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

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

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|                      |                                                                                                              |  Page |
|---------------------------|-------------------------------------------------------------------------------------------------------------------|------------|
|                      |                                                                                                              |       |
| Item 1.                   | Financial Statements:                                                                                             | 4          |
|                      |                                                                                                              |       |
|                      | Unaudited Consolidated Balance Sheets – June 30, 2012 and December 31, 2011                                 | 4          |
|                      |                                                                                                              |       |
|                      | Unaudited Consolidated Statements of Operations – Three and six months ended June 30, 2012 and 2011         | 5          |
|                      |                                                                                                              |       |
|                      | Unaudited Consolidated Statements of Comprehensive Income – Six months ended June 30, 2012                  | 6          |
|                      |                                                                                                              |       |
|                      | Unaudited Consolidated Statements of Changes in Shareholders’ Equity – Six months ended June 30, 2012 | 7          |
|                      |                                                                                                              |       |
|                      | Unaudited Consolidated Statements of Cash Flows – Six months ended June 30, 2012 and 2011                   | 8          |
|                      |                                                                                                              |       |
|                      | Unaudited Notes to Consolidated Financial Statements                                                              | 9          |
|                      |                                                                                                              |       |
| Item 2.                   | Management’s Discussion and Analysis of Financial Condition and Results of Operations                       | 26         |
|                      |                                                                                                              |       |
| Item 3.                   | Quantitative and Qualitative Disclosures About Market Risk                                                        | 45         |
|                      |                                                                                                              |       |
| Item 4.                   | Controls and Procedures                                                                                           | 45         |
|                      |                                                                                                              |       |
| Part II Other Information |
|                      |                                                                                                              |       |
| Item 6.                   | Exhibits                                                                                                          | 46         |
|                      |                                                                                                              |       |
| Signatures                |                                                                                                              |       |

----

Item 1. Financial Statements

| THE BANCORP, INC. AND SUBSIDIARY                                                       |   |
|----------------------------------------------------------------------------------------|--------|
| UNAUDITED CONSOLIDATED BALANCE SHEETS                                                  |   |
|                                                                                   |   |   |   |   |   |   |
|                                                                                   |   | June 30, |   |   | December 31, |   |
|                                                                                   |   | 2012 |   |   | 2011 |   |
|                                                                                   |   |   |   |   |   |   |
|                                                                                   |   | (in thousands) |   |
| ASSETS                                                                                 |   |   |   |   |   |   |
| Cash and cash equivalents                                                              |   |   |   |   |   |   |
| Cash and due from banks                                                                |   | $ | 5,560 |   |   | $ | 96,228 |   |
| Interest earning deposits at Federal Reserve Bank                                      |   |   | 692,582 |   |   |   | 652,946 |   |
| Total cash and cash equivalents                                                        |   |   | 698,142 |   |   |   | 749,174 |   |
|                                                                                   |   |   |   |   |   |   |   |   |
| Investment securities, available-for-sale, at fair value                               |   |   | 582,219 |   |   |   | 448,204 |   |
| Investment securities, held-to-maturity (fair value $13,575 and $13,826, respectively) |   |   | 17,796 |   |   |   | 18,044 |   |
| Federal Home Loan and Atlantic Central Bankers Bank stock                              |   |   | 4,596 |   |   |   | 5,088 |   |
| Loans, net of deferred loan costs                                                      |   |   | 1,804,312 |   |   |   | 1,744,828 |   |
| Allowance for loan and lease losses                                                    |   |   | (31,171 | ) |   |   | (29,568 | ) |
| Loans, net                                                                             |   |   | 1,773,141 |   |   |   | 1,715,260 |   |
| Premises and equipment, net                                                            |   |   | 8,694 |   |   |   | 8,358 |   |
| Accrued interest receivable                                                            |   |   | 9,297 |   |   |   | 8,476 |   |
| Intangible assets, net                                                                 |   |   | 7,504 |   |   |   | 8,004 |   |
| Other real estate owned                                                                |   |   | 4,919 |   |   |   | 7,405 |   |
| Deferred tax asset, net                                                                |   |   | 20,716 |   |   |   | 21,941 |   |
| Other assets                                                                           |   |   | 23,178 |   |   |   | 20,727 |   |
| Total assets                                                                           |   | $ | 3,150,202 |   |   | $ | 3,010,681 |   |
|                                                                                   |   |   |   |   |   |   |   |   |
| LIABILITIES                                                                            |   |   |   |   |   |   |   |   |
| Deposits                                                                               |   |   |   |   |   |   |   |   |
| Demand and interest checking                                                           |   | $ | 2,335,960 |   |   | $ | 2,192,938 |   |
| Savings and money market                                                               |   |   | 456,614 |   |   |   | 454,343 |   |
| Time deposits                                                                          |   |   | 20,619 |   |   |   | 25,528 |   |
| Time deposits, $100,000 and over                                                       |   |   | 9,104 |   |   |   | 9,742 |   |
| Total deposits                                                                         |   |   | 2,822,297 |   |   |   | 2,682,551 |   |
|                                                                                   |   |   |   |   |   |   |   |   |
| Securities sold under agreements to repurchase                                         |   |   | 21,948 |   |   |   | 33,177 |   |
| Accrued interest payable                                                               |   |   | 127 |   |   |   | 123 |   |
| Subordinated debenture                                                                 |   |   | 13,401 |   |   |   | 13,401 |   |
| Other liabilities                                                                      |   |   | 9,555 |   |   |   | 9,950 |   |
| Total liabilities                                                                      |   |   | 2,867,328 |   |   |   | 2,739,202 |   |
|                                                                                   |   |   |   |   |   |   |   |   |

| SHAREHOLDERS' EQUITY                                                                       |   |   |      |   |   |   |      |   |
|--------------------------------------------------------------------------------------------|--------|--------|-----------|--------|--------|--------|-----------|--------|
| Common stock - authorized, 50,000,000 shares of $1.00 par value; 33,201,281 and 33,196,281 |   |   |      |   |   |   |      |   |
| shares issued at June 30, 2012 and December 31, 2011, respectively                         |   |   | 33,201    |   |   |   | 33,196    |   |
| Treasury stock, at cost (100,000 shares)                                                   |   |   | (866      | )      |   |   | (866      | )      |
| Additional paid-in capital                                                                 |   |   | 243,284   |   |   |   | 241,997   |   |
| Accumulated deficit                                                                        |   |   | (1,451    | )      |   |   | (9,277    | )      |
| Accumulated other comprehensive income                                                     |   |   | 8,706     |   |   |   | 6,429     |   |
| Total shareholders' equity                                                                 |   |   | 282,874   |   |   |   | 271,479   |   |
|                                                                                       |   |   |      |   |   |   |      |   |
| Total liabilities and shareholders' equity                                                 |   | $      | 3,150,202 |   |   | $      | 3,010,681 |   |
|                                                                                       |   |   |      |   |   |   |      |   |
|  The accompanying notes are an integral part of these statements.                     |   |   |      |   |   |   |      |   |
|                                                                                       |   |   |      |   |   |   |      |   |

----

| THE BANCORP, INC. AND SUBSIDIARY                                                                                           |   |
|----------------------------------------------------------------------------------------------------------------------------|--------|
| UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS                                                                            |   |
|                                                                                                                       |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                       |   | For the three months ended June 30, |   |   | For the six months ended June 30, |   |
|                                                                                                                       |   | 2012 |   |   | 2011 |   |   | 2012 |   |   | 2011 |   |
|                                                                                                                       |   | (in thousands, except per share data) |   |
| Interest income                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |
| Loans, including fees                                                                                                      |   | $ | 19,260 |   |   | $ | 18,144 |   |   | $ | 38,206 |   |   | $ | 36,437 |   |
| Interest on investment securities:                                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Taxable interest                                                                                                           |   |   | 3,371 |   |   |   | 2,340 |   |   |   | 6,561 |   |   |   | 3,897 |   |
| Tax-exempt interest                                                                                                        |   |   | 712 |   |   |   | 670 |   |   |   | 1,405 |   |   |   | 1,342 |   |
| Interest bearing deposits                                                                                                  |   |   | 605 |   |   |   | 230 |   |   |   | 1,658 |   |   |   | 745 |   |
|                                                                                                                       |   |   | 23,948 |   |   |   | 21,384 |   |   |   | 47,830 |   |   |   | 42,421 |   |
| Interest expense                                                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Deposits                                                                                                                   |   |   | 2,826 |   |   |   | 2,885 |   |   |   | 5,548 |   |   |   | 5,490 |   |
| Securities sold under agreements to repurchase                                                                             |   |   | 24 |   |   |   | 26 |   |   |   | 51 |   |   |   | 42 |   |
| Short-term borrowings                                                                                                      |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 3 |   |
| Subordinated debenture                                                                                                     |   |   | 217 |   |   |   | 216 |   |   |   | 434 |   |   |   | 431 |   |
|                                                                                                                       |   |   | 3,067 |   |   |   | 3,127 |   |   |   | 6,033 |   |   |   | 5,966 |   |
| Net interest income                                                                                                        |   |   | 20,881 |   |   |   | 18,257 |   |   |   | 41,797 |   |   |   | 36,455 |   |
| Provision for loan and lease losses                                                                                        |   |   | 4,287 |   |   |   | 6,963 |   |   |   | 9,507 |   |   |   | 11,635 |   |
| Net interest income after provision for loan and lease losses                                                              |   |   | 16,594 |   |   |   | 11,294 |   |   |   | 32,290 |   |   |   | 24,820 |   |
|                                                                                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Non-interest income                                                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Service fees on deposit accounts                                                                                           |   |   | 847 |   |   |   | 589 |   |   |   | 1,584 |   |   |   | 1,224 |   |
| Merchant credit card processing and ACH fees                                                                               |   |   | 809 |   |   |   | 590 |   |   |   | 1,482 |   |   |   | 1,159 |   |
| Prepaid card fees                                                                                                          |   |   | 7,065 |   |   |   | 4,390 |   |   |   | 16,111 |   |   |   | 9,145 |   |
| Gain on sales of investment securities                                                                                     |   |   | - |   |   |   | 603 |   |   |   | - |   |   |   | 603 |   |
| Other than temporary impairment on securities held-to-maturity (1)                                                         |   |   | (126 | ) |   |   | - |   |   |   | (126 | ) |   |   | (75 | ) |
| Leasing income                                                                                                             |   |   | 843 |   |   |   | 645 |   |   |   | 1,793 |   |   |   | 1,349 |   |
| Debit card income                                                                                                          |   |   | 148 |   |   |   | 189 |   |   |   | 304 |   |   |   | 403 |   |
| Affinity fees                                                                                                              |   |   | 584 |   |   |   | 355 |   |   |   | 1,187 |   |   |   | 534 |   |
| Other                                                                                                                      |   |   | 279 |   |   |   | 426 |   |   |   | 404 |   |   |   | 1,128 |   |
| Total non-interest income                                                                                                  |   |   | 10,449 |   |   |   | 7,787 |   |   |   | 22,739 |   |   |   | 15,470 |   |
|                                                                                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Non-interest expense                                                                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Salaries and employee benefits                                                                                             |   |   | 9,099 |   |   |   | 7,550 |   |   |   | 18,715 |   |   |   | 14,530 |   |
| Depreciation and amortization                                                                                              |   |   | 848 |   |   |   | 723 |   |   |   | 1,654 |   |   |   | 1,452 |   |
| Rent and related occupancy cost                                                                                            |   |   | 795 |   |   |   | 734 |   |   |   | 1,592 |   |   |   | 1,433 |   |
| Data processing expense                                                                                                    |   |   | 2,725 |   |   |   | 2,173 |   |   |   | 5,368 |   |   |   | 4,566 |   |
| Printing and supplies                                                                                                      |   |   | 458 |   |   |   | 398 |   |   |   | 914 |   |   |   | 680 |   |
| Audit expense                                                                                                              |   |   | 273 |   |   |   | 250 |   |   |   | 575 |   |   |   | 510 |   |
| Legal expense                                                                                                              |   |   | 607 |   |   |   | 696 |   |   |   | 1,143 |   |   |   | 1,196 |   |
| Amortization of intangible assets                                                                                          |   |   | 250 |   |   |   | 250 |   |   |   | 500 |   |   |   | 500 |   |
| Losses and write downs on other real estate owned                                                                          |   |   | 421 |   |   |   | 439 |   |   |   | 1,872 |   |   |   | 491 |   |
| FDIC Insurance                                                                                                             |   |   | 754 |   |   |   | 711 |   |   |   | 1,688 |   |   |   | 1,923 |   |
| Software, maintenance and equipment                                                                                        |   |   | 483 |   |   |   | 381 |   |   |   | 914 |   |   |   | 747 |   |
| Other real estate owned expense                                                                                            |   |   | 380 |   |   |   | 317 |   |   |   | 539 |   |   |   | 484 |   |
| Other                                                                                                                      |   |   | 3,946 |   |   |   | 3,510 |   |   |   | 7,352 |   |   |   | 6,710 |   |
| Total non-interest expense                                                                                                 |   |   | 21,039 |   |   |   | 18,132 |   |   |   | 42,826 |   |   |   | 35,222 |   |
| Net income before income tax                                                                                               |   |   | 6,004 |   |   |   | 949 |   |   |   | 12,203 |   |   |   | 5,068 |   |
| Income tax provision                                                                                                       |   |   | 2,150 |   |   |   | 289 |   |   |   | 4,377 |   |   |   | 1,720 |   |
| Net income available to common shareholders                                                                                |   | $ | 3,854 |   |   | $ | 660 |   |   | $ | 7,826 |   |   | $ | 3,348 |   |
| Net income per share - basic                                                                                               |   | $ | 0.12 |   |   | $ | 0.02 |   |   | $ | 0.24 |   |   | $ | 0.11 |   |
| Net income per share - diluted                                                                                             |   | $ | 0.12 |   |   | $ | 0.02 |   |   | $ | 0.24 |   |   | $ | 0.11 |   |
|                                                                                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (1) Other than temporary impairment was due to credit loss and therefore did not include amounts due to market conditions. |   |   |   |   |   |
|                                                                                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  The accompanying notes are an integral part of these statements.                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

| THE BANCORP INC. AND SUBSIDIARY                              |
|--------------------------------------------------------------|
| UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME    |
|                                                         |   |   |   |   |   |   |
|                                                         |   | For the six months |   |
|                                                         |   | ended June 30, |   |
|                                                         |   |  2012 |   |   | 2011 |   |
|                                                         |   | (in thousands)  |   |
| Net income                                                   |   | $ | 7,826 |   |   | $ | 3,348 |   |
| Other comprehensive income, net of tax                       |   |   |   |   |   |   |   |   |
| Unrealized gains on securities                               |   |   |   |   |   |   |   |   |
| Unrealized holding gain arising during the period            |   |   | 3,498 |   |   |   | 6,823 |   |
| Reclassification adjustment for gain included in net income  |   |   | - |   |   |   | (603 | ) |
| Amortization of losses previously held as available for sale |   |   | 6 |   |   |   | 852 |   |
|                                                         |   |   | 3,504 |   |   |   | 7,072 |   |
| Deferred tax expense                                         |   |   |   |   |   |   |   |   |
| Unrealized holding gain arising during the period            |   |   | 1,225 |   |   |   | 2114 |   |
| Amortization of losses previously held as available for sale |   |   | 2 |   |   |   | 290 |   |
|                                                         |   |   | 1,227 |   |   |   | 2,404 |   |
|                                                         |   |   |   |   |   |   |   |   |
| Other comprehensive income                                   |   |   | 2,277 |   |   |   | 4,668 |   |
| Comprehensive income                                         |   | $ | 10,103 |   |   | $ | 8,016 |   |

----

| THE BANCORP INC. AND SUBSIDIARY                                     |   |
|---------------------------------------------------------------------|--------|
| UNAUDITED CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY |   |
| For the six months ended June 30, 2012                              |   |
| (in thousands, except share data)                                   |   |
|                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | Accumulated |   |   |   |   |
|                                                                |   | Common |   |   |   |   |   |   |   |   | Additional |   |   |   |   |   | other |   |   |   |   |
|                                                                |   | stock |   |   | Common |   |   | Treasury |   |   | paid-in |   |   | Accumulated |   |   | comprehensive |   |   |   |   |
|                                                                |   | shares |   |   | stock |   |   | stock |   |   | capital |   |   | deficit |   |   | income |   |   | Total |   |
|                                                                |   |   |   |   |   |   |
| Balance at January 1, 2012                                          |   |   | 33,196,281 |   |   |   | 33,196 |   |   |   | (866 | ) |   |   | 241,997 |   |   |   | (9,277 | ) |   |   | 6,429 |   |   |   | 271,479 |   |
| Net income                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 7,826 |   |   |   |   |   |   |   | 7,826 |   |
| Common stock issued from option exercise, net of tax benefits       |   |   | 5,000 |   |   |   | 5 |   |   |   | - |   |   |   | 34 |   |   |   | - |   |   |   | - |   |   |   | 39 |   |
| Stock-based compensation                                            |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 1,253 |   |   |   | - |   |   |   | - |   |   |   | 1,253 |   |
| Other comprehensive income, net of                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| reclassification adjustments and tax                                |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 2,277 |   |   |   | 2,277 |   |
|                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance at June 30, 2012                                            |   |   | 33,201,281 |   |   | $ | 33,201 |   |   | $ | (866 | ) |   | $ | 243,284 |   |   | $ | (1,451 | ) |   | $ | 8,706 |   |   | $ | 282,874 |   |

|   The accompanying notes are an integral part of this statement. |
|----------------------------------------------------------------------------|

