | 120,468 |   |
|                                                                   |   |   |    |   |   |   |   |   |
| Amount      of the reserve for loan losses allocated to impaired loans |   | $      | 106     |   |   | $      | 2,699 |   |

|                                                             |   | 2009   |    |   | 2008   |   |
|------------------------------------------------------------------|--------|--------|---------|--------|--------|--------|
| Loans      on nonaccrual status                                  |   | $      | 132,110 |   |   | $      | 120,468 |   |
| Loans      past due 90 days or more but not on nonaccrual status |   |   | -       |   |   |   | 5 |   |
| OREO                                                             |   |   | 29,609  |   |   |   | 52,727 |   |
| Total      non-performing assets                                 |   | $      | 161,719 |   |   | $      | 173,200 |   |

----

| 7. | Mortgage banking      activities |
|----|----------------------------------|

|                              |   | 2009   |   |   | 2008   |   |   | 2007   |   |
|-----------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Balance      at beginning of year |   | $      | 3,605  |   |   | $      | 3,756  |   |   | $ | 4,096 |   |
| Additions                         |   |   | 1,873  |   |   |   | 989    |   |   |   | 839 |   |
| Amortization                      |   |   | (1,531 | )      |   |   | (1,140 | )      |   |   | (1,179 | ) |
|                              |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance      at end of year       |   | $      | 3,947  |   |   | $      | 3,605  |   |   | $ | 3,756 |   |

----

|                                       |   | 2009   |   |   | 2008   |   |   | 2007   |   |
|--------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Origination      and processing fees       |   | $      | 1,951  |   |   | $      | 1,363  |   |   | $ | 1,744 |   |
| Gains      on sales of mortgage loans, net |   |   | 1,054  |   |   |   | 583    |   |   |   | 898 |   |
| Servicing      fees                        |   |   | 1,353  |   |   |   | 1,294  |   |   |   | 1,267 |   |
| Amortization                               |   |   | (1,531 | )      |   |   | (1,140 | )      |   |   | (1,179 | ) |
| Mortgage      banking income, net          |   | $      | 2,827  |   |   | $      | 2,100  |   |   | $ | 2,730 |   |

|   | Premises      and equipment at December 31, 2009 and 2008 consisted of the      following: |
|--------|--------------------------------------------------------------------------------------------|

|                                                |   | 2009   |   |   | 2008   |   |
|-----------------------------------------------------|--------|--------|--------|--------|--------|--------|
| Land                                                |   | $      | 9,148  |   |   | $      | 9,237 |   |
| Buildings      and leasehold improvements           |   |   | 30,420 |   |   |   | 30,796 |   |
| Furniture      and equipment                        |   |   | 15,094 |   |   |   | 14,684 |   |
|                                                |   |   | 54,662 |   |   |   | 54,717 |   |
| Less      accumulated depreciation and amortization |   |   | 17,295 |   |   |   | 15,212 |   |
|                                                |   |   | 37,367 |   |   |   | 39,505 |   |
| Construction      in progress                       |   |   | -      |   |   |   | 258 |   |
| Premises      and equipment, net                    |   | $      | 37,367 |   |   | $      | 39,763 |   |

| 2010   |   | $      | 1,476 |   |
|--------|--------|--------|-------|--------|
| 2011   |   |   | 1,476 |   |
| 2012   |   |   | 1,476 |   |
| 2013   |   |   | 1,476 |   |
| 2014   |   |   | 484   |   |
|   |   | $      | 6,388 |   |

----

|                               |   | 2009       |    |   | 2008   |   |   | 2007   |   |
|------------------------------------|--------|------------|---------|--------|--------|--------|--------|--------|--------|
|                               |   | (Restated) |    |   |   |   |   |   |   |
| Balance      at beginning of year  |   | $          | 52,727  |   |   | $      | 9,765  |   |   | $ | 326 |   |
| Additions                          |   |       | 26,059  |   |   |   | 55,760 |   |   |   | 11,651 |   |
| Dispositions                       |   |       | (49,036 | )      |   |   | (7,458 | )      |   |   | (2,212 | ) |
| Change      in valuation allowance |   |       | (890    | )      |   |   | (5,340 | )      |   |   | - |   |
| Balances      at end of year       |   | $          | 28,860  |   |   | $      | 52,727 |   |   | $ | 9,765 |   |

|                                      |   | 2009       |    |   | 2008   |   |
|-------------------------------------------|--------|------------|---------|--------|--------|--------|
|                                      |   | (Restated) |    |   |   |   |
| Balance      at beginning of year         |   | $          | 5,340   |   |   | $      | - |   |
| Additions      to the valuation allowance |   |       | 17,981  |   |   |   | 5,460 |   |
| Reductions      due to sales of OREO      |   |       | (17,091 | )      |   |   | (120 | ) |
| Balance      at end of year               |   | $          | 6,230   |   |   | $      | 5,340 |   |

| 11. | Time      deposits |
|-----|--------------------|

|   | Time      deposits in amounts of $100,000 or more aggregated approximately $280,000      and $349,000 at December 31, 2009 and 2008,  respectively. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------|

|   | At      December 31, 2009, the scheduled annual maturities of all time      deposits were approximately asfollows: |
|--------|-------------------------------------------------------------------------------------------------------------------------|

| 2010       |   | $      | 419,485 |   |
|------------|--------|--------|---------|--------|
| 2011       |   |   | 91,950  |   |
| 2012       |   |   | 44,323  |   |
| 2013       |   |   | 22,318  |   |
| 2014       |   |   | 1,543   |   |
| Thereafter |   |   | 15,138  |   |
|       |   | $      | 594,757 |   |

----

| 12. | Junior subordinated      debentures |
|-----|-------------------------------------|

|                                         |   |       |   |      |   | Junior              |   |   |     |              |       | Effective rate at |   |
|----------------------------------------------|--------|------------|--------|-----------|--------|---------------------|--------|--------|----------|-------------------|------------|-----------------------------|--------|
|                                         |   | Issuance   |   | Maturity  |   | subordinated        |   |   | Interest |              |       | December 31,           |   |
| Issuance      Trust                          |   | date       |   | date      |   | debentures (A) |   |   | rate     |              |       | 2009                        |   |
|                                         |   |       |   |      |   |                |   |   | 3-month  |              |       |                        |   |
|                                         |   |       |   |      |   |                |   |   | LIBOR    |              |       |                        |   |
| Cascade      Bancorp Trust I (D)             |   | 12/31/2004 |   | 3/15/2035 |   | $                   | 20,619 |   |     | +      1.80       | %      (C) |                        |   | 2.054 | % |
|                                         |   |       |   |      |   |                |   |   |     |              |       |                        |   |   |   |
| Cascade      Bancorp Statutory Trust II (E)  |   | 3/31/2006  |   | 6/15/2036 |   |                | 13,660 |   |     | 6.619             | %      (B) |                        |   | 6.619 | % |
|                                         |   |       |   |      |   |                |   |   |     |              |       |                        |   |   |   |
|                                         |   |       |   |      |   |                |   |   |     | 3-month           |       |                        |   |   |   |
|                                         |   |       |   |      |   |                |   |   |     | LIBOR             |       |                        |   |   |   |
| Cascade      Bancorp Statutory Trust III (E) |   | 3/31/2006  |   | 6/15/2036 |   |                | 13,660 |   |     | +      1.33       | %      (C) |                        |   | 1.584 | % |
|                                         |   |       |   |      |   |                |   |   |     |              |       |                        |   |   |   |
|                                         |   |       |   |      |   |                |   |   |     | 3-month           |       |                        |   |   |   |
|                                         |   |       |   |      |   |                |   |   |     | LIBOR             |       |                        |   |   |   |
| Cascade      Bancorp Statutory Trust IV (F)  |   | 6/29/2006  |   | 9/15/2036 |   |                | 20,619 |   |     | +      1.54       | %      (C) |                        |   | 1.794 | % |
|                                         |   |       |   |      |   |                |   |   |     |              |       |                        |   |   |   |
|                                         |   |       |   |      |   |                |   |   |     | Weighted-         |       |                        |   |   |   |
| Totals                                       |   |       |   |      |   | $                   | 68,558 |   |     | average      rate |       |                        |   | 2.792 | % |

