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

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

| MISSISSIPPI                                                   | 64-0636653                              |
|---------------------------------------------------------------|-----------------------------------------|
| (State or other jurisdiction of                               | (I.R.S. Employer Identification Number) |
| Incorporation or organization)                                |                                    |
|                                                          |                                    |
| 134 West Washington Street,  Kosciusko, Mississippi | 39090                                   |
| (Address of principal executive offices)                      | (Zip Code)                              |

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

| Common stock, $5 par value | 9,115,770 Shares                     |
|----------------------------|--------------------------------------|
| Title of Class             | Shares Outstanding at April 30, 2011 |

----

|           |                                                                                       |   | Page     |
|----------------|--------------------------------------------------------------------------------------------|--------|----------|
| PART 1:        | FINANCIAL INFORMATION                                                                      |   |     |
|           |                                                                                       |   |     |
| Item 1         | Financial Statements (unaudited):                                                          |   |   3 |
|           | Consolidated Statements of Condition                                                       |   |   3 |
|           | Consolidated Statements of Operations                                                      |   |   4 |
|           | Consolidated Statements of Comprehensive Income                                            |   |   5 |
|           | Consolidated Statements of Stockholders’ Equity                                      |   |   6 |
|           | Consolidated Statements of Cash Flows                                                      |   |   7 |
|           | Notes to Consolidated Financial Statements                                                 |   |   9 |
|           |                                                                                       |   |     |
| Item 2         | Management’s Discussion and Analysis of Financial Condition and Results of Operation |   | 42       |
|           |                                                                                       |   |     |
| Item 3         | Quantitative and Qualitative Disclosures About Market Risk                                 |   | 71       |
|           |                                                                                       |   |     |
| Item 4         | Controls and Procedures                                                                    |   | 71       |
|           |                                                                                       |   |     |
| PART II:       | OTHER INFORMATION                                                                          |   |     |
|           |                                                                                       |   |     |
| Item 1         | Legal Proceedings                                                                          |   | 72       |
|           |                                                                                       |   |     |
| Item 1A        | Risk Factors                                                                               |   | 72       |
|           |                                                                                       |   |     |
| Item 2         | Unregistered Sales of Equity Securities and Use of Proceeds                                |   | 72       |
|           |                                                                                       |   |     |
| Item 3         | Defaults upon Senior Securities                                                            |   | 72       |
|           |                                                                                       |   |     |
| Item 4         | (Removed and Reserved)                                                                     |   |     |
|           |                                                                                       |   |     |
| Item 5         | Other Information                                                                          |   | 72       |
|           |                                                                                       |   |     |
| Item 6         | Exhibits                                                                                   |   | 73       |
|           |                                                                                       |   |
| SIGNATURES     |                                                                                       | 74     |
|           |                                                                                       |   |
| EXHIBIT INDEX  |                                                                                       | 75     |
|           |                                                                                       |   |
| CERTIFICATIONS |                                                                                       |   |

----

| (Dollars in thousands)                                                                               |   |        |      |   |        |   |
|------------------------------------------------------------------------------------------------------|--------|-------------|-----------|--------|-------------|--------|
|                                                                                                 |   | March 31    |      |   | December 31 |   |
|                                                                                                 |   | 2011        |      |   | 2010        |   |
|                                                                                                 |   | (Unaudited) |      |   | (Note 1)    |   |
| Assets                                                                                               |   |        |      |   |        |   |   |   |
| Cash and due from banks                                                                              |   | $           | 36,184    |   |        | $      | 45,099 |   |
| Interest bearing bank balances                                                                       |   |        | 80,408    |   |        |   | 72,103 |   |
| Federal funds sold                                                                                   |   |        | 25,000    |   |        |   | 25,000 |   |
| Securities available for sale, amortized cost of $294,351 and $274,421                               |   |        | 296,242   |   |        |   | 276,929 |   |
| Loans held for sale                                                                                  |   |        | 2,586     |   |        |   | 6,242 |   |
|                                                                                                 |   |        |      |   |        |   |   |   |
| Loans, net of unearned income                                                                        |   |        | 1,051,261 |   |        |   | 1,060,146 |   |
| Allowance for loan losses                                                                            |   |        | (17,043   | )      |        |   | (16,025 | ) |
| Net loans                                                                                            |   |        | 1,034,218 |   |        |   | 1,044,121 |   |
|                                                                                                 |   |        |      |   |        |   |   |   |
| Bank premises and equipment                                                                          |   |        | 40,531    |   |        |   | 40,696 |   |
| Accrued interest receivable                                                                          |   |        | 6,719     |   |        |   | 6,380 |   |
| Other real estate                                                                                    |   |        | 29,660    |   |        |   | 31,125 |   |
| Other intangible assets                                                                              |   |        | 4,906     |   |        |   | 5,013 |   |
| Bank owned life insurance                                                                            |   |        | 21,988    |   |        |   | 21,790 |   |
| Other assets                                                                                         |   |        | 29,058    |   |        |   | 29,466 |   |
|                                                                                                 |   |        |      |   |        |   |   |   |
|                                                                                                 |   | $           | 1,607,500 |   |        | $      | 1,603,964 |   |
| Liabilities and Stockholders’ Equity                                                           |   |        |      |   |        |   |   |   |
| Liabilities:                                                                                         |   |        |      |   |        |   |   |   |
| Noninterest-bearing deposits                                                                         |   | $           | 208,457   |   |        | $      | 212,199 |   |
| Interest-bearing deposits                                                                            |   |        | 1,191,619 |   |        |   | 1,163,213 |   |
| Total deposits                                                                                       |   |        | 1,400,076 |   |        |   | 1,375,412 |   |
| Federal funds purchased and repurchase agreements                                                    |   |        | 14,561    |   |        |   | 33,481 |   |
| Other borrowings                                                                                     |   |        | 48,527    |   |        |   | 50,416 |   |
| Junior subordinated debt                                                                             |   |        | 30,928    |   |        |   | 30,928 |   |
| Accrued interest payable                                                                             |   |        | 1,367     |   |        |   | 1,470 |   |
| Other liabilities                                                                                    |   |        | 4,362     |   |        |   | 5,192 |   |
| Total liabilities                                                                                    |   |        | 1,499,821 |   |        |   | 1,496,899 |   |
|                                                                                                 |   |        |      |   |        |   |   |   |
| Stockholders’ equity:                                                                          |   |        |      |   |        |   |   |   |
| Preferred stock; Class A; 1,000,000 shares authorized                                                |   |        | -         |   |        |   | - |   |
| Preferred stock; Class B, Series CD; 1,000,000 shares authorized; 30,000 shares issued               |   |        | 16,673    |   |        |   | 16,390 |   |
| Common stock of $5.00 par value; 50,000,000 shares authorized: 9,115,770 and 9,106,803 shares issued |   |        | 45,579    |   |        |   | 45,534 |   |
| Additional paid-in capital                                                                           |   |        | 31,873    |   |        |   | 31,883 |   |
| Nonvested restricted stock awards                                                                    |   |        | 783       |   |        |   | 784 |   |
| Retained earnings                                                                                    |   |        | 12,651    |   |        |   | 12,225 |   |
| Accumulated other comprehensive income                                                               |   |        | 120       |   |        |   | 249 |   |
| Total equity                                                                                         |   |        | 107,679   |   |        |   | 107,065 |   |
|                                                                                                 |   | $           | 1,607,500 |   |        | $      | 1,603,964 |   |

----

| (Dollars in thousands, except per share data)                 |   | Three Months Ended |   |
|---------------------------------------------------------------------------------------------|--------|------------------------------|--------|
|                                                                                        |   | March 31                |   |
|                                                                                        |   | 2011                         |   |   | 2010 |   |
| Interest income:                                                                            |   |                         |   |   |   |   |   |   |
| Interest and fees on loans                                                                  |   | $                            | 15,375 |   |   | $ | 15,388 |   |
| Interest on loans held for sale                                                             |   |                         | 41     |   |   |   | 78 |   |
| Taxable investments                                                                         |   |                         | 1,771  |   |   |   | 2,045 |   |
| Tax-exempt investments                                                                      |   |                         | 314    |   |   |   | 430 |   |
| Federal funds sold                                                                          |   |                         | 16     |   |   |   | 26 |   |
| Interest bearing bank balances                                                              |   |                         | 52     |   |   |   | 45 |   |
| Total interest income                                                                       |   |                         | 17,569 |   |   |   | 18,012 |   |
|                                                                                        |   |                         |   |   |   |   |   |   |
| Interest expense:                                                                           |   |                         |   |   |   |   |   |   |
| Deposits                                                                                    |   |                         | 3,847  |   |   |   | 5,190 |   |
| Federal funds purchased and repurchase agreements                                           |   |                         | 15     |   |   |   | 19 |   |
| Other borrowings                                                                            |   |                         | 524    |   |   |   | 1,066 |   |
| Junior subordinated debt                                                                    |   |                         | 458    |   |   |   | 496 |   |
| Total interest expense                                                                      |   |                         | 4,844  |   |   |   | 6,771 |   |
|                                                                                        |   |                         |   |   |   |   |   |   |
| Net interest income                                                                         |   |                         | 12,725 |   |   |   | 11,241 |   |
| Provision for loan losses                                                                   |   |                         | 2,580  |   |   |   | 2,280 |   |
| Net interest income after  provision for loan losses                              |   |                         | 10,145 |   |   |   | 8,961 |   |
|                                                                                        |   |                         |   |   |   |   |   |   |
| Noninterest income:                                                                         |   |                         |   |   |   |   |   |   |
| Deposit account income                                                                      |   |                         | 2,458  |   |   |   | 2,480 |   |
| Mortgage banking income                                                                     |   |                         | 356    |   |   |   | 343 |   |
| Agency commission income                                                                    |   |                         | 892    |   |   |   | 898 |   |
| Trust and brokerage income                                                                  |   |                         | 133    |   |   |   | 121 |   |
| Bank owned life insurance income                                                            |   |                         | 183    |   |   |   | 170 |   |
| Other income                                                                                |   |                         | 656    |   |   |   | 789 |   |
| Securities gains, net                                                                       |   |                         | 1,349  |   |   |   | 1,004 |   |
|                                                                                        |   |                         |   |   |   |   |   |   |
| Total investment other-than-temporary impairment losses                                     |   |                         | (240   | ) |   |   | (272 | ) |
| Portion of loss recognized in (reclassified from) other comprehensive income (before taxes) |   |                         | (56    | ) |   |   | 70 |   |
| Net investment impairment losses recognized                                                 |   |                         | (296   | ) |   |   | (202 | ) |
|                                                                                        |   |                         |   |   |   |   |   |   |
| Total noninterest income                                                                    |   |                         | 5,731  |   |   |   | 5,603 |   |
|                                                                                        |   |                         |   |   |   |   |   |   |
| Noninterest expenses:                                                                       |   |                         |   |   |   |   |   |   |
| Salaries and employee benefits                                                              |   |                         | 6,956  |   |   |   | 6,825 |   |
| Net occupancy expenses                                                                      |   |                         | 989    |   |   |   | 969 |   |
| Equipment expenses                                                                          |   |                         | 465    |   |   |   | 651 |   |
| Software and processing expenses                                                            |   |                         | 399    |   |   |   | 402 |   |
| Telecommunication expenses                                                                  |   |                         | 225    |   |   |   | 244 |   |
| Marketing and business development expenses                                                 |   |                         | 205    |   |   |   | 242 |   |
| Foreclosed property expenses                                                                |   |                         | 2,353  |   |   |   | 456 |   |
| FDIC insurance assessments                                                                  |   |                         | 774    |   |   |   | 846 |   |
| Intangible asset amortization and impairment                                                |   |                         | 107    |   |   |   | 106 |   |
| Other expenses                                                                              |   |                         | 2,338  |   |   |   | 2,668 |   |
| Total noninterest expenses                                                                  |   |                         | 14,811 |   |   |   | 13,409 |   |
|                                                                                        |   |                         |   |   |   |   |   |   |
| Income before income taxes                                                                  |   |                         | 1,065  |   |   |   | 1,155 |   |
| Income tax expense                                                                          |   |                         | 115    |   |   |   | 301 |   |
| Net income                                                                                  |   |                         | 950    |   |   |   | 854 |   |
| Net income attributable to noncontrolling interests                                         |   |                         | -      |   |   |   | 1 |   |
| Net income attributable to First M&F Corporation                                        |   | $                            | 950    |   |   | $ | 853 |   |
| Dividends and accretion on preferred stock                                                  |   |                         | 432    |   |   |   | 437 |   |
| Net income applicable to common stock                                                       |   | $                            | 518    |   |   | $ | 416 |   |
|                                                                                        |   |                         |   |   |   |   |   |   |
| Net income allocated to common shareholders                                                 |   | $                            | 515    |   |   | $ | 413 |   |
|                                                                                        |   |                         |   |   |   |   |   |   |
| Earnings per share:                                                                         |   |                         |   |   |   |   |   |   |
| Basic                                                                                       |   | $                            | .06    |   |   | $ | .05 |   |
| Diluted                                                                                     |   | $                            | .06    |   |   | $ | .05 |   |