----

| THE BANCORP, INC. AND SUBSIDIARY                                           |   |
|----------------------------------------------------------------------------|--------|
| UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS                            |   |
| (dollars in thousands)                                                     |   |
|                                                                       |   |   |   |
|                                                                       |   | For the six months ended |   |
|                                                                       |   | June 30, |   |
|                                                                       |   | 2012 |   |   | 2011 |   |
| Operating activities                                                       |   |   |   |   |   |   |
| Net income                                                                 |   | $ | 7,826 |   |   | $ | 3,348 |   |
| Adjustments to reconcile net income to net cash                            |   |   |   |   |   |   |   |   |
|   provided by operating activities                               |   |   |   |   |   |   |   |   |
| Depreciation and amortization                                              |   |   | 2,154 |   |   |   | 1,952 |   |
| Provision for loan and lease losses                                        |   |   | 9,507 |   |   |   | 11,635 |   |
| Net amortization of investment securities discounts/premiums               |   |   | 748 |   |   |   | 223 |   |
| Stock-based compensation expense                                           |   |   | 1,253 |   |   |   | 814 |   |
| Mortgage loans originated for sale                                         |   |   | (233 | ) |   |   | (458 | ) |
| Sale of mortgage loans originated for resale                               |   |   | 237 |   |   |   | 462 |   |
| Gain on sale of mortgage loans originated for resale                       |   |   | (4 | ) |   |   | (4 | ) |
| Deferred income tax benefit                                                |   |   | 2 |   |   |   | - |   |
| Gain on sales of fixed assets                                              |   |   | (27 | ) |   |   | (8 | ) |
| Other than temporary impairment on securities held-to-maturity             |   |   | 126 |   |   |   | 75 |   |
| Losses and writedowns of other real estate owned                           |   |   | 1,872 |   |   |   | 491 |   |
| Gain on sales of investment securities                                     |   |   | - |   |   |   | (603 | ) |
| (Increase) decrease in accrued interest receivable                         |   |   | (821 | ) |   |   | 1,039 |   |
| Increase in interest payable                                               |   |   | 4 |   |   |   | 7 |   |
| Increase in other assets                                                   |   |   | (2,784 | ) |   |   | (2,110 | ) |
| Decrease in other liabilities                                              |   |   | (396 | ) |   |   | (1,703 | ) |
|   Net cash provided by operating activities                      |   |   | 19,464 |   |   |   | 15,160 |   |
|                                                                       |   |   |   |   |   |   |   |   |
| Investing activities                                                       |   |   |   |   |   |   |   |   |
| Purchase of  investment securities available-for-sale            |   |   | (179,694 | ) |   |   | (194,522 | ) |
| Proceeds from call of securities held-to-maturity                          |   |   | - |   |   |   | 4,000 |   |
| Proceeds from sale of investment securities available-for-sale             |   |   | - |   |   |   | 23,581 |   |
| Proceeds from redemptions and prepayments of securities available-for-sale |   |   | 49,048 |   |   |   | 55,647 |   |
| Proceeds from sale of other real estate owned                              |   |   | 2,504 |   |   |   | 769 |   |
| Net increase in loans                                                      |   |   | (69,278 | ) |   |   | (70,387 | ) |
| Proceeds from sale of fixed assets                                         |   |   | 139 |   |   |   | 45 |   |
| Purchases of premises and equipment                                        |   |   | (1,769 | ) |   |   | (771 | ) |
|   Net cash used in investing activities                          |   |   | (199,050 | ) |   |   | (181,638 | ) |
|                                                                       |   |   |   |   |   |   |   |   |
| Financing activities                                                       |   |   |   |   |   |   |   |   |
| Net increase in deposits                                                   |   |   | 139,746 |   |   |   | 138,606 |   |
| Net (decrease) increase in securities sold under agreements to repurchase  |   |   | (11,229 | ) |   |   | 5,875 |   |
| Repayment of short-term borrowings and federal funds purchased             |   |   | - |   |   |   | (136,000 | ) |
| Proceeds from issuance of common stock                                     |   |   | - |   |   |   | 54,501 |   |
| Proceeds from the exercise of options                                      |   |   | 39 |   |   |   | - |   |
| Excess tax benefit from share-based payment arrangements                   |   |   | (2 | ) |   |   | - |   |
|   Net cash provided by financing activities                      |   |   | 128,554 |   |   |   | 62,982 |   |
|                                                                       |   |   |   |   |   |   |   |   |
|   Net increase in cash and cash equivalents                      |   |   | (51,032 | ) |   |   | (103,496 | ) |
|                                                                       |   |   |   |   |   |   |   |   |

| Cash and cash equivalents, beginning of period |   |   | 749,174 |   |   |   | 472,319 |   |
|------------------------------------------------|--------|--------|---------|--------|--------|--------|---------|--------|
|                                           |   |   |    |   |   |   |    |   |
| Cash and cash equivalents, end of period       |   | $      | 698,142 |   |   | $      | 368,823 |   |
|                                           |   |   |    |   |   |   |    |   |
| Supplemental disclosure:                       |   |   |    |   |   |   |    |   |
| Interest paid                                  |   | $      | 6,029   |   |   | $      | 5,959   |   |
| Taxes paid                                     |   | $      | 4,275   |   |   | $      | 4,571   |   |
| Transfers of loans to other real estate owned  |   | $      | 1,890   |   |   | $      | 2,909   |   |

----

NOTES TO THE CONSOLDIATED FINANCIAL STATEMENTS

|                    |   | June 30, |
|-------------------------|--------|----------|
|                    |   | 2012     |   |   | 2011 |
| Risk-free interest rate |   |     | 1.97 | % |   |   | 2.96 | %  |
| Expected dividend yield |   |     | - |   |   |   | - |   |
| Expected volatility     |   |     | 72.90 | % |   |   | 55.07 | %  |
| Expected lives (years)  |   |     | 4.83 |   |   |   | 5.40 |   |

----

|                           |   |                                  |      |   |     |   |   | Weighted-   |   |   |      |   |
|--------------------------------|--------|---------------------------------------|-----------|--------|----------|--------|--------|-------------|--------|--------|-----------|--------|
|                           |   |                                  |      |   |     |   |   | average     |   |   |      |   |
|                           |   |                                  |      |   | Weighted |   |   | remaining   |   |   |      |   |
|                           |   |                                  |      |   | average  |   |   | contractual |   |   | Aggregate |   |
|                           |   |                                  |      |   | exercise |   |   | term        |   |   | intrinsic |   |
|                           |   | Shares                                |      |   | price    |   |   | (years)     |   |   | value     |   |
|                           |   | (in thousands, except per share data) |      |
|                           |   |                                  |      |   |     |   |   |        |   |   |      |   |
| Outstanding at January 1, 2012 |   |                                  | 2,745,115 |   |     | $      | 10.10  |        |   |   |      |   |   |   |
| Granted                        |   |                                  | 500,000   |   |     |   | 8.50   |        |   |   | -         |   |   |   | - |   |
| Exercised                      |   |                                  | (5,000    | )      |     |   | 7.81   |        |   |   | -         |   |   |   | - |   |
| Expired                        |   |                                  | -         |   |     |   | -      |        |   |   | -         |   |   |   | - |   |
| Forfeited                      |   |                                  | (20,874   | )      |     |   | 9.16   |        |   |   | -         |   |   |   | - |   |
| Outstanding at June 30, 2012   |   |                                  | 3,219,241 |   |     | $      | 9.86   |        |   |   | 6.46      |   |   | $ | - |   |
| Exercisable at June 30, 2012   |   |                                  | 1,584,741 |   |     |   |   |        |   |   | 3.95      |   |   | $ | - |   |

|                           |   |   |    |   |      |   |   | Average     |   |
|--------------------------------|--------|--------|---------|--------|-----------|--------|--------|-------------|--------|
|                           |   |   |    |   |      |   |   | remaining   |   |
|                           |   |   |    |   | Weighted- |   |   | contractual |   |
|                           |   |   |    |   | average   |   |   | term        |   |
|                           |   | Shares |    |   | price     |   |   | (years)     |   |
|                           |   |   |    |   |      |   |   |        |   |
| Outstanding at January 1, 2012 |   |   | 60,000  |   |      | $      | 11.41  |        |   |   |   |
| Granted                        |   |   | -       |   |      |   | -      |        |   |   | - |   |
| Exercised                      |   |   | -       |   |      |   | -      |        |   |   | - |   |
| Expired/forfeited              |   |   | (60,000 | )      |      |   | 11.41  |        |   |   | - |   |
| Outstanding at June 30, 2012   |   |   | -       |   |      | $      | -      |        |   |   | - |   |

----

|                                        |   | For the three months ended                   |   |
|---------------------------------------------|--------|----------------------------------------------|--------|
|                                        |   | June 30, 2012                                |   |
|                                        |   | Income                                       |   |   | Shares |   |   | Per share |   |
|                                        |   | (numerator)                                  |   |   | (denominator) |   |   | amount |   |
|                                        |   | (dollars in thousands except per share data) |   |
| Basic earnings per share                    |   |                                         |   |   |   |   |   |   |   |
| Net income available to common shareholders |   | $                                            | 3,854  |   |   |   | 33,101,281 |   |   | $ | 0.12 |   |
| Effect of dilutive securities               |   |                                         |   |   |   |   |   |   |   |   |   |   |
| Common stock options                        |   |                                         | -      |   |   |   | 46,510 |   |   |   | - |   |
| Diluted earnings per share                  |   |                                         |   |   |   |   |   |   |   |   |   |   |
| Net income available to common shareholders |   | $                                            | 3,854  |   |   |   | 33,147,791 |   |   | $ | 0.12 |   |

|                                        |   | For the six months ended                     |   |
|---------------------------------------------|--------|----------------------------------------------|--------|
|                                        |   | June 30, 2012                                |   |
|                                        |   | Income                                       |   |   | Shares |   |   | Per share |   |
|                                        |   | (numerator)                                  |   |   | (denominator) |   |   | amount |   |
|                                        |   | (dollars in thousands except per share data) |   |
| Basic earnings per share                    |   |                                         |   |   |   |   |   |   |   |
| Net income available to common shareholders |   | $                                            | 7,826  |   |   |   | 33,099,303 |   |   | $ | 0.24 |   |
| Effect of dilutive securities               |   |                                         |   |   |   |   |   |   |   |   |   |   |
| Common stock options                        |   |                                         | -      |   |   |   | 15,665 |   |   |   | - |   |
| Diluted earnings per share                  |   |                                         |   |   |   |   |   |   |   |   |   |   |
| Net income available to common shareholders |   | $                                            | 7,826  |   |   |   | 33,114,968 |   |   | $ | 0.24 |   |

|                                        |   | For the three months ended                   |   |
|---------------------------------------------|--------|----------------------------------------------|--------|
|                                        |   | June 30, 2011                                |   |
|                                        |   | Income                                       |   |   | Shares |   |   | Per share |   |
|                                        |   | (numerator)                                  |   |   | (denominator) |   |   | amount |   |
|                                        |   | (dollars in thousands except per share data) |   |
| Basic earnings per share                    |   |                                         |   |   |   |   |   |   |   |
| Net income available to common shareholders |   | $                                            | 660    |   |   |   | 33,196,281 |   |   | $ | 0.02 |   |
| Effect of dilutive securities               |   |                                         |   |   |   |   |   |   |   |   |   |   |
| Stock options                               |   |                                         | -      |   |   |   | 9,460 |   |   |   | - |   |
| Diluted earnings per share                  |   |                                         |   |   |   |   |   |   |   |   |   |   |
| Net income available to common shareholders |   | $                                            | 660    |   |   |   | 33,205,741 |   |   | $ | 0.02 |   |

----

|                                        |   | For the six months ended                     |   |
|---------------------------------------------|--------|----------------------------------------------|--------|
|                                        |   | June 30, 2011                                |   |
|                                        |   | Income                                       |   |   | Shares |   |   | Per share |   |
|                                        |   | (numerator)                                  |   |   | (denominator) |   |   | amount |   |
|                                        |   | (dollars in thousands except per share data) |   |
| Basic earnings per share                    |   |                                         |   |   |   |   |   |   |   |
| Net income available to common shareholders |   | $                                            | 3,348  |   |   |   | 30,638,325 |   |   | $ | 0.11 |   |
| Effect of dilutive securities               |   |                                         |   |   |   |   |   |   |   |   |   |   |
| Stock options                               |   |                                         | -      |   |   |   | 7,353 |   |   |   | - |   |
| Diluted earnings per share                  |   |                                         |   |   |   |   |   |   |   |   |   |   |
| Net income available to common shareholders |   | $                                            | 3,348  |   |   |   | 30,645,678 |   |   | $ | 0.11 |   |

| Available-for-sale                                          |   | June 30, 2012 |    |
|-------------------------------------------------------------|--------|---------------|---------|
|                                                        |   |          |    |   | Gross |   |   | Gross |   |   |   |   |
|                                                        |   | Amortized     |    |   | unrealized |   |   | unrealized |   |   | Fair |   |
|                                                        |   | cost          |    |   | gains |   |   | losses |   |   | value |   |
| U.S. Government agency securities                           |   | $             | 8,804   |   |   | $ | 242 |   |   | $ | - |   |   | $ | 9,046 |   |
| Federally insured student loan securities                   |   |          | 50,299  |   |   |   | 56 |   |   |   | (79 | ) |   |   | 50,276 |   |
| Tax-exempt obligations of states and political subdivisions |   |          | 107,957 |   |   |   | 4,530 |   |   |   | (19 | ) |   |   | 112,468 |   |
| Taxable obligations of states and political subdivisions    |   |          | 44,519  |   |   |   | 3,042 |   |   |   | (57 | ) |   |   | 47,504 |   |
| Residential mortgage-backed securities                      |   |          | 195,236 |   |   |   | 3,401 |   |   |   | (219 | ) |   |   | 198,418 |   |
| Commercial mortgage-backed securities                       |   |          | 107,563 |   |   |   | 3,057 |   |   |   | (308 | ) |   |   | 110,312 |   |
| Other debt securities                                       |   |          | 50,561  |   |   |   | 1,022 |   |   |   | (398 | ) |   |   | 51,185 |   |
| Other equity securities                                     |   |          | 3,000   |   |   |   | 10 |   |   |   | - |   |   |   | 3,010 |   |
|                                                        |   | $             | 567,939 |   |   | $ | 15,360 |   |   | $ | (1,080 | ) |   | $ | 582,219 |   |
|                                                        |   |          |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                        |   |          |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                        |   |          |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Held-to-maturity                       |   | June 30, 2012 |   |
|----------------------------------------|--------|---------------|--------|
|                                   |   |          |   |   |   | Gross |   |   | Gross |   |   |   |   |   |
|                                   |   | Amortized     |   |   | unrealized |   |   | unrealized |   |   | Fair |   |
|                                   |   | cost          |   |   | gains |   |   | losses |   |   | value |   |
| Other debt securities - single issuers |   | $             | 16,335 |   |   | $ | 143 |   |   | $ | (4,113 | ) |   | $ | 12,365 |   |
| Other debt securities - pooled         |   |          | 1,461  |   |   |   | - |   |   |   | (251 | ) |   |   | 1,210 |   |
|                                   |   | $             | 17,796 |   |   | $ | 143 |   |   | $ | (4,364 | ) |   | $ | 13,575 |   |

| Available-for-sale                                          |   | December 31, 2011 |    |
|-------------------------------------------------------------|--------|-------------------|---------|
|                                                        |   |              |    |   | Gross |   |   | Gross |   |   |   |   |
|                                                        |   | Amortized         |    |   | unrealized |   |   | unrealized |   |   | Fair |   |
|                                                        |   | cost              |    |   | gains |   |   | losses |   |   | value |   |
| U.S. Government agency securities                           |   | $                 | 9,087   |   |   | $ | 198 |   |   | $ | - |   |   | $ | 9,285 |   |
| Tax-exempt obligations of states and political subdivisions |   |              | 94,227  |   |   |   | 3,580 |   |   |   | (8 | ) |   |   | 97,799 |   |
| Taxable obligations of states and political subdivisions    |   |              | 50,778  |   |   |   | 2,149 |   |   |   | (60 | ) |   |   | 52,867 |   |
| Residential mortgage-backed securities                      |   |              | 190,214 |   |   |   | 3,582 |   |   |   | (111 | ) |   |   | 193,685 |   |
| Commercial mortgage-backed securities                       |   |              | 51,242  |   |   |   | 875 |   |   |   | (56 | ) |   |   | 52,061 |   |
| Other debt securities                                       |   |              | 38,873  |   |   |   | 1,058 |   |   |   | (399 | ) |   |   | 39,532 |   |
| Other equity securities                                     |   |              | 3,000   |   |   |   | - |   |   |   | (25 | ) |   |   | 2,975 |   |
|                                                        |   | $                 | 437,421 |   |   | $ | 11,442 |   |   | $ | (659 | ) |   | $ | 448,204 |   |
|                                                        |   |              |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                        |   |              |    |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

| Held-to-maturity                       |   | December 31, 2011 |   |
|----------------------------------------|--------|-------------------|--------|
|                                   |   |              |   |   |   | Gross |   |   | Gross |   |   |   |   |   |
|                                   |   | Amortized         |   |   | unrealized |   |   | unrealized |   |   | Fair |   |
|                                   |   | cost              |   |   | gains |   |   | losses |   |   | value |   |
| Other debt securities - single issuers |   | $                 | 16,337 |   |   | $ | 138 |   |   | $ | (4,051 | ) |   | $ | 12,424 |   |
| Other debt securities - pooled         |   |              | 1,707  |   |   |   | - |   |   |   | (305 | ) |   |   | 1,402 |   |
|                                   |   | $                 | 18,044 |   |   | $ | 138 |   |   | $ | (4,356 | ) |   | $ | 13,826 |   |

|                                   |   | Available-for-sale |    |   | Held-to-maturity |   |
|----------------------------------------|--------|--------------------|---------|--------|------------------|--------|
|                                   |   | Amortized          |    |   | Fair             |   |   | Amortized |   |   | Fair |   |
|                                   |   | cost               |    |   | value            |   |   | cost |   |   | value |   |
| Due before one year                    |   | $                  | 72,082  |   |             | $      | 72,292 |   |   | $ | - |   |   | $ | - |   |
| Due after one year through five years  |   |               | 170,391 |   |             |   | 174,382 |   |   |   | - |   |   |   | - |   |
| Due after five years through ten years |   |               | 25,249  |   |             |   | 26,162 |   |   |   | 3,248 |   |   |   | 2,853 |   |
| Due after ten years                    |   |               | 297,217 |   |             |   | 306,373 |   |   |   | 14,548 |   |   |   | 10,722 |   |
| Other equity securities                |   |               | 3,000   |   |             |   | 3,010 |   |   |   | - |   |   |   | - |   |
|                                   |   | $                  | 567,939 |   |             | $      | 582,219 |   |   | $ | 17,796 |   |   | $ | 13,575 |   |