----

|   | (A) | The      Junior Subordinated Debentures (Debentures) were issued with substantially      the same terms as the TPS and are the sole assets of the related trusts.      The Company's obligations under the Debentures and related agreements,      taken together, constitute a full and irrevocable guarantee by the Company      of the obligations of the trusts. |
|--------|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (B) | The      Debentures bear a fixed quarterly interest rate for 20 quarters, at which      time the rate begins to float on a quarterly basis based on the      three-month London Inter-Bank Offered Rate (LIBOR) plus 1.33% thereafter      until maturity. |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (C) | The      three-month LIBOR in effect as of December 31, 2009 was      0.25363%. |
|--------|-----|---------------------------------------------------------------------------------|

|   | (D) | The      TPS may be called by the Company at par at any time subsequent to March      15, 2010 and may be redeemed earlier upon the occurrence of certain events      that impact the income tax or the regulatory capital treatment of the      TPS. |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (E) | The      TPS may be called by the Company at par at any time subsequent to June 15,      2011 and may be redeemed earlier upon the occurrence of certain events      that impact the income tax or the regulatory capital treatment of the      TPS. |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (F) | The      TPS may be called by the Company at par at any time subsequent to      September 15, 2011 and may be redeemed earlier upon the occurrence of      certain events that impact the income tax or the regulatory capital      treatment of the TPS. |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 13. | Other      borrowings |
|-----|-----------------------|

|   | At      December 31, 2009, the contractual maturities of the Bank’s FHLB      borrowings outstanding were approximately as  follows: |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------|

| 2011       |   | $      | 50,000  |   |
|------------|--------|--------|---------|--------|
| 2012       |   |   | 85,000  |   |
| 2013       |   |   | -       |   |
| 2014       |   |   | 10,000  |   |
| 2015       |   |   | 25,000  |   |
| Thereafter |   |   | 25,000  |   |
|       |   | $      | 195,000 |   |

----

|   | At      December 31, 2009, the Bank had approximately $83,383 in available      short-term borrowings from the FRB, collateralized by certain of the      Bank’s loans and securities.  Such available borrowings include      participation in the Treasury Tax and Loan (TT&L) program of the      federal government, with access to this funding source limited to $300 and      fully at the discretion of the U.S. Treasury.  Of the total      available FRB borrowings, at December 31, 2009, the Bank had approximately      $207 ($120,518 at December 31, 2008) in total borrowings outstanding from      the FRB.  FRB borrowings at December 31, 2009 consisted of      TT&L overnight borrowings at an interest rate of  0.25%. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 14. | Commitments,      guarantees and contingencies |
|-----|------------------------------------------------|

|   | The      Bank’s exposure to credit loss for commitments to extend credit,      commitments under credit card lines of credit and standby letters of      credit is represented by the contractual amount of these      instruments.  The Company follows the same credit policies in      underwriting and offering commitments and conditional obligations as it      does for on-balance sheet financialinstruments. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                               |   | 2009   |    |   | 2008   |   |
|----------------------------------------------------|--------|--------|---------|--------|--------|--------|
|                                               |   |   |    |   |   |   |
| Commitments      to extend credit                  |   | $      | 253,362 |   |   | $      | 465,500 |   |
| Commitments      under credit card lines of credit |   |   | 28,455  |   |   |   | 30,522 |   |
| Standby      letters of credit                     |   |   | 6,932   |   |   |   | 18,583 |   |
|                                               |   |   |    |   |   |   |   |   |
| Total      off-balance sheet financial instruments |   | $      | 288,749 |   |   | $      | 514,605 |   |

----

| 2010       |   | $      | 1,813  |   |
|------------|--------|--------|--------|--------|
| 2011       |   |   | 1,684  |   |
| 2012       |   |   | 1,617  |   |
| 2013       |   |   | 1,443  |   |
| 2014       |   |   | 1,091  |   |
| Thereafter |   |   | 6,086  |   |
|       |   | $      | 13,734 |   |

----

|   | Litigation |
|--------|------------|

| 15. | Income      taxes |
|-----|-------------------|

|                                     |   | 2009   |    |   | 2008   |   |    | 2007   |   |
|------------------------------------------|--------|--------|---------|--------|--------|--------|---------|--------|--------|
| Current:                                 |   |   |    |   |   |   |    |   |   |
| Federal                                  |   | $      | (42,113 | )      |   | $      | (11,915 | )      |   | $ | 20,682 |   |
| State                                    |   |   | 360     |   |   |   | 479     |   |   |   | 3,915 |   |
|                                     |   |   | (41,753 | )      |   |   | (11,436 | )      |   |   | 24,597 |   |
| Deferred                                 |   |   | 22,168  |   |   |   | (11,870 | )      |   |   | (6,841 | ) |
| Provision      (credit) for income taxes |   | $      | (19,585 | )      |   | $      | (23,306 | )      |   | $ | 17,756 |   |

----

|                                             |   | 2009       |    |   | 2008   |   |    | 2007   |   |
|--------------------------------------------------|--------|------------|---------|--------|--------|--------|---------|--------|--------|
|                                             |   | (Restated) |    |   |   |   |    |   |   |   |   |
| Expected      federal income tax provision       |   |       |    |   |   |   |    |   |   |   |   |   |
| (credit)      at statutory rates                 |   | $          | (47,045 | )      |   | $      | (55,255 | )      |   | $ | 16,707 |   |
| State      income taxes, net of federal effect   |   |       | (7,090  | )      |   |   | (2,860  | )      |   |   | 2,070 |   |
| Effect      of nontaxable income, net            |   |       | (441    | )      |   |   | (509    | )      |   |   | (928 | ) |
| Valuation      allowance for deferred tax assets |   |       | 35,517  |   |   |   | -       |   |   |   | - |   |
| Goodwill      impairment                         |   |       | -       |   |   |   | 35,830  |   |   |   | - |   |
| Other,      net                                  |   |       | (526    | )      |   |   | (512    | )      |   |   | (93 | ) |
| Provision      (credit) for income taxes         |   | $          | (19,585 | )      |   | $      | (23,306 | )      |   | $ | 17,756 |   |

|                                                       |   | 2009       |    |   | 2008   |   |
|------------------------------------------------------------|--------|------------|---------|--------|--------|--------|
|                                                       |   | (Restated) |    |   |   |   |   |
| Deferred      tax assets:                                  |   |       |    |   |   |   |   |   |
| Reserve      for loan losses and unfunded loan commitments |   | $          | 24,195  |   |   | $      | 19,171 |   |
| Deferred      benefit plan expenses, net                   |   |       | 6,252   |   |   |   | 5,742 |   |
| State      net operating loss carryforwards                |   |       | 7,878   |   |   |   | 1,457 |   |
| Tax      credit carryforwards                              |   |       | 1,493   |   |   |   | - |   |
| Net      unrealized losses on investment securities        |   |       | -       |   |   |   | 78 |   |
| Allowance      for losses on OREO                          |   |       | 3,305   |   |   |   | 2,124 |   |
| Accrued      interest on non-accrual loans                 |   |       | 685     |   |   |   | 1,970 |   |
| Other                                                      |   |       | 641     |   |   |   | 797 |   |
| Deferred      tax assets                                   |   |       | 44,449  |   |   |   | 31,339 |   |
|                                                       |   |       |    |   |   |   |   |   |
| Valuation      allowance for deferred tax assets           |   |       | (35,517 | )      |   |   | - |   |
| Deferred      tax assets, net of valuation allowance       |   |       | 8,932   |   |   |   | 31,339 |   |
|                                                       |   |       |    |   |   |   |   |   |
| Deferred      tax liabilities:                             |   |       |    |   |   |   |   |   |
| Accumulated      depreciation and amortization             |   |       | 1,973   |   |   |   | 1,977 |   |
| Deferred      loan income                                  |   |       | 1,646   |   |   |   | 1,674 |   |
| MSRs                                                       |   |       | 1,590   |   |   |   | 1,434 |   |
| Purchased      intangibles related to F&M and CBGP     |   |       | 2,298   |   |   |   | 2,809 |   |
| FHLB      stock dividends                                  |   |       | 580     |   |   |   | 573 |   |
| Net      unrealized gains on investment securities         |   |       | 1,015   |   |   |   | - |   |
| Other                                                      |   |       | 845     |   |   |   | 626 |   |
| Deferred      tax liabilities                              |   |       | 9,947   |   |   |   | 9,093 |   |
| Net      deferred tax assets (liabilities)                 |   | $          | (1,015  | )      |   | $      | 22,246 |   |