----

| (Dollars in thousands)                                                                                                                                                                               |   | Three Months Ended |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------|--------|
|                                                                                                                                                                                                           |   | March 31                |   |
|                                                                                                                                                                                                           |   | 2011                         |   |   | 2010 |   |
|                                                                                                                                                                                                           |   |                         |   |   |   |   |
| Net income                                                                                                                                                                                                     |   | $                            | 950    |   |   | $ | 854 |   |
|                                                                                                                                                                                                           |   |                         |   |   |   |   |   |   |
| Other comprehensive income:                                                                                                                                                                                    |   |                         |   |   |   |   |   |   |
| Unrealized gains (losses) on securities:                                                                                                                                                                       |   |                         |   |   |   |   |   |   |
| Unrealized gains on securities available for sale arising during the period, net of tax of $188 and $185 for the three months ended March 31                                                                   |   |                         | 316    |   |   |   | 314 |   |
| Unrealized losses on other-than-temporarily impaired securities available for sale arising during the period, net of tax of $25 and $100 for the three months ended March 31                                   |   |                         | (43    | ) |   |   | (172 | ) |
| Reclassification adjustment for gains on securities available for sale included in net income, net of tax of $503 and $374 for the three months ended March 31                                                 |   |                         | (846   | ) |   |   | (630 | ) |
| Reclassification adjustment for credit related other-than- temporary impairment losses on securities available for sale included in net income, net of tax of $110 and $75 for the three months ended March 31 |   |                         | 186    |   |   |   | 127 |   |
| Unrealized gains and settlements on cash flow hedge arising during the period, net of tax of $64                                                                                                               |   |                         | 107    |   |   |   | - |   |
| Defined benefit pension plans:                                                                                                                                                                                 |   |                         |   |   |   |   |   |   |
| Amortization of transition asset, net of tax of $0 and $0 for the three months ended March 31                                                                                                                  |   |                         | -      |   |   |   | - |   |
| Amortization of prior service cost, net of tax of $2 and $3 for the three months ended March 31                                                                                                                |   |                         | (4     | ) |   |   | (6 | ) |
| Amortization of actuarial loss, net of tax of $91 and $82 for the three months ended March 31                                                                                                                  |   |                         | 155    |   |   |   | 139 |   |
|                                                                                                                                                                                                           |   |                         |   |   |   |   |   |   |
| Other comprehensive loss                                                                                                                                                                                       |   |                         | (129   | ) |   |   | (228 | ) |
|                                                                                                                                                                                                           |   |                         |   |   |   |   |   |   |
| Total comprehensive income                                                                                                                                                                                     |   |                         | 821    |   |   |   | 626 |   |
| Comprehensive income attributable to noncontrolling interests                                                                                                                                                  |   |                         | -      |   |   |   | 1 |   |
|                                                                                                                                                                                                           |   |                         |   |   |   |   |   |   |
| Comprehensive income of First M&F Corp                                                                                                                                                                     |   | $                            | 821    |   |   | $ | 625 |   |

----

| (Dollars in thousands, except per share data) |   |      |   |   |   |   |   |       | Nonvested |   |       |   |   |      | Accumulated |   |          |   |         |           |   |   |
|-----------------------------------------------------------------------------|--------|-----------|--------|--------|--------|--------|--------|------------|-----------|--------|------------|--------|--------|-----------|-------------|--------|---------------|--------|--------------|----------------|--------|--------|
|                                                                        |   |      |   |   |   |   |   | Additional |      |   | Restricted |   |   | Retained  |        |   | Other         |   |         |           |   |   |   |   |
|                                                                        |   | Preferred |   |   | Common |   |   | Paid-in    |      |   | Stock      |   |   | Earnings  |        |   | Comprehensive |   |         | Noncontrolling |   |   |   |   |
|                                                                        |   | Stock     |   |   | Stock  |   |   | Capital    |      |   | Awards     |   |   | (Deficit) |        |   | Income        |   |         | Interest       |   |   | Total |   |
| January 1, 2010                                                   |   | $         | 28,838 |   |   | $      | 45,347 |       |      | $      | 31,926     |   |   | $         | 734         |   |          | $      | ( 2,595 | )              |   | $      | 379 |   |   | $ | 1 |   |   | $ | 104,630 |   |
| Net income                                                                  |   |      | -      |   |   |   | -      |       |      |   | -          |   |   |      | -           |   |          |   | 853          |           |   |   | - |   |   |   | 1 |   |   |   | 854 |   |
| Cash dividends ($.01 per share)                                             |   |      | -      |   |   |   | -      |       |      |   | -          |   |   |      | -           |   |          |   | (91          | )              |   |   | - |   |   |   | - |   |   |   | (91 | ) |
| Dividends and accretion on preferred stock                                  |   |      | 62     |   |   |   | -      |       |      |   | -          |   |   |      | -           |   |          |   | (437         | )              |   |   | - |   |   |   | - |   |   |   | (375 | ) |
| Share-based compensation expense recognized                                 |   |      | -      |   |   |   | -      |       |      |   | 2          |   |   |      | 46          |   |          |   | -            |           |   |   | - |   |   |   | - |   |   |   | 48 |   |
| Net change                                                                  |   |      | -      |   |   |   | -      |       |      |   | -          |   |   |      | -           |   |          |   | -            |           |   |   | (228 | ) |   |   | - |   |   |   | (228 | ) |
| Distributions                                                               |   |      | -      |   |   |   | -      |       |      |   | -          |   |   |      | -           |   |          |   | -            |           |   |   | - |   |   |   | (2 | ) |   |   | (2 | ) |
|                                                                        |   |      |   |   |   |   |   |       |      |   |       |   |   |      |        |   |          |   |         |           |   |   |   |   |   |   |   |   |   |   |   |   |
| March 31, 2010                                                              |   | $         | 28,900 |   |   | $      | 45,347 |       |      | $      | 31,928     |   |   | $         | 780         |   |          | $      | (2,270       | )              |   | $      | 151 |   |   | $ | - |   |   | $ | 104,836 |   |
|                                                                        |   |      |   |   |   |   |   |       |      |   |       |   |   |      |        |   |          |   |         |           |   |   |   |   |   |   |   |   |   |   |   |   |
| January 1, 2011                                                             |   | $         | 16,390 |   |   | $      | 45,534 |       |      | $      | 31,883     |   |   | $         | 784         |   |          | $      | 12,225       |           |   | $      | 249 |   |   | $ | - |   |   | $ | 107,065 |   |
| Net income                                                                  |   |      | -      |   |   |   | -      |       |      |   | -          |   |   |      | -           |   |          |   | 950          |           |   |   | - |   |   |   | - |   |   |   | 950 |   |
| Cash dividends ($.01 per share)                                             |   |      | -      |   |   |   | -      |       |      |   | -          |   |   |      | -           |   |          |   | (92          | )              |   |   | - |   |   |   | - |   |   |   | (92 | ) |
| 8,967 shares granted to directors                                           |   |      | -      |   |   |   | 45     |       |      |   | (11        | )      |   |      | -           |   |          |   | -            |           |   |   | - |   |   |   | - |   |   |   | 34 |   |
| Dividends and accretion on preferred stock                                  |   |      | 283    |   |   |   | -      |       |      |   | -          |   |   |      | -           |   |          |   | (432         | )              |   |   | - |   |   |   | - |   |   |   | (149 | ) |
| Share-based compensation expense recognized                                 |   |      | -      |   |   |   | -      |       |      |   | 1          |   |   |      | (1          | )      |          |   | -            |           |   |   | - |   |   |   | - |   |   |   | - |   |
| Net change                                                                  |   |      | -      |   |   |   | -      |       |      |   | -          |   |   |      | -           |   |          |   | -            |           |   |   | (129 | ) |   |   | - |   |   |   | (129 | ) |
|                                                                        |   |      |   |   |   |   |   |       |      |   |       |   |   |      |        |   |          |   |         |           |   |   |   |   |   |   |   |   |   |   |   |   |
| March 31, 2011                                                              |   | $         | 16,673 |   |   | $      | 45,579 |       |      | $      | 31,873     |   |   | $         | 783         |   |          | $      | 12,651       |           |   | $      | 120 |   |   | $ | - |   |   | $ | 107,679 |   |