| Available-for-sale                                   |   |                     |   |   | Less than 12 months |   |    | 12 months or longer |   |   | Total      |   |
|------------------------------------------------------|--------|--------------------------|--------|--------|---------------------|--------|---------|---------------------|--------|--------|------------|--------|
|                                                 |   | Number ofsecurities |   |   | Fair Value          |   |    | Unrealized losses   |   |   | Fair Value |   |   | Unrealized losses |   |   | Fair Value |   |   | Unrealized losses |   |
| Description of Securities                            |   |                     |   |   |                |   |    |                |   |   |       |   |   |   |   |   |   |   |   |   |   |
| Federally insured student loan securities            |   |                     | 6      |   |                | $      | 43,440  |                |   | $      | (79        | )      |   | $ | - |   |   | $ | - |   |   | $ | 43,440 |   |   | $ | (79 | ) |
| Tax-exempt obligations of states and                 |   |                     |   |   |                |   |    |                |   |   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|      political subdivisions |   |                     | 4      |   |                |   | 4,180   |                |   |   | (19        | )      |   |   | - |   |   |   | - |   |   |   | 4,180 |   |   |   | (19 | ) |
| Taxable obligations of states and                    |   |                     |   |   |                |   |    |                |   |   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|      political subdivisions |   |                     | 9      |   |                |   | 12,387  |                |   |   | (57        | )      |   |   | - |   |   |   | - |   |   |   | 12,387 |   |   |   | (57 | ) |
| Residential mortgage-backed securities               |   |                     | 9      |   |                |   | 42,155  |                |   |   | (219       | )      |   |   | - |   |   |   | - |   |   |   | 42,155 |   |   |   | (219 | ) |
| Commercial mortgage-backed securities                |   |                     | 7      |   |                |   | 50,734  |                |   |   | (308       | )      |   |   | - |   |   |   | - |   |   |   | 50,734 |   |   |   | (308 | ) |
| Other debt securities                                |   |                     | 7      |   |                |   | 22,270  |                |   |   | (66        | )      |   |   | 2,496 |   |   |   | (332 | ) |   |   | 24,766 |   |   |   | (398 | ) |
| Total temporarily impaired                           |   |                     |   |   |                |   |    |                |   |   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|      investment securities  |   |                     | 42     |   |                | $      | 175,166 |                |   | $      | (748       | )      |   | $ | 2,496 |   |   | $ | (332 | ) |   | $ | 177,662 |   |   | $ | (1,080 | ) |
|                                                 |   |                     |   |   |                |   |    |                |   |   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                 |   |                     |   |   |                |   |    |                |   |   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                 |   |                     |   |   |                |   |    |                |   |   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

| 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 debt securities - single issuers              |   |                 | 2      |   |                | $      | -      |                |   | $      | -          |   |   | $ | 7,969 |   |   | $ | (4,113 | ) |   | $ | 7,969 |   |   | $ | (4,113 | ) |
| Other debt securities - pooled                      |   |                 | 2      |   |                |   | -      |                |   |   | -          |   |   |   | 1,210 |   |   |   | (251 | ) |   |   | 1,210 |   |   |   | (251 | ) |
| Total temporarily impaired                          |   |                 |   |   |                |   |   |                |   |   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|      investment securities |   |                 | 4      |   |                | $      | -      |                |   | $      | -          |   |   | $ | 9,179 |   |   | $ | (4,364 | ) |   | $ | 9,179 |   |   | $ | (4,364 | ) |

|                                                 |   |                 |   |   |                |   |   |                   |   |   |       |   |   |              |   |   |       |   |   |              |   |
|------------------------------------------------------|--------|----------------------|--------|--------|---------------------|--------|--------|------------------------|--------|--------|------------|--------|--------|-------------------|--------|--------|------------|--------|--------|-------------------|--------|
| 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                            |   |                 |   |   |                |   |   |                   |   |   |       |   |   |              |   |   |       |   |   |              |   |
| Tax-exempt obligations of states and                 |   |                 |   |   |                |   |   |                   |   |   |       |   |   |              |   |   |       |   |   |              |   |
|      political subdivisions |   |                 | 7      |   |                | $      | 11,104 |                   |   | $      | (8         | )      |   | $                 | -      |   |       | $      | -      |              |   | $ | 11,104 |   |   | $ | (8 | ) |
| Taxable obligations of states and                    |   |                 |   |   |                |   |   |                   |   |   |       |   |   |              |   |   |       |   |   |              |   |   |   |   |   |   |   |   |
|      political subdivisions |   |                 | 10     |   |                |   | 16,905 |                   |   |   | (60        | )      |   |              | -      |   |       |   | -      |              |   |   | 16,905 |   |   |   | (60 | ) |
| Residential mortgage-backed securities               |   |                 | 5      |   |                |   | 10,054 |                   |   |   | (111       | )      |   |              | -      |   |       |   | -      |              |   |   | 10,054 |   |   |   | (111 | ) |
| Commercial mortgage-backed securities                |   |                 | 4      |   |                |   | 24,421 |                   |   |   | (56        | )      |   |              | -      |   |       |   | -      |              |   |   | 24,421 |   |   |   | (56 | ) |
| Other debt securities                                |   |                 | 3      |   |                |   | 10,929 |                   |   |   | (93        | )      |   |              | 2,549  |   |       |   | (306   | )                 |   |   | 13,478 |   |   |   | (399 | ) |
| Other equity securities                              |   |                 | 1      |   |                |   | 2,975  |                   |   |   | (25        | )      |   |              | -      |   |       |   | -      |              |   |   | 2,975 |   |   |   | (25 | ) |
| Total temporarily impaired                           |   |                 |   |   |                |   |   |                   |   |   |       |   |   |              |   |   |       |   |   |              |   |   |   |   |   |   |   |   |
|      investment securities  |   |                 | 30     |   |                | $      | 76,388 |                   |   | $      | (353       | )      |   | $                 | 2,549  |   |       | $      | (306   | )                 |   | $ | 78,937 |   |   | $ | (659 | ) |
|                                                 |   |                 |   |   |                |   |   |                   |   |   |       |   |   |              |   |   |       |   |   |              |   |   |   |   |   |   |   |   |
|                                                 |   |                 |   |   |                |   |   |                   |   |   |       |   |   |              |   |   |       |   |   |              |   |   |   |   |   |   |   |   |
|                                                 |   |                 |   |   |                |   |   |                   |   |   |       |   |   |              |   |   |       |   |   |              |   |   |   |   |   |   |   |   |

| 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 debt securities - single issuers              |   |                 | 2      |   |                | $      | -      |                   |   | $      | -          |   |   | $ | 8,021 |   |   | $ | (4,051 | ) |   | $ | 8,021 |   |   | $ | (4,051 | ) |
| Other debt securities - pooled                      |   |                 | 2      |   |                |   | -      |                   |   |   | -          |   |   |   | 1,402 |   |   |   | (305 | ) |   |   | 1,402 |   |   |   | (305 | ) |
| Total temporarily impaired                          |   |                 |   |   |                |   |   |                   |   |   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|      investment securities |   |                 | 4      |   |                | $      | -      |                   |   | $      | -          |   |   | $ | 9,423 |   |   | $ | (4,356 | ) |   | $ | 9,423 |   |   | $ | (4,356 | ) |

----

|                                                                                                                                                                          |   |   | June 30,  |   |   |   | December 31, |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|-----------|--------|--------|--------|--------------|--------|
|                                                                                                                                                                          |   |   | 2012      |   |   |   | 2011         |   |
|                                                                                                                                                                          |   |   |      |   |   |   |         |   |
| Commercial                                                                                                                                                                    |   | $      | 441,167   |   |   | $      | 450,411      |   |
| Commercial mortgage *                                                                                                                                                         |   |   | 596,639   |   |   |   | 609,487      |   |
| Construction                                                                                                                                                                  |   |   | 269,636   |   |   |   | 246,611      |   |
| Total commercial loans                                                                                                                                                        |   |   | 1,307,442 |   |   |   | 1,306,509    |   |
| Direct lease financing                                                                                                                                                        |   |   | 140,012   |   |   |   | 129,682      |   |
| Residential mortgage                                                                                                                                                          |   |   | 97,226    |   |   |   | 96,110       |   |
| Consumer loans and others                                                                                                                                                     |   |   | 255,769   |   |   |   | 209,041      |   |
|                                                                                                                                                                          |   |   | 1,800,449 |   |   |   | 1,741,342    |   |
| Unamortized loan costs                                                                                                                                                        |   |   | 3,863     |   |   |   | 3,486        |   |
| Total loans, net of deferred loan costs                                                                                                                                       |   | $      | 1,804,312 |   |   | $      | 1,744,828    |   |
|                                                                                                                                                                          |   |   |      |   |   |   |         |   |
| Supplemental loan data:                                                                                                                                                       |   |   |      |   |   |   |         |   |
| Construction 1-4 family                                                                                                                                                       |   | $      | 79,546    |   |   | $      | 85,189       |   |
| Commercial construction, acquisition and development                                                                                                                          |   |   | 190,090   |   |   |   | 161,422      |   |
|                                                                                                                                                                          |   | $      | 269,636   |   |   | $      | 246,611      |   |
|                                                                                                                                                                          |   |   |      |   |   |   |         |   |
| * At June 30, 2012, our owner occupied loans amounted to $141.9 million, or 23. 8% of commercial mortgages as compared to $137.9 million, or 22.6% at December 31, 2011. |   |

----

|                          |   | Recordedinvestment |   |   | Unpaidprincipalbalance |   |   | Relatedallowance |   |   | Averagerecordedinvestment |   |   | Interestincomerecognized |   |
|-------------------------------|--------|--------------------|--------|--------|------------------------|--------|--------|------------------|--------|--------|---------------------------|--------|--------|--------------------------|--------|
| June 30, 2012                 |   |               |   |   |                   |   |   |             |   |   |                      |   |   |                     |   |
| Without an allowance recorded |   |               |   |   |                   |   |   |             |   |   |                      |   |   |                     |   |
| Construction                  |   | $                  | 2,541  |   |                   | $      | 5,781  |             |   | $      | -                         |   |   | $                        | 1,123  |   |   | $ | - |   |
| Commercial mortgage           |   |               | 3,482  |   |                   |   | 4,027  |             |   |   | -                         |   |   |                     | 1,550  |   |   |   | - |   |
| Commercial                    |   |               | 1,689  |   |                   |   | 3,727  |             |   |   | -                         |   |   |                     | 1,284  |   |   |   | - |   |
| Consumer - home equity        |   |               | 927    |   |                   |   | 927    |             |   |   | -                         |   |   |                     | 927    |   |   |   | - |   |
| Residential                   |   |               | -      |   |                   |   | -      |             |   |   | -                         |   |   |                     | 421    |   |   |   | - |   |
| With an allowance recorded    |   |               |   |   |                   |   |   |             |   |   |                      |   |   |                     |   |   |   |   |   |   |
| Construction                  |   |               | 6,433  |   |                   |   | 7,249  |             |   |   | 3,303                     |   |   |                     | 7,069  |   |   |   | - |   |
| Commercial mortgage           |   |               | 4,508  |   |                   |   | 5,052  |             |   |   | 903                       |   |   |                     | 5,089  |   |   |   | - |   |
| Commercial                    |   |               | 7,847  |   |                   |   | 8,043  |             |   |   | 2,739                     |   |   |                     | 6,051  |   |   |   | - |   |
| Consumer - home equity        |   |               | -      |   |                   |   | -      |             |   |   | -                         |   |   |                     | 108    |   |   |   | - |   |
| Residential                   |   |               | 95     |   |                   |   | 95     |             |   |   | 73                        |   |   |                     | 31     |   |   |   | - |   |
| Total                         |   |               |   |   |                   |   |   |             |   |   |                      |   |   |                     |   |   |   |   |   |   |
| Construction                  |   | $                  | 8,974  |   |                   | $      | 13,030 |             |   | $      | 3,303                     |   |   | $                        | 8,192  |   |   | $ | - |   |
| Commercial mortgage           |   | $                  | 7,990  |   |                   | $      | 9,079  |             |   | $      | 903                       |   |   | $                        | 6,639  |   |   | $ | - |   |
| Commercial                    |   | $                  | 9,536  |   |                   | $      | 11,770 |             |   | $      | 2,739                     |   |   | $                        | 7,335  |   |   | $ | - |   |
| Consumer - home equity        |   | $                  | 927    |   |                   | $      | 927    |             |   | $      | -                         |   |   | $                        | 1,035  |   |   | $ | - |   |
| Residential                   |   | $                  | 95     |   |                   | $      | 95     |             |   | $      | 73                        |   |   | $                        | 452    |   |   | $ | - |   |
|                          |   |               |   |   |                   |   |   |             |   |   |                      |   |   |                     |   |   |   |   |   |   |
| December 31, 2011             |   |               |   |   |                   |   |   |             |   |   |                      |   |   |                     |   |   |   |   |   |   |
| Without an allowance recorded |   |               |   |   |                   |   |   |             |   |   |                      |   |   |                     |   |   |   |   |   |   |
| Construction                  |   | $                  | -      |   |                   | $      | -      |             |   | $      | -                         |   |   | $                        | 100    |   |   | $ | - |   |
| Commercial mortgage           |   |               | -      |   |                   |   | -      |             |   |   | -                         |   |   |                     | 310    |   |   |   | - |   |
| Commercial                    |   |               | 900    |   |                   |   | 2,042  |             |   |   | 6,831                     |   |   |                     | 626    |   |   |   | - |   |
| Consumer - home equity        |   |               | 927    |   |                   |   | 927    |             |   |   | 3,765                     |   |   |                     | 371    |   |   |   | - |   |
| Residential                   |   |               | 1,264  |   |                   |   | 1,414  |             |   |   | 149                       |   |   |                     | 662    |   |   |   | - |   |
| With an allowance recorded    |   |               |   |   |                   |   |   |             |   |   |                      |   |   |                     |   |   |   |   |   |   |
| Construction                  |   |               | 4,949  |   |                   |   | 4,949  |             |   |   | 2,296                     |   |   |                     | 2,123  |   |   |   | - |   |
| Commercial mortgage           |   |               | 3,672  |   |                   |   | 3,672  |             |   |   | 712                       |   |   |                     | 2,793  |   |   |   | - |   |
| Commercial                    |   |               | 5,550  |   |                   |   | 5,550  |             |   |   | 2,724                     |   |   |                     | 3,075  |   |   |   | - |   |
| Consumer - home equity        |   |               | 325    |   |                   |   | 325    |             |   |   | 204                       |   |   |                     | 510    |   |   |   | - |   |
| Residential                   |   |               | -      |   |                   |   | -      |             |   |   | -                         |   |   |                     | 5,048  |   |   |   | - |   |
| Total                         |   |               |   |   |                   |   |   |             |   |   |                      |   |   |                     |   |   |   |   |   |   |
| Construction                  |   | $                  | 4,949  |   |                   | $      | 4,949  |             |   | $      | 2,296                     |   |   | $                        | 2,223  |   |   | $ | - |   |
| Commercial mortgage           |   | $                  | 3,672  |   |                   | $      | 3,672  |             |   | $      | 712                       |   |   | $                        | 3,103  |   |   | $ | - |   |
| Commercial                    |   | $                  | 6,450  |   |                   | $      | 7,592  |             |   | $      | 9,555                     |   |   | $                        | 3,701  |   |   | $ | - |   |
| Consumer - home equity        |   | $                  | 1,252  |   |                   | $      | 1,252  |             |   | $      | 3,969                     |   |   | $                        | 881    |   |   | $ | - |   |
| Residential                   |   | $                  | 1,264  |   |                   | $      | 1,414  |             |   | $      | 149                       |   |   | $                        | 5,710  |   |   | $ | - |   |

----

|                                                                              |   | June 30,       |   |   | June 30, |   |   | December 31, |   |
|-----------------------------------------------------------------------------------|--------|----------------|--------|--------|----------|--------|--------|--------------|--------|
|                                                                              |   | 2012           |   |   | 2011     |   |   | 2011         |   |
|                                                                              |   | (in thousands) |   |
|                                                                              |   |           |   |   |     |   |   |         |   |
| Non-accrual loans                                                                 |   |           |   |   |     |   |   |         |   |
|           Construction *        |   | $              | 8,698  |   |     | $      | 845    |         |   | $ | 4,949 |   |
|           Commercial mortgage * |   |           | 5,559  |   |     |   | 2,782  |         |   |   | 3,672 |   |
|           Commercial *          |   |           | 9,536  |   |     |   | 5,337  |         |   |   | 6,450 |   |
|           Consumer              |   |           | 927    |   |     |   | 633    |         |   |   | 1,252 |   |
|           Residential           |   |           | 95     |   |     |   | 9,929  |         |   |   | 1,264 |   |
| Total non-accrual loans                                                           |   |           | 24,815 |   |     |   | 19,526 |         |   |   | 17,587 |   |
|                                                                              |   |           |   |   |     |   |   |         |   |   |   |   |
| Loans past due 90 days or more                                                    |   |           | 3,105  |   |     |   | 4,397  |         |   |   | 4,101 |   |
| Total non-performing loans                                                        |   |           | 27,920 |   |     |   | 23,923 |         |   |   | 21,688 |   |
| Other real estate owned                                                           |   |           | 4,919  |   |     |   | 3,764  |         |   |   | 7,405 |   |
| Total non-performing assets                                                       |   | $              | 32,839 |   |     | $      | 27,687 |         |   | $ | 29,093 |   |

|                 |   | June 30, 2012 |   |   | December 31, 2011                    |   |
|----------------------|--------|---------------|--------|--------|--------------------------------------|--------|
|                 |   |          |   |   |                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                 |   | Number        |   |   | Pre-modification recorded investment |   |   | Post-modification recorded investment |   |   | Number |   |   | Pre-modification recorded investment |   |   | Post-modification recorded investment |   |
| Commercial           |   |          | 1      |   |                                 | $      | 3,155 |   |   | $ | 3,155 |   |   |   | - |   |   | $ | - |   |   | $ | - |   |
| Commercial mortgage  |   |          | 3      |   |                                 |   | 3,167 |   |   |   | 3,167 |   |   |   | 1 |   |   |   | 759 |   |   |   | 759 |   |
| Construction         |   |          | 4      |   |                                 |   | 3,701 |   |   |   | 3,701 |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Residential mortgage |   |          | -      |   |                                 |   | - |   |   |   | - |   |   |   | 1 |   |   |   | 364 |   |   |   | 364 |   |
| Total                |   |          | 8      |   |                                 | $      | 10,023 |   |   | $ | 10,023 |   |   |   | 2 |   |   | $ | 1,123 |   |   | $ | 1,123 |   |

|                 |   | June 30, 2012          |   |   | December 31, 2011 |   |
|----------------------|--------|------------------------|--------|--------|-------------------|--------|
|                 |   | Adjusted interest rate |   |   | Extended maturity |   |   | Combined rate and maturity |   |   | Adjusted interest rate |   |   | Extended maturity |   |   | Combined rate and maturity |   |
| Commercial           |   | $                      | -      |   |              | $      | 3,155 |   |   | $ | - |   |   | $ | - |   |   | $ | - |   |   | $ | - |   |
| Commercial mortgage  |   |                   | 736    |   |              |   | 214 |   |   |   | 2,217 |   |   |   | 759 |   |   |   | - |   |   |   | - |   |
| Construction         |   |                   | -      |   |              |   | 3,701 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Residential mortgage |   |                   | -      |   |              |   | - |   |   |   | - |   |   |   | 364 |   |   |   | - |   |   |   | - |   |
| Total                |   | $                      | 736    |   |              | $      | 7,070 |   |   | $ | 2,217 |   |   | $ | 1,123 |   |   | $ | - |   |   | $ | - |   |