----

| 16. | Basic and diluted      earnings (loss) per commonshare |
|-----|--------------------------------------------------------|

----

|                                                                   |         |               |     |   | Weighted-     |   |       |       |   |
|------------------------------------------------------------------------|--------------|--------------------|----------|--------|---------------|--------|------------|------------|--------|
|                                                                   |         | Net                |     |   | average       |   |       |       |   |
|                                                                   |         | income (loss) |     |   | shares        |   |       | Per-share  |   |
|                                                                   |         | (numerator)        |     |   | (denominator) |   |       | amount     |   |
|                                                                   |         | (Restated)         |     |   |          |   |       | (Restated) |   |
| 2009                                                                   |         |               |     |   |          |   |       |       |   |
| Basic      loss per common share —                               |         |               |     |   |          |   |       |       |   |
| Net      loss                                                          |    | $                  | (114,829 | )      |     |   | 28,001,110 |       |   | $ | (4.10 | ) |
| Effect      of stock options and nonvested restricted stock            |         |               | -        |   |          |   | -          |       |   |   |   |   |
| Diluted      loss per common share                                     |         | $                  | (114,829 | )      |          |   | 28,001,110 |       |   | $ | (4.10 | ) |
|                                                                   |         |               |     |   |          |   |       |       |   |   |   |   |
| Common      stock equivalent shares excluded due to antidilutiveeffect |         |               |     |   |          |   | 123,194    |       |   |   |   |   |
|                                                                   |         |               |     |   |          |   |       |       |   |   |   |   |
| 2008                                                                   |         |               |     |   |          |   |       |       |   |   |   |   |
| Basic      loss per common share —                               |         |               |     |   |          |   |       |       |   |   |   |   |
| Net      loss                                                          |         | $                  | (134,566 | )      |          |   | 27,935,736 |       |   | $ | (4.82 | ) |
| Effect      of stock options and nonvested restricted stock            |         |               | -        |   |          |   | -          |       |   |   |   |   |
| Diluted      loss per common share                                     |         | $                  | (134,566 | )      |          |   | 27,935,736 |       |   | $ | (4.82 | ) |
|                                                                   |         |               |     |   |          |   |       |       |   |   |   |   |
| Common      stock equivalent shares excluded due to antidilutiveeffect |         |               |     |   |          |   | 236,129    |       |   |   |   |   |
|                                                                   |         |               |     |   |          |   |       |       |   |   |   |   |
| 2007                                                                   |         |               |     |   |          |   |       |       |   |   |   |   |
| Basic      earnings per common share —                           |         |               |     |   |          |   |       |       |   |   |   |   |
| Net      income                                                        |         | $                  | 29,979   |   |          |   | 28,242,684 |       |   | $ | 1.06 |   |
| Effect      of stock options and nonvested restricted stock            |         |               | -        |   |          |   | 334,720    |       |   |   |   |   |
| Diluted      earnings per common share                                 |         | $                  | 29,979   |   |          |   | 28,577,404 |       |   | $ | 1.05 |   |

| 17. | Transactions with      related parties |
|-----|----------------------------------------|

|   | Certain      officers and directors (and the companies with which they are associated)      are customers of, and have had banking transactions with, the Bank in the      ordinary course of the Bank’s business.  In addition, the Bank      expects to continue to have such banking transactions in the      future.  All loans, and commitments to loan, to such parties are      generally made on the same terms, including interest rates and collateral,      as those prevailing at the time for comparable transactions with other      persons.  In the opinion of management, these transactions do      not involve more than the normal risk of collectibility or present any      other unfavorable features. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                              |   | 2009   |   |   | 2008   |   |
|-----------------------------------|--------|--------|--------|--------|--------|--------|
| Balance      at beginning of year |   | $      | 1,161  |   |   | $      | 1,007 |   |
| Additions                         |   |   | 443    |   |   |   | 2,139 |   |
| Repayments                        |   |   | (526   | )      |   |   | (1,985 | ) |
| Balance      at end of year       |   | $      | 1,078  |   |   | $      | 1,161 |   |

|   | In      addition, during the years ended December 31, 2009, 2008 and 2007, the      Company incurred legal fees of approximately $446, $47 and $243 to firms      in which certain directors werepartners. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| 18. | Benefit      plans |
|-----|--------------------|

|   | 401(k) profit sharing      plan |
|--------|---------------------------------|

|   | The      Company maintains a 401(k) profit sharing plan (the Plan) that covers      substantially all full-time employees.  Employees may make      voluntary tax-deferred contributions to the Plan, and the Company’s      contributions related to the Plan are at the discretion of the Board, not      to exceed the amount deductible for federal income tax      purposes. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Other benefit      plans |
|--------|--------------------------|

----

| 19. | Stock-based      compensation plans |
|-----|-------------------------------------|

|                         |   | 2008         |   |   | 2007         |   |
|------------------------------|--------|--------------|--------|--------|--------------|--------|
| Dividend      yield          |   |         | 3.9    | %      |         |   | 1.3 | % |
| Expected      volatility     |   |         | 32.0   | %      |         |   | 29.9 | % |
| Risk-free      interest rate |   |         | 3.0    | %      |         |   | 4.8 | % |
| Expected      option lives   |   | 7      years |   |   | 6      years |   |

----

|                              |   | 2009     |      |      | 2008   |   |     | 2007   |      |
|-----------------------------------|--------|----------|-----------|-----------|--------|--------|----------|--------|-----------|
|                              |   |     |      | Weighted- |   |   |     |   | Weighted- |   |   |   |   | Weighted- |   |
|                              |   | Options  |      | Average   |   |   | Options  |   | average   |   |   | Options |   | average |   |
|                              |   | out-     |      | Exercise  |   |   | out-     |   | exercise  |   |   | out- |   | exercise |   |
|                              |   | standing |      | price     |   |   | standing |   | price     |   |   | standing |   | price |   |
| Balance      at beginning of year |   |     | 1,089,091 |      |   | $      | 12.05    |   |      |   | 751,088 |   |   | $ | 13.34 |   |   |   | 770,095 |   |   | $ | 9.79 |   |
| Granted                           |   |     | -         |      |   |   | -        |   |      |   | 400,130 |   |   |   | 10.06 |   |   |   | 139,962 |   |   |   | 27.09 |   |
| Exercised                         |   |     | -         |      |   |   | -        |   |      |   | (11,505 | ) |   |   | 5.67 |   |   |   | (146,109 | ) |   |   | 6.86 |   |
| Cancelled                         |   |     | (98,473   | )         |   |   | 11.54    |   |      |   | (50,622 | ) |   |   | 15.39 |   |   |   | (12,860 | ) |   |   | 21.06 |   |
| Balance      at end of year       |   |     | 990,618   |      |   | $      | 12.18    |   |      |   | 1,089,091 |   |   | $ | 12.05 |   |   |   | 751,088 |   |   | $ | 13.34 |   |
|                              |   |     |      |      |   |   |     |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Exercisable      at end of year   |   |     | 526,656   |      |   |   |     |   |      |   | 520,645 |   |   |   |   |   |   |   | 488,203 |   |   |   |   |   |