----

| (Dollars in thousands)                                                  |   | Three Months Ended March 31 |    |
|-----------------------------------------------------------------------------------|--------|-------------------------------------------------|---------|
|                                                                              |   | 2011                                            |    |   | 2010 |   |
| Cash flows from operating activities:                                             |   |                                            |    |   |   |   |
| Net income                                                                        |   | $                                               | 950     |   |   | $ | 854 |   |
| Adjustments to reconcile net income to net cash provided by operating activities: |   |                                            |    |   |   |   |   |   |
| Share-based compensation                                                          |   |                                            | -       |   |   |   | 48 |   |
| Director fees issued in stock                                                     |   |                                            | 34      |   |   |   | - |   |
| Amortization of pension costs                                                     |   |                                            | 211     |   |   |   | 197 |   |
| Depreciation and amortization                                                     |   |                                            | 652     |   |   |   | 688 |   |
| Provision for loan losses                                                         |   |                                            | 2,580   |   |   |   | 2,280 |   |
| Net investment amortization                                                       |   |                                            | 559     |   |   |   | 455 |   |
| Net change in unearned fees/deferred costs on loans                               |   |                                            | 40      |   |   |   | (153 | ) |
| Capitalized dividends on FHLB stock                                               |   |                                            | (7      | ) |   |   | (7 | ) |
| Net accretion of discount on time deposits                                        |   |                                            | 7       |   |   |   | 4 |   |
| Gain on securities available for sale                                             |   |                                            | (1,349  | ) |   |   | (1,004 | ) |
| Impairment loss on securities available for sale                                  |   |                                            | 296     |   |   |   | 202 |   |
| Gain on loans held for sale                                                       |   |                                            | (210    | ) |   |   | (288 | ) |
| Other real estate losses                                                          |   |                                            | 2,018   |   |   |   | 211 |   |
| Other asset sales (gains) losses                                                  |   |                                            | 70      |   |   |   | (20 | ) |
| Deferred income taxes                                                             |   |                                            | 114     |   |   |   | 284 |   |
| Originations of loans held for sale, net of repayments                            |   |                                            | (12,553 | ) |   |   | (20,703 | ) |
| Sales proceeds of loans held for sale                                             |   |                                            | 16,426  |   |   |   | 22,600 |   |
| (Increase) decrease in:                                                           |   |                                            |    |   |   |   |   |   |
| Accrued interest receivable                                                       |   |                                            | (339    | ) |   |   | 558 |   |
| Cash surrender value of bank owned life insurance                                 |   |                                            | (183    | ) |   |   | (170 | ) |
| Other assets                                                                      |   |                                            | 266     |   |   |   | 1,274 |   |
| Increase (decrease) in:                                                           |   |                                            |    |   |   |   |   |   |
| Accrued interest payable                                                          |   |                                            | (103    | ) |   |   | (444 | ) |
| Other liabilities                                                                 |   |                                            | (782    | ) |   |   | 332 |   |
|                                                                              |   |                                            |    |   |   |   |   |   |
| Net cash provided by operating activities                                         |   |                                            | 8,697   |   |   |   | 7,198 |   |
|                                                                              |   |                                            |    |   |   |   |   |   |
| Cash flows from investing activities:                                             |   |                                            |    |   |   |   |   |   |
| Purchases of securities available for sale                                        |   |                                            | (74,537 | ) |   |   | (81,182 | ) |
| Sales of securities available for sale                                            |   |                                            | 41,421  |   |   |   | 39,548 |   |
| Maturities of securities available for sale                                       |   |                                            | 13,680  |   |   |   | 36,602 |   |
| Sales of nonperforming loans                                                      |   |                                            | -       |   |   |   | 500 |   |
| Net decrease in other loans held for investment                                   |   |                                            | 4,273   |   |   |   | 1,873 |   |
| Net (increase) decrease in:                                                       |   |                                            |    |   |   |   |   |   |
| Interest bearing bank balances                                                    |   |                                            | (8,305  | ) |   |   | 2,684 |   |
| Federal funds sold                                                                |   |                                            | -       |   |   |   | 28,000 |   |
| Bank premises and equipment                                                       |   |                                            | (366    | ) |   |   | 41 |   |
| Net purchases of bank owned life insurance                                        |   |                                            | (15     | ) |   |   | (18 | ) |
| Proceeds from sales of other real estate and other repossessed assets             |   |                                            | 2,635   |   |   |   | 1,058 |   |
| Payments for ORE improvements and lien holder payoffs                             |   |                                            | (5      | ) |   |   | (492 | ) |
|                                                                              |   |                                            |    |   |   |   |   |   |
| Net cash provided by (used in) investing activities                               |   |                                            | (21,219 | ) |   |   | 28,614 |   |
|                                                                              |   |                                            |    |   |   |   |   |   |
|                                                                              |   |                                            |    |   |   | (Continued) |   |

----

| (Dollars in thousands)                     |   | Three Months Ended March 31 |    |
|------------------------------------------------------|--------|-------------------------------------------------|---------|
|                                                 |   | 2011                                            |    |   | 2010 |   |
| Cash flows from financing activities:                |   |                                            |    |   |   |   |
| Net increase (decrease) in deposits                  |   | $                                               | 24,657  |   |   | $ | (14,269 | ) |
| Net increase (decrease) in short-term borrowings     |   |                                            | (18,920 | ) |   |   | 5,583 |   |
| Proceeds from other borrowings                       |   |                                            | 686     |   |   |   | - |   |
| Repayments of other borrowings                       |   |                                            | (2,575  | ) |   |   | (31,270 | ) |
| Earnings distributions to noncontrolling interests   |   |                                            | -       |   |   |   | (2 | ) |
| Common dividends paid                                |   |                                            | (92     | ) |   |   | (91 | ) |
| Preferred dividends paid                             |   |                                            | (149    | ) |   |   | (375 | ) |
|                                                 |   |                                            |    |   |   |   |   |   |
| Net cash provided by (used in) financing activities  |   |                                            | 3,607   |   |   |   | (40,424 | ) |
|                                                 |   |                                            |    |   |   |   |   |   |
| Net decrease in cash and due from banks              |   |                                            | (8,915  | ) |   |   | (4,612 | ) |
|                                                 |   |                                            |    |   |   |   |   |   |
| Cash and due from banks at January 1                 |   |                                            | 45,099  |   |   |   | 42,446 |   |
|                                                 |   |                                            |    |   |   |   |   |   |
| Cash and due from banks at March 31                  |   | $                                               | 36,184  |   |   | $ | 37,834 |   |
|                                                 |   |                                            |    |   |   |   |   |   |
| Supplemental disclosures:                            |   |                                            |    |   |   |   |   |   |
| Total interest paid                                  |   | $                                               | 4,952   |   |   | $ | 7,216 |   |
| Total income taxes paid                              |   |                                            | 1       |   |   |   | 226 |   |
| Income tax refunds received                          |   |                                            | -       |   |   |   | 210 |   |
|                                                 |   |                                            |    |   |   |   |   |   |
| Transfers of loans to foreclosed property            |   |                                            | 3,182   |   |   |   | 8,484 |   |
| Transfers of buildings to foreclosed property        |   |                                            | -       |   |   |   | 176 |   |
| U. S. Treasury preferred dividend accrued but unpaid |   |                                            | 75      |   |   |   | 187 |   |
| Accretion on U. S. Treasury preferred stock          |   |                                            | 283     |   |   |   | 62 |   |

----

----

----

|                                             |   |                       |    |   | Fair Value Measurements at |   |
|--------------------------------------------------|--------|----------------------------|---------|--------|-------------------------------------------|--------|
|                                             |   |                       |    |   | March 31, 2011, Using      |   |
|                                             |   |                       |    |   | Quoted                                    |   |   |   |   |   |   |   |
|                                             |   |                       |    |   | Prices In                            |   |   |   |   |   |   |   |
|                                             |   |                       |    |   | Active                                    |   |   |   |   |   |   |   |
|                                             |   |                       |    |   | Markets                                   |   |   | Significant |   |   |   |   |
|                                             |   | Assets/Liabilities         |    |   | For                                       |   |   | Other |   |   | Significant |   |
|                                             |   | Measured at Fair |    |   | Identical                                 |   |   | Observable |   |   | Unobservable |   |
|                                             |   | Value                      |    |   | Assets                                    |   |   | Inputs |   |   | Inputs |   |
| (Dollars in thousands)                 |   | March 31, 2011   |    |   | (Level 1)                            |   |   | (Level 2) |   |   | (Level 3) |   |
|                                             |   |                       |    |   |                                      |   |   |   |   |   |   |   |
| U.S. Government sponsored entities               |   | $                          | 54,159  |   |                                      | $      | - |   |   | $ | 54,159 |   |   | $ | - |   |
| Mortgage-backed investments                      |   |                       | 198,237 |   |                                      |   | - |   |   |   | 198,237 |   |   |   | - |   |
| Obligations of states and political subdivisions |   |                       | 41,426  |   |                                      |   | - |   |   |   | 41,426 |   |   |   | - |   |
| Collateralized debt obligations                  |   |                       | 866     |   |                                      |   | - |   |   |   | - |   |   |   | 866 |   |
| Other debt securities                            |   |                       | 1,554   |   |                                      |   | - |   |   |   | 1,554 |   |   |   | - |   |
| Total securities available for sale              |   | $                          | 296,242 |   |                                      | $      | - |   |   | $ | 295,376 |   |   | $ | 866 |   |
|                                             |   |                       |    |   |                                      |   |   |   |   |   |   |   |   |   |   |   |
| Interest rate swap                               |   |                       | 988     |   |                                      |   | - |   |   |   | - |   |   |   | 988 |   |
|                                             |   |                       |    |   |                                      |   |   |   |   |   |   |   |   |   |   |   |
| Mortgage derivative assets                       |   |                       | 47      |   |                                      |   | - |   |   |   | - |   |   |   | 47 |   |
|                                             |   |                       |    |   |                                      |   |   |   |   |   |   |   |   |   |   |   |
| Mortgage derivative liabilities                  |   |                       | 16      |   |                                      |   | - |   |   |   | - |   |   |   | 16 |   |