----

|                                                  |   |       |    |   |               |   |    |         |   |   |                |   |   |     |   |   |                  |   |    |        |   |   |    |   |
|-------------------------------------------------------|--------|------------|---------|--------|--------------------|--------|---------|--------------|--------|--------|---------------------|--------|--------|----------|--------|--------|-----------------------|--------|---------|-------------|--------|--------|---------|--------|
| Six months ended                                      |   | Commercial |    |   | Commercialmortgage |   |    | Construction |   |   | Residentialmortgage |   |   | Consumer |   |   | Direct leasefinancing |   |    | Unallocated |   |   | Total   |   |
| June 30, 2012                                         |   |       |    |   |               |   |    |         |   |   |                |   |   |     |   |   |                  |   |    |        |   |   |    |   |
| Beginning balance                                     |   | $          | 10,214  |   |               | $      | 9,274   |         |   | $      | 5,352               |   |   | $        | 2,090  |   |                  | $      | 1,346   |        |   | $      | 254     |   |   | $ | 1,038 |   |   | $ | 29,568 |   |
| Charge-offs                                           |   |       | (2,454  | )      |               |   | (1,646  | )            |   |   | (4,837              | )      |   |     | -      |   |                  |   | (258    | )           |   |   | (87     | )      |   |   | - |   |   |   | (9,282 | ) |
| Recoveries                                            |   |       | 254     |   |               |   | 1,018   |         |   |   | 9                   |   |   |     | 85     |   |                  |   | -       |        |   |   | 12      |   |   |   | - |   |   |   | 1,378 |   |
| Provision                                             |   |       | 2,109   |   |               |   | (1,442  | )            |   |   | 8,728               |   |   |     | (21    | )      |                  |   | 552     |        |   |   | 152     |   |   |   | (571 | ) |   |   | 9,507 |   |
| Ending balance                                        |   | $          | 10,123  |   |               | $      | 7,204   |         |   | $      | 9,252               |   |   | $        | 2,154  |   |                  | $      | 1,640   |        |   | $      | 331     |   |   | $ | 467 |   |   | $ | 31,171 |   |
|                                                  |   |       |    |   |               |   |    |         |   |   |                |   |   |     |   |   |                  |   |    |        |   |   |    |   |   |   |   |   |   |   |   |   |
| Ending balance: Individually evaluated for impairment |   | $          | 2,739   |   |               | $      | 902     |         |   | $      | 3,303               |   |   | $        | 73     |   |                  | $      | -       |        |   | $      | -       |   |   | $ | - |   |   | $ | 7,017 |   |
|                                                  |   |       |    |   |               |   |    |         |   |   |                |   |   |     |   |   |                  |   |    |        |   |   |    |   |   |   |   |   |   |   |   |   |
| Ending balance: Collectively evaluated for impairment |   | $          | 7,384   |   |               | $      | 6,302   |         |   | $      | 5,949               |   |   | $        | 2,081  |   |                  | $      | 1,640   |        |   | $      | 331     |   |   | $ | 467 |   |   | $ | 24,154 |   |
|                                                  |   |       |    |   |               |   |    |         |   |   |                |   |   |     |   |   |                  |   |    |        |   |   |    |   |   |   |   |   |   |   |   |   |
|                                                  |   |       |    |   |               |   |    |         |   |   |                |   |   |     |   |   |                  |   |    |        |   |   |    |   |   |   |   |   |   |   |   |   |
| Loans:                                                |   |       |    |   |               |   |    |         |   |   |                |   |   |     |   |   |                  |   |    |        |   |   |    |   |   |   |   |   |   |   |   |   |
| Ending balance                                        |   | $          | 441,167 |   |               | $      | 596,639 |         |   | $      | 269,636             |   |   | $        | 97,226 |   |                  | $      | 255,769 |        |   | $      | 140,012 |   |   | $ | 3,863 |   |   | $ | 1,804,312 |   |
|                                                  |   |       |    |   |               |   |    |         |   |   |                |   |   |     |   |   |                  |   |    |        |   |   |    |   |   |   |   |   |   |   |   |   |
| Ending balance: Individually evaluated for impairment |   | $          | 9,536   |   |               | $      | 7,990   |         |   | $      | 8,974               |   |   | $        | 95     |   |                  | $      | 927     |        |   | $      | -       |   |   | $ | - |   |   | $ | 27,522 |   |
|                                                  |   |       |    |   |               |   |    |         |   |   |                |   |   |     |   |   |                  |   |    |        |   |   |    |   |   |   |   |   |   |   |   |   |
| Ending balance: Collectively evaluated for impairment |   | $          | 431,631 |   |               | $      | 588,649 |         |   | $      | 260,662             |   |   | $        | 97,131 |   |                  | $      | 254,842 |        |   | $      | 140,012 |   |   | $ | 3,863 |   |   | $ | 1,776,790 |   |
|                                                  |   |       |    |   |               |   |    |         |   |   |                |   |   |     |   |   |                  |   |    |        |   |   |    |   |   |   |   |   |   |   |   |   |
|                                                  |   |       |    |   |               |   |    |         |   |   |                |   |   |     |   |   |                  |   |    |        |   |   |    |   |   |   |   |   |   |   |   |   |

| Twelve months ended                                   |   | Commercial |    |   | Commercialmortgage |   |    | Construction |   |   | Residentialmortgage |   |   | Consumer |   |   | Direct leasefinancing |   |    | Unallocated |   |   | Total   |   |
|-------------------------------------------------------|--------|------------|---------|--------|--------------------|--------|---------|--------------|--------|--------|---------------------|--------|--------|----------|--------|--------|-----------------------|--------|---------|-------------|--------|--------|---------|--------|
| December 31, 2011                                     |   |       |    |   |               |   |    |         |   |   |                |   |   |     |   |   |                  |   |    |        |   |   |    |   |
| Beginning balance                                     |   | $          | 6,051   |   |               | $      | 9,501   |         |   | $      | 5,030               |   |   | $        | 2,115  |   |                  | $      | 578     |        |   | $      | 164     |   |   | $ | 624 |   |   | $ | 24,063 |   |
| Charge-offs                                           |   |       | (7,453  | )      |               |   | (1,198  | )            |   |   | (3,254              | )      |   |     | (2,870 | )      |                  |   | (1,280  | )           |   |   | (39     | )      |   |   | - |   |   |   | (16,094 | ) |
| Recoveries                                            |   |       | 2       |   |               |   | 89      |         |   |   | 4                   |   |   |     | -      |   |                  |   | 6       |        |   |   | -       |   |   |   | - |   |   |   | 101 |   |
| Provision                                             |   |       | 11,614  |   |               |   | 882     |         |   |   | 3,572               |   |   |     | 2,845  |   |                  |   | 2,042   |        |   |   | 129     |   |   |   | 414 |   |   |   | 21,498 |   |
| Ending balance                                        |   | $          | 10,214  |   |               | $      | 9,274   |         |   | $      | 5,352               |   |   | $        | 2,090  |   |                  | $      | 1,346   |        |   | $      | 254     |   |   | $ | 1,038 |   |   | $ | 29,568 |   |
|                                                  |   |       |    |   |               |   |    |         |   |   |                |   |   |     |   |   |                  |   |    |        |   |   |    |   |   |   |   |   |   |   |   |   |
| Ending balance:Individually evaluated for impairment  |   | $          | 2,724   |   |               | $      | 712     |         |   | $      | 2,296               |   |   | $        | -      |   |                  | $      | 204     |        |   | $      | -       |   |   | $ | - |   |   | $ | 5,936 |   |
|                                                  |   |       |    |   |               |   |    |         |   |   |                |   |   |     |   |   |                  |   |    |        |   |   |    |   |   |   |   |   |   |   |   |   |
| Ending balance: Collectively evaluated for impairment |   | $          | 7,490   |   |               | $      | 8,562   |         |   | $      | 3,056               |   |   | $        | 2,090  |   |                  | $      | 1,142   |        |   | $      | 254     |   |   | $ | 1,038 |   |   | $ | 23,632 |   |
|                                                  |   |       |    |   |               |   |    |         |   |   |                |   |   |     |   |   |                  |   |    |        |   |   |    |   |   |   |   |   |   |   |   |   |
|                                                  |   |       |    |   |               |   |    |         |   |   |                |   |   |     |   |   |                  |   |    |        |   |   |    |   |   |   |   |   |   |   |   |   |
| Loans:                                                |   |       |    |   |               |   |    |         |   |   |                |   |   |     |   |   |                  |   |    |        |   |   |    |   |   |   |   |   |   |   |   |   |
| Ending balance                                        |   | $          | 450,411 |   |               | $      | 609,487 |         |   | $      | 246,611             |   |   | $        | 96,110 |   |                  | $      | 209,041 |        |   | $      | 129,682 |   |   | $ | 3,486 |   |   | $ | 1,744,828 |   |
|                                                  |   |       |    |   |               |   |    |         |   |   |                |   |   |     |   |   |                  |   |    |        |   |   |    |   |   |   |   |   |   |   |   |   |
| Ending balance: Individually evaluated for impairment |   | $          | 6,450   |   |               | $      | 3,672   |         |   | $      | 4,949               |   |   | $        | 1,264  |   |                  | $      | 1,252   |        |   | $      | -       |   |   | $ | - |   |   | $ | 17,587 |   |
|                                                  |   |       |    |   |               |   |    |         |   |   |                |   |   |     |   |   |                  |   |    |        |   |   |    |   |   |   |   |   |   |   |   |   |
| Ending balance: Collectively evaluated for impairment |   | $          | 443,961 |   |               | $      | 605,815 |         |   | $      | 241,662             |   |   | $        | 94,846 |   |                  | $      | 207,789 |        |   | $      | 129,682 |   |   | $ | 3,486 |   |   | $ | 1,727,241 |   |
|                                                  |   |       |    |   |               |   |    |         |   |   |                |   |   |     |   |   |                  |   |    |        |   |   |    |   |   |   |   |   |   |   |   |   |
|                                                  |   |       |    |   |               |   |    |         |   |   |                |   |   |     |   |   |                  |   |    |        |   |   |    |   |   |   |   |   |   |   |   |   |

| Six months ended                                      |   | Commercial |    |   | Commercialmortgage |   |    | Construction |   |   | Residentialmortgage |   |   | Consumer |   |   | Direct leasefinancing |   |    | Unallocated |   |   | Total   |   |
|-------------------------------------------------------|--------|------------|---------|--------|--------------------|--------|---------|--------------|--------|--------|---------------------|--------|--------|----------|--------|--------|-----------------------|--------|---------|-------------|--------|--------|---------|--------|
| June 30, 2011                                         |   |       |    |   |               |   |    |         |   |   |                |   |   |     |   |   |                  |   |    |        |   |   |    |   |   |   |   |   |   |   |   |   |
| Beginning balance                                     |   | $          | 6,051   |   |               | $      | 9,501   |         |   | $      | 5,030               |   |   | $        | 2,115  |   |                  | $      | 578     |        |   | $      | 164     |   |   | $ | 624 |   |   | $ | 24,063 |   |
| Charge-offs                                           |   |       | (4,702  | )      |               |   | (102    | )            |   |   | (2,496              | )      |   |     | (49    | )      |                  |   | (681    | )           |   |   | -       |   |   |   | - |   |   |   | (8,030 | ) |
| Recoveries                                            |   |       | 2       |   |               |   | 13      |         |   |   | 2                   |   |   |     | -      |   |                  |   | -       |        |   |   | -       |   |   |   | - |   |   |   | 17 |   |
| Provision                                             |   |       | 8,852   |   |               |   | (526    | )            |   |   | 983                 |   |   |     | 939    |   |                  |   | 1,488   |        |   |   | 78      |   |   |   | (179 | ) |   |   | 11,635 |   |
| Ending balance                                        |   | $          | 10,203  |   |               | $      | 8,886   |         |   | $      | 3,519               |   |   | $        | 3,005  |   |                  | $      | 1,385   |        |   | $      | 242     |   |   | $ | 445 |   |   | $ | 27,685 |   |
|                                                  |   |       |    |   |               |   |    |         |   |   |                |   |   |     |   |   |                  |   |    |        |   |   |    |   |   |   |   |   |   |   |   |   |
| Ending balance: Individually evaluated for impairment |   | $          | 1,674   |   |               | $      | 542     |         |   | $      | 394                 |   |   | $        | 2,163  |   |                  | $      | 428     |        |   | $      | -       |   |   | $ | - |   |   | $ | 5,201 |   |
|                                                  |   |       |    |   |               |   |    |         |   |   |                |   |   |     |   |   |                  |   |    |        |   |   |    |   |   |   |   |   |   |   |   |   |
| Ending balance: Collectively evaluated for impairment |   | $          | 8,529   |   |               | $      | 8,344   |         |   | $      | 3,125               |   |   | $        | 842    |   |                  | $      | 957     |        |   | $      | 242     |   |   | $ | 445 |   |   | $ | 22,484 |   |
|                                                  |   |       |    |   |               |   |    |         |   |   |                |   |   |     |   |   |                  |   |    |        |   |   |    |   |   |   |   |   |   |   |   |   |
|                                                  |   |       |    |   |               |   |    |         |   |   |                |   |   |     |   |   |                  |   |    |        |   |   |    |   |   |   |   |   |   |   |   |   |
| Loans:                                                |   |       |    |   |               |   |    |         |   |   |                |   |   |     |   |   |                  |   |    |        |   |   |    |   |   |   |   |   |   |   |   |   |
| Ending balance                                        |   | $          | 450,916 |   |               | $      | 593,842 |         |   | $      | 205,730             |   |   | $        | 98,113 |   |                  | $      | 200,132 |        |   | $      | 127,016 |   |   | $ | 2,911 |   |   | $ | 1,678,660 |   |
|                                                  |   |       |    |   |               |   |    |         |   |   |                |   |   |     |   |   |                  |   |    |        |   |   |    |   |   |   |   |   |   |   |   |   |
| Ending balance: Individually evaluated for impairment |   | $          | 5,337   |   |               | $      | 2,782   |         |   | $      | 845                 |   |   | $        | 9,929  |   |                  | $      | 633     |        |   | $      | -       |   |   | $ | - |   |   | $ | 19,526 |   |
|                                                  |   |       |    |   |               |   |    |         |   |   |                |   |   |     |   |   |                  |   |    |        |   |   |    |   |   |   |   |   |   |   |   |   |
| Ending balance: Collectively evaluated for impairment |   | $          | 445,579 |   |               | $      | 591,060 |         |   | $      | 204,885             |   |   | $        | 88,184 |   |                  | $      | 199,499 |        |   | $      | 127,016 |   |   | $ | 2,911 |   |   | $ | 1,659,134 |   |

----

| Age Analysis of Past Due Loans |   |
|--------------------------------|--------|
|                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                           |   | 30-59 Days |   |   | 60-89 Days |   |   | Greater than |   |   |   |   |   | Total |   |   |   |   |   | Total |   |
| June 30, 2012                  |   | past due |   |   | past due |   |   | 90 days |   |   | Non-accrual |   |   | past due |   |   | Current |   |   | loans |   |
| Commercial                     |   | $ | 670 |   |   | $ | - |   |   | $ | 540 |   |   | $ | 9,536 |   |   | $ | 10,746 |   |   | $ | 430,421 |   |   | $ | 441,167 |   |
| Commercial mortgage            |   |   | - |   |   |   | 5,628 |   |   |   | 1,632 |   |   |   | 5,559 |   |   |   | 12,819 |   |   |   | 583,820 |   |   |   | 596,639 |   |
| Construction                   |   |   | 1,823 |   |   |   | 2,690 |   |   |   | 667 |   |   |   | 8,698 |   |   |   | 13,878 |   |   |   | 255,758 |   |   |   | 269,636 |   |
| Direct lease financing         |   |   | - |   |   |   | 99 |   |   |   | 266 |   |   |   | - |   |   |   | 365 |   |   |   | 139,647 |   |   |   | 140,012 |   |
| Consumer - other               |   |   | 75 |   |   |   | 2 |   |   |   | - |   |   |   | - |   |   |   | 77 |   |   |   | 211,415 |   |   |   | 211,492 |   |
| Consumer - home equity         |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 927 |   |   |   | 927 |   |   |   | 43,350 |   |   |   | 44,277 |   |
| Residential mortgage           |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 95 |   |   |   | 95 |   |   |   | 97,131 |   |   |   | 97,226 |   |
| Unamortized costs              |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 3,863 |   |   |   | 3,863 |   |
|                           |   | $ | 2,568 |   |   | $ | 8,419 |   |   | $ | 3,105 |   |   | $ | 24,815 |   |   | $ | 38,907 |   |   | $ | 1,765,405 |   |   | $ | 1,804,312 |   |
|                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |      |   |   |   |      |   |
|------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|-----------|--------|--------|--------|-----------|--------|
| December 31, 2011      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |      |   |   |   |      |   |
| Commercial             |   | $      | -      |   |   | $      | 242    |   |   | $      | 817    |   |   | $      | 6,450  |   |   | $      | 7,509  |   |   | $      | 442,902   |   |   | $      | 450,411   |   |
| Commercial mortgage    |   |   | 278    |   |   |   | 1,763  |   |   |   | 1,597  |   |   |   | 3,672  |   |   |   | 7,310  |   |   |   | 602,177   |   |   |   | 609,487   |   |
| Construction           |   |   | -      |   |   |   | 825    |   |   |   | 942    |   |   |   | 4,949  |   |   |   | 6,716  |   |   |   | 239,895   |   |   |   | 246,611   |   |
| Direct lease financing |   |   | 1,230  |   |   |   | 606    |   |   |   | 745    |   |   |   | -      |   |   |   | 2,581  |   |   |   | 127,101   |   |   |   | 129,682   |   |
| Consumer - other       |   |   | -      |   |   |   | -      |   |   |   | -      |   |   |   | 1,252  |   |   |   | 1,252  |   |   |   | 164,145   |   |   |   | 165,397   |   |
| Consumer - home equity |   |   | -      |   |   |   | 2      |   |   |   | -      |   |   |   | -      |   |   |   | 2      |   |   |   | 43,642    |   |   |   | 43,644    |   |
| Residential mortgage   |   |   | -      |   |   |   | -      |   |   |   | -      |   |   |   | 1,264  |   |   |   | 1,264  |   |   |   | 94,846    |   |   |   | 96,110    |   |
| Unamortized costs      |   |   | -      |   |   |   | -      |   |   |   | -      |   |   |   | -      |   |   |   | -      |   |   |   | 3,486     |   |   |   | 3,486     |   |
|                   |   | $      | 1,508  |   |   | $      | 3,438  |   |   | $      | 4,101  |   |   | $      | 17,587 |   |   | $      | 26,634 |   |   | $      | 1,718,194 |   |   | $      | 1,744,828 |   |

|                      |   |       |    |   |         |   |    |      |   |   |       |   |   |       |    |   |        |   |
|---------------------------|--------|------------|---------|--------|--------------|--------|---------|-----------|--------|--------|------------|--------|--------|------------|---------|--------|-------------|--------|
|                      |   |       |    |   |         |   |    |      |   |   |       |   |   | Commercial |    |   | Residential |   |
|                      |   | Commercial |    |   | Construction |   |    | mortgage  |   |   | mortgage   |   |
|                      |   | 6/30/2012  |    |   | 12/31/2011   |   |    | 6/30/2012 |   |   | 12/31/2011 |   |   | 6/30/2012  |    |   | 12/31/2011  |   |   | 6/30/2012 |   |   | 12/31/2011 |   |
| Risk Rating               |   |       |    |   |         |   |    |      |   |   |       |   |   |       |    |   |        |   |   |   |   |   |   |   |
| Pass                      |   | $          | 303,881 |   |         | $      | 320,287 |      |   | $      | 193,150    |   |   | $          | 176,824 |   |        | $      | 454,857 |   |   | $ | 476,421 |   |   | $ | 28,209 |   |   | $ | 28,981 |   |
| Special Mention           |   |       | 2,769   |   |         |   | 1,049   |      |   |   | -          |   |   |       | -       |   |        |   | 24,696 |   |   |   | 21,615 |   |   |   | - |   |   |   | - |   |
| Substandard               |   |       | 10,009  |   |         |   | 7,696   |      |   |   | 12,055     |   |   |       | 6,716   |   |        |   | 10,340 |   |   |   | 6,867 |   |   |   | 94 |   |   |   | 1,264 |   |
| Doubtful                  |   |       | -       |   |         |   | -       |      |   |   | -          |   |   |       | -       |   |        |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Loss                      |   |       | -       |   |         |   | -       |      |   |   | -          |   |   |       | -       |   |        |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Unrated *                 |   |       | 124,508 |   |         |   | 121,379 |      |   |   | 64,431     |   |   |       | 63,071  |   |        |   | 106,746 |   |   |   | 104,584 |   |   |   | 68,923 |   |   |   | 65,865 |   |
| Total                     |   | $          | 441,167 |   |         | $      | 450,411 |      |   | $      | 269,636    |   |   | $          | 246,611 |   |        | $      | 596,639 |   |   | $ | 609,487 |   |   | $ | 97,226 |   |   | $ | 96,110 |   |
| Unrated subject to review |   |       | 31      | %      |         |   | 50      | %         |   |   | 84         | %      |   |       | 79      | %      |        |   | 27 | % |   |   | 25 | % |   |   | 4 | % |   |   | 3 | % |

----

|                      |   |      |    |   |       |   |    |              |   |   |       |   |   |      |    |   |       |   |   |      |   |   |       |   |
|---------------------------|--------|-----------|---------|--------|------------|--------|---------|-------------------|--------|--------|------------|--------|--------|-----------|---------|--------|------------|--------|--------|-----------|--------|--------|------------|--------|
|                      |   |      |    |   |       |   |    | Direct lease      |   |   |       |   |   |      |    |   |       |   |   |      |   |
|                      |   | Consumer  |    |   | financing  |   |    | Unamortized costs |   |   | Total      |   |
|                      |   | 6/30/2012 |    |   | 12/31/2011 |   |    | 6/30/2012         |   |   | 12/31/2011 |   |   | 6/30/2012 |    |   | 12/31/2011 |   |   | 6/30/2012 |   |   | 12/31/2011 |   |
| Risk Rating               |   |      |    |   |       |   |    |              |   |   |       |   |   |      |    |   |       |   |   |      |   |   |       |   |
| Pass                      |   | $         | 50,270  |   |       | $      | 64,236  |              |   | $      | 18,259     |   |   | $         | 12,025  |   |       | $      | -      |      |   | $      | -          |   |   | $ | 1,048,626 |   |   | $ | 1,078,774 |   |
| Special Mention           |   |      | -       |   |       |   | -       |              |   |   | -          |   |   |      | -       |   |       |   | -      |      |   |   | -          |   |   |   | 27,465 |   |   |   | 22,664 |   |
| Substandard               |   |      | 2,339   |   |       |   | 2,718   |              |   |   | 236        |   |   |      | 649     |   |       |   | -      |      |   |   | -          |   |   |   | 35,073 |   |   |   | 25,910 |   |
| Doubtful                  |   |      | -       |   |       |   | -       |              |   |   | -          |   |   |      | -       |   |       |   | -      |      |   |   | -          |   |   |   | - |   |   |   | - |   |
| Loss                      |   |      | -       |   |       |   | -       |              |   |   | -          |   |   |      | -       |   |       |   | -      |      |   |   | -          |   |   |   | - |   |   |   | - |   |
| Unrated *                 |   |      | 203,160 |   |       |   | 142,087 |              |   |   | 121,517    |   |   |      | 117,008 |   |       |   | 3,863  |      |   |   | 3,486      |   |   |   | 693,148 |   |   |   | 617,480 |   |
| Total                     |   | $         | 255,769 |   |       | $      | 209,041 |              |   | $      | 140,012    |   |   | $         | 129,682 |   |       | $      | 3,863  |      |   | $      | 3,486      |   |   | $ | 1,804,312 |   |   | $ | 1,744,828 |   |
| Unrated subject to review |   |      | 4       | %      |       |   | 2       | %                 |   |   | 17         | %      |   |      | 25      | %      |       |   | 0      | %         |   |   | 0          | %      |   |   | 22 | % |   |   | 28 | % |

----

----

|                                                      |   | June 30, 2012 |      |
|-----------------------------------------------------------|--------|---------------|-----------|
|                                                      |   | Carrying      |      |   | Estimated |   |   | Quoted pricesin activemarkets foridentical assets |   |   | Significant otherobservableinputs |   |   | Significantunobservableinputs |   |
|                                                      |   | amount        |      |   | fair value |   |   | (Level 1) |   |   | (Level 2) |   |   | (Level 3) |   |
| Cash and cash equivalents                                 |   | $             | 698,142   |   |   | $ | 698,142 |   |   | $ | 698,142 |   |   | $ | - |   |   | $ | - |   |
| Investment securities available-for-sale                  |   |          | 582,219   |   |   |   | 582,219 |   |   |   | 3,010 |   |   |   | 578,594 |   |   |   | 615 |   |
| Investment securities held-to-maturity                    |   |          | 17,796    |   |   |   | 13,575 |   |   |   | - |   |   |   | - |   |   |   | 13,575 |   |
| Federal Home Loan and Atlantic Central Bankers Bank stock |   |          | 4,596     |   |   |   | 4,596 |   |   |   | 4,596 |   |   |   | - |   |   |   | - |   |
| Loans receivable, net                                     |   |          | 1,804,312 |   |   |   | 1,782,607 |   |   |   | - |   |   |   | - |   |   |   | 1,782,607 |   |
| Demand and interest checking                              |   |          | 2,335,960 |   |   |   | 2,335,960 |   |   |   | 2,335,960 |   |   |   | - |   |   |   | - |   |
| Savings and money market                                  |   |          | 456,614   |   |   |   | 456,614 |   |   |   | 456,614 |   |   |   | - |   |   |   | - |   |
| Time deposits                                             |   |          | 29,723    |   |   |   | 29,859 |   |   |   | - |   |   |   | - |   |   |   | 29,859 |   |
| Subordinated debenture                                    |   |          | 13,401    |   |   |   | 9,282 |   |   |   | - |   |   |   | - |   |   |   | 9,282 |   |
| Securities sold under agreements to repurchase            |   |          | 21,948    |   |   |   | 21,948 |   |   |   | 21,948 |   |   |   | - |   |   |   | - |   |
| Accrued interest payable                                  |   |          | 127       |   |   |   | 127 |   |   |   | 127 |   |   |   | - |   |   |   | - |   |

|                                                      |   | December 31, 2011 |      |
|-----------------------------------------------------------|--------|-------------------|-----------|
|                                                      |   | Carrying          |      |   | Estimated |   |
|                                                      |   | amount            |      |   | fair value |   |
| Cash and cash equivalents                                 |   | $                 | 749,174   |   |   | $ | 749,174 |   |
| Investment securities available-for-sale                  |   |              | 448,204   |   |   |   | 448,204 |   |
| Investment securities held-to-maturity                    |   |              | 18,044    |   |   |   | 13,826 |   |
| Federal Home Loan and Atlantic Central Bankers Bank stock |   |              | 5,088     |   |   |   | 5,088 |   |
| Loans receivable, net                                     |   |              | 1,744,828 |   |   |   | 1,718,698 |   |
| Demand and interest checking                              |   |              | 2,192,938 |   |   |   | 2,192,938 |   |
| Savings and money market                                  |   |              | 454,343   |   |   |   | 454,343 |   |
| Time deposits                                             |   |              | 35,270    |   |   |   | 35,336 |   |
| Subordinated debenture                                    |   |              | 13,401    |   |   |   | 9,287 |   |
| Securities sold under agreements to repurchase            |   |              | 33,177    |   |   |   | 33,177 |   |
| Accrued interest payable                                  |   |              | 123       |   |   |   | 123 |   |

----

|                                             |   |          |    |   | Fair Value Measurements at Reporting Date Using |   |
|--------------------------------------------------|--------|---------------|---------|--------|-------------------------------------------------|--------|
|                                             |   |          |    |   | Quoted prices in active                         |   |   | Significant other |   |   | Significant |   |
|                                             |   |          |    |   | markets for identical                           |   |   | observable |   |   | unobservable |   |
|                                             |   | Fair value    |    |   | assets                                          |   |   | inputs |   |   | inputs |   |
|                                             |   | June 30, 2012 |    |   | (Level 1)                                       |   |   | (Level 2) |   |   | (Level 3) |   |
|                                             |   |          |    |   |                                            |   |   |   |   |   |   |   |
| Investment                                       |   |          |    |   |                                            |   |   |   |   |   |   |   |
| U.S. Government agency securities                |   | $             | 9,046   |   |                                            | $      | - |   |   | $ | 9,046 |   |   | $ | - |   |
| Federally insured student loan securities        |   |          | 50,276  |   |                                            |   | - |   |   |   | 50,276 |   |   |   |   |   |
| Obligations of states and political subdivisions |   |          | 159,972 |   |                                            |   | - |   |   |   | 159,972 |   |   |   | - |   |
| Residential mortgage-backed securities           |   |          | 198,418 |   |                                            |   | - |   |   |   | 198,418 |   |   |   | - |   |
| Commercial mortgage-backed securities            |   |          | 110,312 |   |                                            |   | - |   |   |   | 110,312 |   |   |   | - |   |
| Other debt securities                            |   |          | 51,185  |   |                                            |   | - |   |   |   | 50,570 |   |   |   | 615 |   |
| Other equity securities                          |   |          | 3,010   |   |                                            |   | 3,010 |   |   |   | - |   |   |   | - |   |
|                                             |   | $             | 582,219 |   |                                            | $      | 3,010 |   |   | $ | 578,594 |   |   | $ | 615 |   |
|                                             |   |          |    |   |                                            |   |   |   |   |   |   |   |   |   |   |   |

|                                             |   |              |    |   |      | Fair Value Measurements at Reporting Date Using |   |
|--------------------------------------------------|--------|-------------------|---------|--------|-----------|-------------------------------------------------|--------|
|                                             |   |              |    |   |      | Quoted prices in active                         |   |   | Significant other |   |   | Significant |   |
|                                             |   |              |    |   |      | markets for identical                           |   |   | observable |   |   | unobservable |   |
|                                             |   | Fair value        |    |   | assets    |                                            |   | inputs |   |   | inputs |   |
|                                             |   | December 31, 2011 |    |   | (Level 1) |                                            |   | (Level 2) |   |   | (Level 3) |   |
|                                             |   |              |    |   |      |                                            |   |   |   |   |   |   |   |   |   |   |
| Investment                                       |   |              |    |   |      |                                            |   |   |   |   |   |   |   |   |   |   |
| U.S. Government agency securities                |   | $                 | 9,285   |   |      | $                                               | -      |   |   | $ | 9,285 |   |   | $ | - |   |
| Obligations of states and political subdivisions |   |              | 150,666 |   |      |                                            | -      |   |   |   | 150,666 |   |   |   | - |   |
| Residential mortgage-backed securities           |   |              | 193,685 |   |      |                                            | -      |   |   |   | 193,685 |   |   |   | - |   |
| Commercial mortgage-backed securities            |   |              | 52,061  |   |      |                                            | -      |   |   |   | 52,061 |   |   |   | - |   |
| Other debt securities                            |   |              | 39,532  |   |      |                                            | -      |   |   |   | 38,902 |   |   |   | 630 |   |
| Other equity securities                          |   |              | 2,975   |   |      |                                            | 2,975  |   |   |   | - |   |   |   | - |   |
|                                             |   | $                 | 448,204 |   |      | $                                               | 2,975  |   |   | $ | 444,599 |   |   | $ | 630 |   |

|   Fair Value Measurements Using Significant Unobservable Inputs (Level 3) |   |               |   |
|--------------------------------------------------------------------------------|--------|--------------------|--------|
|                                                                           |   | Available-for-sale |   |
|                                                                           |   | securities         |   |
|                                                                           |   | June 30, 2012      |   |   | December 31, 2011 |   |
| Beginning balance                                                              |   | $                  | 630    |   |   | $ | 748 |   |
| Transfers into level 3                                                         |   |               | -      |   |   |   | - |   |
| Transfers out of level 3                                                       |   |               | -      |   |   |   | - |   |
| Total gains or losses (realized/unrealized)                                    |   |               |   |   |   |   |   |   |
| Included in earnings                                                           |   |               | -      |   |   |   | (2 | ) |
| Included in other comprehensive income                                         |   |               | 10     |   |   |   | (62 | ) |
| Purchases, issuances, and settlements                                          |   |               |   |   |   |   |   |   |
| Purchases                                                                      |   |               | -      |   |   |   | - |   |
| Issuances                                                                      |   |               | -      |   |   |   | - |   |
| Sales                                                                          |   |               |   |   |   |   |   |   |
| Settlements                                                                    |   |               | (25    | ) |   |   | (54 | ) |
| Ending balance                                                                 |   | $                  | 615    |   |   | $ | 630 |   |

----

|                    |   |          |   |   | 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, 2012 |   |   | (Level 1)                                       |   |   | (Level 2) |   |   | (Level 3) |   |
|                    |   |          |   |   |                                            |   |   |   |   |   |   |   |
| Impaired loans          |   | $             | 27,522 |   |                                            | $      | - |   |   | $ | - |   |   | $ | 27,522 |   |
| Other real estate owned |   |          | 4,919  |   |                                            |   | - |   |   |   | - |   |   |   | 4,919 |   |
|                    |   | $             | 32,441 |   |                                            | $      | - |   |   | $ | - |   |   | $ | 32,441 |   |
|                    |   |          |   |   |                                            |   |   |   |   |   |   |   |   |   |   |   |

|                    |   |              |   |   |      | 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, 2011 |   |   | (Level 1) |                                            |   | (Level 2) |   |   | (Level 3) |   |
|                    |   |              |   |   |      |                                            |   |   |   |   |   |   |   |   |   |   |
| Impaired loans          |   | $                 | 17,587 |   |      | $                                               | -      |   |   | $ | - |   |   | $ | 17,587 |   |
| Other real estate owned |   |              | 7,405  |   |      |                                            | -      |   |   |   | - |   |   |   | 7,405 |   |
|                    |   | $                 | 24,992 |   |      | $                                               | -      |   |   | $ | - |   |   | $ | 24,992 |   |

----

----

Part I - Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operation

----

----

----

|                                                             |   | Three months ended June 30, |
|------------------------------------------------------------------|--------|-----------------------------|
|                                                             |   | 2012                        |   | 2011 |
|                                                             |   | Average Balance        |   | Interest |   | Average Rate  |   | Average Balance   |   | Interest  |   | Average Rate   |
|                                                             |   | (dollars in thousands)      |   | (dollars in thousands) |
| Assets:                                                          |   |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest earning assets:                                         |   |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loans net of unearned discount                                   |   | $                           | 1,780,071 |   |   | $ | 19,125 |   |   |   | 4.30 | % |   | $ | 1,642,867 |   |   | $ | 18,084 |   |   |   | 4.40 | % |
| Leases - bank qualified*                                         |   |                        | 13,770 |   |   |   | 207 |   |   |   | 6.01 | % |   |   | 4,820 |   |   |   | 100 |   |   |   | 8.30 | % |
| Investment securities-taxable                                    |   |                        | 435,903 |   |   |   | 3,371 |   |   |   | 3.09 | % |   |   | 270,535 |   |   |   | 2,340 |   |   |   | 3.46 | % |
| Investment securities-nontaxable*                                |   |                        | 105,869 |   |   |   | 1,096 |   |   |   | 4.14 | % |   |   | 76,123 |   |   |   | 1,007 |   |   |   | 5.29 | % |
|  Interest earning deposits at Federal Reserve Bank          |   |                        | 954,213 |   |   |   | 605 |   |   |   | 0.25 | % |   |   | 389,794 |   |   |   | 230 |   |   |   | 0.24 | % |
| Net interest earning assets                                      |   |                        | 3,289,826 |   |   |   | 24,404 |   |   |   | 2.97 | % |   |   | 2,384,139 |   |   |   | 21,761 |   |   |   | 3.65 | % |
|                                                             |   |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Allowance for loan and lease losses                              |   |                        | (32,101 | ) |   |   |   |   |   |   |   |   |   |   | (26,463 | ) |   |   |   |   |   |   |   |   |
| Other assets                                                     |   |                        | 126,547 |   |   |   |   |   |   |   |   |   |   |   | 271,564 |   |   |   |   |   |   |   |   |   |
|                                                             |   | $                           | 3,384,272 |   |   |   |   |   |   |   |   |   |   | $ | 2,629,240 |   |   |   |   |   |   |   |   |   |
|                                                             |   |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Liabilities and shareholders' equity:                            |   |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Deposits:                                                        |   |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Demand and interest checking                                     |   | $                           | 2,580,647 |   |   | $ | 2,094 |   |   |   | 0.32 | % |   | $ | 1,978,071 |   |   | $ | 2,188 |   |   |   | 0.44 | % |
| Savings and money market                                         |   |                        | 448,571 |   |   |   | 626 |   |   |   | 0.56 | % |   |   | 336,244 |   |   |   | 654 |   |   |   | 0.78 | % |
| Time                                                             |   |                        | 29,862 |   |   |   | 106 |   |   |   | 1.42 | % |   |   | 12,812 |   |   |   | 43 |   |   |   | 1.34 | % |
| Total deposits                                                   |   |                        | 3,059,080 |   |   |   | 2,826 |   |   |   | 0.37 | % |   |   | 2,327,127 |   |   |   | 2,885 |   |   |   | 0.50 | % |
|                                                             |   |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Repurchase agreements                                            |   |                        | 22,255 |   |   |   | 24 |   |   |   | 0.43 | % |   |   | 19,832 |   |   |   | 26 |   |   |   | 0.52 | % |
| Subordinated debt                                                |   |                        | 13,401 |   |   |   | 217 |   |   |   | 6.48 | % |   |   | 13,401 |   |   |   | 216 |   |   |   | 6.45 | % |
| Total deposits and interest bearing liabilities                  |   |                        | 3,094,736 |   |   |   | 3,067 |   |   |   | 0.40 | % |   |   | 2,360,360 |   |   |   | 3,127 |   |   |   | 0.53 | % |
|                                                             |   |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other liabilities                                                |   |                        | 9,551 |   |   |   |   |   |   |   |   |   |   |   | 9,668 |   |   |   |   |   |   |   |   |   |
| Total liabilities                                                |   |                        | 3,104,287 |   |   |   |   |   |   |   |   |   |   |   | 2,370,028 |   |   |   |   |   |   |   |   |   |
|                                                             |   |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Shareholders' equity                                             |   |                        | 279,985 |   |   |   |   |   |   |   |   |   |   |   | 259,212 |   |   |   |   |   |   |   |   |   |
|                                                             |   | $                           | 3,384,272 |   |   |   |   |   |   |   |   |   |   | $ | 2,629,240 |   |   |   |   |   |   |   |   |   |
|                                                             |   |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net interest income on tax equivalent basis *                    |   |                        | $ | 21,337 |   |   |   |   |   |   |   |   |   |   | $ | 18,634 |   |   |   |   |   |
|                                                             |   |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Tax equivalent adjustment                                        |   |                        |   |   |   |   | 456 |   |   |   |   |   |   |   |   |   |   |   | 377 |   |   |   |   |   |
|                                                             |   |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net interest income                                              |   |                        |   |   |   | $ | 20,881 |   |   |   |   |   |   |   |   |   |   | $ | 18,257 |   |   |   |   |   |
|                                                             |   |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net interest margin *                                            |   |                        |   |   |   |   |   |   |   |   | 2.59 | % |   |   |   |   |   |   |   |   |   |   | 3.13 | % |
|                                                             |   |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |
| * Full taxable equivalent basis, using a 35% statutory tax rate. |   |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

----

|                                                             |   | Six months ended June 30, |      |
|------------------------------------------------------------------|--------|---------------------------|-----------|
|                                                             |   | 2012                      |      |   | 2011 |   |
|                                                             |   | Average Balance      |      |   |  Interest |   |   | Average Rate  |   |   | Average Balance |   |   | Interest  |   |   | Average Rate   |   |
|                                                             |   | (dollars in thousands)    |      | (dollars in thousands) |
| Assets:                                                          |   |                      |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest earning assets:                                         |   |                      |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loans net of unearned discount                                   |   | $                         | 1,756,910 |   |   | $ | 37,948 |   |   |   | 4.32 | % |   | $ | 1,635,432 |   |   | $ | 36,344 |   |   |   | 4.44 | % |
| Leases - bank qualified*                                         |   |                      | 12,105    |   |   |   | 397 |   |   |   | 6.56 | % |   |   | 3,589 |   |   |   | 150 |   |   |   | 8.36 | % |
| Investment securities-taxable                                    |   |                      | 402,949   |   |   |   | 6,561 |   |   |   | 3.26 | % |   |   | 228,302 |   |   |   | 3,897 |   |   |   | 3.41 | % |
| Investment securities-nontaxable*                                |   |                      | 101,126   |   |   |   | 2,161 |   |   |   | 4.27 | % |   |   | 76,854 |   |   |   | 2,018 |   |   |   | 5.25 | % |
| Interest earning deposits at Federal Reserve Bank                |   |                      | 1,325,250 |   |   |   | 1,658 |   |   |   | 0.25 | % |   |   | 610,215 |   |   |   | 745 |   |   |   | 0.24 | % |
| Net interest earning assets                                      |   |                      | 3,598,340 |   |   |   | 48,725 |   |   |   | 2.71 | % |   |   | 2,554,392 |   |   |   | 43,154 |   |   |   | 3.38 | % |
|                                                             |   |                      |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Allowance for loan and lease losses                              |   |                      | (31,388   | ) |   |   |   |   |   |   |   |   |   |   | (25,648 | ) |   |   |   |   |   |   |   |   |
| Other assets                                                     |   |                      | 179,115   |   |   |   |   |   |   |   |   |   |   |   | 279,032 |   |   |   |   |   |   |   |   |   |
|                                                             |   | $                         | 3,746,067 |   |   |   |   |   |   |   |   |   |   | $ | 2,807,776 |   |   |   |   |   |   |   |   |   |
|                                                             |   |                      |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Liabilities and shareholders' equity:                            |   |                      |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Deposits:                                                        |   |                      |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Demand and interest checking                                     |   | $                         | 2,936,649 |   |   | $ | 4,088 |   |   |   | 0.28 | % |   | $ | 2,169,238 |   |   | $ | 4,033 |   |   |   | 0.37 | % |
| Savings and money market                                         |   |                      | 453,213   |   |   |   | 1,257 |   |   |   | 0.55 | % |   |   | 328,899 |   |   |   | 1,310 |   |   |   | 0.80 | % |
| Time                                                             |   |                      | 30,608    |   |   |   | 203 |   |   |   | 1.33 | % |   |   | 29,567 |   |   |   | 147 |   |   |   | 0.99 | % |
| Total deposits                                                   |   |                      | 3,420,470 |   |   |   | 5,548 |   |   |   | 0.32 | % |   |   | 2,527,704 |   |   |   | 5,490 |   |   |   | 0.43 | % |
|                                                             |   |                      |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Short term borrowings                                            |   |                      | -         |   |   |   | - |   |   |   | 0.00 | % |   |   | 1,503 |   |   |   | 3 |   |   |   | 0.40 | % |
| Repurchase agreements                                            |   |                      | 25,257    |   |   |   | 51 |   |   |   | 0.40 | % |   |   | 18,439 |   |   |   | 42 |   |   |   | 0.46 | % |
| Subordinated debt                                                |   |                      | 13,401    |   |   |   | 434 |   |   |   | 6.48 | % |   |   | 13,401 |   |   |   | 431 |   |   |   | 6.43 | % |
| Total deposits and interest bearing liabilities                  |   |                      | 3,459,128 |   |   |   | 6,033 |   |   |   | 0.35 | % |   |   | 2,561,047 |   |   |   | 5,966 |   |   |   | 0.47 | % |
|                                                             |   |                      |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other liabilities                                                |   |                      | 10,078    |   |   |   |   |   |   |   |   |   |   |   | 9,553 |   |   |   |   |   |   |   |   |   |
| Total liabilities                                                |   |                      | 3,469,206 |   |   |   |   |   |   |   |   |   |   |   | 2,570,600 |   |   |   |   |   |   |   |   |   |
|                                                             |   |                      |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Shareholders' equity                                             |   |                      | 276,861   |   |   |   |   |   |   |   |   |   |   |   | 237,176 |   |   |   |   |   |   |   |   |   |
|                                                             |   | $                         | 3,746,067 |   |   |   |   |   |   |   |   |   |   | $ | 2,807,776 |   |   |   |   |   |   |   |   |   |
|                                                             |   |                      |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net interest income on tax equivalent basis *                    |   |                      | $         | 42,692 |   |   |   |   |   |   |   |   |   |   | $ | 37,188 |   |   |   |   |   |
|                                                             |   |                      |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Tax equivalent adjustment                                        |   |                      |      |   |   |   | 895 |   |   |   |   |   |   |   |   |   |   |   | 733 |   |   |   |   |   |
|                                                             |   |                      |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net interest income                                              |   |                      |      |   |   | $ | 41,797 |   |   |   |   |   |   |   |   |   |   | $ | 36,455 |   |   |   |   |   |
|                                                             |   |                      |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net interest margin *                                            |   |                      |      |   |   |   |   |   |   |   | 2.37 | % |   |   |   |   |   |   |   |   |   |   | 2.91 | % |
|                                                             |   |                      |      |   |   |   |   |   |   |   |   |   |   |   |   |
| * Full taxable equivalent basis, using a 35% statutory tax rate. |   |                      |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

----

----

|                                                    |   | 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, 2012                                     |   |           |   |   |             |   |   |             |   |
| The Company                                             |   |           | 8.22   | %      |             |   | 14.72  | %                |   |   | 15.98 | % |
| The Bancorp Bank                                        |   |           | 6.76   | %      |             |   | 12.14  | %                |   |   | 13.39 | % |
| "Well capitalized" institution (under FDIC regulations) |   |           | 5.00   | %      |             |   | 6.00   | %                |   |   | 10.00 | % |
|                                                    |   |           |   |   |             |   |   |             |   |   |   |   |
| As of December 31, 2011                                 |   |           |   |   |             |   |   |             |   |   |   |   |
| The Company                                             |   |           | 8.69   | %      |             |   | 14.64  | %                |   |   | 15.89 | % |
| The Bancorp Bank                                        |   |           | 6.13   | %      |             |   | 10.34  | %                |   |   | 11.60 | % |
| "Well capitalized" institution (under FDIC regulations) |   |           | 5.00   | %      |             |   | 6.00   | %                |   |   | 10.00 | % |

----

|                                           |   | 1-90 Days         |      |   | 91-364Days  |   |    | 1-3Years  |   |   | 3-5 Years  |   |   | Over 5 Years  |    |
|------------------------------------------------|--------|------------------------|-----------|--------|------------------|--------|---------|----------------|--------|--------|-----------------|--------|--------|--------------------|---------|
|                                           |   | (dollars in thousands) |      |
| Interest earning assets:                       |   |                   |      |
| Loans net of deferred loan costs               |   | $                      | 735,560   |   |             | $      | 323,218 |           |   | $      | 331,210         |   |   | $                  | 205,390 |   |   | $ | 208,934 |   |
| Investment securities                          |   |                   | 93,887    |   |             |   | 55,370  |           |   |   | 119,751         |   |   |               | 156,366 |   |   |   | 174,641 |   |
| Interest earning deposits                      |   |                   | 692,582   |   |             |   | -       |           |   |   | -               |   |   |               | -       |   |   |   | - |   |
| Total interest earning assets                  |   |                   | 1,522,029 |   |             |   | 378,588 |           |   |   | 450,961         |   |   |               | 361,756 |   |   |   | 383,575 |   |
|                                           |   |                   |      |   |             |   |    |           |   |   |            |   |   |               |    |   |   |   |   |   |
| Interest bearing liabilities:                  |   |                   |      |   |             |   |    |           |   |   |            |   |   |               |    |   |   |   |   |   |
| Demand and interest checking                   |   |                   | 1,445,796 |   |             |   | 149,903 |           |   |   | 149,903         |   |   |               | -       |   |   |   | - |   |
| Savings and money market                       |   |                   | 114,153   |   |             |   | 228,308 |           |   |   | 114,153         |   |   |               | -       |   |   |   | - |   |
| Time deposits                                  |   |                   | 1,682     |   |             |   | 6,484   |           |   |   | 12,108          |   |   |               | 9,425   |   |   |   | 24 |   |
| Securities sold under agreements to repurchase |   |                   | 21,948    |   |             |   | -       |           |   |   | -               |   |   |               | -       |   |   |   | - |   |
| Subordinated debenture                         |   |                   | 3,401     |   |             |   | -       |           |   |   | -               |   |   |               | 10,000  |   |   |   | - |   |
| Total interest bearing liabilities             |   |                   | 1,586,980 |   |             |   | 384,695 |           |   |   | 276,164         |   |   |               | 19,425  |   |   |   | 24 |   |
| Gap                                            |   | $                      | (64,951   | )      |             | $      | (6,107  | )              |   | $      | 174,797         |   |   | $                  | 342,331 |   |   | $ | 383,551 |   |
| Cumulative gap                                 |   | $                      | (64,951   | )      |             | $      | (71,058 | )              |   | $      | 103,739         |   |   | $                  | 446,070 |   |   | $ | 829,621 |   |
| Gap to assets ratio                            |   |                   | -2        | %      |             |   | *       |           |   |   | 6               | %      |   |               | 11      | % |   |   | 12 | % |
| Cumulative gap to assets ratio                 |   |                   | -2        | %      |             |   | -2      | %              |   |   | 3               | %      |   |               | 14      | % |   |   | 26 | % |

----

| Single issuer                                           |   | Book value |   |   | Fair value |   |   | Unrealized gain/(loss) |   |   | Credit rating |
|---------------------------------------------------------|--------|------------|--------|--------|------------|--------|--------|------------------------|--------|--------|---------------|
| Security A                                              |   | $          | 1,886  |   |       | $      | 2,001  |                   |   | $      | 115           |   |   | Not rated |
| Security B                                              |   |       | 2,367  |   |       |   | 2,395  |                   |   |   | 28            |   |   | Not rated |
| Security C                                              |   |       | 3,248  |   |       |   | 2,853  |                   |   |   | (395          | ) |   | Not rated |
| Security D                                              |   |       | 8,834  |   |       |   | 5,116  |                   |   |   | (3,718        | ) |   | Not rated |
|                                                    |   |       |   |   |       |   |   |                   |   |   |          |   |   |   |
| Class: All of the above are trust preferred securities. |   |       |   |   |       |   |   |

| Pooled issue                   |   | Class        |   | Book value |   |   | Fair value |   |   | Unrealized gain/(loss) |   |   | Credit rating |   | Excess subordination |   |
|--------------------------------|--------|--------------|--------|------------|--------|--------|------------|--------|--------|------------------------|--------|--------|---------------|--------|----------------------|--------|
|                           |   |         |   |       |   |   |       |   |   |                   |   |   |          |   |                 |   |
| Pool A (17 performing issuers) |   | Mezzanine *  |   | $          | 868    |   |       | $      | 666    |                   |   | $      | (202          | )      |                 | Ca     |   |   | *** |   |
| Pool B (14 performing issuers) |   | Mezzanine ** |   |       | 593    |   |       |   | 544    |                   |   |   | (49           | )      |                 | Ca     |   |   | *** |   |

|                                                                                                                                                                                                                                                                    |   |   |   |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|--------|
| * The actual deferrals and defaults as a percentage of the original collateral were 26%.  Assumed losses resulting from expected deferrals and defaults as a percentage of remaining collateral is .75% annually with 15% recovery with a two year lag.  |
| ** The actual deferrals and defaults as a percentage of the original collateral were 27%.  Assumed losses resulting from expected deferrals and defaults as a percentage of remaining collateral is 1.2% every three years with no recoveries.           |
| *** There is no excess subordination in these securities.                                                                                                                                                                                                               |

----

|                                                                                                                                                                    |   | June 30, |      |   | December 31, |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------|-----------|--------|--------------|--------|
|                                                                                                                                                                    |   | 2012     |      |   | 2011         |   |
|                                                                                                                                                                    |   |     |      |   |         |   |
| Commercial                                                                                                                                                              |   | $        | 441,167   |   |         | $      | 450,411 |   |
| Commercial mortgage *                                                                                                                                                   |   |     | 596,639   |   |         |   | 609,487 |   |
| Construction                                                                                                                                                            |   |     | 269,636   |   |         |   | 246,611 |   |
| Total commercial loans                                                                                                                                                  |   |     | 1,307,442 |   |         |   | 1,306,509 |   |
| Direct lease financing                                                                                                                                                  |   |     | 140,012   |   |         |   | 129,682 |   |
| Residential mortgage                                                                                                                                                    |   |     | 97,226    |   |         |   | 96,110 |   |
| Consumer loans and others                                                                                                                                               |   |     | 255,769   |   |         |   | 209,041 |   |
|                                                                                                                                                                    |   |     | 1,800,449 |   |         |   | 1,741,342 |   |
| Unamortized loan costs                                                                                                                                                  |   |     | 3,863     |   |         |   | 3,486 |   |
| Total loans, net of deferred loan costs                                                                                                                                 |   | $        | 1,804,312 |   |         | $      | 1,744,828 |   |
|                                                                                                                                                                    |   |     |      |   |         |   |   |   |
| Supplemental loan data:                                                                                                                                                 |   |     |      |   |         |   |   |   |
| Construction 1-4 family                                                                                                                                                 |   | $        | 79,546    |   |         | $      | 85,189 |   |
| Commercial construction, acquisition and development                                                                                                                    |   |     | 190,090   |   |         |   | 161,422 |   |
|                                                                                                                                                                    |   | $        | 269,636   |   |         | $      | 246,611 |   |
|                                                                                                                                                                    |   |     |      |   |         |   |   |   |
| * At June 30, 2012, our owner occupied loans amounted to $141.9 million, or 23.8% of commercial mortgages as compared to $137.9 million, or 22.6% at December 31, 2011. |   |

----

| Age Analysis of Past Due Loans |
|--------------------------------|
|                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                           |   | 30-59 Days |   |   | 60-89 Days |   |   | Greater than |   |   |   |   |   | Total |   |   |   |   |   | Total |   |
| June 30, 2012                  |   | past due |   |   | past due |   |   | 90 days |   |   | Non-accrual |   |   | past due |   |   | Current |   |   | loans |   |
| Commercial                     |   | $ | 670 |   |   | $ | - |   |   | $ | 540 |   |   | $ | 9,536 |   |   | $ | 10,746 |   |   | $ | 430,421 |   |   | $ | 441,167 |   |
| Commercial mortgage            |   |   | - |   |   |   | 5,628 |   |   |   | 1,632 |   |   |   | 5,559 |   |   |   | 12,819 |   |   |   | 583,820 |   |   |   | 596,639 |   |
| Construction                   |   |   | 1,823 |   |   |   | 2,690 |   |   |   | 667 |   |   |   | 8,698 |   |   |   | 13,878 |   |   |   | 255,758 |   |   |   | 269,636 |   |
| Direct lease financing         |   |   | - |   |   |   | 99 |   |   |   | 266 |   |   |   | - |   |   |   | 365 |   |   |   | 139,647 |   |   |   | 140,012 |   |
| Consumer - other               |   |   | 75 |   |   |   | 2 |   |   |   | - |   |   |   | - |   |   |   | 77 |   |   |   | 211,415 |   |   |   | 211,492 |   |
| Consumer - home equity         |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 927 |   |   |   | 927 |   |   |   | 43,350 |   |   |   | 44,277 |   |
| Residential mortgage           |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 95 |   |   |   | 95 |   |   |   | 97,131 |   |   |   | 97,226 |   |
| Unamortized costs              |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 3,863 |   |   |   | 3,863 |   |
|                           |   | $ | 2,568 |   |   | $ | 8,419 |   |   | $ | 3,105 |   |   | $ | 24,815 |   |   | $ | 38,907 |   |   | $ | 1,765,405 |   |   | $ | 1,804,312 |   |
|                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| December 31, 2011              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commercial                     |   | $ | - |   |   | $ | 242 |   |   | $ | 817 |   |   | $ | 6,450 |   |   | $ | 7,509 |   |   | $ | 442,902 |   |   | $ | 450,411 |   |
| Commercial mortgage            |   |   | 278 |   |   |   | 1,763 |   |   |   | 1,597 |   |   |   | 3,672 |   |   |   | 7,310 |   |   |   | 602,177 |   |   |   | 609,487 |   |
| Construction                   |   |   | - |   |   |   | 825 |   |   |   | 942 |   |   |   | 4,949 |   |   |   | 6,716 |   |   |   | 239,895 |   |   |   | 246,611 |   |
| Direct lease financing         |   |   | 1,230 |   |   |   | 606 |   |   |   | 745 |   |   |   | - |   |   |   | 2,581 |   |   |   | 127,101 |   |   |   | 129,682 |   |
| Consumer - other               |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 1,252 |   |   |   | 1,252 |   |   |   | 164,145 |   |   |   | 165,397 |   |
| Consumer - home equity         |   |   | - |   |   |   | 2 |   |   |   | - |   |   |   | - |   |   |   | 2 |   |   |   | 43,642 |   |   |   | 43,644 |   |
| Residential mortgage           |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 1,264 |   |   |   | 1,264 |   |   |   | 94,846 |   |   |   | 96,110 |   |
| Unamortized costs              |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 3,486 |   |   |   | 3,486 |   |
|                           |   | $ | 1,508 |   |   | $ | 3,438 |   |   | $ | 4,101 |   |   | $ | 17,587 |   |   | $ | 26,634 |   |   | $ | 1,718,194 |   |   | $ | 1,744,828 |   |

----

|                                                  |   |       |    |   | Commercial |   |    |         |   |   | Residential |   |   |     |   |   | Direct lease |   |    |        |   |   |    |   |
|-------------------------------------------------------|--------|------------|---------|--------|------------|--------|---------|--------------|--------|--------|-------------|--------|--------|----------|--------|--------|--------------|--------|---------|-------------|--------|--------|---------|--------|
| Six months ended                                      |   | Commercial |    |   | mortgage   |   |    | Construction |   |   | mortgage    |   |   | Consumer |   |   | financing    |   |    | Unallocated |   |   | Total   |   |
| June 30, 2012                                         |   |       |    |   |       |   |    |         |   |   |        |   |   |     |   |   |         |   |    |        |   |   |    |   |
| Beginning balance                                     |   | $          | 10,214  |   |       | $      | 9,274   |         |   | $      | 5,352       |   |   | $        | 2,090  |   |         | $      | 1,346   |        |   | $      | 254     |   |   | $ | 1,038 |   |   | $ | 29,568 |   |
| Charge-offs                                           |   |       | (2,454  | )      |       |   | (1,646  | )            |   |   | (4,837      | )      |   |     | -      |   |         |   | (258    | )           |   |   | (87     | )      |   |   | - |   |   |   | (9,282 | ) |
| Recoveries                                            |   |       | 254     |   |       |   | 1,018   |         |   |   | 9           |   |   |     | 85     |   |         |   | -       |        |   |   | 12      |   |   |   | - |   |   |   | 1,378 |   |
| Provision                                             |   |       | 2,109   |   |       |   | (1,442  | )            |   |   | 8,728       |   |   |     | (21    | )      |         |   | 552     |        |   |   | 152     |   |   |   | (571 | ) |   |   | 9,507 |   |
| Ending balance                                        |   | $          | 10,123  |   |       | $      | 7,204   |         |   | $      | 9,252       |   |   | $        | 2,154  |   |         | $      | 1,640   |        |   | $      | 331     |   |   | $ | 467 |   |   | $ | 31,171 |   |
|                                                  |   |       |    |   |       |   |    |         |   |   |        |   |   |     |   |   |         |   |    |        |   |   |    |   |   |   |   |   |   |   |   |   |
| Ending balance: Individually evaluated for impairment |   | $          | 2,739   |   |       | $      | 902     |         |   | $      | 3,303       |   |   | $        | 73     |   |         | $      | -       |        |   | $      | -       |   |   | $ | - |   |   | $ | 7,017 |   |
|                                                  |   |       |    |   |       |   |    |         |   |   |        |   |   |     |   |   |         |   |    |        |   |   |    |   |   |   |   |   |   |   |   |   |
| Ending balance: Collectively evaluated for impairment |   | $          | 7,384   |   |       | $      | 6,302   |         |   | $      | 5,949       |   |   | $        | 2,081  |   |         | $      | 1,640   |        |   | $      | 331     |   |   | $ | 467 |   |   | $ | 24,154 |   |
|                                                  |   |       |    |   |       |   |    |         |   |   |        |   |   |     |   |   |         |   |    |        |   |   |    |   |   |   |   |   |   |   |   |   |
|                                                  |   |       |    |   |       |   |    |         |   |   |        |   |   |     |   |   |         |   |    |        |   |   |    |   |   |   |   |   |   |   |   |   |
| Loans:                                                |   |       |    |   |       |   |    |         |   |   |        |   |   |     |   |   |         |   |    |        |   |   |    |   |   |   |   |   |   |   |   |   |
| Ending balance                                        |   | $          | 441,167 |   |       | $      | 596,639 |         |   | $      | 269,636     |   |   | $        | 97,226 |   |         | $      | 255,769 |        |   | $      | 140,012 |   |   | $ | 3,863 |   |   | $ | 1,804,312 |   |
|                                                  |   |       |    |   |       |   |    |         |   |   |        |   |   |     |   |   |         |   |    |        |   |   |    |   |   |   |   |   |   |   |   |   |
| Ending balance: Individually evaluated for impairment |   | $          | 9,536   |   |       | $      | 7,990   |         |   | $      | 8,974       |   |   | $        | 95     |   |         | $      | 927     |        |   | $      | -       |   |   | $ | - |   |   | $ | 27,522 |   |
|                                                  |   |       |    |   |       |   |    |         |   |   |        |   |   |     |   |   |         |   |    |        |   |   |    |   |   |   |   |   |   |   |   |   |
| Ending balance: Collectively evaluated for impairment |   | $          | 431,631 |   |       | $      | 588,649 |         |   | $      | 260,662     |   |   | $        | 97,131 |   |         | $      | 254,842 |        |   | $      | 140,012 |   |   | $ | 3,863 |   |   | $ | 1,776,790 |   |
|                                                  |   |       |    |   |       |   |    |         |   |   |        |   |   |     |   |   |         |   |    |        |   |   |    |   |   |   |   |   |   |   |   |   |

|                                                  |   |       |    |   |     | Commercial |    |         |   |   |     |   | Residential |     |   |   |      |   |    | Direct lease |   |   |    |   |   |   |   |   |   |
|-------------------------------------------------------|--------|------------|---------|--------|----------|------------|---------|--------------|--------|--------|----------|--------|-------------|----------|--------|--------|-----------|--------|---------|--------------|--------|--------|---------|--------|--------|--------|--------|--------|--------|
| Twelve months ended                                   |   | Commercial |    |   | mortgage |       |    | Construction |   |   | mortgage |   |        | Consumer |   |   | financing |   |    | Unallocated  |   |   | Total   |   |
| December 31, 2011                                     |   |       |    |   |     |       |    |         |   |   |     |   |        |     |   |   |      |   |    |         |   |   |    |   |   |   |   |   |   |   |   |   |
| Beginning balance                                     |   | $          | 6,051   |   |     | $          | 9,501   |         |   | $      | 5,030    |   |        | $        | 2,115  |   |      | $      | 578     |         |   | $      | 164     |   |   | $      | 624    |   |   | $ | 24,063 |   |
| Charge-offs                                           |   |       | (7,453  | )      |     |       | (1,198  | )            |   |   | (3,254   | )      |        |     | (2,870 | )      |      |   | (1,280  | )            |   |   | (39     | )      |   |   | -      |   |   |   | (16,094 | ) |
| Recoveries                                            |   |       | 2       |   |     |       | 89      |         |   |   | 4        |   |        |     | -      |   |      |   | 6       |         |   |   | -       |   |   |   | -      |   |   |   | 101 |   |
| Provision                                             |   |       | 11,614  |   |     |       | 882     |         |   |   | 3,572    |   |        |     | 2,845  |   |      |   | 2,042   |         |   |   | 129     |   |   |   | 414    |   |   |   | 21,498 |   |
| Ending balance                                        |   | $          | 10,214  |   |     | $          | 9,274   |         |   | $      | 5,352    |   |        | $        | 2,090  |   |      | $      | 1,346   |         |   | $      | 254     |   |   | $      | 1,038  |   |   | $ | 29,568 |   |
|                                                  |   |       |    |   |     |       |    |         |   |   |     |   |        |     |   |   |      |   |    |         |   |   |    |   |   |   |   |   |   |   |   |   |
| Ending balance: Individually evaluated for impairment |   | $          | 2,724   |   |     | $          | 712     |         |   | $      | 2,296    |   |        | $        | -      |   |      | $      | 204     |         |   | $      | -       |   |   | $      | -      |   |   | $ | 5,936 |   |
|                                                  |   |       |    |   |     |       |    |         |   |   |     |   |        |     |   |   |      |   |    |         |   |   |    |   |   |   |   |   |   |   |   |   |
| Ending balance: Collectively evaluated for impairment |   | $          | 7,490   |   |     | $          | 8,562   |         |   | $      | 3,056    |   |        | $        | 2,090  |   |      | $      | 1,142   |         |   | $      | 254     |   |   | $      | 1,038  |   |   | $ | 23,632 |   |
|                                                  |   |       |    |   |     |       |    |         |   |   |     |   |        |     |   |   |      |   |    |         |   |   |    |   |   |   |   |   |   |   |   |   |
|                                                  |   |       |    |   |     |       |    |         |   |   |     |   |        |     |   |   |      |   |    |         |   |   |    |   |   |   |   |   |   |   |   |   |
| Loans:                                                |   |       |    |   |     |       |    |         |   |   |     |   |        |     |   |   |      |   |    |         |   |   |    |   |   |   |   |   |   |   |   |   |
| Ending balance                                        |   | $          | 450,411 |   |     | $          | 609,487 |         |   | $      | 246,611  |   |        | $        | 96,110 |   |      | $      | 209,041 |         |   | $      | 129,682 |   |   | $      | 3,486  |   |   | $ | 1,744,828 |   |
|                                                  |   |       |    |   |     |       |    |         |   |   |     |   |        |     |   |   |      |   |    |         |   |   |    |   |   |   |   |   |   |   |   |   |
| Ending balance: Individually evaluated for impairment |   | $          | 6,450   |   |     | $          | 3,672   |         |   | $      | 4,949    |   |        | $        | 1,264  |   |      | $      | 1,252   |         |   | $      | -       |   |   | $      | -      |   |   | $ | 17,587 |   |
|                                                  |   |       |    |   |     |       |    |         |   |   |     |   |        |     |   |   |      |   |    |         |   |   |    |   |   |   |   |   |   |   |   |   |
| Ending balance: Collectively evaluated for impairment |   | $          | 443,961 |   |     | $          | 605,815 |         |   | $      | 241,662  |   |        | $        | 94,846 |   |      | $      | 207,789 |         |   | $      | 129,682 |   |   | $      | 3,486  |   |   | $ | 1,727,241 |   |
|                                                  |   |       |    |   |     |       |    |         |   |   |     |   |        |     |   |   |      |   |    |         |   |   |    |   |   |   |   |   |   |   |   |   |

----

|                                                  |   |       |    |   |     | Commercial |    |         |   |   |     |   | Residential |     |   |   |      |   |    | Direct lease |   |   |    |   |   |   |   |   |   |
|-------------------------------------------------------|--------|------------|---------|--------|----------|------------|---------|--------------|--------|--------|----------|--------|-------------|----------|--------|--------|-----------|--------|---------|--------------|--------|--------|---------|--------|--------|--------|--------|--------|--------|
| Six months ended                                      |   | Commercial |    |   | mortgage |       |    | Construction |   |   | mortgage |   |        | Consumer |   |   | financing |   |    | Unallocated  |   |   | Total   |   |
| June 30, 2011                                         |   |       |    |   |     |       |    |         |   |   |     |   |        |     |   |   |      |   |    |         |   |   |    |   |   |   |   |   |   |   |   |   |
| Beginning balance                                     |   | $          | 6,051   |   |     | $          | 9,501   |         |   | $      | 5,030    |   |        | $        | 2,115  |   |      | $      | 578     |         |   | $      | 164     |   |   | $      | 624    |   |   | $ | 24,063 |   |
| Charge-offs                                           |   |       | (4,702  | )      |     |       | (102    | )            |   |   | (2,496   | )      |        |     | (49    | )      |      |   | (681    | )            |   |   | -       |   |   |   | -      |   |   |   | (8,030 | ) |
| Recoveries                                            |   |       | 2       |   |     |       | 13      |         |   |   | 2        |   |        |     | -      |   |      |   | -       |         |   |   | -       |   |   |   | -      |   |   |   | 17 |   |
| Provision                                             |   |       | 8,852   |   |     |       | (526    | )            |   |   | 983      |   |        |     | 939    |   |      |   | 1,488   |         |   |   | 78      |   |   |   | (179   | )      |   |   | 11,635 |   |
| Ending balance                                        |   | $          | 10,203  |   |     | $          | 8,886   |         |   | $      | 3,519    |   |        | $        | 3,005  |   |      | $      | 1,385   |         |   | $      | 242     |   |   | $      | 445    |   |   | $ | 27,685 |   |
|                                                  |   |       |    |   |     |       |    |         |   |   |     |   |        |     |   |   |      |   |    |         |   |   |    |   |   |   |   |   |   |   |   |   |
| Ending balance: Individually evaluated for impairment |   | $          | 1,674   |   |     | $          | 542     |         |   | $      | 394      |   |        | $        | 2,163  |   |      | $      | 428     |         |   | $      | -       |   |   | $      | -      |   |   | $ | 5,201 |   |
|                                                  |   |       |    |   |     |       |    |         |   |   |     |   |        |     |   |   |      |   |    |         |   |   |    |   |   |   |   |   |   |   |   |   |
| Ending balance: Collectively evaluated for impairment |   | $          | 8,529   |   |     | $          | 8,344   |         |   | $      | 3,125    |   |        | $        | 842    |   |      | $      | 957     |         |   | $      | 242     |   |   | $      | 445    |   |   | $ | 22,484 |   |
|                                                  |   |       |    |   |     |       |    |         |   |   |     |   |        |     |   |   |      |   |    |         |   |   |    |   |   |   |   |   |   |   |   |   |
|                                                  |   |       |    |   |     |       |    |         |   |   |     |   |        |     |   |   |      |   |    |         |   |   |    |   |   |   |   |   |   |   |   |   |
| Loans:                                                |   |       |    |   |     |       |    |         |   |   |     |   |        |     |   |   |      |   |    |         |   |   |    |   |   |   |   |   |   |   |   |   |
| Ending balance                                        |   | $          | 450,916 |   |     | $          | 593,842 |         |   | $      | 205,730  |   |        | $        | 98,113 |   |      | $      | 200,132 |         |   | $      | 127,016 |   |   | $      | 2,911  |   |   | $ | 1,678,660 |   |
|                                                  |   |       |    |   |     |       |    |         |   |   |     |   |        |     |   |   |      |   |    |         |   |   |    |   |   |   |   |   |   |   |   |   |
| Ending balance: Individually evaluated for impairment |   | $          | 5,337   |   |     | $          | 2,782   |         |   | $      | 845      |   |        | $        | 9,929  |   |      | $      | 633     |         |   | $      | -       |   |   | $      | -      |   |   | $ | 19,526 |   |
|                                                  |   |       |    |   |     |       |    |         |   |   |     |   |        |     |   |   |      |   |    |         |   |   |    |   |   |   |   |   |   |   |   |   |
| Ending balance: Collectively evaluated for impairment |   | $          | 445,579 |   |     | $          | 591,060 |         |   | $      | 204,885  |   |        | $        | 88,184 |   |      | $      | 199,499 |         |   | $      | 127,016 |   |   | $      | 2,911  |   |   | $ | 1,659,134 |   |

|                                                              |   | As of or for the three months ended |   |
|-------------------------------------------------------------------|--------|-------------------------------------|--------|
|                                                              |   | June 30,                            |   |
|                                                              |   | 2012                                |   |   | 2011 |   |
|                                                              |   |                                |   |   |   |   |
| Ratio of the allowance for loan losses to total loans             |   |                                | 1.73   | % |   |   | 1.65 | % |
| Ratio of the allowance for loan losses to nonperforming loans (1) |   |                                | 111.64 | % |   |   | 115.73 | % |
| Ratio of nonperforming assets to total assets (1)                 |   |                                | 1.04   | % |   |   | 1.12 | % |
| Ratio of net charge-offs to average loans                         |   |                                | 0.45   | % |   |   | 0.49 | % |
|                                                              |   |                                |   |   |   |   |   |   |
| (1) Includes loans 90 days past due still accruing interest       |   |                                |   |   |   |   |   |   |