|             |   | Options      outstanding |    |      | Exercisable      options |   |
|------------------|--------|--------------------------|---------|-----------|--------------------------|--------|
|             |   |                     |    |      |                     |   | Weighted- |   |   |   |   |   |   |   |
|             |   |                     |    | Weighted- |                     |   | average |   |   |   |   |   | Weighted- |   |
|             |   |                     |    | average   |                     |   | remaining |   |   |   |   |   | average |   |
| Exercise         |   | Number      of           |    | exercise  |                     |   | contractual |   |   | Number      of |   |   | exercise |   |
| price      range |   | options                  |    |      | price                    |   |   | life      (years) |   |   | options |   |   | price |   |
| Under      $5.00 |   |                     | 115,672 |      |                     | $      | 4.64 |   |   |   | 0.6 |   |   |   | 115,672 |   |   | $ | 4.64 |   |
| $5.01-$8.00      |   |                     | 84,416  |      |                     |   | 6.73 |   |   |   | 2.0 |   |   |   | 82,416 |   |   |   | 6.89 |   |
| $8.01-$12.00     |   |                     | 466,252 |      |                     |   | 9.81 |   |   |   | 6.6 |   |   |   | 140,737 |   |   |   | 9.07 |   |
| $12.01-$16.00    |   |                     | 154,174 |      |                     |   | 13.64 |   |   |   | 4.4 |   |   |   | 147,485 |   |   |   | 13.57 |   |
| $16.01-$22.00    |   |                     | 50,532  |      |                     |   | 20.35 |   |   |   | 6.0 |   |   |   | 38,471 |   |   |   | 20.23 |   |
| $22.01-$30.12    |   |                     | 119,572 |      |                     |   | 27.22 |   |   |   | 7.1 |   |   |   | 1,875 |   |   |   | 24.48 |   |
|             |   |                     |    |      |                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|             |   |                     | 990,618 |      |                     | $      | 12.18 |   |   |   | 4.4 |   |   |   | 526,656 |   |   | $ | 9.89 |   |

----

|                                   |   |           |    | Weighted-                 |   |
|----------------------------------------|--------|----------------|---------|---------------------------|--------|
|                                   |   |           |    | average grant        |   |
|                                   |   | Number of |    | date fair value |   |
|                                   |   | shares         |    | per share            |   |
| Nonvested      as of December 31, 2008 |   |           | 131,593 |                      |   | $ | 17.70 |   |
| Granted                                |   |           | 86,880  |                      |   |   | 2.13 |   |
| Vested                                 |   |           | (86,739 | )                         |   |   | 2.72 |   |
| Nonvested      as of December 31, 2009 |   |           | 131,734 |                      |   | $ | 14.68 |   |

|                                |   |           |   | Weighted-                 |   |
|-------------------------------------|--------|----------------|--------|---------------------------|--------|
|                                |   |           |   | average grant        |   |
|                                |   | Number of |   | date fair value |   |
|                                |   | shares         |   | per share            |   |
| Vested      as of December 31, 2008 |   |           | 2,971  |                      |   | $ | 8.75 |   |
| Vested      shares granted          |   |           | 8,840  |                      |   |   | 2.50 |   |
| Vested      as of December 31, 2009 |   |           | 11,811 |                      |   | $ | 4.07 |   |

| 20. | Fair value      measurements |
|-----|------------------------------|

|   | · | Quoted prices in      active markets for identical assets (Level 1): Inputs that are      quoted unadjusted prices in active markets for identical assets that the      Company has the ability to access at the measurement date. An active      market for the asset is a market in which transactions for the asset or      liability occur with sufficient frequency and volume to provide pricing      information on an ongoing basis. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Significant other      observable inputs (Level 2): Inputs that reflect the assumptions      market participants would use in pricing the asset or liability developed      based on market data obtained from sources independent of the reporting      entity including quoted prices for similar assets or liabilities in active      markets, quoted prices for identical or similar assets or liabilities in      inactive markets, and inputs derived principally from, or corroborated by,      observable market data by correlation or other  means. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | · | Significant      unobservable inputs (Level 3): Inputs that reflect the      reporting entity's own assumptions about the assumptions market      participants would use in pricing the asset or liability developed based      on the best information available in the circumstances. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                               | Quoted Prices in |   | Significant    |   |           |   |
|----------------------------------------------------|----------------------------|--------|----------------|--------|----------------|--------|
|                                               | Active Markets        |   | Other          |   | Significant    |   |
|                                               | for Identical         |   | Observable     |   | Unobservable   |   |
|                                               | Assets                     |   | Inputs         |   | Inputs         |   |
|                                               | (Level 1)             |   | (Level 2) |   | (Level 3) |   |
| 2009                                               |                       |   |           |   |           |   |   |   |   |
| Investment      securities available - for - sale  |                       | $      | -              |   |           | $      | 133,755 |   |   | $ | - |   |
| Total      recurring assets measured at fair value |                       | $      | -              |   |           | $      | 133,755 |   |   | $ | - |   |
|                                               |                       |   |           |   |           |   |   |   |   |   |   |   |
| 2008                                               |                       |   |           |   |           |   |   |   |   |   |   |   |
| Investment      securities available - for - sale  |                       | $      | -              |   |           | $      | 107,480 |   |   | $ | - |   |
| Total      recurring assets measured at fair value |                       | $      | -              |   |           | $      | 107,480 |   |   | $ | - |   |

----

|                                                   | Quoted Prices in |   | Significant    |   |           |   |
|--------------------------------------------------------|----------------------------|--------|----------------|--------|----------------|--------|
|                                                   | Active Markets        |   | Other          |   | Significant    |   |
|                                                   | for Identical         |   | Observable     |   | Unobservable   |   |
|                                                   | Assets                     |   | Inputs         |   | Inputs         |   |
|                                                   | (Level 1)             |   | (Level 2) |   | (Level 3) |   |
|                                                   |                       |   |           |   |           |   |   |   |   | (Restated) |   |
| 2009                                                   |                       |   |           |   |           |   |   |   |   |   |   |   |
| Impaired      loans with specific valuation allowances |                       | $      | -              |   |           | $      | - |   |   | $ | 114,039 |   |
| Other      real estate owned                           |                       |   |           |   |           |   | - |   |   |   | 28,860 |   |
|                                                   |                       | $      | -              |   |           | $      | - |   |   | $ | 142,899 |   |
|                                                   |                       |   |           |   |           |   |   |   |   |   |   |   |
| 2008                                                   |                       |   |           |   |           |   |   |   |   |   |   |   |
| Impaired      loans with specific valuation allowances |                       | $      | -              |   |           | $      | - |   |   | $ | 120,468 |   |
| Other      real estate owned                           |                       |   |           |   |           |   | - |   |   |   | 52,727 |   |
|                                                   |                       | $      | -              |   |           | $      | - |   |   | $ | 173,195 |   |

|   | Cash and cash      equivalents:  The carrying amount approximates the      estimated fair value of theseinstruments. |
|--------|--------------------------------------------------------------------------------------------------------------------------------|