|                                             |   |                        |    |   | Fair Value Measurements at |   |
|--------------------------------------------------|--------|-----------------------------|---------|--------|-------------------------------------------|--------|
|                                             |   |                        |    |   | December 31, 2010, Using   |   |
|                                             |   |                        |    |   | Quoted                                    |   |   |   |   |   |   |   |
|                                             |   |                        |    |   | Prices In                            |   |   |   |   |   |   |   |
|                                             |   |                        |    |   | Active                                    |   |   |   |   |   |   |   |
|                                             |   |                        |    |   | Markets                                   |   |   | Significant |   |   |   |   |
|                                             |   | Assets/Liabilities          |    |   | For                                       |   |   | Other |   |   | Significant |   |
|                                             |   | Measured at Fair  |    |   | Identical                                 |   |   | Observable |   |   | Unobservable |   |
|                                             |   | Value                       |    |   | Assets                                    |   |   | Inputs |   |   | Inputs |   |
| (Dollars in thousands)                 |   | December 31, 2010 |    |   | (Level 1)                            |   |   | (Level 2) |   |   | (Level 3) |   |
|                                             |   |                        |    |   |                                      |   |   |   |   |   |   |   |
| U.S. Government sponsored entities               |   | $                           | 58,611  |   |                                      | $      | - |   |   | $ | 58,611 |   |   | $ | - |   |
| Mortgage-backed investments                      |   |                        | 173,921 |   |                                      |   | - |   |   |   | 173,921 |   |   |   | - |   |
| Obligations of states and political subdivisions |   |                        | 41,828  |   |                                      |   | - |   |   |   | 41,828 |   |   |   | - |   |
| Collateralized debt obligations                  |   |                        | 934     |   |                                      |   | - |   |   |   | - |   |   |   | 934 |   |
| Other debt securities                            |   |                        | 1,635   |   |                                      |   | - |   |   |   | 1,635 |   |   |   | - |   |
| Total available for sale securities              |   | $                           | 276,929 |   |                                      | $      | - |   |   | $ | 275,995 |   |   | $ | 934 |   |
|                                             |   |                        |    |   |                                      |   |   |   |   |   |   |   |   |   |   |   |
| Interest rate swap                               |   |                        | 817     |   |                                      |   |   |   |   |   |   |   |   |   | 817 |   |
|                                             |   |                        |    |   |                                      |   |   |   |   |   |   |   |   |   |   |   |
| Mortgage derivative assets                       |   |                        | 246     |   |                                      |   | - |   |   |   | - |   |   |   | 246 |   |
|                                             |   |                        |    |   |                                      |   |   |   |   |   |   |   |   |   |   |   |
| Mortgage derivative liabilities                  |   |                        | 28      |   |                                      |   | - |   |   |   | - |   |   |   | 28 |   |

----

----

|                                                                                                                                                                                 |   |                         |   |   |                         |   |   |     |   |   |           |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------|--------|--------|------------------------------|--------|--------|----------|--------|--------|----------------|--------|
|                                                                                                                                                                                 |   | Three Months Ended |   |   | Three Months Ended |   |
| (Dollars in thousands)                                                                                                                                                     |   | March 31, 2011     |   |   | March 31, 2010     |   |
|                                                                                                                                                                                 |   | Collateralized               |   |   |                         |   |   | Interest |   |   | Collateralized |   |   |   |   |
|                                                                                                                                                                                 |   | Debt                         |   |   | Mortgage                     |   |   | Rate     |   |   | Debt           |   |   | Mortgage |   |
|                                                                                                                                                                                 |   | Obligations                  |   |   | Derivatives                  |   |   | Swap     |   |   | Obligations    |   |   | Derivatives |   |
| Beginning Balance                                                                                                                                                                    |   | $                            | 934    |   |                         | $      | 218    |     |   | $      | 817            |   |   | $ | 1,080 |   |   | $ | 84 |   |
| Total gains or losses (realized/unrealized)                                                                                                                                          |   |                         |   |   |                         |   |   |     |   |   |           |   |   |   |   |   |   |   |   |   |
| Other-than-temporary impairment included in earnings                                                                                                                                 |   |                         | (296   | )      |                         |   | -      |     |   |   | -              |   |   |   | (202 | ) |   |   | - |   |
| Other-than-temporary impairment (included in) transferred from other comprehensive income                                                                                            |   |                         | 56     |   |                         |   | -      |     |   |   | -              |   |   |   | (70 | ) |   |   | - |   |
| Other gains/losses included in other comprehensive income                                                                                                                            |   |                         | 172    |   |                         |   | -      |     |   |   | 142            |   |   |   | 237 |   |   |   | - |   |
| Net swap settlement recorded                                                                                                                                                         |   |                         | -      |   |                         |   | -      |     |   |   | 29             |   |   |   | - |   |   |   | - |   |
| IRLC and FSA issuances                                                                                                                                                               |   |                         | -      |   |                         |   | 167    |     |   |   | -              |   |   |   | - |   |   |   | 154 |   |
| IRLC and FSA expirations and fair value changes included in earnings                                                                                                                 |   |                         | -      |   |                         |   | (15    | )        |   |   | -              |   |   |   | - |   |   |   | (24 | ) |
| IRLC transfers into closed loans/FSA transferred on sales                                                                                                                            |   |                         | -      |   |                         |   | (339   | )        |   |   | -              |   |   |   | - |   |   |   | (146 | ) |
| Ending Balance                                                                                                                                                                       |   | $                            | 866    |   |                         | $      | 31     |     |   | $      | 988            |   |   | $ | 1,045 |   |   | $ | 68 |   |
|                                                                                                                                                                                 |   |                         |   |   |                         |   |   |     |   |   |           |   |   |   |   |   |   |   |   |   |
| The amount of total gains or losses for the period included in earnings attributable to the change in unrealized gains or losses relating to assets still held at the reporting date |   | $                            | (296   | )      |                         | $      | -      |     |   | $      | -              |   |   | $ | (202 | ) |   | $ | - |   |

----

|                             |   |              |   |   | Fair Value Measurements Using |   |   |           |   |   |           |   |
|----------------------------------|--------|-------------------|--------|--------|----------------------------------------------|--------|--------|----------------|--------|--------|----------------|--------|
|                             |   |              |   |   | Quoted                                       |   |   |           |   |   |           |   |   |   |   |   |   |   |
|                             |   |              |   |   | Prices in                               |   |   |           |   |   |           |   |   |   |   |   | Fair Value |   |
|                             |   |              |   |   | Active                                       |   |   | Significant    |   |   |           |   |   | Charged to |   |   | Adjustment |   |
|                             |   | For the      |   |   | Markets for                             |   |   | Other          |   |   | Significant    |   |   | Allowance |   |   | Recognized |   |
|                             |   | Quarter-to-Date   |   |   | Identical                                    |   |   | Observable     |   |   | Unobservable   |   |   | for Loan Losses |   |   | In Earnings |   |
|                             |   | Ended             |   |   | Assets                                       |   |   | Inputs         |   |   | Inputs         |   |   | During |   |   | During |   |
| (Dollars in thousands) |   | 03/31/11 (a) |   |   | (Level 1)                               |   |   | (Level 2) |   |   | (Level 3) |   |   | Current Period |   |   | Current Period |   |
|                             |   |              |   |   |                                         |   |   |           |   |   |           |   |   |   |   |   |   |   |
| Impaired loans                   |   | $                 | 4,710  |   |                                         | $      | -      |           |   | $      | -              |   |   | $ | 4,710 |   |   | $ | - |   |   | $ | (1,446 | ) |
| Loan foreclosures                |   |              | 443    |   |                                         |   | -      |           |   |   | -              |   |   |   | 443 |   |   |   | 190 |   |   |   | - |   |
| Other real estate                |   |              | 5,069  |   |                                         |   | -      |           |   |   | -              |   |   |   | 5,069 |   |   |   | - |   |   |   | (1,842 | ) |

|                             |   |              |   |   | Fair Value Measurements Using |   |
|----------------------------------|--------|-------------------|--------|--------|----------------------------------------------|--------|
|                             |   |              |   |   | Quoted                                       |   |   |   |   |   |   |   |
|                             |   |              |   |   | Prices in                               |   |   |   |   |   |   |   |
|                             |   |              |   |   | Active                                       |   |   | Significant |   |   |   |   |
|                             |   | For the      |   |   | Markets for                             |   |   | Other |   |   | Significant |   |
|                             |   | Year-to-Date      |   |   | Identical                                    |   |   | Observable |   |   | Unobservable |   |
|                             |   | Ended             |   |   | Assets                                       |   |   | Inputs |   |   | Inputs |   |
| (Dollars in thousands) |   | 12/31/10 (a) |   |   | (Level 1)                               |   |   | (Level 2) |   |   | (Level 3) |   |
|                             |   |              |   |   |                                         |   |   |   |   |   |   |   |
| Impaired loans                   |   | $                 | 27,335 |   |                                         | $      | - |   |   | $ | - |   |   | $ | 27,335 |   |
| Loan foreclosures                |   |              | 5,013  |   |                                         |   | - |   |   |   | - |   |   |   | 5,013 |   |
| Loans transferred to HFS         |   |              | 500    |   |                                         |   | - |   |   |   | - |   |   |   | - |   |
| Other real estate                |   |              | 12,498 |   |                                         |   | - |   |   |   | - |   |   |   | 12,498 |   |

|   | (a) | These amounts represent the carrying amounts on the consolidated statement of condition at the balance sheet date for impaired real estate-secured loans and other real estate for which fair value re-measurements took place during the period. Loan foreclosures represent the fair value portion of the carrying amounts of other real estate properties that were re-measured at the point of foreclosure during the period and were still owned at the balance sheet date. |
|--------|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