----

|                                                                              |   |           |   |   |     |   |   |         |   |
|-----------------------------------------------------------------------------------|--------|----------------|--------|--------|----------|--------|--------|--------------|--------|
|                                                                              |   | June 30,       |   |   | June 30, |   |   | December 31, |   |
|                                                                              |   | 2012           |   |   | 2011     |   |   | 2011         |   |
|                                                                              |   | (in thousands) |   |
|                                                                              |   |           |   |   |     |   |   |         |   |
| Non-accrual loans                                                                 |   |           |   |   |     |   |   |         |   |
|           Construction *        |   | $              | 8,698  |   |     | $      | 845    |         |   | $ | 4,949 |   |
|           Commercial mortgage * |   |           | 5,559  |   |     |   | 2,782  |         |   |   | 3,672 |   |
|           Commercial *          |   |           | 9,536  |   |     |   | 5,337  |         |   |   | 6,450 |   |
|           Consumer              |   |           | 927    |   |     |   | 633    |         |   |   | 1,252 |   |
|           Residential           |   |           | 95     |   |     |   | 9,929  |         |   |   | 1,264 |   |
| Total non-accrual loans                                                           |   |           | 24,815 |   |     |   | 19,526 |         |   |   | 17,587 |   |
|                                                                              |   |           |   |   |     |   |   |         |   |   |   |   |
| Loans past due 90 days or more                                                    |   |           | 3,105  |   |     |   | 4,397  |         |   |   | 4,101 |   |
| Total non-performing loans                                                        |   |           | 27,920 |   |     |   | 23,923 |         |   |   | 21,688 |   |
| Other real estate owned                                                           |   |           | 4,919  |   |     |   | 3,764  |         |   |   | 7,405 |   |
| Total non-performing assets                                                       |   | $              | 32,839 |   |     | $      | 27,687 |         |   | $ | 29,093 |   |

|                 |   | June 30, 2012 |   |   | December 31, 2011                    |   |
|----------------------|--------|---------------|--------|--------|--------------------------------------|--------|
|                 |   | Number        |   |   | Pre-modification recorded investment |   |   | Post-modification recorded investment |   |   | Number |   |   | Pre-modification recorded investment |   |   | Post-modification recorded investment |   |
| Commercial           |   |          | 1      |   |                                 | $      | 3,155 |   |   | $ | 3,155 |   |   |   | - |   |   | $ | - |   |   | $ | - |   |
| Commercial mortgage  |   |          | 3      |   |                                 |   | 3,167 |   |   |   | 3,167 |   |   |   | 1 |   |   |   | 759 |   |   |   | 759 |   |
| Construction         |   |          | 4      |   |                                 |   | 3,701 |   |   |   | 3,701 |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Residential mortgage |   |          | -      |   |                                 |   | - |   |   |   | - |   |   |   | 1 |   |   |   | 364 |   |   |   | 364 |   |
| Total                |   |          | 8      |   |                                 | $      | 10,023 |   |   | $ | 10,023 |   |   |   | 2 |   |   | $ | 1,123 |   |   | $ | 1,123 |   |

|                 |   | June 30, 2012          |   |   | December 31, 2011 |   |
|----------------------|--------|------------------------|--------|--------|-------------------|--------|
|                 |   | Adjusted interest rate |   |   | Extended maturity |   |   | Combined rate and maturity |   |   | Adjusted interest rate |   |   | Extended maturity |   |   | Combined rate and maturity |   |
| Commercial           |   | $                      | -      |   |              | $      | 3,155 |   |   | $ | - |   |   | $ | - |   |   | $ | - |   |   | $ | - |   |
| Commercial mortgage  |   |                   | 736    |   |              |   | 214 |   |   |   | 2,217 |   |   |   | 759 |   |   |   | - |   |   |   | - |   |
| Construction         |   |                   | -      |   |              |   | 3,701 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Residential mortgage |   |                   | -      |   |              |   | - |   |   |   | - |   |   |   | 364 |   |   |   | - |   |   |   | - |   |
| Total                |   | $                      | 736    |   |              | $      | 7,070 |   |   | $ | 2,217 |   |   | $ | 1,123 |   |   | $ | - |   |   | $ | - |   |

----

|                          |   | Recordedinvestment |   |   | Unpaidprincipalbalance |   |   | Relatedallowance |   |   | Averagerecordedinvestment |   |   | Interestincomerecognized |   |
|-------------------------------|--------|--------------------|--------|--------|------------------------|--------|--------|------------------|--------|--------|---------------------------|--------|--------|--------------------------|--------|
| June 30, 2012                 |   |               |   |   |                   |   |   |             |   |   |                      |   |   |                     |   |
| Without an allowance recorded |   |               |   |   |                   |   |   |             |   |   |                      |   |   |                     |   |
| Construction                  |   | $                  | 2,541  |   |                   | $      | 5,781  |             |   | $      | -                         |   |   | $                        | 1,123  |   |   | $ | - |   |
| Commercial mortgage           |   |               | 3,482  |   |                   |   | 4,027  |             |   |   | -                         |   |   |                     | 1,550  |   |   |   | - |   |
| Commercial                    |   |               | 1,689  |   |                   |   | 3,727  |             |   |   | -                         |   |   |                     | 1,284  |   |   |   | - |   |
| Consumer - home equity        |   |               | 927    |   |                   |   | 927    |             |   |   | -                         |   |   |                     | 927    |   |   |   | - |   |
| Residential                   |   |               | -      |   |                   |   | -      |             |   |   | -                         |   |   |                     | 421    |   |   |   | - |   |
| With an allowance recorded    |   |               |   |   |                   |   |   |             |   |   |                      |   |   |                     |   |   |   |   |   |   |
| Construction                  |   |               | 6,433  |   |                   |   | 7,249  |             |   |   | 3,303                     |   |   |                     | 7,069  |   |   |   | - |   |
| Commercial mortgage           |   |               | 4,508  |   |                   |   | 5,052  |             |   |   | 903                       |   |   |                     | 5,089  |   |   |   | - |   |
| Commercial                    |   |               | 7,847  |   |                   |   | 8,043  |             |   |   | 2,739                     |   |   |                     | 6,051  |   |   |   | - |   |
| Consumer - home equity        |   |               | -      |   |                   |   | -      |             |   |   | -                         |   |   |                     | 108    |   |   |   | - |   |
| Residential                   |   |               | 95     |   |                   |   | 95     |             |   |   | 73                        |   |   |                     | 31     |   |   |   | - |   |
| Total                         |   |               |   |   |                   |   |   |             |   |   |                      |   |   |                     |   |   |   |   |   |   |
| Construction                  |   | $                  | 8,974  |   |                   | $      | 13,030 |             |   | $      | 3,303                     |   |   | $                        | 8,192  |   |   | $ | - |   |
| Commercial mortgage           |   | $                  | 7,990  |   |                   | $      | 9,079  |             |   | $      | 903                       |   |   | $                        | 6,639  |   |   | $ | - |   |
| Commercial                    |   | $                  | 9,536  |   |                   | $      | 11,770 |             |   | $      | 2,739                     |   |   | $                        | 7,335  |   |   | $ | - |   |
| Consumer - home equity        |   | $                  | 927    |   |                   | $      | 927    |             |   | $      | -                         |   |   | $                        | 1,035  |   |   | $ | - |   |
| Residential                   |   | $                  | 95     |   |                   | $      | 95     |             |   | $      | 73                        |   |   | $                        | 452    |   |   | $ | - |   |
|                          |   |               |   |   |                   |   |   |             |   |   |                      |   |   |                     |   |   |   |   |   |   |
| December 31, 2011             |   |               |   |   |                   |   |   |             |   |   |                      |   |   |                     |   |   |   |   |   |   |
| Without an allowance recorded |   |               |   |   |                   |   |   |             |   |   |                      |   |   |                     |   |   |   |   |   |   |
| Construction                  |   | $                  | -      |   |                   | $      | -      |             |   | $      | -                         |   |   | $                        | 100    |   |   | $ | - |   |
| Commercial mortgage           |   |               | -      |   |                   |   | -      |             |   |   | -                         |   |   |                     | 310    |   |   |   | - |   |
| Commercial                    |   |               | 900    |   |                   |   | 2,042  |             |   |   | 6,831                     |   |   |                     | 626    |   |   |   | - |   |
| Consumer - home equity        |   |               | 927    |   |                   |   | 927    |             |   |   | 3,765                     |   |   |                     | 371    |   |   |   | - |   |
| Residential                   |   |               | 1,264  |   |                   |   | 1,414  |             |   |   | 149                       |   |   |                     | 662    |   |   |   | - |   |
| With an allowance recorded    |   |               |   |   |                   |   |   |             |   |   |                      |   |   |                     |   |   |   |   |   |   |
| Construction                  |   |               | 4,949  |   |                   |   | 4,949  |             |   |   | 2,296                     |   |   |                     | 2,123  |   |   |   | - |   |
| Commercial mortgage           |   |               | 3,672  |   |                   |   | 3,672  |             |   |   | 712                       |   |   |                     | 2,793  |   |   |   | - |   |
| Commercial                    |   |               | 5,550  |   |                   |   | 5,550  |             |   |   | 2,724                     |   |   |                     | 3,075  |   |   |   | - |   |
| Consumer - home equity        |   |               | 325    |   |                   |   | 325    |             |   |   | 204                       |   |   |                     | 510    |   |   |   | - |   |
| Residential                   |   |               | -      |   |                   |   | -      |             |   |   | -                         |   |   |                     | 5,048  |   |   |   | - |   |
| Total                         |   |               |   |   |                   |   |   |             |   |   |                      |   |   |                     |   |   |   |   |   |   |
| Construction                  |   | $                  | 4,949  |   |                   | $      | 4,949  |             |   | $      | 2,296                     |   |   | $                        | 2,223  |   |   | $ | - |   |
| Commercial mortgage           |   | $                  | 3,672  |   |                   | $      | 3,672  |             |   | $      | 712                       |   |   | $                        | 3,103  |   |   | $ | - |   |
| Commercial                    |   | $                  | 6,450  |   |                   | $      | 7,592  |             |   | $      | 9,555                     |   |   | $                        | 3,701  |   |   | $ | - |   |
| Consumer - home equity        |   | $                  | 1,252  |   |                   | $      | 1,252  |             |   | $      | 3,969                     |   |   | $                        | 881    |   |   | $ | - |   |
| Residential                   |   | $                  | 1,264  |   |                   | $      | 1,414  |             |   | $      | 149                       |   |   | $                        | 5,710  |   |   | $ | - |   |

----

|                      |   |       |    |   |                  |   |    |               |   |   |                |   |
|---------------------------|--------|------------|---------|--------|-----------------------|--------|---------|--------------------|--------|--------|---------------------|--------|
|                      |   | Commercial |    |   | Construction          |   |    | Commercialmortgage |   |   | Residentialmortgage |   |
|                      |   | 6/30/2012  |    |   | 12/31/2011            |   |    | 6/30/2012          |   |   | 12/31/2011          |   |   | 6/30/2012 |   |   | 12/31/2011 |   |   | 6/30/2012 |   |   | 12/31/2011 |   |
| Risk Rating               |   |       |    |   |                  |   |    |               |   |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Pass                      |   | $          | 303,881 |   |                  | $      | 320,287 |               |   | $      | 193,150             |   |   | $ | 176,824 |   |   | $ | 454,857 |   |   | $ | 476,421 |   |   | $ | 28,209 |   |   | $ | 28,981 |   |
| Special Mention           |   |       | 2,769   |   |                  |   | 1,049   |               |   |   | -                   |   |   |   | - |   |   |   | 24,696 |   |   |   | 21,615 |   |   |   | - |   |   |   | - |   |
| Substandard               |   |       | 10,009  |   |                  |   | 7,696   |               |   |   | 12,055              |   |   |   | 6,716 |   |   |   | 10,340 |   |   |   | 6,867 |   |   |   | 94 |   |   |   | 1,264 |   |
| Doubtful                  |   |       | -       |   |                  |   | -       |               |   |   | -                   |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Loss                      |   |       | -       |   |                  |   | -       |               |   |   | -                   |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Unrated *                 |   |       | 124,508 |   |                  |   | 121,379 |               |   |   | 64,431              |   |   |   | 63,071 |   |   |   | 106,746 |   |   |   | 104,584 |   |   |   | 68,923 |   |   |   | 65,865 |   |
| Total                     |   | $          | 441,167 |   |                  | $      | 450,411 |               |   | $      | 269,636             |   |   | $ | 246,611 |   |   | $ | 596,639 |   |   | $ | 609,487 |   |   | $ | 97,226 |   |   | $ | 96,110 |   |
| Unrated subject to review |   |       | 31      | %      |                  |   | 50      | %                  |   |   | 84                  | %      |   |   | 79 | % |   |   | 27 | % |   |   | 25 | % |   |   | 4 | % |   |   | 3 | % |
|                      |   |       |    |   |                  |   |    |               |   |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                      |   |       |    |   |                  |   |    |               |   |   |                |   |
|                      |   | Consumer   |    |   | Direct leasefinancing |   |    | Unamortized costs  |   |   | Total               |   |
|                      |   | 6/30/2012  |    |   | 12/31/2011            |   |    | 6/30/2012          |   |   | 12/31/2011          |   |   | 6/30/2012 |   |   | 12/31/2011 |   |   | 6/30/2012 |   |   | 12/31/2011 |   |
| Risk Rating               |   |       |    |   |                  |   |    |               |   |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Pass                      |   | $          | 50,270  |   |                  | $      | 64,236  |               |   | $      | 18,259              |   |   | $ | 12,025 |   |   | $ | - |   |   | $ | - |   |   | $ | 1,048,626 |   |   | $ | 1,078,774 |   |
| Special Mention           |   |       | -       |   |                  |   | -       |               |   |   | -                   |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 27,465 |   |   |   | 22,664 |   |
| Substandard               |   |       | 2,339   |   |                  |   | 2,718   |               |   |   | 236                 |   |   |   | 649 |   |   |   | - |   |   |   | - |   |   |   | 35,073 |   |   |   | 25,910 |   |
| Doubtful                  |   |       | -       |   |                  |   | -       |               |   |   | -                   |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Loss                      |   |       | -       |   |                  |   | -       |               |   |   | -                   |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Unrated *                 |   |       | 203,160 |   |                  |   | 142,087 |               |   |   | 121,517             |   |   |   | 117,008 |   |   |   | 3,863 |   |   |   | 3,486 |   |   |   | 693,148 |   |   |   | 617,480 |   |
| Total                     |   | $          | 255,769 |   |                  | $      | 209,041 |               |   | $      | 140,012             |   |   | $ | 129,682 |   |   | $ | 3,863 |   |   | $ | 3,486 |   |   | $ | 1,804,312 |   |   | $ | 1,744,828 |   |
| Unrated subject to review |   |       | 4       | %      |                  |   | 2       | %                  |   |   | 17                  | %      |   |   | 25 | % |   |   | 0 | % |   |   | 0 | % |   |   | 22 | % |   |   | 28 | % |

|                         |   | For the six months ended |      |   | For the year ended |   |
|------------------------------|--------|--------------------------|-----------|--------|--------------------|--------|
|                         |   | June 30, 2012            |      |   | December 31, 2011  |   |
|                         |   | Average                  |      |   | Average            |   |   | Average |   |   | Average |   |
|                         |   | balance                  |      |   | rate               |   |   | balance |   |   | rate |   |
|                         |   | (unaudited)              |      |   |               |   |
| Demand and interest checking |   | $                        | 2,936,649 |   |               |   | 0.28 | % |   | $ | 2,175,972 |   |   |   | 0.35 | % |
| Savings and money market     |   |                     | 453,213   |   |               |   | 0.55 | % |   |   | 355,094 |   |   |   | 0.86 | % |
| Time                         |   |                     | 30,608    |   |               |   | 1.33 | % |   |   | 31,066 |   |   |   | 1.14 | % |
| Total deposits               |   | $                        | 3,420,470 |   |               |   | 0.32 | % |   | $ | 2,562,132 |   |   |   | 0.43 | % |

----

----

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Item 4. Controls and Procedures

----

Item 6. Exhibits

SIGNATURES

|           | THE BANCORP INC.                      |
|----------------|---------------------------------------|
|           | (Registrant)                          |
|           |                                  |
| August 9, 2012 | /s/ Betsy Z. Cohen                    |
| Date           | Betsy Z. Cohen                        |
|           | Chief Executive Officer               |
|           |                                  |
|           |                                  |
| August 9, 2012 | /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. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----