----

|   | Loans:  The      estimated fair value of loans is calculated by discounting the contractual      cash flows of the loans using December 31, 2009 and 2008 origination      rates. The resulting amounts are adjusted to estimate the effect of      changes in the credit quality of borrowers since the loans were      originated. Fair values for impaired loans are estimated using a      discounted cash flow analysis or the underlying collateral      values. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | BOLI:  The      carrying amount approximates the estimated fair value of these      instruments. |
|--------|------------------------------------------------------------------------------------------------------------|

|   | OREO:  See      above description. |
|--------|----------------------------------------------|

|   | Deposits:  The      estimated fair value of demand deposits, consisting of checking, interest      bearing demand and savings deposit accounts, is represented by the amounts      payable on demand.  At the reporting date, the estimated fair      value of time deposits is calculated by discounting the scheduled cash      flows using the December 31, 2009 and 2008 rates offered on those      instruments. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Junior subordinated      debentures, other borrowings and TLGP senior unsecured      debt:  The fair value of the Bank’s junior subordinated      debentures, other borrowings (including federal funds purchased) and TLGP      senior unsecured debt are estimated using discounted cash flow analyses      based on the Bank’s December 31, 2009 and 2008 incremental borrowing rates      for similar types of borrowing arrangements.  However, as of      December 31, 2009, the estimated fair value of the Bank’s junior      subordinated debentures has been adjusted to reflect the possible      negotiated exchange of such debentures forcash. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Customer repurchase      agreements: The carrying value approximates the estimated fair      value. |
|--------|-----------------------------------------------------------------------------------------------------|

|   | Loan commitments and      standby letters of credit:  The majority of the Bank’s      commitments to extend credit have variable interest rates and “escape”      clauses if the customer’s credit quality deteriorates. Therefore, the fair      values of these items are not significant and are not included in the      following table. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                                                                       |   | December 31, 2009 |      | December 31, 2008 |   |
|--------------------------------------------------------------------------------------------|--------|-------------------|-----------|-------------------|--------|
|                                                                                       |   | Carrying          |      | Estimated         |   | Carrying |   | Estimated |   |
|                                                                                       |   | value             |      | fair value        |   | value |   | fair value |   |
| Financial      assets:                                                                     |   | (Restated)        |      | (Restated)        |   |   |   |   |   |
| Cash      and cash equivalents                                                             |   | $                 | 359,322   |              | $      | 359,322 |   | $ | 48,946 |   | $ | 48,946 |   |
| Investment      securities:                                                                |   |              |      |              |   |   |   |   |   |   |   |   |   |
| Available-for-sale                                                                         |   |              | 133,755   |              |   | 133,755 |   |   | 107,480 |   |   | 107,480 |   |
| Held-to-maturity                                                                           |   |              | 2,008     |              |   | 2,143 |   |   | 2,211 |   |   | 2,247 |   |
| FHLB      stock                                                                            |   |              | 10,472    |              |   | 10,472 |   |   | 10,472 |   |   | 10,472 |   |
| Loans,      net                                                                            |   |              | 1,489,090 |              |   | 1,483,232 |   |   | 1,909,018 |   |   | 1,950,602 |   |
| BOLI                                                                                       |   |              | 33,635    |              |   | 33,635 |   |   | 33,568 |   |   | 33,568 |   |
| OREO                                                                                       |   |              | 28,860    |              |   | 28,860 |   |   | 52,727 |   |   | 52,727 |   |
|                                                                                       |   |              |      |              |   |   |   |   |   |   |   |   |   |
| Financial      liabilities:                                                                |   |              |      |              |   |   |   |   |   |   |   |   |   |
| Deposits                                                                                   |   |              | 1,815,348 |              |   | 1,819,103 |   |   | 1,794,611 |   |   | 1,795,004 |   |
| Junior      subordinated debentures, other borrowings, and TLGP senior unsecured      debt |   |              | 304,765   |              |   | 256,814 |   |   | 317,533 |   |   | 320,796 |   |
| Customer      repurchase agreements                                                        |   |              | -         |              |   | - |   |   | 9,871 |   |   | 9,867 |   |

| 21. | Regulatory      matters |
|-----|-------------------------|

----

----

|                           |   |             |    |   |             |   |   |                            |   |   | Regulatory minimum                 |   |
|--------------------------------|--------|------------------|---------|--------|------------------|--------|--------|---------------------------------|--------|--------|-----------------------------------------|--------|
|                           |   |             |    |   |             |   |   | Regulatory minimum to |   |   | to be "well capitalized" |   |
|                           |   |             |    |   |             |   |   | be "adequately             |   |   | under prompt corrective       |   |
|                           |   | Actual           |    |   | capitalized"     |   |   | action provisions          |   |
|                           |   | Capital          |    |   |             |   |   | Capital                         |   |   |                                    |   |   | Capital |   |   |   |   |
|                           |   | Amount           |    |   | Ratio            |   |   | Amount                          |   |   | Ratio                                   |   |   | Amount |   |   | Ratio |   |
|                           |   | (Restated)  |    |   | (Restated)  |   |   | (Restated)                 |   |   |                                    |   |   | (Restated)  |   |   |   |   |
| December      31, 2009:        |   |             |    |   |             |   |   |                            |   |   |                                    |   |   |   |   |   |   |   |
| Tier      1 leverage           |   |             |    |   |             |   |   |                            |   |   |                                    |   |   |   |   |   |   |   |
| (to      average assets)       |   | $                | 24,637  |   |             |   | 1.1    | %                               |   | $      | 88,563                                  |   |   |   | 4.0 | % |   | $ | 110,704 |   |   |   | 5.0 | % |
| Tier      1 risked             |   |             |    |   |             |   |   |                            |   |   |                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (to      risk-weighted assets) |   |             | 24,637  |   |             |   | 1.5    |                            |   |   | 66,754                                  |   |   |   | 4.0 |   |   |   | 100,132 |   |   |   | 6.0 |   |
| Total      capital             |   |             |    |   |             |   |   |                            |   |   |                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (to      risk-weighted assets) |   |             | 49,274  |   |             |   | 3.0    |                            |   |   | 133,509                                 |   |   |   | 8.0 |   |   |   | 166,886 |   |   |   | 10.0 |   |
|                           |   |             |    |   |             |   |   |                            |   |   |                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| December      31, 2008:        |   |             |    |   |             |   |   |                            |   |   |                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Tier      1 leverage           |   |             |    |   |             |   |   |                            |   |   |                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (to      average assets)       |   | $                | 196,707 |   |             |   | 8.2    | %                               |   | $      | 96,127                                  |   |   |   | 4.0 | % |   | $ | 120,159 |   |   |   | 5.0 | % |
| Tier      1 capital            |   |             |    |   |             |   |   |                            |   |   |                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (to      risk-weighted assets) |   |             | 196,707 |   |             |   | 8.9    |                            |   |   | 87,968                                  |   |   |   | 4.0 |   |   |   | 131,951 |   |   |   | 6.0 |   |
| Total      capital             |   |             |    |   |             |   |   |                            |   |   |                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (to      risk-weighted assets) |   |             | 224,701 |   |             |   | 10.2   |                            |   |   | 175,935                                 |   |   |   | 8.0 |   |   |   | 219,919 |   |   |   | 10.0 |   |

----

|                           |   |       |    |   |             |   |   |                                   |   |   | Regulatory      minimum       |   |
|--------------------------------|--------|------------|---------|--------|------------------|--------|--------|----------------------------------------|--------|--------|-------------------------------|--------|
|                           |   |       |    |   |             |   |   | Regulatory      minimum to             |   |   | to      be "well capitalized" |   |
|                           |   |       |    |   |             |   |   | be      "adequately                    |   |   | under      prompt             |   |
|                           |   | Actual     |    |   | capitalized"     |   |   | corrective      action      provisions |   |
|                           |   | Capital    |    |   |             |   |   | Capital                                |   |   |                          |   |   | Capital |   |   |   |   |
|                           |   | Amount     |    |   | Ratio            |   |   | Amount                                 |   |   | Ratio                         |   |   | Amount |   |   | Ratio |   |
|                           |   | (Restated) |    |   | (Restated)  |   |   | (Restated)                             |   |   |                          |   |   | (Restated) |   |   |   |   |
| December      31, 2009:        |   |       |    |   |             |   |   |                                   |   |   |                          |   |   |   |   |   |   |   |
| Tier      1 leverage           |   |       |    |   |             |   |   |                                   |   |   |                          |   |   |   |   |   |   |   |
| (to      average assets)       |   | $          | 82,847  |   |             |   | 3.8    | %                                      |   | $      | 88,629                        |   |   |   | 4.0 | % |   | $ | 110,787 |   |   |   | 5.0 | % |
| Tier      1 capital            |   |       |    |   |             |   |   |                                   |   |   |                          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (to      risk-weighted assets) |   |       | 82,847  |   |             |   | 5.0    |                                   |   |   | 66,664                        |   |   |   | 4.0 |   |   |   | 99,996 |   |   |   | 6.0 |   |
| Total      capital             |   |       |    |   |             |   |   |                                   |   |   |                          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (to      risk-weighted assets) |   |       | 104,159 |   |             |   | 6.3    |                                   |   |   | 133,328                       |   |   |   | 8.0 |   |   |   | 166,660 |   |   |   | 10.0 |   |
|                           |   |       |    |   |             |   |   |                                   |   |   |                          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| December      31, 2008:        |   |       |    |   |             |   |   |                                   |   |   |                          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Tier      1 leverage           |   |       |    |   |             |   |   |                                   |   |   |                          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (to      average assets)       |   | $          | 194,051 |   |             |   | 8.1    | %                                      |   | $      | 95,998                        |   |   |   | 4.0 | % |   | $ | 119,997 |   |   |   | 5.0 | % |
| Tier      1 capital            |   |       |    |   |             |   |   |                                   |   |   |                          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (to      risk-weighted assets) |   |       | 194,051 |   |             |   | 8.8    |                                   |   |   | 87,878                        |   |   |   | 4.0 |   |   |   | 131,816 |   |   |   | 6.0 |   |
| Total      capital             |   |       |    |   |             |   |   |                                   |   |   |                          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (to      risk-weighted assets) |   |       | 221,772 |   |             |   | 10.1   |                                   |   |   | 175,755                       |   |   |   | 8.0 |   |   |   | 219,694 |   |   |   | 10.0 |   |

| 22. | Parent company      financial information |
|-----|-------------------------------------------|

|   | Condensed      financial information for Bancorp (Parent company only) is presented as      follows: |
|--------|------------------------------------------------------------------------------------------------------|

|                                            |   | December      31,  |   |
|-------------------------------------------------|--------|--------------------|--------|
|                                            |   | 2009               |   |   | 2008 |   |
|                                            |   | (Restated)         |   |   |   |   |
| Assets:                                         |   |     |   |   |   |   |
| Cash      and cash equivalents                  |   | $                  | 2,663  |   |   | $ | 2,697 |   |
| Investment      in subsidiary                   |   |               | 88,750 |   |   |   | 199,080 |   |
| Other      assets                               |   |               | 2,223  |   |   |   | 2,216 |   |
|                                            |   |               |   |   |   |   |   |   |
| Total      assets                               |   | $                  | 93,636 |   |   | $ | 203,993 |   |
|                                            |   |               |   |   |   |   |   |   |
| Liabilities      and stockholders' equity:      |   |               |   |   |   |   |   |   |
| Junior      subordinated debentures             |   | $                  | 68,558 |   |   | $ | 68,558 |   |
| Other      liabilities                          |   |               | 1,760  |   |   |   | 196 |   |
| Stockholders'      equity                       |   |               | 23,318 |   |   |   | 135,239 |   |
|                                            |   |               |   |   |   |   |   |   |
| Total      liabilities and stockholders' equity |   | $                  | 93,636 |   |   | $ | 203,993 |   |

----

|                                                                                                                                      |   | Years      ended December 31, |     |
|-------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------|----------|
|                                                                                                                                      |   | 2009                          |     |   | 2008 |   |   | 2007 |   |
|                                                                                                                                      |   | (Restated)                    |     |   |   |   |   |   |   |
| Income:                                                                                                                                   |   |                |     |   |   |   |   |   |   |
| Interest      and dividend income                                                                                                         |   | $                             | 5        |   |   | $ | 18 |   |   | $ | 38 |   |
| Gains      on sales of investment securities available-for-sale                                                                           |   |                          | -        |   |   |   | 115 |   |   |   | 260 |   |
| Total      income                                                                                                                         |   |                          | 5        |   |   |   | 133 |   |   |   | 298 |   |
|                                                                                                                                      |   |                          |     |   |   |   |   |   |   |   |   |   |
| Expenses:                                                                                                                                 |   |                          |     |   |   |   |   |   |   |   |   |   |
| Administrative                                                                                                                            |   |                          | 1,569    |   |   |   | 1,945 |   |   |   | 2,001 |   |
| Interest                                                                                                                                  |   |                          | 2,287    |   |   |   | 3,466 |   |   |   | 4,679 |   |
| Other                                                                                                                                     |   |                          | 538      |   |   |   | 621 |   |   |   | 431 |   |
| Total      expenses                                                                                                                       |   |                          | 4,394    |   |   |   | 6,032 |   |   |   | 7,111 |   |
|                                                                                                                                      |   |                          |     |   |   |   |   |   |   |   |   |   |
| Net      loss before credit for income taxes, dividends from the Bank and equity in      undistributed net earnings (losses) of subsidary |   |                          | (4,389   | ) |   |   | (5,899 | ) |   |   | (6,813 | ) |
| Credit      for income taxes                                                                                                              |   |                          | 1,669    |   |   |   | 2,283 |   |   |   | 2,377 |   |
| Net      loss before dividends from the Bank and equity in undistributed net      earnings (losses) of subsidiary                         |   |                          | (2,720   | ) |   |   | (3,616 | ) |   |   | (4,436 | ) |
| Dividends      from the Bank                                                                                                              |   |                          | -        |   |   |   | 6,900 |   |   |   | 20,200 |   |
| Equity      in undistributed net earnings (loss) of subsidiary                                                                            |   |                          | (112,109 | ) |   |   | (137,850 | ) |   |   | 14,215 |   |
| Net      income (loss)                                                                                                                    |   | $                             | (114,829 | ) |   | $ | (134,566 | ) |   | $ | 29,979 |   |

----

|                                                                                               |   | 2009               |     |   | 2008   |   |     | 2007   |   |
|----------------------------------------------------------------------------------------------------|--------|--------------------|----------|--------|--------|--------|----------|--------|--------|
|                                                                                               |   | (Restated)         |     |   |   |   |     |   |   |
| Cash      flows from operating activities:                                                         |   |     |     |   |   |   |     |   |   |
| Net      income (loss)                                                                             |   | $                  | (114,829 | )      |   | $      | (134,566 | )      |   | $ | 29,979 |   |
| Adjustments      to reconcile net income (loss) to net cash provided by operating      activities: |   |               |     |   |   |   |     |   |   |   |   |   |
| Dividends      from the Bank                                                                       |   |               | -        |   |   |   | 6,900    |   |   |   | 20,200 |   |
| Equity      in undistributed net (earnings) loss of subsidiary                                     |   |               | 112,109  |   |   |   | 130,950  |   |   |   | (34,415 | ) |
| Gains      on sales of investment securities available-for-sale                                    |   |               | -        |   |   |   | (115     | )      |   |   | (260 | ) |
| Stock-based      compensation expense                                                              |   |               | 1,258    |   |   |   | 1,566    |   |   |   | 1,632 |   |
| Increase      in other assets                                                                      |   |               | (6       | )      |   |   | (4       | )      |   |   | (5 | ) |
| (Decrease)      increase in other liabilities                                                      |   |               | 1,564    |   |   |   | (49      | )      |   |   | 12 |   |
| Net      cash provided by operating activities                                                     |   |               | 96       |   |   |   | 4,682    |   |   |   | 17,143 |   |
|                                                                                               |   |               |     |   |   |   |     |   |   |   |   |   |
| Cash      flows provided by investing activities:                                                  |   |               |     |   |   |   |     |   |   |   |   |   |
| Proceeds      from sales of investment securities available-for-sale                               |   |               | -        |   |   |   | 425      |   |   |   | 525 |   |
|                                                                                               |   |               |     |   |   |   |     |   |   |   |   |   |
| Cash      flows from financing activities:                                                         |   |               |     |   |   |   |     |   |   |   |   |   |
| Cash      dividends paid                                                                           |   |               | -        |   |   |   | (6,158   | )      |   |   | (10,491 | ) |
| Repurchases      of common stock                                                                   |   |               | -        |   |   |   | -        |   |   |   | (9,205 | ) |
| Proceeds      from stock options exercised                                                         |   |               | -        |   |   |   | 67       |   |   |   | 1,979 |   |
| Tax      benefit (cost) from non-qualified stock options exercised                                 |   |               | -        |   |   |   | (297     | )      |   |   | 548 |   |
| Income      taxes withheld on vested restricted stock                                              |   |               | (130     | )      |   |   | -        |   |   |   | - |   |
|                                                                                               |   |               |     |   |   |   |     |   |   |   |   |   |
| Net      cash used by financing activities                                                         |   |               | (130     | )      |   |   | (6,388   | )      |   |   | (17,169 | ) |
|                                                                                               |   |               |     |   |   |   |     |   |   |   |   |   |
| Net      (decrease) increase in cash and cash equivalents                                          |   |               | (34      | )      |   |   | (1,281   | )      |   |   | 499 |   |
| Cash      and cash equivalents at beginning of year                                                |   |               | 2,697    |   |   |   | 3,978    |   |   |   | 3,479 |   |
| Cash      and cash equivalents at end of year                                                      |   | $                  | 2,663    |   |   | $      | 2,697    |   |   | $ | 3,978 |   |

| 23. | Restatement of      consolidated financialstatements |
|-----|------------------------------------------------------|

----

|                                                           |   | As of and for the year ended December 31, 2009 |      |
|----------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------|-----------|
|                                                           |   | As Previously                                                                          |      |   |   |   |   |   |   |
|                                                           |   | Reported                                                                                    |      |   | Adjustment |   |   | Restated |   |
| Consolidated      balance sheet                                |   |                                                                                        |      |   |   |   |   |   |   |
| Reserve      for loan losses                                   |   | $                                                                                           | 37,586    |   |   | $ | 21,000 |   |   | $ | 58,586 |   |
| Net      loans                                                 |   |                                                                                        | 1,510,090 |   |   |   | (21,000 | ) |   |   | 1,489,090 |   |
| Other      real estate owned                                   |   |                                                                                        | 29,609    |   |   |   | (749 | ) |   |   | 28,860 |   |
| Total      assets                                              |   |                                                                                        | 2,193,877 |   |   |   | (21,749 | ) |   |   | 2,172,128 |   |
| Accumulated      deficit                                       |   |                                                                                        | (116,204  | ) |   |   | (21,749 | ) |   |   | (137,953 | ) |
| Total      stockholders' equity                                |   |                                                                                        | 45,067    |   |   |   | (21,749 | ) |   |   | 23,318 |   |
| Total      liabilities and stockholders' equity                |   |                                                                                        | 2,193,877 |   |   |   | (21,749 | ) |   |   | 2,172,128 |   |
|                                                           |   |                                                                                        |      |   |   |   |   |   |   |   |   |   |
| Consolidated      statement of operations                      |   |                                                                                        |      |   |   |   |   |   |   |   |   |   |
| Loan      loss provision                                       |   | $                                                                                           | 113,000   |   |   | $ | 21,000 |   |   | $ | 134,000 |   |
| Net      interest loss after loan loss provision               |   |                                                                                        | (40,324   | ) |   |   | (21,000 | ) |   |   | (61,324 | ) |
| OREO      expense                                              |   |                                                                                        | 22,391    |   |   |   | 749 |   |   |   | 23,140 |   |
| Non-interest      expense                                      |   |                                                                                        | 93,967    |   |   |   | 749 |   |   |   | 94,716 |   |
| Loss      before income taxes                                  |   |                                                                                        | (112,665  | ) |   |   | (21,749 | ) |   |   | (134,414 | ) |
| Net      loss                                                  |   |                                                                                        | (93,080   | ) |   |   | (21,749 | ) |   |   | (114,829 | ) |
|                                                           |   |                                                                                        |      |   |   |   |   |   |   |   |   |   |
| Per      share data:                                           |   |                                                                                        |      |   |   |   |   |   |   |   |   |   |
| Basic      loss per common share                               |   | $                                                                                           | (3.32     | ) |   | $ | (0.78 | ) |   | $ | (4.10 | ) |
| Diluted      loss per common share                             |   |                                                                                        | (3.32     | ) |   |   | (0.78 | ) |   |   | (4.10 | ) |
|                                                           |   |                                                                                        |      |   |   |   |   |   |   |   |   |   |
| Consolidated      statement of changes in stockholders' equity |   |                                                                                        |      |   |   |   |   |   |   |   |   |   |
| Net      loss                                                  |   | $                                                                                           | (93,080   | ) |   | $ | (21,749 | ) |   | $ | (114,829 | ) |
| Accumulated      deficit                                       |   |                                                                                        | (116,204  | ) |   |   | (21,749 | ) |   |   | (137,953 | ) |
|                                                           |   |                                                                                        |      |   |   |   |   |   |   |   |   |   |
| Consolidated      statement of cash flows:                     |   |                                                                                        |      |   |   |   |   |   |   |   |   |   |
| Net      loss                                                  |   | $                                                                                           | (93,080   | ) |   | $ | (21,749 | ) |   | $ | (114,829 | ) |
| Loan      loss provision                                       |   |                                                                                        | 113,000   |   |   |   | 21,000 |   |   |   | 134,000 |   |
| Writedown      of OREO                                         |   |                                                                                        | 17,232    |   |   |   | 749 |   |   |   | 17,981 |   |
| Net      cash provided by operating activities                 |   |                                                                                        | 30,576    |   |   |   | 17,232 |   |   |   | 47,808 |   |
| Net      cash provided by investing activities                 |   |                                                                                        | 281,832   |   |   |   | (17,232 | ) |   |   | 264,600 |   |

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

|   | Proposal      1. | To      approve an amendment to our Articles of Incorporation, as amended, to      increase the number of authorized shares of the Company’s Common Stock      from 45,000,000 to 300,000,000: |
|--------|------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| Votes      |   | Votes     |    |   | Votes     |   |
|------------|--------|-----------|---------|--------|-----------|--------|
| "FOR"      |   | "AGAINST" |    |   | "ABSTAIN" |   |
| 23,792,834 |   |      | 825,493 |   |      |   | 11,933 |   |

|  | Proposal      2. | To      approve the issuance of up to $65 million of the Company’s Common Stock to      investors in Private Offerings, which will result in such investors owning      greater than 20% of the outstanding voting securities of the      Company: |
|--|------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Votes      |   | Votes     |    |   | Votes     |   |
|------------|--------|-----------|---------|--------|-----------|--------|
| "FOR"      |   | "AGAINST" |    |   | "ABSTAIN" |   |
| 16,449,360 |   |      | 590,248 |   |      |   | 121,871 |   |

|  | Proposal      3. | To      approve an amendment to our Articles of Incorporation, as amended, to      effect a one for ten reverse stock split of our Common Stock and payment      of cash for resulting fractionalshares: |
|--|------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Votes      |   | Votes     |      |   | Votes     |   |
|------------|--------|-----------|-----------|--------|-----------|--------|
| "FOR"      |   | "AGAINST" |      |   | "ABSTAIN" |   |
| 23,177,966 |   |      | 1,453,150 |   |      |   | 106,542 |   |

----

, except for the effects of

----

| ITEM      12. | SECURITY OWNERSHIP OF      CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCK HOLDER      MATTERS |
|---------------|-----------------------------------------------------------------------------------------------------------|

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|   | (a) | The      following documents are filed as part of this Annual Report on Form      10-K: |
|--------|-----|-----------------------------------------------------------------------------------------|

|   | (1) | The      consolidated financial statements required in this Annual Report are      listed in the accompanying Index to Consolidated Financial Statements on      page 64. |
|--------|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (2) | All      consolidated financial statement schedules are omitted because they are      not applicable or not required, or because the required information is      included in the consolidated financial statements or the notes      thereto |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (3) | Exhibits.  Exhibits      filed with this Annual Report on Form 10-K or incorporated by reference      from other filing are as follows: |
|--------|-----|---------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 3.1  | Articles of Incorporation of      Cascade Bancorp, as amended.  Filed as exhibit 3.1 to      registrant’s Quarterly Report on Form 10-Q, as filed with the Securities      and Exchange Commission filed June 30, 2997 and incorporated herein by      reference.                                                                                                                    |
|--------|------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | 3.2  | Bylaws of Cascade Bancorp, as      amended and restated. 10.1 Registrant’s 1994 Incentive      Stock Option Plan.  Filed as an exhibit to registrant’s      Registration Statement on Form 10-SB, as filed with the Securities and      Exchange Commission in January 1994, and incorporated herein by      reference.                                                        |
|   | 10.2 | Incentive Stock Option Plan      Letter Agreement.  Entered into between registrant and      certain employees pursuant to registrant’s 1994 Incentive Stock Option      Plan. Filed as an exhibit to registrant’s Registration Statement on Form      10-SB, as filed with the Securities and Exchange Commission in January      1994, and incorporated herein by reference. |
|   | 10.3 | Incentive Stock Option Plan      Letter Agreement.  Entered into between registrant and      certain employees pursuant to registrant’s 1994 Incentive Stock Option      Plan. Filed as an exhibit to registrant’s Registration Statement on Form      10-SB, as filed with the Securities and Exchange Commission in January      1994, and incorporated herein by reference. |
|   | 10.4 | Deferred Compensation      Plans.  Established for the Board, certain key executives      and managers during the fourth quarter ended December 31, 1995. Filed as      exhibit 10.5 to registrant’s Form 10-KSB, as filed with the Securities and      Exchange Commission on March 28, 1996 (File No. 000-23322), and      incorporated herein by reference.                       |
|   | 10.5 | Executive Employment Agreement      between Cascade Bancorp, Bank of the Cascades, and Patricia L. Moss,      entered into February 18, 2008.  Filed as an exhibit to      the registrant’s filing on Form 8-K Current Report, as filed with the      Securities and Exchange Commission on February 19, 2008, and incorporated      herein by reference.                            |
|   | 10.6 | Executive Employment Agreement      between Cascade Bancorp, Bank of the Cascades, and Gregory D. Newton      entered into February 18, 2008.  Filed as an exhibit to      the registrant’s filing on Form 8-K Current Report, as filed with the      Securities and Exchange Commission on February 19, 2008, and incorporated      herein by reference.                            |
|   | 10.7 | Executive Employment Agreement      between Cascade Bancorp, Bank of the Cascades, and Peggy L. Biss entered      into February 18, 2008.  Filed as an exhibit to the      registrant’s filing on Form 8-K Current Report, as filed with the      Securities and Exchange Commission on February 19, 2008, and incorporated      herein by reference.                                |
|   | 10.8 | Executive Employment Agreement      between Cascade Bancorp, Bank of the Cascades, and Frank R. Weis entered      into February 18, 2008.  Filed as an exhibit to the      registrant’s filing on Form 8-K Current Report, as filed with the      Securities and Exchange Commission on February 19, 2008, and incorporated      herein by reference.                                |
|   | 10.9 | Agreement, together with Order      to Cease and Desist dated August 27, 2009.  The Order to      Cease and Desist was filed as exhibit 99.2 to the registrant’s filing on      Form 8-K Current Report, as filed with the Securities and Exchange      Commission on September 2, 2009, and incorporated herein by      reference.                                                  |

----

|   | 10.10 | Shareholders Agreement dated      December 27,2005, by and among Cascade Bancorp, David F. Bolger and      Two-forth Associates.  Filed as exhibit 4 to Schedule 13D      filed by Mr. David Bolger and Two-Forty Associates on April 27, 2006 and      incorporated herein by reference.                                                                     |
|--------|-------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | 10.6  | First      Amendment to the Securities Purchase Agreement, dated February 16, 2010,      between the Company and David F. Bolger, Two-Forty Associates, and The      David F. Bolger 2008 Grantor Retained Annuity Trust.  Filed as      an exhibit to the registrants Form 8-K filed with the Securities and      Exchange Commission on February 19, 2010). |
|   | 10.7  | First      Amendment to the Securities Purchase Agreement dated February16, 2010,      between the Company and BOTC Holdings LLC incorporated by reference to      exhibit 10.2 of the registrants filing on Form 8-K filed with the      Securities and Exchange Commission on February 19,  2010).                                                                    |
|   | 11.1  | Earnings      per Share Computation. The information called for by this item is located      on page 92 of this Form 10-K/A Annual Report, and is incorporated herein      by reference.                                                                                                                                                                                |
|   | 21.1  | Subsidiaries      of registrant.                                                                                                                                                                                                                                                                                                                                        |
|   | 23.1  | Consent      of Symonds, Evans & Company, P.C., Independent      Accountants.                                                                                                                                                                                                                                                                                       |
|   | 31.1  | Certification      of Chief Executive Officer pursuant to Rule 13a-14(a) or Rule      15d-4(a).                                                                                                                                                                                                                                                                         |
|   | 31.2  | Certification      of Chief Financial Officer pursuant to Rule 13a-14(a) or Rule      15d-4(a).                                                                                                                                                                                                                                                                         |
|   | 32.0  | Certification      of Chief Executive Officer and Chief Financial Officer pursuant to Rule      13a-14(b) or Rule 15d-14(b) and Section      906 of the Sarbanes-Oxley Act of2002.                                                                                                                                                                                 |

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| CASCADE      BANCORP                        |   | CASCADE      BANCORP                                  |
|---------------------------------------------|--------|-------------------------------------------------------|
|                                        |   |                                                  |
| /s/ Patricia L. Moss                        |   | /s/ Gregory D. Newton                                 |
| Patricia      L. Moss                       |   | Gregory      D. Newton                                |
| President/Chief      Executive Officer      |   | Executive      Vice President/Chief Financial Officer |
|                                        |   |                                                  |
| Date:    March 12,      2010 |   | Date:     March 12,      2010     |

| /s/ Jerol E. Andres                                 |   | March 12, 2010 |   |
|-----------------------------------------------------|--------|----------------|--------|
| Jerol      E. Andres, Director/Vice Chairman        |   | Date           |   |
|                                                |   |           |   |
| /s/ Gary L. Hoffman                                 |   | March 12, 2010 |   |
| Gary      L. Hoffman, Director/Chairman             |   | Date           |   |
|                                                |   |           |   |
| /s/ Henry H. Hewitt                                 |   | March 12, 2010 |   |
| Henry      H. Hewitt, Director                      |   | Date           |   |
|                                                |   |           |   |
| /s/ Judith A. Johansen                              |   | March 12, 2010 |   |
| Judith      A. Johansen, Director                   |   | Date           |   |
|                                                |   |           |   |
| /s/ Clarence Jones                                  |   | March 12, 2010 |   |
| Clarence      Jones, Director                       |   | Date           |   |
|                                                |   |           |   |
| /s/ Patricia L. Moss                                |   | March 12, 2010 |   |
| Patricia      L. Moss, Director/President & CEO |   | Date           |   |
|                                                |   |           |   |
| /s/ Ryan R. Patrick                                 |   | March 12, 2010 |   |
| Ryan      R. Patrick, Director                      |   | Date           |   |
|                                                |   |           |   |
| /s/ James E. Petersen                               |   | March 12, 2010 |   |
| James      E. Petersen, Director                    |   | Date           |   |

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