|                                               |   | March 31, 2011 |      |   | December 31, 2010 |   |
|----------------------------------------------------|--------|--------------------------|-----------|--------|-----------------------------|--------|
| (Dollars in thousands)                   |   | Carrying                 |      |   | Estimated                   |   |   | Carrying |   |   | Estimated |   |
|                                               |   | Amount                   |      |   | Fair Value             |   |   | Amount |   |   | Fair Value |   |
| Financial assets:                                  |   |                     |      |   |                        |   |   |   |   |   |   |   |
| Cash and short-term investments                    |   | $                        | 141,592   |   |                        | $      | 141,592 |   |   | $ | 142,202 |   |   | $ | 142,202 |   |
| Securities available for sale                      |   |                     | 296,242   |   |                        |   | 296,242 |   |   |   | 276,929 |   |   |   | 276,929 |   |
| Loans held for sale                                |   |                     | 2,586     |   |                        |   | 2,616 |   |   |   | 6,242 |   |   |   | 6,242 |   |
| Loans held for investment                          |   |                     | 1,034,218 |   |                        |   | 952,862 |   |   |   | 1,044,121 |   |   |   | 965,894 |   |
| Agency accounts receivable                         |   |                     | 305       |   |                        |   | 305 |   |   |   | 346 |   |   |   | 346 |   |
| Accrued interest receivable                        |   |                     | 6,719     |   |                        |   | 6,719 |   |   |   | 6,380 |   |   |   | 6,380 |   |
| Nonmarketable equity investments                   |   |                     | 7,360     |   |                        |   | 7,360 |   |   |   | 7,353 |   |   |   | 7,353 |   |
| Investments in unconsolidated VIEs                 |   |                     | 3,638     |   |                        |   | 3,638 |   |   |   | 3,615 |   |   |   | 3,615 |   |
| Mortgage derivative assets                         |   |                     | 47        |   |                        |   | 47 |   |   |   | 246 |   |   |   | 246 |   |
| Financial liabilities:                             |   |                     |      |   |                        |   |   |   |   |   |   |   |   |   |   |   |
| Noninterest-bearing deposits                       |   |                     | 208,457   |   |                        |   | 208,457 |   |   |   | 212,199 |   |   |   | 212,199 |   |
| NOW, MMDA and savings deposits                     |   |                     | 690,571   |   |                        |   | 690,571 |   |   |   | 645,433 |   |   |   | 645,433 |   |
| Certificates of deposit                            |   |                     | 501,048   |   |                        |   | 509,139 |   |   |   | 517,780 |   |   |   | 527,971 |   |
| Short-term borrowings                              |   |                     | 14,561    |   |                        |   | 14,561 |   |   |   | 33,481 |   |   |   | 33,481 |   |
| Other borrowings                                   |   |                     | 48,527    |   |                        |   | 50,975 |   |   |   | 50,416 |   |   |   | 53,213 |   |
| Junior subordinated debt                           |   |                     | 30,928    |   |                        |   | 26,654 |   |   |   | 30,928 |   |   |   | 25,123 |   |
| Agency accounts payable                            |   |                     | 567       |   |                        |   | 567 |   |   |   | 586 |   |   |   | 586 |   |
| Accrued interest payable                           |   |                     | 1,367     |   |                        |   | 1,367 |   |   |   | 1,470 |   |   |   | 1,470 |   |
| Mortgage derivative liabilities                    |   |                     | 16        |   |                        |   | 16 |   |   |   | 28 |   |   |   | 28 |   |
| Other financial instruments:                       |   |                     |      |   |                        |   |   |   |   |   |   |   |   |   |   |   |
| Commitments to extend credit and letters of credit |   |                     | (8        | )      |                        |   | (313 | ) |   |   | (15 | ) |   |   | (306 | ) |
| Interest rate swap                                 |   |                     | 988       |   |                        |   | 988 |   |   |   | 817 |   |   |   | 817 |   |

----

----

----

|                                             |   | Amortized |    |   | Gross Unrealized |   |   | Fair   |   |
|--------------------------------------------------|--------|-----------|---------|--------|-----------------------|--------|--------|--------|--------|
| (Dollars in thousands)                 |   | Cost      |    |   | Gains                 |   |   | Losses |   |   | Value |   |
| March 31, 2011:                                  |   |      |    |   |                  |   |   |   |   |   |   |   |
| U.S. Government sponsored entities               |   | $         | 53,950  |   |                  | $      | 489    |   |   | $ | 280 |   |   | $ | 54,159 |   |
| Mortgage-backed investments                      |   |      | 195,250 |   |                  |   | 3,334  |   |   |   | 347 |   |   |   | 198,237 |   |
| Obligations of states and political subdivisions |   |      | 40,212  |   |                  |   | 1,335  |   |   |   | 121 |   |   |   | 41,426 |   |
| Collateralized debt obligations                  |   |      | 3,472   |   |                  |   | -      |   |   |   | 2,606 |   |   |   | 866 |   |
| Other debt securities                            |   |      | 1,467   |   |                  |   | 87     |   |   |   | - |   |   |   | 1,554 |   |
|                                             |   |      |    |   |                  |   |   |   |   |   |   |   |   |   |   |   |
|                                             |   | $         | 294,351 |   |                  | $      | 5,245  |   |   | $ | 3,354 |   |   | $ | 296,242 |   |
|                                             |   |      |    |   |                  |   |   |   |   |   |   |   |   |   |   |   |
| December 31, 2010:                               |   |      |    |   |                  |   |   |   |   |   |   |   |   |   |   |   |
| U.S. Government sponsored entities               |   | $         | 58,152  |   |                  | $      | 650    |   |   | $ | 191 |   |   | $ | 58,611 |   |
| Mortgage-backed investments                      |   |      | 170,039 |   |                  |   | 4,268  |   |   |   | 386 |   |   |   | 173,921 |   |
| Obligations of states and political subdivisions |   |      | 40,924  |   |                  |   | 1,104  |   |   |   | 200 |   |   |   | 41,828 |   |
| Collateralized debt obligations                  |   |      | 3,768   |   |                  |   | -      |   |   |   | 2,834 |   |   |   | 934 |   |
| Other debt securities                            |   |      | 1,538   |   |                  |   | 97     |   |   |   | - |   |   |   | 1,635 |   |
|                                             |   |      |    |   |                  |   |   |   |   |   |   |   |   |   |   |   |
|                                             |   | $         | 274,421 |   |                  | $      | 6,119  |   |   | $ | 3,611 |   |   | $ | 276,929 |   |

| (Dollars in thousands)                     |   | Less Than 12 Months |   |   | 12 Months or More |   |   | Total  |   |
|------------------------------------------------------|--------|------------------------------------|--------|--------|----------------------------------|--------|--------|--------|--------|
|                                                 |   | Fair                               |   |   | Unrealized                       |   |   | Fair   |   |   | Unrealized |   |   | Fair |   |   | Unrealized |   |
| March 31, 2011:                            |   | Value                              |   |   | Losses                           |   |   | Value  |   |   | Losses |   |   | Value |   |   | Losses |   |
| U.S. Government sponsored entities                   |   | $                                  | 19,485 |   |                             | $      | 280    |   |   | $ | - |   |   | $ | - |   |   | $ | 19,485 |   |   | $ | 280 |   |
| Mortgage-backed investments                          |   |                               | 37,300 |   |                             |   | 347    |   |   |   | - |   |   |   | - |   |   |   | 37,300 |   |   |   | 347 |   |
| Obligations of states and                            |   |                               |   |   |                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|      political subdivisions |   |                               | 3,509  |   |                             |   | 93     |   |   |   | 329 |   |   |   | 28 |   |   |   | 3,838 |   |   |   | 121 |   |
| Collateralized debt obligations                      |   |                               | -      |   |                             |   | -      |   |   |   | 866 |   |   |   | 2,606 |   |   |   | 866 |   |   |   | 2,606 |   |
|                                                 |   |                               |   |   |                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                 |   | $                                  | 60,294 |   |                             | $      | 720    |   |   | $ | 1,195 |   |   | $ | 2,634 |   |   | $ | 61,489 |   |   | $ | 3,354 |   |
|                                                 |   |                               |   |   |                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| December 31, 2010:                                   |   |                               |   |   |                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| U.S. Government sponsored entities                   |   | $                                  | 10,898 |   |                             | $      | 191    |   |   | $ | - |   |   | $ | - |   |   | $ | 10,898 |   |   | $ | 191 |   |
| Mortgage-backed investments                          |   |                               | 35,821 |   |                             |   | 386    |   |   |   | - |   |   |   | - |   |   |   | 35,821 |   |   |   | 386 |   |
| Obligations of states and political subdivisions     |   |                               | 5,898  |   |                             |   | 162    |   |   |   | 317 |   |   |   | 38 |   |   |   | 6,215 |   |   |   | 200 |   |
| Collateralized debt obligations                      |   |                               | -      |   |                             |   | -      |   |   |   | 934 |   |   |   | 2,834 |   |   |   | 934 |   |   |   | 2,834 |   |
|                                                 |   |                               |   |   |                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                 |   | $                                  | 52,617 |   |                             | $      | 739    |   |   | $ | 1,251 |   |   | $ | 2,872 |   |   | $ | 53,868 |   |   | $ | 3,611 |   |

----

----

| (Dollars in thousands)                         |   | Three Months EndedMarch 31 |   |
|----------------------------------------------------------|--------|-------------------------------------------|--------|
|                                                     |   | 2011                                      |   |   | 2010 |   |
| Beginning balance                                        |   | $                                         | 1,232  |   |   | $ | 829 |   |
| OTTI credit losses on securities not previously impaired |   |                                      | -      |   |   |   | - |   |
| OTTI credit losses on previously impaired securities     |   |                                      | 296    |   |   |   | 202 |   |
|                                                     |   |                                      |   |   |   |   |   |   |
| Ending balance                                           |   | $                                         | 1,528  |   |   | $ | 1,031 |   |

| (Dollars in thousands)                                                            |   | Three Months Ended March 31 |   |
|---------------------------------------------------------------------------------------------|--------|-------------------------------------------------|--------|
|                                                                                        |   | 2011                                            |   |   | 2010 |   |
| Proceeds from sales                                                                         |   | $                                               | 41,421 |   |   | $ | 39,548 |   |
|                                                                                        |   |                                            |   |   |   |   |   |   |
| Gross realized gains                                                                        |   |                                            | 1,358  |   |   |   | 1,094 |   |
| Gross realized losses                                                                       |   |                                            | 9      |   |   |   | 90 |   |
|                                                                                        |   |                                            |   |   |   |   |   |   |
| Net gains from sales                                                                        |   | $                                               | 1,349  |   |   | $ | 1,004 |   |
| Gross recognized losses related to the credit component of other-than-temporary impairments |   | $                                               | 296    |   |   | $ | 202 |   |

|                             |   | Amortized |    |   | Fair   |   |
|----------------------------------|--------|-----------|---------|--------|--------|--------|
| (Dollars in thousands) |   | Cost      |    |   | Value  |   |
|                             |   |      |    |   |   |   |
| One year or less                 |   | $         | 38,680  |   |   | $      | 38,746 |   |
| After one through five years     |   |      | 41,601  |   |   |   | 42,552 |   |
| After five through ten years     |   |      | 14,478  |   |   |   | 14,959 |   |
| After ten years                  |   |      | 4,342   |   |   |   | 1,748 |   |
|                             |   |      | 99,101  |   |   |   | 98,005 |   |
| Mortgage-backed investments      |   |      | 195,250 |   |   |   | 198,237 |   |
|                             |   |      |    |   |   |   |   |   |
|                             |   | $         | 294,351 |   |   | $      | 296,242 |   |

----

| (Dollars in thousands)        |   | March 31 |      |   | December 31 |   |
|-----------------------------------------|--------|---------------|-----------|--------|------------------|--------|
|                                    |   | 2011          |      |   | 2010             |   |
|                                    |   |          |      |   |             |   |
| Construction and land development loans |   | $             | 92,744    |   |             | $      | 89,093 |   |
| Other commercial real estate loans      |   |          | 549,629   |   |             |   | 557,638 |   |
| Asset-based loans                       |   |          | 32,166    |   |             |   | 28,132 |   |
| Other commercial loans                  |   |          | 105,454   |   |             |   | 105,094 |   |
| Home equity loans                       |   |          | 38,622    |   |             |   | 40,305 |   |
| Other 1-4 family residential loans      |   |          | 189,289   |   |             |   | 195,184 |   |
| Consumer loans                          |   |          | 43,357    |   |             |   | 44,700 |   |
|                                    |   |          |      |   |             |   |   |   |
| Total loans                             |   | $             | 1,051,261 |   |             | $      | 1,060,146 |   |

| (Dollars in thousands)        |   |          |   |   |          |   |   |         |   |   |   |   |   |    |   |   |       |   |      | Total                   |   |
|-----------------------------------------|--------|---------------|--------|--------|---------------|--------|--------|--------------|--------|--------|--------|--------|--------|---------|--------|--------|------------|--------|-----------|-------------------------|--------|
|                                    |   | 30-59         |   |   | 60-89         |   |   | Greater      |   |   | Total  |   |   |    |   |   | Total      |   |      | Loans > 90 |   |
|                                    |   | Days          |   |   | Days          |   |   | Than         |   |   | Past   |   |   |    |   |   | Loans      |   |      | Days and           |   |
|                                    |   | Past Due |   |   | Past Due |   |   | 90 Days |   |   | Due    |   |   | Current |   |   | Receivable |   |      | Accruing                |   |
| Construction and land development loans |   | $             | 1,960  |   |          | $      | 132    |         |   | $      | 10,902 |   |   | $       | 12,994 |   |       | $      | 79,750    |                    |   | $ | 92,744 |   |   | $ | 101 |   |
| Other commercial real estate loans      |   |          | 4,220  |   |          |   | 6,320  |         |   |   | 12,231 |   |   |    | 22,771 |   |       |   | 526,858   |                    |   |   | 549,629 |   |   |   | 65 |   |
| Asset based loans                       |   |          | -      |   |          |   | -      |         |   |   | -      |   |   |    | -      |   |       |   | 32,166    |                    |   |   | 32,166 |   |   |   | - |   |
| Other commercial loans                  |   |          | 2,330  |   |          |   | 135    |         |   |   | 1,181  |   |   |    | 3,646  |   |       |   | 101,808   |                    |   |   | 105,454 |   |   |   | 56 |   |
| Home equity loans                       |   |          | 45     |   |          |   | 83     |         |   |   | 517    |   |   |    | 645    |   |       |   | 37,977    |                    |   |   | 38,622 |   |   |   | - |   |
| Other 1-4 family residential loans      |   |          | 2,198  |   |          |   | 212    |         |   |   | 2,126  |   |   |    | 4,536  |   |       |   | 184,753   |                    |   |   | 189,289 |   |   |   | 102 |   |
| Consumer loans                          |   |          | 282    |   |          |   | 27     |         |   |   | 153    |   |   |    | 462    |   |       |   | 42,895    |                    |   |   | 43,357 |   |   |   | 14 |   |
| Total                                   |   | $             | 11,035 |   |          | $      | 6,909  |         |   | $      | 27,110 |   |   | $       | 45,054 |   |       | $      | 1,006,207 |                    |   | $ | 1,051,261 |   |   | $ | 338 |   |

| (Dollars in thousands)        |   |          |   |   |          |   |   |         |   |   |   |   |   |    |   |   |       |   |      | Total                   |   |
|-----------------------------------------|--------|---------------|--------|--------|---------------|--------|--------|--------------|--------|--------|--------|--------|--------|---------|--------|--------|------------|--------|-----------|-------------------------|--------|
|                                    |   | 30-59         |   |   | 60-89         |   |   | Greater      |   |   | Total  |   |   |    |   |   | Total      |   |      | Loans > 90 |   |
|                                    |   | Days          |   |   | Days          |   |   | Than         |   |   | Past   |   |   |    |   |   | Loans      |   |      | Days and           |   |
|                                    |   | Past Due |   |   | Past Due |   |   | 90 Days |   |   | Due    |   |   | Current |   |   | Receivable |   |      | Accruing                |   |
| Construction and land development loans |   | $             | 1,295  |   |          | $      | 388    |         |   | $      | 11,190 |   |   | $       | 12,873 |   |       | $      | 76,220    |                    |   | $ | 89,093 |   |   | $ | 274 |   |
| Other commercial real estate loans      |   |          | 997    |   |          |   | 1,453  |         |   |   | 11,632 |   |   |    | 14,082 |   |       |   | 543,556   |                    |   |   | 557,638 |   |   |   | - |   |
| Asset based loans                       |   |          | -      |   |          |   | -      |         |   |   | -      |   |   |    | -      |   |       |   | 28,132    |                    |   |   | 28,132 |   |   |   | - |   |
| Other commercial loans                  |   |          | 873    |   |          |   | 48     |         |   |   | 2,028  |   |   |    | 2,949  |   |       |   | 102,145   |                    |   |   | 105,094 |   |   |   | 99 |   |
| Home equity loans                       |   |          | 453    |   |          |   | -      |         |   |   | 220    |   |   |    | 673    |   |       |   | 39,632    |                    |   |   | 40,305 |   |   |   | - |   |
| Other 1-4 family residential loans      |   |          | 2,396  |   |          |   | 452    |         |   |   | 2,549  |   |   |    | 5,397  |   |       |   | 189,787   |                    |   |   | 195,184 |   |   |   | 564 |   |
| Consumer loans                          |   |          | 315    |   |          |   | 147    |         |   |   | 46     |   |   |    | 508    |   |       |   | 44,192    |                    |   |   | 44,700 |   |   |   | 14 |   |
| Total                                   |   | $             | 6,329  |   |          | $      | 2,488  |         |   | $      | 27,665 |   |   | $       | 36,482 |   |       | $      | 1,023,664 |                    |   | $ | 1,060,146 |   |   | $ | 951 |   |

----

| (Dollars in thousands)          |   | March 31, 2011 |   |   | December 31, 2010 |   |
|-------------------------------------------|--------|--------------------------|--------|--------|-----------------------------|--------|
| Construction and land development loans   |   | $                        | 13,608 |   |                        | $      | 13,993 |   |
| Other commercial real estate loans        |   |                     | 19,111 |   |                        |   | 13,027 |   |
| Asset based loans                         |   |                     | -      |   |                        |   | - |   |
| Other commercial loans                    |   |                     | 1,343  |   |                        |   | 2,151 |   |
| Home equity loans                         |   |                     | 601    |   |                        |   | 303 |   |
| Other 1-4 family residential loans        |   |                     | 2,543  |   |                        |   | 3,560 |   |
| Consumer loans                            |   |                     | 201    |   |                        |   | 93 |   |
| Total nonaccrual loans                    |   | $                        | 37,407 |   |                        | $      | 33,127 |   |
| Other real estate owned                   |   |                     | 29,660 |   |                        |   | 31,125 |   |
|                                      |   |                     |   |   |                        |   |   |   |
| Total nonperforming credit-related assets |   | $                        | 67,067 |   |                        | $      | 64,252 |   |

|                                    |   | March 31, 2011 |   |
|-----------------------------------------|--------|----------------|--------|
| (Dollars in thousands)                  |   |           |   |   | Accruing |   |   |   |   |   |   |   |
|                                    |   |           |   |   | 30-59 |   |   |   |   |   |   |   |
|                                    |   |           |   |   | Days |   |   |   |   |   |   |   |
|                                    |   | Current        |   |   | Past Due |   |   | Nonaccrual |   |   | Total |   |
| Construction and land development loans |   | $              | 2,135  |   |   | $ | - |   |   | $ | 1,634 |   |   | $ | 3,769 |   |
| Other commercial real estate loans      |   |           | 12,887 |   |   |   | 30 |   |   |   | 5,379 |   |   |   | 18,296 |   |
| Other commercial loans                  |   |           | -      |   |   |   | - |   |   |   | 57 |   |   |   | 57 |   |
| Other 1-4 family residential loans      |   |           | 1,269  |   |   |   | - |   |   |   | 157 |   |   |   | 1,426 |   |
| Total restructured loans                |   | $              | 16,291 |   |   | $ | 30 |   |   | $ | 7,227 |   |   | $ | 23,548 |   |

|                                    |   | December 31, 2010 |   |
|-----------------------------------------|--------|-------------------|--------|
| (Dollars in thousands)                  |   |              |   |   | Accruing |   |   |   |   |   |   |   |
|                                    |   |              |   |   | 30-59 |   |   |   |   |   |   |   |
|                                    |   |              |   |   | Days |   |   |   |   |   |   |   |
|                                    |   | Current           |   |   | Past Due |   |   | Nonaccrual |   |   | Total |   |
| Construction and land development loans |   | $                 | 2,135  |   |   | $ | - |   |   | $ | - |   |   | $ | 2,135 |   |
| Other commercial real estate loans      |   |              | 14,419 |   |   |   | - |   |   |   | - |   |   |   | 14,419 |   |
| Other commercial loans                  |   |              | -      |   |   |   | 153 |   |   |   | 57 |   |   |   | 210 |   |
| Other 1-4 family residential loans      |   |              | 1,346  |   |   |   | - |   |   |   | - |   |   |   | 1,346 |   |
| Total restructured loans                |   | $                 | 17,900 |   |   | $ | 153 |   |   | $ | 57 |   |   | $ | 18,110 |   |

----

----

----

| (Dollars in thousands) |   |         |   |   | Other Commercial |   |    |        |   |   |                  |   |
|----------------------------------|--------|--------------|--------|--------|-----------------------|--------|---------|-------------|--------|--------|-----------------------|--------|
|                             |   | Construction |   |   | Real Estate      |   |    | Asset-Based |   |   | Other Commercial |   |
| 10 and 20                        |   | $            | -      |   |                  | $      | -       |        |   | $      | -                     |   |   | $ | 13,776 |   |
| 30-32                            |   |         | 52,890 |   |                  |   | 462,491 |        |   |   | 23,686                |   |   |   | 80,463 |   |
| 40                               |   |         | 6,962  |   |                  |   | 28,980  |        |   |   | 7,458                 |   |   |   | 3,632 |   |
| 50                               |   |         | 25,945 |   |                  |   | 58,089  |        |   |   | 1,022                 |   |   |   | 6,861 |   |
| 60                               |   |         | 6,947  |   |                  |   | 69      |        |   |   | -                     |   |   |   | 722 |   |
| Total                            |   | $            | 92,744 |   |                  | $      | 549,629 |        |   | $      | 32,166                |   |   | $ | 105,454 |   |

| (Dollars in thousands) |   | Home Equity |   |   | Other 1-4 Family |   |    | Consumer |   |
|----------------------------------|--------|------------------|--------|--------|----------------------------|--------|---------|----------|--------|
| 10 and 20              |   | $                | -      |   |                       | $      | 140     |     |   | $ | 14,093 |   |
| 30-32                            |   |             | 37,540 |   |                       |   | 174,687 |     |   |   | 28,372 |   |
| 40                               |   |             | 374    |   |                       |   | 8,559   |     |   |   | 272 |   |
| 50                               |   |             | 708    |   |                       |   | 5,810   |     |   |   | 617 |   |
| 60                               |   |             | -      |   |                       |   | 93      |     |   |   | 3 |   |
| Total                            |   | $                | 38,622 |   |                       | $      | 189,289 |     |   | $ | 43,357 |   |

| (Dollars in thousands) |   |         |   |   | Other Commercial |   |    |        |   |   |                  |   |
|----------------------------------|--------|--------------|--------|--------|-----------------------|--------|---------|-------------|--------|--------|-----------------------|--------|
|                             |   | Construction |   |   | Real Estate      |   |    | Asset-Based |   |   | Other Commercial |   |
| 10 and 20                        |   | $            | -      |   |                  | $      | -       |        |   | $      | -                     |   |   | $ | 13,141 |   |
| 30-32                            |   |         | 51,077 |   |                  |   | 472,614 |        |   |   | 19,162                |   |   |   | 79,856 |   |
| 40                               |   |         | 4,111  |   |                  |   | 30,696  |        |   |   | 7,947                 |   |   |   | 3,771 |   |
| 50                               |   |         | 26,978 |   |                  |   | 54,178  |        |   |   | 1,023                 |   |   |   | 7,565 |   |
| 60                               |   |         | 6,927  |   |                  |   | 150     |        |   |   | -                     |   |   |   | 761 |   |
| Total                            |   | $            | 89,093 |   |                  | $      | 557,638 |        |   | $      | 28,132                |   |   | $ | 105,094 |   |

| (Dollars in thousands) |   | Home Equity |   |   | Other 1-4 Family |   |    | Consumer |   |
|----------------------------------|--------|------------------|--------|--------|----------------------------|--------|---------|----------|--------|
| 10 and 20                        |   | $                | -      |   |                       | $      | 170     |     |   | $ | 14,516 |   |
| 30-32                            |   |             | 39,478 |   |                       |   | 179,501 |     |   |   | 29,288 |   |
| 40                               |   |             | 274    |   |                       |   | 8,514   |     |   |   | 292 |   |
| 50                               |   |             | 508    |   |                       |   | 6,810   |     |   |   | 600 |   |
| 60                               |   |             | 45     |   |                       |   | 189     |     |   |   | 4 |   |
| Total                            |   | $                | 40,305 |   |                       | $      | 195,184 |     |   | $ | 44,700 |   |

----

| (Dollars in thousands)              |   |     |   |   |      |   |   |      |   |   | Average                     |   |   | Interest        |   |
|-----------------------------------------------|--------|----------|--------|--------|-----------|--------|--------|-----------|--------|--------|-----------------------------|--------|--------|-----------------|--------|
|                                          |   |     |   |   | Unpaid    |   |   |      |   |   | Investment                  |   |   | Income          |   |
|                                          |   | Recorded |   |   | Principal |   |   | Specific  |   |   | In Impaired Loans |   |   | Recognized      |   |
|                                          |   | Balance  |   |   | Balance   |   |   | Allowance |   |   | Quarter-to-Date             |   |   | Quarter-to-Date |   |
| Loans without a specific valuation allowance: |   |     |   |   |      |   |   |      |   |   |                        |   |   |            |   |
| Construction and land development loans       |   | $        | 20,094 |   |      | $      | 27,754 |      |   | $      | -                           |   |   | $               | 20,556 |   |   | $ | 132 |   |
| Other commercial real estate loans            |   |     | 48,496 |   |      |   | 52,858 |      |   |   | -                           |   |   |            | 48,583 |   |   |   | 484 |   |
| Asset based loans                             |   |     | -      |   |      |   | -      |      |   |   | -                           |   |   |            | -      |   |   |   | - |   |
| Other commercial loans                        |   |     | 6,279  |   |      |   | 6,305  |      |   |   | -                           |   |   |            | 6,312  |   |   |   | 79 |   |
| Home equity loans                             |   |     | 708    |   |      |   | 708    |      |   |   | -                           |   |   |            | 708    |   |   |   | - |   |
| Other 1-4 family residential loans            |   |     | 3,054  |   |      |   | 3,054  |      |   |   | -                           |   |   |            | 3,096  |   |   |   | 34 |   |
| Consumer loans                                |   |     | 515    |   |      |   | 526    |      |   |   | -                           |   |   |            | 527    |   |   |   | 7 |   |
|                                          |   |     |   |   |      |   |   |      |   |   |                        |   |   |            |   |   |   |   |   |   |
| Loans with a specific valuation allowance:    |   |     |   |   |      |   |   |      |   |   |                        |   |   |            |   |   |   |   |   |   |
| Construction and land development loans       |   | $        | 12,798 |   |      | $      | 13,960 |      |   | $      | 2,821                       |   |   | $               | 12,795 |   |   | $ | 96 |   |
| Other commercial real estate loans            |   |     | 9,661  |   |      |   | 9,668  |      |   |   | 2,128                       |   |   |            | 9,672  |   |   |   | 46 |   |
| Asset based loans                             |   |     | -      |   |      |   | -      |      |   |   | -                           |   |   |            | -      |   |   |   | - |   |
| Other commercial loans                        |   |     | 1,305  |   |      |   | 1,458  |      |   |   | 908                         |   |   |            | 1,312  |   |   |   | 9 |   |
| Home equity loans                             |   |     | -      |   |      |   | -      |      |   |   | -                           |   |   |            | -      |   |   |   | - |   |
| Other 1-4 family residential loans            |   |     | 2,850  |   |      |   | 2,872  |      |   |   | 953                         |   |   |            | 2,852  |   |   |   | 4 |   |
| Consumer loans                                |   |     | 105    |   |      |   | 105    |      |   |   | 51                          |   |   |            | 106    |   |   |   | - |   |
|                                          |   |     |   |   |      |   |   |      |   |   |                        |   |   |            |   |   |   |   |   |   |
| Total:                                        |   |     |   |   |      |   |   |      |   |   |                        |   |   |            |   |   |   |   |   |   |
| Construction and land development loans       |   | $        | 32,892 |   |      | $      | 41,714 |      |   | $      | 2,821                       |   |   | $               | 33,351 |   |   | $ | 228 |   |
| Other commercial real estate loans            |   |     | 58,157 |   |      |   | 62,526 |      |   |   | 2,128                       |   |   |            | 58,255 |   |   |   | 530 |   |
| Asset based loans                             |   |     | -      |   |      |   | -      |      |   |   | -                           |   |   |            | -      |   |   |   | - |   |
| Other commercial loans                        |   |     | 7,584  |   |      |   | 7,763  |      |   |   | 908                         |   |   |            | 7,624  |   |   |   | 88 |   |
| Home equity loans                             |   |     | 708    |   |      |   | 708    |      |   |   | -                           |   |   |            | 708    |   |   |   | - |   |
| Other 1-4 family residential loans            |   |     | 5,904  |   |      |   | 5,926  |      |   |   | 953                         |   |   |            | 5,948  |   |   |   | 38 |   |
| Consumer loans                                |   |     | 620    |   |      |   | 631    |      |   |   | 51                          |   |   |            | 633    |   |   |   | 7 |   |

----

| (Dollars in thousands)              |   |     |   |   |      |   |   |      |   |
|-----------------------------------------------|--------|----------|--------|--------|-----------|--------|--------|-----------|--------|
|                                          |   |     |   |   | Unpaid    |   |   |      |   |
|                                          |   | Recorded |   |   | Principal |   |   | Specific  |   |
|                                          |   | Balance  |   |   | Balance   |   |   | Allowance |   |
| Loans without a specific valuation allowance: |   |     |   |   |      |   |   |      |   |
| Construction and land development loans       |   | $        | 20,531 |   |      | $      | 29,004 |      |   | $ | - |   |
| Other commercial real estate loans            |   |     | 45,611 |   |      |   | 49,868 |      |   |   | - |   |
| Asset based loans                             |   |     | -      |   |      |   | -      |      |   |   | - |   |
| Other commercial loans                        |   |     | 7,028  |   |      |   | 8,049  |      |   |   | - |   |
| Home equity loans                             |   |     | 508    |   |      |   | 508    |      |   |   | - |   |
| Other 1-4 family residential loans            |   |     | 4,695  |   |      |   | 4,961  |      |   |   | - |   |
| Consumer loans                                |   |     | 474    |   |      |   | 485    |      |   |   | - |   |
|                                          |   |     |   |   |      |   |   |      |   |   |   |   |
| Loans with a specific valuation allowance:    |   |     |   |   |      |   |   |      |   |   |   |   |
| Construction and land development loans       |   | $        | 12,900 |   |      | $      | 13,921 |      |   | $ | 2,871 |   |
| Other commercial real estate loans            |   |     | 8,716  |   |      |   | 8,716  |      |   |   | 1,582 |   |
| Asset based loans                             |   |     | -      |   |      |   | -      |      |   |   | - |   |
| Other commercial loans                        |   |     | 1,268  |   |      |   | 1,419  |      |   |   | 809 |   |
| Home equity loans                             |   |     | 45     |   |      |   | 45     |      |   |   | 45 |   |
| Other 1-4 family residential loans            |   |     | 2,304  |   |      |   | 2,304  |      |   |   | 765 |   |
| Consumer loans                                |   |     | 129    |   |      |   | 129    |      |   |   | 60 |   |
|                                          |   |     |   |   |      |   |   |      |   |   |   |   |
| Total:                                        |   |     |   |   |      |   |   |      |   |   |   |   |
| Construction and land development loans       |   | $        | 33,431 |   |      | $      | 42,925 |      |   | $ | 2,871 |   |
| Other commercial real estate loans            |   |     | 54,327 |   |      |   | 58,584 |      |   |   | 1,582 |   |
| Asset based loans                             |   |     | -      |   |      |   | -      |      |   |   | - |   |
| Other commercial loans                        |   |     | 8,296  |   |      |   | 9,468  |      |   |   | 809 |   |
| Home equity loans                             |   |     | 553    |   |      |   | 553    |      |   |   | 45 |   |
| Other 1-4 family residential loans            |   |     | 6,999  |   |      |   | 7,265  |      |   |   | 765 |   |
| Consumer loans                                |   |     | 603    |   |      |   | 614    |      |   |   | 60 |   |

----

| (Dollars in thousands)                                                     |   |         |   |   |      |   |    |       |   |   |        |   |   |     |    |   |        |   |   |   |
|----------------------------------------------------------------------------|--------|--------------|--------|--------|-----------|--------|---------|------------|--------|--------|-------------|--------|--------|----------|---------|--------|-------------|--------|--------|--------|
|                                                                       |   | Construction |   |   | Other CRE |   |    | Commercial |   |   | Residential |   |   | Consumer |    |   | Unallocated |   |   | Total  |   |
| Allowance for loan losses:                                                 |   |         |   |   |      |   |    |       |   |   |        |   |   |     |    |   |        |   |   |   |   |
| Balance, beginning of year                                                 |   | $            | 3,942  |   |      | $      | 2,763   |       |   | $      | 4,442       |   |   | $        | 3,701   |   |        | $      | 1,177  |   |   | $ | - |   |   | $ | 16,025 |   |
| Provision charged to expense                                               |   |         | 114    |   |      |   | 797     |       |   |   | 1,377       |   |   |     | 200     |   |        |   | 92     |   |   |   | - |   |   |   | 2,580 |   |
| Losses charged off                                                         |   |         | (220   | )      |      |   | (502    | )          |   |   | (840        | )      |   |     | (380    | )      |        |   | (205   | )      |   |   | - |   |   |   | (2,147 | ) |
| Recoveries                                                                 |   |         | 288    |   |      |   | 107     |       |   |   | 44          |   |   |     | 85      |   |        |   | 61     |   |   |   | - |   |   |   | 585 |   |
| Balance, end of year                                                       |   | $            | 4,124  |   |      | $      | 3,165   |       |   | $      | 5,023       |   |   | $        | 3,606   |   |        | $      | 1,125  |   |   | $ | - |   |   | $ | 17,043 |   |
| Ending balance individually evaluated for impairment                       |   | $            | 2,821  |   |      | $      | 2,128   |       |   | $      | 908         |   |   | $        | 953     |   |        | $      | 51     |   |   | $ | - |   |   | $ | 6,861 |   |
| Ending balance: collectively evaluated for impairment                      |   | $            | 1,303  |   |      | $      | 1,037   |       |   | $      | 4,115       |   |   | $        | 2,653   |   |        | $      | 1,074  |   |   | $ | - |   |   | $ | 10,182 |   |
| Ending balance: loans acquired with  deteriorated credit quality |   | $            | -      |   |      | $      | -       |       |   | $      | -           |   |   | $        | -       |   |        | $      | -      |   |   | $ | - |   |   | $ | - |   |
|                                                                       |   |         |   |   |      |   |    |       |   |   |        |   |   |     |    |   |        |   |   |   |   |   |   |   |   |   |   |   |
| Loans:                                                                     |   |         |   |   |      |   |    |       |   |   |        |   |   |     |    |   |        |   |   |   |   |   |   |   |   |   |   |   |
| Ending balance                                                             |   | $            | 92,744 |   |      | $      | 549,629 |       |   | $      | 137,620     |   |   | $        | 227,911 |   |        | $      | 43,357 |   |   | $ | - |   |   | $ | 1,051,261 |   |
| Ending balance: individually evaluated for impairment                      |   | $            | 32,892 |   |      | $      | 58,157  |       |   | $      | 7,584       |   |   | $        | 6,612   |   |        | $      | 620    |   |   | $ | - |   |   | $ | 105,865 |   |
| Ending balance: collectively evaluated for impairment                      |   | $            | 59,852 |   |      | $      | 491,472 |       |   | $      | 130,036     |   |   | $        | 221,299 |   |        | $      | 42,737 |   |   | $ | - |   |   | $ | 945,396 |   |
| Ending balance: loans acquired with deteriorated credit quality            |   | $            | -      |   |      | $      | -       |       |   | $      | -           |   |   | $        | -       |   |        | $      | -      |   |   | $ | - |   |   | $ | - |   |

| (Dollars in thousands)                                                              |   |   |   |
|-------------------------------------------------------------------------------------|--------|--------|--------|
|                                                                                |   |   |   |
| Balance at January 1, 2010                                                          |   | $      | 24,014 |   |
|                                                                                |   |   |   |   |
| Loans charged off                                                                   |   |   | (5,603 | ) |
| Charge offs resulting from write-downs of loans transferred to held for sale status |   |   | (325   | ) |
| Recoveries                                                                          |   |   | 749    |   |
| Net charge-offs                                                                     |   |   | (5,179 | ) |
|                                                                                |   |   |   |   |
| Provision for loan losses                                                           |   |   | 2,280  |   |
|                                                                                |   |   |   |   |
| Balance at March 31, 2010                                                           |   | $      | 21,115 |   |

----

| (Dollars in thousands)                                |   |         |   |   |           |   |    |       |   |   |        |   |   |     |    |   |        |   |   |   |
|-----------------------------------------------------------------|--------|--------------|--------|--------|----------------|--------|---------|------------|--------|--------|-------------|--------|--------|----------|---------|--------|-------------|--------|--------|--------|
|                                                            |   | Construction |   |   | Other CRE |   |    | Commercial |   |   | Residential |   |   | Consumer |    |   | Unallocated |   |   | Total  |   |
| Ending balance                                                  |   | $            | 3,942  |   |           | $      | 2,763   |       |   | $      | 4,442       |   |   | $        | 3,701   |   |        | $      | 1,177  |   |   | $ | - |   |   | $ | 16,025 |   |
| Ending balance: individually evaluated for impairment           |   | $            | 2,871  |   |           | $      | 1,582   |       |   | $      | 809         |   |   | $        | 810     |   |        | $      | 60     |   |   | $ | - |   |   | $ | 6,132 |   |
| Ending balance: collectively evaluated for impairment           |   | $            | 1,071  |   |           | $      | 1,181   |       |   | $      | 3,633       |   |   | $        | 2,891   |   |        | $      | 1,117  |   |   | $ | - |   |   | $ | 9,893 |   |
| Ending balance: loans acquired with deteriorated credit quality |   | $            | -      |   |           | $      | -       |       |   | $      | -           |   |   | $        | -       |   |        | $      | -      |   |   | $ | - |   |   | $ | - |   |
|                                                            |   |         |   |   |           |   |    |       |   |   |        |   |   |     |    |   |        |   |   |   |   |   |   |   |   |   |   |   |
| Loans:                                                          |   |         |   |   |           |   |    |       |   |   |        |   |   |     |    |   |        |   |   |   |   |   |   |   |   |   |   |   |
| Ending balance                                                  |   | $            | 89,093 |   |           | $      | 557,638 |       |   | $      | 133,226     |   |   | $        | 235,489 |   |        | $      | 44,700 |   |   | $ | - |   |   | $ | 1,060,146 |   |
| Ending balance: individually evaluated for impairment           |   | $            | 33,431 |   |           | $      | 54,327  |       |   | $      | 8,296       |   |   | $        | 7,552   |   |        | $      | 603    |   |   | $ | - |   |   | $ | 104,209 |   |
| Ending balance: collectively evaluated for impairment           |   | $            | 55,662 |   |           | $      | 503,311 |       |   | $      | 124,930     |   |   | $        | 227,937 |   |        | $      | 44,097 |   |   | $ | - |   |   | $ | 955,937 |   |
| Ending balance: loans acquired with deteriorated credit quality |   | $            | -      |   |           | $      | -       |       |   | $      | -           |   |   | $        | -       |   |        | $      | -      |   |   | $ | - |   |   | $ | - |   |

| (Dollars in thousands)         |   | March 31, 2011 |   |   | December 31, 2010 |   |
|------------------------------------------|--------|--------------------------|--------|--------|-----------------------------|--------|
|                                     |   | Recorded                 |   |   |                        |   |   | Recorded |   |   |   |   |
|                                     |   | Balance                  |   |   | Allowance                   |   |   | Balance |   |   | Allowance |   |
| Restructured loans with an allowance:    |   |                     |   |   |                        |   |   |   |   |   |   |   |
| Construction and land development loans  |   | $                        | 3,770  |   |                        | $      | 650 |   |   | $ | 2,135 |   |   | $ | 450 |   |
| Other commercial real estate loans       |   |                     | 158    |   |                        |   | 90 |   |   |   | 2,086 |   |   |   | 160 |   |
| Other commercial loans                   |   |                     | 57     |   |                        |   | 23 |   |   |   | 210 |   |   |   | 175 |   |
| Other 1-4 family residential loans       |   |                     | 1,179  |   |                        |   | 512 |   |   |   | 1,179 |   |   |   | 512 |   |
|                                     |   |                     |   |   |                        |   |   |   |   |   |   |   |   |   |   |   |
| Restructured loans without an allowance: |   |                     |   |   |                        |   |   |   |   |   |   |   |   |   |   |   |
| Construction and land development loans  |   |                     | -      |   |                        |   | - |   |   |   | - |   |   |   | - |   |
| Other commercial real estate loans       |   |                     | 18,137 |   |                        |   | - |   |   |   | 12,333 |   |   |   | - |   |
| Other commercial loans                   |   |                     | -      |   |                        |   | - |   |   |   | - |   |   |   | - |   |
| Other 1-4 family residential loans       |   |                     | 247    |   |                        |   | - |   |   |   | 167 |   |   |   | - |   |
|                                     |   |                     |   |   |                        |   |   |   |   |   |   |   |   |   |   |   |
| Total restructured loans                 |   | $                        | 23,548 |   |                        | $      | 1,275 |   |   | $ | 18,110 |   |   | $ | 1,279 |   |

----

| (Dollars in thousands)         |   |     |   |
|--------------------------------|--------|----------|--------|
|                           |   | Core     |   |
|                           |   | