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

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

| Delaware                                                                                            | 23-3016517          |
|-----------------------------------------------------------------------------------------------------|---------------------|
|                                                                                                |                |
| (State or other jurisdiction of                                                                     | (IRS Employer       |
| incorporation or organization)                                                                      | Identification No.) |
|                                                                                                |                |
|                                                                                                |                |
|                                                                                                |                |
| 409 Silverside RoadWilmington, DE 19809(Address of principalexecutive offices)(Zip code)  |

----

| (Check one):                      |                          |
|-----------------------------------|-------------------------------|
|  Large accelerated filer [ ] | Accelerated filer [X]         |
| Non-accelerated filer [ ]         | Smaller reporting company [ ] |
| (Do not check if a smaller        |                          |
| reporting company)                |                          |

----

|                         |                                                                                                              |   | Page      |
|------------------------------|-------------------------------------------------------------------------------------------------------------------|--------|-----------|
| Part I Financial Information |
|                         |                                                                                                              |   |      |
| Item 1.                      | Financial Statements:                                                                                             |   | 4         |
|                         |                                                                                                              |   |      |
|                         | Consolidated Balance Sheets – June 30, 2010 (unaudited) and December 31, 2009                               |   | 4         |
|                         |                                                                                                              |   |      |
|                         | Unaudited Consolidated Income Statements – Three and six months ended June 30, 2010 and 2009                |   | 5         |
|                         |                                                                                                              |   |      |
|                         | Unaudited Consolidated Statements of Changes in Shareholders’ Equity – Six months ended June 30, 2010 |   | 6         |
|                         |                                                                                                              |   |      |
|                         | Unaudited Consolidated Statements of Cash Flows – Six months ended June 30, 2010 and 2009                   |   | 7         |
|                         |                                                                                                              |   |      |
|                         | Unaudited Notes to Consolidated Financial Statements                                                              |   | 8         |
|                         |                                                                                                              |   |      |
| Item 2.                      | Management’s Discussion and Analysis of Financial Condition and Results of Operations                       |   | 20        |
|                         |                                                                                                              |   |      |
| Item 3.                      | Quantitative and Qualitative Disclosures About Market Risk                                                        |   | 30        |
|                         |                                                                                                              |   |      |
| Item 4.                      | Controls and Procedures                                                                                           |   | 30        |
|                         |                                                                                                              |   |      |
| Part II Other Information    |
|                         |                                                                                                              |   |      |
| Item 1A.                     | Risk Factors                                                                                                      |   |   31 |
|                         |                                                                                                              |   |      |
| Item 6.                      | Exhibits                                                                                                          |   | 31        |
|                         |                                                                                                              |   |      |
| Signatures                   |                                                                                                              |   | 32        |

----

Item 1. 

| THE BANCORP, INC. AND SUBSIDIARY                                                       |   |
|----------------------------------------------------------------------------------------|--------|
| CONSOLIDATED BALANCE SHEET                                                             |   |
|                                                                                   |   |   |   |   |   |   |
|                                                                                   |   | June 30, |   |   | December 31, |   |
|                                                                                   |   | 2010 |   |   | 2009 |   |
|                                                                                   |   | (unaudited) |   |   |   |   |
|                                                                                   |   | (in thousands) |   |
| ASSETS                                                                                 |   |   |   |   |   |   |
| Cash and cash equivalents                                                              |   |   |   |   |   |   |
| Cash and due from banks                                                                |   | $ | 92,620 |   |   | $ | 135,246 |   |
| Interest bearing deposits                                                              |   |   | 171,054 |   |   |   | 219,213 |   |
| Total cash and cash equivalents                                                        |   |   | 263,674 |   |   |   | 354,459 |   |
|                                                                                   |   |   |   |   |   |   |   |   |
| Investment securities, available-for-sale, at fair value                               |   |   | 208,080 |   |   |   | 93,478 |   |
| Investment securities, held-to-maturity (fair value $15,461 and $15,415, respectively) |   |   | 21,496 |   |   |   | 21,468 |   |
| Loans, net of deferred loan costs                                                      |   |   | 1,576,525 |   |   |   | 1,523,722 |   |
| Allowance for loan and lease losses                                                    |   |   | (22,336 | ) |   |   | (19,123 | ) |
| Loans, net                                                                             |   |   | 1,554,189 |   |   |   | 1,504,599 |   |
| Premises and equipment, net                                                            |   |   | 8,229 |   |   |   | 7,942 |   |
| Accrued interest receivable                                                            |   |   | 8,483 |   |   |   | 7,722 |   |
| Intangible assets, net                                                                 |   |   | 9,505 |   |   |   | 10,005 |   |
| Other real estate owned                                                                |   |   | 459 |   |   |   | 459 |   |
| Deferred tax asset, net                                                                |   |   | 20,258 |   |   |   | 20,875 |   |
| Other assets                                                                           |   |   | 29,497 |   |   |   | 22,527 |   |
| Total assets                                                                           |   | $ | 2,123,870 |   |   | $ | 2,043,534 |   |
|                                                                                   |   |   |   |   |   |   |   |   |
| LIABILITIES                                                                            |   |   |   |   |   |   |   |   |
| Deposits                                                                               |   |   |   |   |   |   |   |   |
| Demand (non-interest bearing)                                                          |   | $ | 827,268 |   |   | $ | 661,383 |   |
| Savings, money market and interest checking                                            |   |   | 903,599 |   |   |   | 850,306 |   |
| Time deposits                                                                          |   |   | 140,285 |   |   |   | 125,255 |   |
| Time deposits, $100,000 and over                                                       |   |   | 10,455 |   |   |   | 17,565 |   |
| Total deposits                                                                         |   |   | 1,881,607 |   |   |   | 1,654,509 |   |
|                                                                                   |   |   |   |   |   |   |   |   |
| Securities sold under agreements to repurchase                                         |   |   | 7,552 |   |   |   | 2,588 |   |
| Short-term borrowings                                                                  |   |   | - |   |   |   | 100,000 |   |
| Accrued interest payable                                                               |   |   | 165 |   |   |   | 362 |   |
| Subordinated debenture                                                                 |   |   | 13,401 |   |   |   | 13,401 |   |
| Other liabilities                                                                      |   |   | 17,367 |   |   |   | 27,471 |   |
| Total liabilities                                                                      |   |   | 1,920,092 |   |   |   | 1,798,331 |   |
|                                                                                   |   |   |   |   |   |   |   |   |
| SHAREHOLDERS' EQUITY                                                                   |   |   |   |   |   |   |   |   |
| Preferred stock - Series B, $1,000 liquidation value, 0 and 45,220 shares issued and   |   |   | - |   |   |   | 39,411 |   |
| outstanding at June 30, 2010 and December 31, 2009, respectively                       |   |   |   |   |   |   |   |   |
| Common stock - authorized, 50,000,000 shares of $1.00 par value; 26,181,291            |   |   |   |   |   |   |   |   |
| shares issued and outstanding at June 30, 2010 and December 31, 2009, respectively     |   |   | 26,181 |   |   |   | 26,181 |   |
| Additional paid-in capital                                                             |   |   | 197,027 |   |   |   | 196,875 |   |
| Accumulated deficit                                                                    |   |   | (20,824 | ) |   |   | (17,175 | ) |
| Accumulated other comprehensive income (loss)                                          |   |   | 1,394 |   |   |   | (89 | ) |
| Total shareholders' equity                                                             |   |   | 203,778 |   |   |   | 245,203 |   |
|                                                                                   |   |   |   |   |   |   |   |   |
| Total liabilities and shareholders' equity                                             |   | $ | 2,123,870 |   |   | $ | 2,043,534 |   |
|                                                                                   |   |   |   |   |   |   |   |   |
|  The accompanying notes are an integral part of these statements.                 |   |   |   |   |   |   |   |   |

----

| THE BANCORP, INC. AND SUBSIDIARY                                 |   |
|------------------------------------------------------------------|--------|
| UNAUDITED CONSOLIDATED STATEMENT OF OPERATIONS                   |   |
|                                                             |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                             |   | For the three months ending June 30, |   |   | For the six months ended June 30, |   |
|                                                             |   | 2010 |   |   | 2009 |   |   | 2010 |   |   | 2009 |   |
|                                                             |   | (in thousands, except per share data) |   |
| Interest income                                                  |   |   |   |   |   |   |   |   |   |   |   |   |
| Loans, including fees                                            |   | $ | 18,373 |   |   | $ | 18,213 |   |   | $ | 36,289 |   |   | $ | 36,387 |   |
| Interest on investment securities:                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Taxable interest                                                 |   |   | 1,702 |   |   |   | 1,381 |   |   |   | 3,010 |   |   |   | 2,456 |   |
| Tax-exempt interest                                              |   |   | 347 |   |   |   | 400 |   |   |   | 737 |   |   |   | 402 |   |
| Federal funds sold                                               |   |   | - |   |   |   | 26 |   |   |   | - |   |   |   | 119 |   |
| Interest bearing deposits                                        |   |   | 83 |   |   |   | 2 |   |   |   | 434 |   |   |   | 5 |   |
|                                                             |   |   | 20,505 |   |   |   | 20,022 |   |   |   | 40,470 |   |   |   | 39,369 |   |
| Interest expense                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Deposits                                                         |   |   | 3,534 |   |   |   | 3,655 |   |   |   | 6,992 |   |   |   | 7,799 |   |
| Securities sold under agreements to repurchase                   |   |   | 7 |   |   |   | 5 |   |   |   | 14 |   |   |   | 16 |   |
| Short-term borrowings                                            |   |   | 59 |   |   |   | 171 |   |   |   | 64 |   |   |   | 220 |   |
| Subordinated debt                                                |   |   | 216 |   |   |   | 222 |   |   |   | 431 |   |   |   | 449 |   |
|                                                             |   |   | 3,816 |   |   |   | 4,053 |   |   |   | 7,501 |   |   |   | 8,484 |   |
| Net interest income                                              |   |   | 16,689 |   |   |   | 15,969 |   |   |   | 32,969 |   |   |   | 30,885 |   |
| Provision for loan and lease losses                              |   |   | 5,806 |   |   |   | 2,500 |   |   |   | 9,954 |   |   |   | 5,500 |   |
| Net interest income after provision for loan and lease losses    |   |   | 10,883 |   |   |   | 13,469 |   |   |   | 23,015 |   |   |   | 25,385 |   |
|                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Non-interest income                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Service fees on deposit accounts                                 |   |   | 527 |   |   |   | 359 |   |   |   | 908 |   |   |   | 636 |   |
| Merchant credit card deposit and ach fees                        |   |   | 577 |   |   |   | 310 |   |   |   | 1,063 |   |   |   | 668 |   |
| Stored value income                                              |   |   | 2,512 |   |   |   | 1,681 |   |   |   | 5,327 |   |   |   | 4,040 |   |
| Gain on sales of investment securities                           |   |   | 469 |   |   |   | 670 |   |   |   | 1,219 |   |   |   | 670 |   |
| Leasing income                                                   |   |   | 511 |   |   |   | 410 |   |   |   | 1,175 |   |   |   | 471 |   |
| Debit card income                                                |   |   | 172 |   |   |   | 124 |   |   |   | 342 |   |   |   | 244 |   |
| Other                                                            |   |   | 191 |   |   |   | 155 |   |   |   | 419 |   |   |   | 237 |   |
| Total non-interest income                                        |   |   | 4,959 |   |   |   | 3,709 |   |   |   | 10,453 |   |   |   | 6,966 |   |
|                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Non-interest expense                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Salaries and employee benefits                                   |   |   | 6,468 |   |   |   | 5,664 |   |   |   | 12,840 |   |   |   | 11,849 |   |
| Depreciation and amortization                                    |   |   | 741 |   |   |   | 720 |   |   |   | 1,463 |   |   |   | 1,440 |   |
| Rent and related occupancy cost                                  |   |   | 654 |   |   |   | 673 |   |   |   | 1,277 |   |   |   | 1,327 |   |
| Data processing expense                                          |   |   | 1,695 |   |   |   | 1,633 |   |   |   | 3,308 |   |   |   | 3,211 |   |
| Printing and supplies                                            |   |   | 337 |   |   |   | 256 |   |   |   | 751 |   |   |   | 545 |   |
| Audit expense                                                    |   |   | 311 |   |   |   | 332 |   |   |   | 602 |   |   |   | 632 |   |
| Legal expense                                                    |   |   | 701 |   |   |   | 494 |   |   |   | 1,055 |   |   |   | 727 |   |
| Amortization of intangible assets                                |   |   | 250 |   |   |   | 250 |   |   |   | 500 |   |   |   | 500 |   |
| Loss on sale of other real estate owned                          |   |   | - |   |   |   | 1,700 |   |   |   | - |   |   |   | 1,700 |   |
| FDIC Insurance                                                   |   |   | 1,098 |   |   |   | 1,387 |   |   |   | 1,854 |   |   |   | 1,681 |   |
| Software, maintenance and equipment                              |   |   | 328 |   |   |   | 192 |   |   |   | 586 |   |   |   | 353 |   |
| Other                                                            |   |   | 2,655 |   |   |   | 2,138 |   |   |   | 5,209 |   |   |   | 4,656 |   |
| Total non-interest expense                                       |   |   | 15,238 |   |   |   | 15,439 |   |   |   | 29,445 |   |   |   | 28,621 |   |
| Net income before income tax                                     |   |   | 604 |   |   |   | 1,739 |   |   |   | 4,023 |   |   |   | 3,730 |   |
| Income tax provision                                             |   |   | 197 |   |   |   | 632 |   |   |   | 1,430 |   |   |   | 1,413 |   |
| Net income                                                       |   |   | 407 |   |   |   | 1,107 |   |   |   | 2,593 |   |   |   | 2,317 |   |
| Less preferred stock dividends and accretion                     |   |   | - |   |   |   | (982 | ) |   |   | (6,242 | ) |   |   | (1,829 | ) |
| Net income (loss) available to common shareholders               |   | $ | 407 |   |   | $ | 125 |   |   | $ | (3,649 | ) |   | $ | 488 |   |
| Net income (loss) per share - basic                              |   | $ | 0.02 |   |   | $ | 0.01 |   |   | $ | (0.14 | ) |   | $ | 0.03 |   |
| Net income (loss) per share - diluted                            |   | $ | 0.02 |   |   | $ | 0.01 |   |   | $ | (0.14 | ) |   | $ | 0.03 |   |
|                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| The accompanying notes are an integral part of these statements. |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

| THE BANCORP INC. AND SUBSIDIARY                                     |   |
|---------------------------------------------------------------------|--------|
| UNAUDITED CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY |   |
| For the six months ended June 30, 2010                              |   |
| (in thousands except share data)                                    |   |
|                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | Accumulated |   |   |   |   |   |   |   |
|                                                                |   | Common |   |   |   |   |   |   |   |   | Additional |   |   |   |   |   | other |   |   |   |   |   |   |   |
|                                                                |   | stock |   |   | Common |   |   | Preferred |   |   | paid-in |   |   | Accumulated |   |   | comprehensive |   |   | Comprehensive |   |   |   |   |
|                                                                |   | shares |   |   | stock |   |   | stock |   |   | capital |   |   | deficit |   |   | gain/(loss) |   |   | income |   |   | Total |   |
|                                                                |   |   |   |   |   |   |
| Balance at December 31, 2009                                        |   |   | 26,181,291 |   |   | $ | 26,181 |   |   | $ | 39,411 |   |   | $ | 196,875 |   |   | $ | (17,175 | ) |   | $ | (89 | ) |   |   |   |   | $ | 245,203 |   |
| Net income                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 2,593 |   |   |   |   |   |   | $ | 2,593 |   |   |   | 2,593 |   |
| Cash dividends on  preferred stock                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | (433 | ) |   |   |   |   |   |   |   |   |   |   | (433 | ) |
| Accretion of Series B preferred shares                              |   |   |   |   |   |   |   |   |   |   | 5,809 |   |   |   |   |   |   |   | (5,809 | ) |   |   |   |   |   |   |   |   |   |   | - |   |
| Stock-based compensation                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 152 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 152 |   |
| Series B Preferred stock repayment to US Treasury                   |   |   |   |   |   |   |   |   |   |   | (45,220 | ) |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | (45,220 | ) |
| Other comprehensive income, net of                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| reclassification adjustments and tax                                |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 1,483 |   |   |   | 1,483 |   |   |   | 1,483 |   |
|                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | $ | 4,076 |   |   |   |   |   |
| Balance at June 30, 2010                                            |   |   | 26,181,291 |   |   | $ | 26,181 |   |   | $ | - |   |   | $ | 197,027 |   |   | $ | (20,824 | ) |   | $ | 1,394 |   |   |   |   |   |   | $ | 203,778 |   |
|                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| The accompanying notes are an integral part of these statements.    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

| THE BANCORP, INC. AND SUBSIDIARY                                          |   |
|---------------------------------------------------------------------------|--------|
| UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS                            |   |
| (dollars in thousands)                                                    |   |
|                                                                      |   |   |   |
|                                                                      |   | For the six months ended |   |
|                                                                      |   | June 30, |   |
|                                                                      |   | 2010 |   |   | 2009 |   |
| Operating activities                                                      |   |   |   |   |   |   |
| Net income                                                                |   | $ | 2,593 |   |   | $ | 2,317 |   |
| Adjustments to reconcile net income to net cash                           |   |   |   |   |   |   |   |   |
|   provided by operating activities                              |   |   |   |   |   |   |   |   |
| Depreciation and amortization                                             |   |   | 1,963 |   |   |   | 1,935 |   |
| Provision for loan and lease losses                                       |   |   | 9,954 |   |   |   | 5,500 |   |
| Net amortization of investment securities discounts/premiums              |   |   | 46 |   |   |   | 29 |   |
| Stock-based compensation                                                  |   |   | 152 |   |   |   | 53 |   |
| Mortgage loans originated for sale                                        |   |   | (704 | ) |   |   | (5,582 | ) |
| Sales of mortgage loans originated for resale                             |   |   | 709 |   |   |   | 5,194 |   |
| Gain on sales of mortgage loans originated for resale                     |   |   | (5 | ) |   |   | (24 | ) |
| Deferred income tax benefit                                               |   |   | (3 | ) |   |   | - |   |
| Loss (gain) on sales of fixed assets                                      |   |   | 27 |   |   |   | (39 | ) |
| Gain on sales of investment securities                                    |   |   | (1,219 | ) |   |   | (670 | ) |
| Loss on sale of other real estate owned                                   |   |   | - |   |   |   | 1,700 |   |
| (Increase) decrease in accrued interest receivable                        |   |   | (761 | ) |   |   | 34 |   |
| Decrease in interest payable                                              |   |   | (197 | ) |   |   | (2,069 | ) |
| (Increase) decrease in other assets                                       |   |   | (7,268 | ) |   |   | 6,711 |   |
| (Decrease) increase in other liabilities                                  |   |   | (10,104 | ) |   |   | 2,128 |   |
|   Net cash (used in) provided by operating activities           |   |   | (4,817 | ) |   |   | 17,217 |   |
|                                                                      |   |   |   |   |   |   |   |   |
| Investing activities                                                      |   |   |   |   |   |   |   |   |
| Purchase of  investment securities available-for-sale           |   |   | (170,278 | ) |   |   | (111,400 | ) |
| Proceeds from redemptions and repayment on securities available-for-sale  |   |   | 28,925 |   |   |   | 45,418 |   |
| Proceeds from sale of other real estate owned                             |   |   | 189 |   |   |   | 2,900 |   |
| Proceeds from sales of investment securities available-for-sale           |   |   | 30,144 |   |   |   | 29,522 |   |
| Net increase in loans                                                     |   |   | (59,733 | ) |   |   | (14,980 | ) |
| Proceeds from sales of fixed assets                                       |   |   | - |   |   |   | 75 |   |
| Purchases of premises and equipment                                       |   |   | (1,624 | ) |   |   | (1,264 | ) |
|   Net cash used in investing activities                         |   |   | (172,377 | ) |   |   | (49,729 | ) |
|                                                                      |   |   |   |   |   |   |   |   |
| Financing activities                                                      |   |   |   |   |   |   |   |   |
| Net increase (decrease) in deposits                                       |   |   | 227,098 |   |   |   | (34,877 | ) |
| Net increase (decrease) in securities sold under agreements to repurchase |   |   | 4,964 |   |   |   | (7,025 | ) |
| Repayment of short-term borrowings                                        |   |   | (100,000 | ) |   |   | (20,000 | ) |
| Redemption of preferred stock                                             |   |   | (45,220 | ) |   |   | - |   |
| Dividends paid on Series A and B preferred stock                          |   |   | (433 | ) |   |   | (993 | ) |
|   Net cash provided by (used in) financing activities           |   |   | 86,409 |   |   |   | (62,895 | ) |
|                                                                      |   |   |   |   |   |   |   |   |
|   Net decrease in cash and cash equivalents                     |   |   | (90,785 | ) |   |   | (95,407 | ) |
|                                                                      |   |   |   |   |   |   |   |   |
| Cash and cash equivalents, beginning of year                              |   |   | 354,459 |   |   |   | 179,506 |   |
|                                                                      |   |   |   |   |   |   |   |   |
| Cash and cash equivalents, end of period                                  |   | $ | 263,674 |   |   | $ | 84,099 |   |
|                                                                      |   |   |   |   |   |   |   |   |
| Supplemental disclosure:                                                  |   |   |   |   |   |   |   |   |
| Interest paid                                                             |   | $ | 7,698 |   |   | $ | 10,670 |   |
| Taxes paid                                                                |   | $ | 31 |   |   | $ | 352 |   |
| Transfers of loans to other real estate owned                             |   | $ | 189 |   |   | $ | - |   |

----

|                    |   | June 30, |   |
|-------------------------|--------|----------|--------|
|                    |   | 2010     |   |   | 2009 |   |
| Risk-free interest rate |   |     | 3.45   | % |   |   | - |   |
| Expected dividend yield |   |     | -      |   |   |   | - |   |
| Expected volatility     |   |     | 55.40  | % |   |   | - |   |
| Expected lives (years)  |   |     | 5.94   |   |   |   | - |   |

----

|                           |   | For the six months ended June 30, 2010       |      |
|--------------------------------|--------|----------------------------------------------|-----------|
|                           |   |                                         |      |   |   |   |   |   |   |   |   |   |
| Stock options:                 |   |                                         |      |   |   |   |   | Weighted- |   |   |   |   |
|                           |   |                                         |      |   |   |   |   | average |   |   |   |   |
|                           |   |                                         |      |   | Weighted- |   |   | remaining |   |   |   |   |
|                           |   |                                         |      |   | average |   |   | contractual |   |   | Aggregate |   |
|                           |   |                                         |      |   | exercise |   |   | term |   |   | intrinsic |   |
|                           |   | Shares                                       |      |   | price |   |   | (Years) |   |   | value |   |
|                           |   | (dollars in thousands except per share data) |      |
|                           |   |                                         |      |   |   |   |   |   |   |   |   |   |
| Outstanding at January 1, 2010 |   |                                         | 1,322,864 |   |   | $ | 12.34 |   |   |   |   |   |   |   |
| Granted                        |   |                                         | 646,000   |   |   |   | 7.81 |   |   |   | - |   |   |   | - |   |
| Exercised                      |   |                                         | -         |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Cancelled/forfeited            |   |                                         | (1,500    | ) |   |   | 12.83 |   |   |   | - |   |   |   | - |   |
| Outstanding at June 30, 2010   |   |                                         | 1,967,364 |   |   | $ | 10.85 |   |   |   | 5.57 |   |   | $ | 12,920 |   |
| Exercisable at June 30, 2010   |   |                                         | 1,321,364 |   |   |   |   |   |   |   | 3.48 |   |   | $ | - |   |
|                           |   |                                         |      |   |   |   |   |   |   |   |   |   |   |   |   |   |

| Stock appreciation rights:               |   |   |   |   |      |   |   | Average     |   |
|------------------------------------------|--------|--------|--------|--------|-----------|--------|--------|-------------|--------|
|                                     |   |   |   |   |      |   |   | remaining   |   |
|                                     |   |   |   |   | Weighted- |   |   | contractual |   |
|                                     |   |   |   |   | average   |   |   | term        |   |
|                                     |   | Shares |   |   | price     |   |   | (Years)     |   |
|                                     |   |   |   |   |      |   |   |        |   |
| Outstanding at January 1, 2010 |   |   | 60,000 |   |      | $      | 11.41  |        |   |   |   |
| Granted                                  |   |   | -      |   |      |   | -      |        |   |   | - |   |
| Exercised                                |   |   | -      |   |      |   | -      |        |   |   | - |   |
| Forfeited                                |   |   | -      |   |      |   | -      |        |   |   | - |   |
| Outstanding at June 30, 2010   |   |   | 60,000 |   |      | $      | 11.41  |        |   |   | 1.75 |   |

----

|                                        |   | For the three months ended                   |   |
|---------------------------------------------|--------|----------------------------------------------|--------|
|                                        |   | June 30, 2010                                |   |
|                                        |   | Income                                       |   |   | Shares |   |   | Per share |   |
|                                        |   | (numerator)                                  |   |   | (denominator) |   |   | amount |   |
|                                        |   | (dollars in thousands except per share data) |   |
| Basic earnings per share                    |   |                                         |   |   |   |   |   |   |   |
| Net income available to common shareholders |   | $                                            | 407    |   |   |   | 26,181,291 |   |   | $ | 0.02 |   |
| Effect of dilutive securities               |   |                                         |   |   |   |   |   |   |   |   |   |   |
| Common stock warrants                       |   |                                         | -      |   |   |   | 578,170 |   |   |   | - |   |
| Diluted earnings per share                  |   |                                         |   |   |   |   |   |   |   |   |   |   |
| Net income available to common shareholders |   | $                                            | 407    |   |   |   | 26,759,461 |   |   | $ | 0.02 |   |

|                                        |   | For the six months ended                     |   |
|---------------------------------------------|--------|----------------------------------------------|--------|
|                                        |   | June 30, 2010                                |   |
|                                        |   | Income                                       |   |   | Shares |   |   | Per share |   |
|                                        |   | (numerator)                                  |   |   | (denominator) |   |   | amount |   |
|                                        |   | (dollars in thousands except per share data) |   |
| Basic loss per share                        |   |                                         |   |   |   |   |   |   |   |
| Net income available to common shareholders |   | $                                            | (3,649 | ) |   |   | 26,181,291 |   |   | $ | (0.14 | ) |
| Effect of dilutive securities               |   |                                         |   |   |   |   |   |   |   |   |   |   |
| Stock options and warrants                  |   |                                         | -      |   |   |   | - |   |   |   | - |   |
| Diluted loss per share                      |   |                                         |   |   |   |   |   |   |   |   |   |   |
| Net loss available to common shareholders   |   | $                                            | (3,649 | ) |   |   | 26,181,291 |   |   | $ | (0.14 | ) |

|                                        |   | For the three months ended                   |   |
|---------------------------------------------|--------|----------------------------------------------|--------|
|                                        |   | June 30, 2009                                |   |
|                                        |   | Income                                       |   |   | Shares |   |   | Per share |   |
|                                        |   | (numerator)                                  |   |   | (denominator) |   |   | amount |   |
|                                        |   | (dollars in thousands except per share data) |   |
| Basic earnings per share                    |   |                                         |   |   |   |   |   |   |   |
| Net income available to common shareholders |   | $                                            | 125    |   |   |   | 14,563,919 |   |   | $ | 0.01 |   |
| Effect of dilutive securities               |   |                                         |   |   |   |   |   |   |   |   |   |   |
| Common stock warrants                       |   |                                         | -      |   |   |   | 787,924 |   |   |   | - |   |
| Diluted earnings per share                  |   |                                         |   |   |   |   |   |   |   |   |   |   |
| Net income available to common shareholders |   | $                                            | 125    |   |   |   | 15,351,843 |   |   | $ | 0.01 |   |

----

|                                        |   | For the six months ended                     |   |
|---------------------------------------------|--------|----------------------------------------------|--------|
|                                        |   | June 30, 2009                                |   |
|                                        |   | Income                                       |   |   | Shares |   |   | Per share |   |
|                                        |   | (numerator)                                  |   |   | (denominator) |   |   | amount |   |
|                                        |   | (dollars in thousands except per share data) |   |
| Basic earnings per share                    |   |                                         |   |   |   |   |   |   |   |
| Net income available to common shareholders |   | $                                            | 488    |   |   |   | 14,563,919 |   |   | $ | 0.03 |   |
| Effect of dilutive securities               |   |                                         |   |   |   |   |   |   |   |   |   |   |
| Common stock warrants                       |   |                                         | -      |   |   |   | 471,286 |   |   |   | - |   |
| Diluted earnings per share                  |   |                                         |   |   |   |   |   |   |   |   |   |   |
| Net income available to common shareholders |   | $                                            | 488    |   |   |   | 15,035,205 |   |   | $ | 0.03 |   |

| Available-for-sale                                          |   | June 30, 2010 |    |
|-------------------------------------------------------------|--------|---------------|---------|
|                                                        |   |          |    |   | Gross |   |   | Gross |   |   |   |   |
|                                                        |   | Amortized     |    |   | unrealized |   |   | unrealized |   |   | Fair |   |
|                                                        |   | cost          |    |   | gains |   |   | losses |   |   | value |   |
| U.S. Government agency securities                           |   | $             | 47,000  |   |   | $ | 140 |   |   | $ | - |   |   | $ | 47,140 |   |
| Tax-exempt obligations of states and political subdivisions |   |          | 45,408  |   |   |   | 1,184 |   |   |   | (31 | ) |   |   | 46,561 |   |
| Taxable obligations of states and political subdivisions    |   |          | 23,333  |   |   |   | 524 |   |   |   | (69 | ) |   |   | 23,788 |   |
| Mortgage-backed securities                                  |   |          | 44,267  |   |   |   | 1,104 |   |   |   | - |   |   |   | 45,371 |   |
| Other debt securities                                       |   |          | 37,662  |   |   |   | 1,394 |   |   |   | (401 | ) |   |   | 38,655 |   |
| Federal Home Loan and Atlantic Central                      |   |          |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Bankers Bank stock                              |   |          | 6,565   |   |   |   | - |   |   |   | - |   |   |   | 6,565 |   |
|                                                        |   | $             | 204,235 |   |   | $ | 4,346 |   |   | $ | (501 | ) |   | $ | 208,080 |   |

| Held-to-maturity      |   | June 30, 2010 |   |
|-----------------------|--------|---------------|--------|
|                  |   |          |   |   | Gross |   |   | Gross |   |   |   |   |
|                  |   | Amortized     |   |   | unrealized |   |   | unrealized |   |   | Fair |   |
|                  |   | cost          |   |   | gains |   |   | losses |   |   | value |   |
| Other debt securities |   | $             | 21,496 |   |   | $ | - |   |   | $ | (6,035 | ) |   | $ | 15,461 |   |
|                  |   | $             | 21,496 |   |   | $ | - |   |   | $ | (6,035 | ) |   | $ | 15,461 |   |

|  Available-for-sale                                    |   | December 31, 2009 |   |
|-------------------------------------------------------------|--------|-------------------|--------|
|                                                        |   |              |   |   | Gross |   |   | Gross |   |   |   |   |
|                                                        |   | Amortized         |   |   | unrealized |   |   | unrealized |   |   | Fair |   |
|                                                        |   | cost              |   |   | gains |   |   | losses |   |   | value |   |
| U.S. Government agency securities                           |   | $                 | 27,000 |   |   | $ | - |   |   | $ | (241 | ) |   | $ | 26,759 |   |
| Tax-exempt obligations of states and political subdivisions |   |              | 29,344 |   |   |   | 1,809 |   |   |   | - |   |   |   | 31,153 |   |
| Mortgage-backed securities                                  |   |              | 7,929  |   |   |   | 119 |   |   |   | - |   |   |   | 8,048 |   |
| Other debt securities                                       |   |              | 21,005 |   |   |   | 326 |   |   |   | (378 | ) |   |   | 20,953 |   |
| Federal Home Loan and Atlantic Central                      |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Bankers Bank stock                              |   |              | 6,565  |   |   |   | - |   |   |   | - |   |   |   | 6,565 |   |
|                                                        |   | $                 | 91,843 |   |   | $ | 2,254 |   |   | $ | (619 | ) |   | $ | 93,478 |   |
|                                                        |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

| Held-to-maturity      |   | December 31, 2009 |   |
|-----------------------|--------|-------------------|--------|
|                  |   |              |   |   | Gross |   |   | Gross |   |   |   |   |
|                  |   | Amortized         |   |   | unrealized |   |   | unrealized |   |   | Fair |   |
|                  |   | cost              |   |   | gains |   |   | losses |   |   | value |   |
| Other debt securities |   | $                 | 21,468 |   |   | $ | - |   |   | $ | (6,053 | ) |   | $ | 15,415 |   |
|                  |   | $                 | 21,468 |   |   | $ | - |   |   | $ | (6,053 | ) |   | $ | 15,415 |   |

----

|                                   |   | Available-for-sale |    |   | Held-to-maturity |   |
|----------------------------------------|--------|--------------------|---------|--------|------------------|--------|
|                                   |   | Amortized          |    |   | Fair             |   |   | Amortized |   |   | Fair |   |
|                                   |   | cost               |    |   | value            |   |   | cost |   |   | value |   |
| Due before one year                    |   | $                  | 13,702  |   |             | $      | 13,643 |   |   | $ | - |   |   | $ | - |   |
| Due after one year through five years  |   |               | 26,989  |   |             |   | 27,723 |   |   |   | - |   |   |   | - |   |
| Due after five years through ten years |   |               | 25,949  |   |             |   | 26,420 |   |   |   | 3,311 |   |   |   | 2,826 |   |
| Due after ten years                    |   |               | 131,030 |   |             |   | 133,729 |   |   |   | 18,185 |   |   |   | 12,635 |   |
| Federal Home Loan and Atlantic         |   |               |    |   |             |   |   |   |   |   |   |   |   |   |   |   |
|   Central Bankers Bank stock |   |               | 6,565   |   |             |   | 6,565 |   |   |   | - |   |   |   | - |   |
|                                   |   | $                  | 204,235 |   |             | $      | 208,080 |   |   | $ | 21,496 |   |   | $ | 15,461 |   |

----

| June 30, 2010Available-for-sale                          |   | Less than 12 months  |   |   | 12 months or longer |                |   |              |                |   |       |   |
|----------------------------------------------------------|--------|----------------------|--------|--------|---------------------|---------------------|--------|-------------------|---------------------|--------|------------|--------|
|                                                     |   | Number of securities |   |   | Fair Value          |                |   | Unrealized losses |                |   | Fair Value |   |   | Unrealized losses |   |   | Fair Value |   |   | Unrealized losses |   |
| Description of Securities                                |   |                 |   |   |                |                |   |              |                |   |       |   |   |   |   |   |   |   |   |   |   |
| Tax-exempt obligations of states                         |   |                 |   |   |                |                |   |              |                |   |       |   |   |   |   |   |   |   |   |   |   |
|      and political subdivisions |   |                 | 5      |   |                | $                   | 3,050  |              |                | $      | (31        | )      |   | $ | - |   |   | $ | - |   |   | $ | 3,050 |   |   | $ | (31 | ) |
| Taxable obligations of states and                        |   |                 |   |   |                |                |   |              |                |   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|      political subdivisions     |   |                 | 2      |   |                |                | 1,787  |              |                |   | (69        | )      |   |   | - |   |   |   | - |   |   |   | 1,787 |   |   |   | (69 | ) |
| Other securities                                         |   |                 | 5      |   |                |                | 11,627 |              |                |   | (60        | )      |   |   | 640 |   |   |   | (341 | ) |   |   | 12,267 |   |   |   | (401 | ) |
| Total temporarily impaired                               |   |                 |   |   |                |                |   |              |                |   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|      investment securities      |   |                 | 12     |   |                | $                   | 16,464 |              |                | $      | (160       | )      |   | $ | 640 |   |   | $ | (341 | ) |   | $ | 17,104 |   |   | $ | (501 | ) |
|                                                     |   |                 |   |   |                |                |   |              |                |   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                     |   |                 |   |   |                |                |   |              |                |   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| June 30, 2010                                            |   |                 |   |   |                |                |   |              |                |   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Held-to-maturity                                         |   |                 |   |   |                | Less than 12 months |   |              | 12 months or longer |   |       | Total  |   |
|                                                     |   | Number of securities |   |   | Fair Value          |                |   | Unrealized losses |                |   | Fair Value |   |   | Unrealized losses |   |   | Fair Value |   |   | Unrealized losses |   |
| Description of Securities                                |   |                 |   |   |                |                |   |              |                |   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other securities                                         |   |                 | 7      |   |                | $                   | -      |              |                | $      | -          |   |   | $ | 15,461 |   |   | $ | (6,035 | ) |   | $ | 15,461 |   |   | $ | (6,035 | ) |
| Total temporarily impaired                               |   |                 |   |   |                |                |   |              |                |   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|      investment securities      |   |                 | 7      |   |                | $                   | -      |              |                | $      | -          |   |   | $ | 15,461 |   |   | $ | (6,035 | ) |   | $ | 15,461 |   |   | $ | (6,035 | ) |

|                                                |   |                 |   |   |                |                |   |                |                |   |       |   |   |              |   |   |       |   |   |              |   |
|-----------------------------------------------------|--------|----------------------|--------|--------|---------------------|---------------------|--------|---------------------|---------------------|--------|------------|--------|--------|-------------------|--------|--------|------------|--------|--------|-------------------|--------|
| December 31, 2009                                   |   |                 |   |   |                |                |   |                |                |   |       |   |   |              |   |   |       |   |   |              |   |
| Available-for-sale                                  |   |                 |   |   | Less than 12 months |                |   | 12 months or longer |                |   | Total      |   |
|                                                |   | Number of securities |   |   | Fair Value          |                |   | Unrealized losses   |                |   | Fair Value |   |   | Unrealized losses |   |   | Fair Value |   |   | Unrealized losses |   |
| Description of Securities                           |   |                 |   |   |                |                |   |                |                |   |       |   |   |              |   |   |       |   |   |              |   |
| U.S. Government agency securities                   |   |                 | 1      |   |                | $                   | 26,759 |                |                | $      | (241       | )      |   | $                 | -      |   |       | $      | -      |              |   | $ | 26,759 |   |   | $ | (241 | ) |
| Other securities                                    |   |                 | 3      |   |                |                | 9,970  |                |                |   | (29        | )      |   |              | 658    |   |       |   | (349   | )                 |   |   | 10,628 |   |   |   | (378 | ) |
| Total temporarily impaired                          |   |                 |   |   |                |                |   |                |                |   |       |   |   |              |   |   |       |   |   |              |   |   |   |   |   |   |   |   |
|      investment securities |   |                 | 4      |   |                | $                   | 36,729 |                |                | $      | (270       | )      |   | $                 | 658    |   |       | $      | (349   | )                 |   | $ | 37,387 |   |   | $ | (619 | ) |
|                                                |   |                 |   |   |                |                |   |                |                |   |       |   |   |              |   |   |       |   |   |              |   |   |   |   |   |   |   |   |
|                                                |   |                 |   |   |                |                |   |                |                |   |       |   |   |              |   |   |       |   |   |              |   |   |   |   |   |   |   |   |
| December 31, 2009                                   |   |                 |   |   |                |                |   |                |                |   |       |   |   |              |   |   |       |   |   |              |   |   |   |   |   |   |   |   |
| Held-to-maturity                                    |   |                 |   |   |                | Less than 12 months |   |                | 12 months or longer |   |       | Total  |   |
|                                                |   | Number of securities |   |   | Fair Value          |                |   | Unrealized losses   |                |   | Fair Value |   |   | Unrealized losses |   |   | Fair Value |   |   | Unrealized losses |   |
| Description of Securities                           |   |                 |   |   |                |                |   |                |                |   |       |   |   |              |   |   |       |   |   |              |   |   |   |   |   |   |   |   |
| Other securities                                    |   |                 | 7      |   |                | $                   | -      |                |                | $      | -          |   |   | $                 | 15,415 |   |       | $      | (6,053 | )                 |   | $ | 15,415 |   |   | $ | (6,053 | ) |
| Total temporarily impaired                          |   |                 |   |   |                |                |   |                |                |   |       |   |   |              |   |   |       |   |   |              |   |   |   |   |   |   |   |   |
|      investment securities |   |                 | 7      |   |                | $                   | -      |                |                | $      | -          |   |   | $                 | 15,415 |   |       | $      | (6,053 | )                 |   | $ | 15,415 |   |   | $ | (6,053 | ) |

----

|                                                                                                     |   | June 30, |      |   | December 31, |   |
|----------------------------------------------------------------------------------------------------------|--------|----------|-----------|--------|--------------|--------|
|                                                                                                     |   | 2010     |      |   | 2009         |   |
|                                                                                                     |   |     |      |   |         |   |
| Commercial                                                                                               |   | $        | 403,320   |   |         | $      | 402,232 |   |
| Commercial mortgage *                                                                                    |   |     | 580,542   |   |         |   | 569,434 |   |
| Construction                                                                                             |   |     | 207,846   |   |         |   | 207,184 |   |
| Total commercial loans                                                                                   |   |     | 1,191,708 |   |         |   | 1,178,850 |   |
| Direct financing leases, net                                                                             |   |     | 96,319    |   |         |   | 78,802 |   |
| Residential mortgage                                                                                     |   |     | 95,542    |   |         |   | 85,759 |   |
| Consumer loans and others                                                                                |   |     | 190,729   |   |         |   | 178,608 |   |
|                                                                                                     |   |     | 1,574,298 |   |         |   | 1,522,019 |   |
| Deferred loan costs                                                                                      |   |     | 2,227     |   |         |   | 1,703 |   |
| Total loans, net of deferred loan costs                                                                  |   | $        | 1,576,525 |   |         | $      | 1,523,722 |   |
|                                                                                                     |   |     |      |   |         |   |   |   |
| Supplemental loan data:                                                                                  |   |     |      |   |         |   |   |   |
| Construction 1-4 family                                                                                  |   | $        | 102,730   |   |         | $      | 100,088 |   |
| Construction commercial, acquisition and development                                                     |   |     | 105,116   |   |         |   | 107,096 |   |
|                                                                                                     |   | $        | 207,846   |   |         | $      | 207,184 |   |
|                                                                                                     |   |     |      |   |         |   |   |   |
| * At June 30, 2010 our owner-occupied loans amounted to $120 million, or 20.7%, of commercial mortgages. |   |

----

|                                          |   | June 30, |   |   | December 31, |   |
|-----------------------------------------------|--------|----------|--------|--------|--------------|--------|
|                                          |   | 2010     |   |   | 2009         |   |
| Non-accrual loans                             |   | $        | 18,193 |   |         | $      | 12,270 |   |
| Loans past due 90 days or more still accruing |   |     | 10,529 |   |         |   | 12,994 |   |

|                                  |   | Six months ended |   |
|---------------------------------------|--------|------------------|--------|
|                                  |   | June 30,         |   |
|                                  |   | 2010             |   |   | 2009 |   |
|                                  |   |             |
| Balances at the beginning of the year |   | $                | 19,123 |   |   | $ | 17,361 |   |
| Charge-offs                           |   |             | (6,845 | ) |   |   | (5,047 | ) |
| Recoveries                            |   |             | 104    |   |   |   | 266 |   |
| Provision charged to operations       |   |             | 9,954  |   |   |   | 5,500 |   |
| Balances at the end of the year       |   | $                | 22,336 |   |   | $ | 18,080 |   |

----

|                                           |   | June 30, 2010  |      |   | December 31, 2009   |   |
|------------------------------------------------|--------|----------------|-----------|--------|---------------------|--------|
|                                           |   | Carryingamount |      |   | Estimatedfair value |   |   | Carryingamount |   |   | Estimatedfair value |   |
|                                           |   | (in thousands) |      |
| Cash and cash equivalents                      |   | $              | 263,674   |   |                | $      | 263,674 |   |   | $ | 354,459 |   |   | $ | 354,459 |   |
| Investment securities available-for-sale       |   |           | 208,080   |   |                |   | 208,080 |   |   |   | 93,478 |   |   |   | 93,478 |   |
| Investment securities held-to-maturity         |   |           | 21,496    |   |                |   | 15,461 |   |   |   | 21,468 |   |   |   | 15,415 |   |
| Loans receivable, net                          |   |           | 1,576,525 |   |                |   | 1,549,733 |   |   |   | 1,523,722 |   |   |   | 1,499,199 |   |
| Demand deposits (non-interest bearing)         |   |           | 827,268   |   |                |   | 827,268 |   |   |   | 506,641 |   |   |   | 506,641 |   |
| Savings, money market and interest checking    |   |           | 903,599   |   |                |   | 903,599 |   |   |   | 1,005,048 |   |   |   | 1,005,048 |   |
| Certificates of deposit                        |   |           | 150,740   |   |                |   | 152,356 |   |   |   | 142,820 |   |   |   | 142,818 |   |
| Subordinated debentures and notes              |   |           | 13,401    |   |                |   | 9,238 |   |   |   | 13,401 |   |   |   | 9,152 |   |
| Securities sold under agreements to repurchase |   |           | 7,552     |   |                |   | 7,552 |   |   |   | 2,588 |   |   |   | 2,588 |   |
| Short-term borrowings                          |   |           | -         |   |                |   | - |   |   |   | 100,000 |   |   |   | 100,000 |   |

----

|                                             |   |          |    |   | Fair Value Measurements at Reporting Date Using |   |
|--------------------------------------------------|--------|---------------|---------|--------|-------------------------------------------------|--------|
|                                             |   |          |    |   | Quoted Prices in Active                         |   |   | Significant Other |   |   | Significant |   |
|                                             |   |          |    |   | Markets for Identical                           |   |   | Observable |   |   | Unobservable |   |
|                                             |   | Fair Value    |    |   | Assets                                          |   |   | Inputs |   |   | Inputs |   |
| Description                                      |   | June 30, 2010 |    |   | (Level 1)                                       |   |   | (Level 2) |   |   | (Level 3) |   |
|                                             |   |          |    |   |                                            |   |   |   |   |   |   |   |
| Investment                                       |   |          |    |   |                                            |   |   |   |   |   |   |   |
| U.S. Government agency securities                |   | $             | 47,140  |   |                                            | $      | - |   |   | $ | 47,140 |   |   | $ | - |   |
| Obligations of states and political subdivisions |   |          | 70,349  |   |                                            |   | - |   |   |   | 70,349 |   |   |   | - |   |
| Mortgage-backed securities                       |   |          | 45,371  |   |                                            |   | - |   |   |   | 45,371 |   |   |   | - |   |
| Other debt securities                            |   |          | 38,655  |   |                                            |   | - |   |   |   | 38,015 |   |   |   | 640 |   |
| Federal Home Loan and Atlantic Central           |   |          |    |   |                                            |   |   |   |   |   |   |   |   |   |   |   |
|   Bankers Bank stock                   |   |          | 6,565   |   |                                            |   | - |   |   |   | - |   |   |   | 6,565 |   |
|                                             |   | $             | 208,080 |   |                                            | $      | - |   |   | $ | 200,875 |   |   | $ | 7,205 |   |

|                                                                                               |   |              |   |   | Fair Value Measurements at Reporting Date Using |   |
|----------------------------------------------------------------------------------------------------|--------|-------------------|--------|--------|-------------------------------------------------|--------|
|                                                                                               |   |              |   |   | Quoted Prices in Active                         |   |   | Significant Other |   |   | Significant |   |
|                                                                                               |   |              |   |   | Markets for Identical                           |   |   | Observable |   |   | Unobservable |   |
|                                                                                               |   | Fair value        |   |   | Assets                                          |   |   | Inputs |   |   | Inputs |   |
| Description                                                                                        |   | December 31, 2009 |   |   | (Level 1)                                       |   |   | (Level 2) |   |   | (Level 3) |   |
| Investment                                                                                         |   |              |   |   |                                            |   |   |   |   |   |   |   |
| U.S. Government agency securities                                                                  |   | $                 | 26,759 |   |                                            |   | - |   |   | $ | 26,759 |   |   |   | - |   |
| Obligations of states and political subdivisions                                                   |   |              | 31,153 |   |                                            |   | - |   |   |   | 31,153 |   |   |   | - |   |
| Mortgage-backed securities                                                                         |   |              | 8,048  |   |                                            |   | - |   |   |   | 8,048 |   |   |   | - |   |
| Other securities                                                                                   |   |              | 20,953 |   |                                            |   | - |   |   |   | 20,296 |   |   |   | 657 |   |
| Federal Home Loan and Atlantic                                                                     |   |              |   |   |                                            |   |   |   |   |   |   |   |   |   |   |   |
|             Central Bankers Bank stock |   |              | 6,565  |   |                                            |   | - |   |   |   | - |   |   |   | 6,565 |   |
|                                                                                               |   | $                 | 93,478 |   |                                            | $      | - |   |   | $ | 86,256 |   |   | $ | 7,222 |   |

----

| Fair Value Measurements Using                                |   |
|--------------------------------------------------------------|--------|
| Significant Unobservable Inputs                              |   |
| (Level 3)                                                    |   |
|                                                         |   | Available-for -sale securities |   |
|                                                         |   | June 30, 2010 |   |   | December 31, 2009 |   |
|                                                         |   |   |   |   |   |   |
| Beginning Balance                                            |   | $ | 7,222 |   |   | $ | 7,032 |   |
| Total gains or losses (realized/unrealized)                  |   |   | - |   |   |   | - |   |
| Included in earnings (or changes in net assets)              |   |   | - |   |   |   | - |   |
| Included in other comprehensive income                       |   |   | 8 |   |   |   | (252 | ) |
| Purchases, issuances, and settlements                        |   |   | (25 | ) |   |   | 442 |   |
| Transfers in                                                 |   |   | - |   |   |   | - |   |
| Ending Balance                                               |   | $ | 7,205 |   |   | $ | 7,222 |   |
|                                                         |   |   |   |   |   |   |   |   |
| The amount of total gains or losses for the period           |   |   |   |   |   |
| included in earnings (or changes in net assets) attributable |   |   |   |   |   |
| to the change in unrealized gains or losses relating to      |   |   |   |   |   |
| assets still held at the reporting date.                     |   | $ | - |   |   | $ | - |   |

|                    |   |              |   |   | Fair Value Measurements at Reporting Date Using |                                            |
|-------------------------|--------|-------------------|--------|--------|-------------------------------------------------|-------------------------------------------------|
|                    |   |              |   |   | Quoted Prices in Active                         |                                            |   | Significant Other |   |   | Significant |   |
|                    |   |              |   |   | Markets for Identical                           |                                            |   | Observable |   |   | Unobservable |   |
|                    |   |              |   |   | Assets                                          |                                            |   | Inputs |   |   | Inputs |   |
| Description             |   | June 30, 2010     |   |   | (Level 1)                                       |                                            |   | (Level 2) |   |   | (Level 3) |   |
|                    |   |              |   |   |                                            |                                            |   |   |   |   |   |   |
| Impaired loans          |   | $                 | 18,193 |   |                                            | $                                               | - |   |   | $ | - |   |   | $ | 18,193 |   |
| Other real estate owned |   |              | 459    |   |                                            |                                            | - |   |   |   | - |   |   |   | 459 |   |
|                    |   | $                 | 18,652 |   |                                            | $                                               | - |   |   | $ | - |   |   | $ | 18,652 |   |
|                    |   |              |   |   |                                            |                                            |   |   |   |   |   |   |   |   |   |   |
|                    |   |              |   |   |                                            |                                            |   |   |   |   |   |   |   |   |   |   |
|                    |   |              |   |   |                                            | Fair Value Measurements at Reporting Date Using |   |
|                    |   |              |   |   |                                            | Quoted Prices in Active                         |   |   | Significant Other |   |   | Significant |   |
|                    |   |              |   |   |                                            | Markets for Identical                           |   |   | Observable |   |   | Unobservable |   |
|                    |   |              |   |   |                                            | Assets                                          |   |   | Inputs |   |   | Inputs |   |
| Description             |   | December 31, 2009 |   |   | (Level 1)                                       |                                            |   | (Level 2) |   |   | (Level 3) |   |
|                    |   |              |   |   |                                            |                                            |   |   |   |   |   |   |   |   |   |   |
| Impaired loans          |   | $                 | 15,483 |   |                                            | $                                               | - |   |   | $ | - |   |   | $ | 15,483 |   |
| Other real estate owned |   |              | 459    |   |                                            |                                            | - |   |   |   | - |   |   |   | 459 |   |
|                    |   | $                 | 15,942 |   |                                            | $                                               | - |   |   | $ | - |   |   | $ | 15,942 |   |

----

Note 9. Subsequent Events

----

Part I - Item 2. Management’s 

----

----

|                                          |   | Three months ended June 30, |      |
|-----------------------------------------------|--------|-----------------------------|-----------|
|                                          |   | 2010                        |      |   | 2009 |   |
|                                          |   | Average                     |      |   |   |   |   | Average |   |   | Average |   |   |   |   |   | Average |   |
|                                          |   | Balance                     |      |   | Interest |   |   | Rate |   |   | Balance |   |   | Interest |   |   | Rate |   |
|                                          |   | (dollars in thousands)      |      |   |   |   |   | (dollars in thousands) |   |   |   |   |
| Assets:                                       |   |                        |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-earning assets:                      |   |                        |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loans net of unearned discount                |   | $                           | 1,572,787 |   |   | $ | 18,373 |   |   |   | 4.67 | % |   | $ | 1,470,347 |   |   | $ | 18,213 |   |   |   | 4.95 | % |
| Investment securities-taxable                 |   |                        | 173,447   |   |   |   | 1,702 |   |   |   | 3.93 | % |   |   | 107,435 |   |   |   | 1,381 |   |   |   | 5.14 | % |
| Investment securities-nontaxable*             |   |                        | 31,948    |   |   |   | 520 |   |   |   | 6.51 | % |   |   | 27,667 |   |   |   | 565 |   |   |   | 8.17 | % |
| Interest bearing deposits                     |   |                        | 179,874   |   |   |   | 83 |   |   |   | 0.18 | % |   |   | 2,047 |   |   |   | 2 |   |   |   | 0.39 | % |
| Federal funds sold                            |   |                        | -         |   |   |   | - |   |   |   | 0.00 | % |   |   | 23,068 |   |   |   | 26 |   |   |   | 0.45 | % |
| Net interest-earning assets                   |   |                        | 1,958,056 |   |   |   | 20,678 |   |   |   | 4.22 | % |   |   | 1,630,564 |   |   |   | 20,187 |   |   |   | 4.95 | % |
|                                          |   |                        |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Allowance for loan and lease losses           |   |                        | (21,094   | ) |   |   |   |   |   |   |   |   |   |   | (19,474 | ) |   |   |   |   |   |   |   |   |
| Other assets                                  |   |                        | 166,798   |   |   |   |   |   |   |   |   |   |   |   | 138,007 |   |   |   |   |   |   |   |   |   |
|                                          |   | $                           | 2,103,760 |   |   |   |   |   |   |   |   |   |   | $ | 1,749,097 |   |   |   |   |   |   |   |   |   |
|                                          |   |                        |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Liabilities and shareholders' equity:         |   |                        |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Deposits:                                     |   |                        |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Demand (non-interest bearing) **              |   | $                           | 853,413   |   |   | $ | 279 |   |   |   | 0.13 | % |   | $ | 543,335 |   |   | $ | 68 |   |   |   | 0.05 | % |
| Interest bearing deposits                     |   |                        |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest checking                             |   |                        | 601,861   |   |   |   | 2,096 |   |   |   | 1.39 | % |   |   | 352,215 |   |   |   | 1,438 |   |   |   | 1.63 | % |
| Savings and money market                      |   |                        | 290,447   |   |   |   | 1,039 |   |   |   | 1.43 | % |   |   | 384,078 |   |   |   | 1,790 |   |   |   | 1.86 | % |
| Time                                          |   |                        | 91,561    |   |   |   | 120 |   |   |   | 0.52 | % |   |   | 170,251 |   |   |   | 359 |   |   |   | 0.84 | % |
| Total interest bearing deposits               |   |                        | 983,869   |   |   |   | 3,255 |   |   |   | 1.32 | % |   |   | 906,544 |   |   |   | 3,587 |   |   |   | 1.58 | % |
| Total deposits                                |   |                        | 1,837,282 |   |   |   | 3,534 |   |   |   | 0.77 | % |   |   | 1,449,879 |   |   |   | 3,655 |   |   |   | 1.01 | % |
|                                          |   |                        |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Short term borrowings                         |   |                        | 34,835    |   |   |   | 59 |   |   |   | 0.68 | % |   |   | 93,610 |   |   |   | 171 |   |   |   | 0.73 | % |
| Repurchase agreements                         |   |                        | 8,134     |   |   |   | 7 |   |   |   | 0.33 | % |   |   | 2,774 |   |   |   | 5 |   |   |   | 0.72 | % |
| Subordinated debt                             |   |                        | 13,401    |   |   |   | 216 |   |   |   | 6.44 | % |   |   | 13,401 |   |   |   | 222 |   |   |   | 6.63 | % |
| Net interest bearing liabilities              |   |                        | 1,040,239 |   |   |   | 3,537 |   |   |   | 1.36 | % |   |   | 1,016,329 |   |   |   | 3,985 |   |   |   | 1.57 | % |
| Total cost of funds                           |   |                        | 1,893,652 |   |   |   | 3,816 |   |   |   | 0.81 | % |   |   | 1,559,664 |   |   |   | 4,053 |   |   |   | 1.04 | % |
|                                          |   |                        |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other liabilities                             |   |                        | 7,230     |   |   |   |   |   |   |   |   |   |   |   | 6,816 |   |   |   |   |   |   |   |   |   |
| Total liabilities                             |   |                        | 1,900,882 |   |   |   |   |   |   |   |   |   |   |   | 1,566,480 |   |   |   |   |   |   |   |   |   |
|                                          |   |                        |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Shareholders' equity                          |   |                        | 202,878   |   |   |   |   |   |   |   |   |   |   |   | 182,617 |   |   |   |   |   |   |   |   |   |
|                                          |   | $                           | 2,103,760 |   |   |   |   |   |   |   |   |   |   | $ | 1,749,097 |   |   |   |   |   |   |   |   |   |
|                                          |   |                        |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net interest income on tax equivalent basis * |   |                        | $         | 16,862 |   |   |   |   |   |   |   |   |   |   | $ | 16,134 |   |   |   |   |   |
|                                          |   |                        |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Tax equivalent adjustment                     |   |                        |      |   |   |   | 173 |   |   |   |   |   |   |   |   |   |   |   | 165 |   |   |   |   |   |
|                                          |   |                        |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net interest income                           |   |                        |      |   |   | $ | 16,689 |   |   |   |   |   |   |   |   |   |   | $ | 15,969 |   |   |   |   |   |
|                                          |   |                        |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net interest margin *                         |   |                        |      |   |   |   |   |   |   |   | 3.44% |   |   |   |   |   |   |   |   |   |   |   | 3.96% |   |

|                                                                                                                                                                                                                                                      |   |   |   |   |   |   |   |   |   |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| * Full taxable equivalent basis, using a 34% statutory tax rate                                                                                                                                                                                           |   |   |   |   |   |   |   |
|                                                                                                                                                                                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |
| ** Non-interest bearing demand accounts are not paid interest. The amount shown as interest reflects the fees paid to affinity groups, which are based upon rate indices and/or deposit balances, and therefore classified as interest expense. |   |   |
|                                                                                                                                                                                                                                                      |   |
|                                                                                                                                                                                                                                                      |   |   |   |   |   |   |   |   |   |   |

----

----

|                                          |   | Six months ended June 30, 2010 |      |
|-----------------------------------------------|--------|--------------------------------|-----------|
|                                          |   | 2010                           |      |   | 2009 |   |
|                                          |   | Average                        |      |   |   |   |   | Average |   |   | Average |   |   |   |   |   | Average |   |
|                                          |   | Balance                        |      |   | Interest |   |   | Rate |   |   | Balance |   |   | Interest |   |   | Rate |   |
|                                          |   | (dollars in thousands)         |      |   | (dollars in thousands) |   |
| Interest-earning assets:                      |   |                           |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loans net of unearned discount                |   | $                              | 1,545,859 |   |   | $ | 36,289 |   |   |   | 4.70 | % |   | $ | 1,463,752 |   |   | $ | 36,387 |   |   |   | 4.97 | % |
| Investment securities-taxable                 |   |                           | 152,060   |   |   |   | 3,010 |   |   |   | 3.96 | % |   |   | 108,592 |   |   |   | 2,456 |   |   |   | 4.52 | % |
| Investment securities-nontaxable*             |   |                           | 31,405    |   |   |   | 1,107 |   |   |   | 7.05 | % |   |   | 13,910 |   |   |   | 567 |   |   |   | 8.15 | % |
| Interest bearing deposits                     |   |                           | 327,096   |   |   |   | 434 |   |   |   | 0.27 | % |   |   | 2,045 |   |   |   | 5 |   |   |   | 0.49 | % |
| Federal funds sold                            |   |                           | -         |   |   |   | - |   |   |   | 0.00 | % |   |   | 60,434 |   |   |   | 119 |   |   |   | 0.39 | % |
| Net interest-earning assets                   |   |                           | 2,056,420 |   |   |   | 40,840 |   |   |   | 3.97 | % |   |   | 1,648,733 |   |   |   | 39,534 |   |   |   | 4.80 | % |
|                                          |   |                           |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Allowance for loan and lease losses           |   |                           | (20,472   | ) |   |   |   |   |   |   |   |   |   |   | (18,689 | ) |   |   |   |   |   |   |   |   |
| Other assets                                  |   |                           | 178,762   |   |   |   |   |   |   |   |   |   |   |   | 152,803 |   |   |   |   |   |   |   |   |   |
|                                          |   | $                              | 2,214,710 |   |   |   |   |   |   |   |   |   |   | $ | 1,782,847 |   |   |   |   |   |   |   |   |   |
|                                          |   |                           |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Liabilities and shareholders' equity:         |   |                           |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Deposits:                                     |   |                           |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Demand (non-interest bearing) **              |   | $                              | 985,453   |   |   | $ | 498 |   |   |   | 0.10 | % |   | $ | 609,003 |   |   | $ | 191 |   |   |   | 0.06 | % |
| Interest bearing deposits                     |   |                           |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest checking                             |   |                           | 570,980   |   |   |   | 4,020 |   |   |   | 1.41 | % |   |   | 333,971 |   |   |   | 2,709 |   |   |   | 1.62 | % |
| Savings and money market                      |   |                           | 323,746   |   |   |   | 2,221 |   |   |   | 1.37 | % |   |   | 382,954 |   |   |   | 3,015 |   |   |   | 1.57 | % |
| Time                                          |   |                           | 71,029    |   |   |   | 253 |   |   |   | 0.71 | % |   |   | 193,245 |   |   |   | 1,884 |   |   |   | 1.95 | % |
| Total interest bearing deposits               |   |                           | 965,755   |   |   |   | 6,494 |   |   |   | 1.34 | % |   |   | 910,170 |   |   |   | 7,608 |   |   |   | 1.67 | % |
| Total deposits                                |   |                           | 1,951,208 |   |   |   | 6,992 |   |   |   | 0.72 | % |   |   | 1,519,173 |   |   |   | 7,799 |   |   |   | 1.03 | % |
|                                          |   |                           |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Short term borrowings                         |   |                           | 19,097    |   |   |   | 64 |   |   |   | 0.68 | % |   |   | 59,196 |   |   |   | 220 |   |   |   | 0.74 | % |
| Repurchase agreements                         |   |                           | 6,464     |   |   |   | 14 |   |   |   | 0.43 | % |   |   | 2,563 |   |   |   | 16 |   |   |   | 1.25 | % |
| Subordinated debt                             |   |                           | 13,179    |   |   |   | 431 |   |   |   | 6.54 | % |   |   | 13,401 |   |   |   | 449 |   |   |   | 6.70 | % |
| Net interest bearing liabilities              |   |                           | 1,004,495 |   |   |   | 7,003 |   |   |   | 1.39 | % |   |   | 985,330 |   |   |   | 8,293 |   |   |   | 1.68 | % |
| Total cost of funds                           |   |                           | 1,989,948 |   |   |   | 7,501 |   |   |   | 0.75 | % |   |   | 1,594,333 |   |   |   | 8,484 |   |   |   | 1.06 | % |
|                                          |   |                           |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other liabilities                             |   |                           | 9,978     |   |   |   |   |   |   |   |   |   |   |   | 6,707 |   |   |   |   |   |   |   |   |   |
| Total liabilities                             |   |                           | 1,999,926 |   |   |   |   |   |   |   |   |   |   |   | 1,601,040 |   |   |   |   |   |   |   |   |   |
|                                          |   |                           |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Shareholders' equity                          |   |                           | 214,784   |   |   |   |   |   |   |   |   |   |   |   | 181,807 |   |   |   |   |   |   |   |   |   |
|                                          |   | $                              | 2,214,710 |   |   |   |   |   |   |   |   |   |   | $ | 1,782,847 |   |   |   |   |   |   |   |   |   |
|                                          |   |                           |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net interest income on tax equivalent basis * |   |                           | $         | 33,339 |   |   |   |   |   |   |   |   |   |   | $ | 31,050 |   |   |   |   |   |
|                                          |   |                           |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Tax equivalent adjustment                     |   |                           |      |   |   |   | 370 |   |   |   |   |   |   |   |   |   |   |   | 165 |   |   |   |   |   |
|                                          |   |                           |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net interest income                           |   |                           |      |   |   | $ | 32,969 |   |   |   |   |   |   |   |   |   |   | $ | 30,885 |   |   |   |   |   |
|                                          |   |                           |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

|                                                                                                                                                                                                                              | Net interest margin * |   |   |   |   |   | 3.24%  |   |   |   |   | 3.77%  |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
|                                                                                                                                                                                                                              |                  |   |   |   |   |   |   |   |   |   |   |
| * Full taxable equivalent basis, using a 34% statutory tax rate                                                                                                                                                                   |                  |   |   |   |   |   |   |   |
| ** Non-interest bearing demand accounts are not paid interest. The amount shown as interest reflects the fees paid to affinity groups, which are based upon a rate index, and therefore classified as interest expense. |                  |   |   |
|                                                                                                                                                                                                                              |                  |   |
|                                                                                                                                                                                                                              |                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

----

|                                                    |   | Tier 1 capital |   |   | Tier 1 capital   |   |   | Total capital    |   |
|---------------------------------------------------------|--------|----------------|--------|--------|------------------|--------|--------|------------------|--------|
|                                                    |   | to average     |   |   | to risk-weighted |   |   | to risk-weighted |   |
|                                                    |   | assets ratio   |   |   | assets ratio     |   |   | assets ratio     |   |
|                                                    |   |           |   |   |             |   |   |             |   |
| As of June 30, 2010                                     |   |           |   |   |             |   |   |             |   |
| The Company                                             |   |           | 9.76   | %      |             |   | 12.82  | %                |   |   | 14.07 | % |
| The Bancorp Bank                                        |   |           | 8.28   | %      |             |   | 10.90  | %                |   |   | 12.15 | % |
| "Well capitalized" institution (under FDIC regulations) |   |           | 5.00   | %      |             |   | 6.00   | %                |   |   | 10.00 | % |
|                                                    |   |           |   |   |             |   |   |             |   |   |   |   |
| As of December 31, 2009                                 |   |           |   |   |             |   |   |             |   |   |   |   |
| The Company                                             |   |           | 12.68  | %      |             |   | 15.81  | %                |   |   | 17.06 | % |
| The Bancorp Bank                                        |   |           | 8.78   | %      |             |   | 10.97  | %                |   |   | 12.22 | % |
| "Well capitalized" institution (under FDIC regulations) |   |           | 5.00   | %      |             |   | 6.00   | %                |   |   | 10.00 | % |

----

|                                           |   | 1-90                   |    |   | 91-364 |   |    | 1-3    |   |   | 3-5     |   |   | Over 5 |    |
|------------------------------------------------|--------|------------------------|---------|--------|--------|--------|---------|--------|--------|--------|---------|--------|--------|--------|---------|
|                                           |   | Days                   |    |   | Days   |   |    | Years  |   |   | Years   |   |   | Years  |    |
|                                           |   | (dollars in thousands) |    |
| Interest earning assets:                       |   |                   |    |   |   |   |    |   |   |   |    |   |   |   |    |   |   |   |   |
| Loans net of deferred loan costs               |   | $                      | 758,471 |   |   | $      | 305,160 |   |   | $      | 252,561 |   |   | $      | 91,831  |   |   | $ | 168,502 |   |
| Investment securities                          |   |                   | -       |   |   |   |    |   |   |   | 29,327  |   |   |   | 12,039  |   |   |   | 188,210 |   |
| Interest bearing deposits                      |   |                   | 171,054 |   |   |   | -       |   |   |   | -       |   |   |   | -       |   |   |   | - |   |
| Total interest earning assets                  |   |                   | 929,525 |   |   |   | 305,160 |   |   |   | 281,888 |   |   |   | 103,870 |   |   |   | 356,712 |   |
|                                           |   |                   |    |   |   |   |    |   |   |   |    |   |   |   |    |   |   |   |   |   |
| Interest bearing liabilities:                  |   |                   |    |   |   |   |    |   |   |   |    |   |   |   |    |   |   |   |   |   |
| Demand deposits *                              |   |                   | 227,596 |   |   |   |    |   |   |   |    |   |   |   |    |   |   |   |   |   |
| Interest checking                              |   |                   | 306,158 |   |   |   | 153,079 |   |   |   | 153,079 |   |   |   | -       |   |   |   | - |   |
| Savings and money market                       |   |                   | 72,821  |   |   |   | 145,641 |   |   |   | 72,821  |   |   |   | -       |   |   |   | - |   |
| Time deposits                                  |   |                   | 134,682 |   |   |   | 13,239  |   |   |   | 2,126   |   |   |   | -       |   |   |   | 693 |   |
| Securities sold under agreements to repurchase |   |                   | 7,552   |   |   |   | -       |   |   |   | -       |   |   |   | -       |   |   |   | - |   |
| Subordinated debt                              |   |                   | 3,401   |   |   |   | -       |   |   |   | -       |   |   |   | 10,000  |   |   |   | - |   |
| Total interest bearing liabilities             |   |                   | 752,210 |   |   |   | 311,959 |   |   |   | 228,026 |   |   |   | 10,000  |   |   |   | 693 |   |
| Gap                                            |   | $                      | 177,315 |   |   | $      | (6,799  | )      |   | $      | 53,862  |   |   | $      | 93,870  |   |   | $ | 356,019 |   |
| Cumulative gap                                 |   | $                      | 177,315 |   |   | $      | 170,516 |   |   | $      | 224,378 |   |   | $      | 318,248 |   |   | $ | 674,267 |   |
| Gap to assets ratio                            |   |                   | 8       | %      |   |   | **      |   |   |   | 3       | %      |   |   | 4       | % |   |   | 17 | % |
| Cumulative gap to assets ratio                 |   |                   | 8       | %      |   |   | 8       | %      |   |   | 11      | %      |   |   | 15      | % |   |   | 32 | % |

----

|                                                                                                    |   | June 30, |      |   | December 31, |   |
|---------------------------------------------------------------------------------------------------------|--------|----------|-----------|--------|--------------|--------|
|                                                                                                    |   | 2010     |      |   | 2009         |   |
|                                                                                                    |   |     |      |   |         |   |
| Commercial                                                                                              |   | $        | 403,320   |   |         | $      | 402,232 |   |
| Commercial mortgage *                                                                                   |   |     | 580,542   |   |         |   | 569,434 |   |
| Construction                                                                                            |   |     | 207,846   |   |         |   | 207,184 |   |
| Total commercial loans                                                                                  |   |     | 1,191,708 |   |         |   | 1,178,850 |   |
| Direct financing leases, net                                                                            |   |     | 96,319    |   |         |   | 78,802 |   |
| Residential mortgage                                                                                    |   |     | 95,542    |   |         |   | 85,759 |   |
| Consumer loans and others                                                                               |   |     | 190,729   |   |         |   | 178,608 |   |
|                                                                                                    |   |     | 1,574,298 |   |         |   | 1,522,019 |   |
| Deferred loan costs                                                                                     |   |     | 2,227     |   |         |   | 1,703 |   |
| Total loans, net of deferred loan costs                                                                 |   | $        | 1,576,525 |   |         | $      | 1,523,722 |   |
|                                                                                                    |   |     |      |   |         |   |   |   |
| Supplemental loan data:                                                                                 |   |     |      |   |         |   |   |   |
| Construction 1-4 family                                                                                 |   | $        | 102,730   |   |         | $      | 100,088 |   |
| Construction commercial, acquisition and development                                                    |   |     | 105,116   |   |         |   | 107,096 |   |
|                                                                                                    |   | $        | 207,846   |   |         | $      | 207,184 |   |
|                                                                                                    |   |     |      |   |         |   |   |   |
| * At June 30, 2010 our owner-occupied loans amounted to $120 million, or 20.7% of commercial mortgages. |   |

----

|                                                  |   | Six months ended       |   |   | For the year ended |   |
|-------------------------------------------------------|--------|------------------------|--------|--------|--------------------|--------|
|                                                  |   | June 30,               |   |   | December 31,       |   |
|                                                  |   | 2010                   |   |   | 2009               |   |   | 2009 |   |
|                                                  |   | (dollars in thousands) |   |
| Balance in the allowance for loan and lease losses at |   |                   |   |   |               |   |   |   |   |
| beginning of period                                   |   | $                      | 19,123 |   |               | $      | 17,361 |   |   | $ | 17,361 |   |
|                                                  |   |                   |   |   |               |   |   |   |   |   |   |   |
| Loans charged-off:                                    |   |                   |   |   |               |   |   |   |   |   |   |   |
| Commercial                                            |   |                   | 5,919  |   |               |   | 1,894 |   |   |   | 6,314 |   |
| Construction                                          |   |                   | 565    |   |               |   | 3,080 |   |   |   | 4,546 |   |
| Lease financing                                       |   |                   | -      |   |               |   | 49 |   |   |   | 49 |   |
| Residential mortgage                                  |   |                   | 223    |   |               |   | - |   |   |   | 328 |   |
| Consumer                                              |   |                   | 138    |   |               |   | 24 |   |   |   | 127 |   |
| Total                                                 |   |                   | 6,845  |   |               |   | 5,047 |   |   |   | 11,364 |   |
|                                                  |   |                   |   |   |               |   |   |   |   |   |   |   |
| Recoveries:                                           |   |                   |   |   |               |   |   |   |   |   |   |   |
| Commercial                                            |   |                   | 79     |   |               |   | 227 |   |   |   | 53 |   |
| Construction                                          |   |                   | 3      |   |               |   | 14 |   |   |   | 32 |   |
| Lease financing                                       |   |                   | -      |   |               |   | 12 |   |   |   | 27 |   |
| Residential mortgage                                  |   |                   | 16     |   |               |   | 12 |   |   |   | 12 |   |
| Consumer                                              |   |                   | 6      |   |               |   | 1 |   |   |   | 2 |   |
| Total                                                 |   |                   | 104    |   |               |   | 266 |   |   |   | 126 |   |
| Net charge-offs                                       |   |                   | 6,741  |   |               |   | 4,781 |   |   |   | 11,238 |   |
| Provision charged to operations                       |   |                   | 9,954  |   |               |   | 5,500 |   |   |   | 13,000 |   |
| Balance in allowance for loan and lease losses at end |   |                   |   |   |               |   |   |   |   |   |   |   |
| of period                                             |   | $                      | 22,336 |   |               | $      | 18,080 |   |   | $ | 19,123 |   |
| Net charge-offs/average loans                         |   |                   | 0.44   | %      |               |   | 0.33 | % |   |   | 0.76 | % |

----

|                                          |   | June 30,       |   |   | December 31, |   |
|-----------------------------------------------|--------|----------------|--------|--------|--------------|--------|
|                                          |   | 2010           |   |   | 2009         |   |
|                                          |   | (in thousands) |   |
|                                          |   | Amount         |   |   | Amount       |   |
|                                          |   |           |   |   |         |   |
| Non-accrual loans                             |   | $              | 18,193 |   |         | $      | 12,270 |   |
| Total non-performing loans                    |   |           | 18,193 |   |         |   | 12,270 |   |
| Other real estate owned                       |   |           | 459    |   |         |   | 459 |   |
| Total non-performing assets                   |   | $              | 18,652 |   |         | $      | 12,729 |   |
| Loans past due 90 days or more still accruing |   | $              | 10,529 |   |         | $      | 12,994 |   |

|                                                                                                                                                                                                                        |   | For the six months ended |      |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------|-----------|
|                                                                                                                                                                                                                        |   | June 30, 2010            |      |
|                                                                                                                                                                                                                        |   | Average                  |      |   | Average |   |
|                                                                                                                                                                                                                        |   | balance                  |      |   | Rate |   |
|                                                                                                                                                                                                                        |   | (unaudited)              |      |
| Demand (non-interest bearing) *                                                                                                                                                                                             |   | $                        | 985,453   |   |   |   | 0.10 | % |
| Interest checking                                                                                                                                                                                                           |   |                     | 570,980   |   |   |   | 1.41 | % |
| Savings and money market                                                                                                                                                                                                    |   |                     | 323,746   |   |   |   | 1.37 | % |
| Time                                                                                                                                                                                                                        |   |                     | 71,029    |   |   |   | 0.71 | % |
| Total deposits                                                                                                                                                                                                              |   | $                        | 1,951,208 |   |   |   | 0.72 | % |
| * Non-interest bearing demand accounts are not paid interest. The amount shown as interest reflects the fees paid to affinity groups, which are based upon rate indices, and therefore classified as interest expense. |
|                                                                                                                                                                                                                        |

----

Item 3

----

PART II – OTHER INFORMATION

| Signatures  |
|------------------|
|             |   | THE BANCORP INC. |
|             |   | (Registrant) |
|             |   |   |
| August 6, 2010   |   | /s/ Betsy Z. Cohen |
| Date             |   | Betsy Z. Cohen |
|             |   | Chief Executive Officer |
|             |   |   |
| August 6, 2010   |   | /s/Paul  Frenkiel |
| Date             |   | Executive Vice President of Strategy, |
|             |   | Chief Financial Officer and Secretary |
|             |   |   |
|             |   |   |

----

|             |                                    |   |
|------------------|-----------------------------------------|--------|
| Exhibit No. |  Description                       |
|             |                                    |
| 3.1              | Certificate of Incorporation (1)        |
|             |                                    |
| 3.2              | Bylaws (1)                              |
|             |                                    |
| 31.1             | Rule 13a-14(a)/15d-14(a) Certifications |
|             |                                    |
| 31.2             | Rule 13a-14(a)/15d-14(a) Certifications |
|             |                                    |
| 32.1             | Section 1350 Certifications             |
|             |                                    |
| 32.2             | Section 1350 Certifications             |

| (1) | Filed previously as an exhibit to our Registration Statement on Form S-4, as amended, registration number 333-117385, and by this reference incorporated herein. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----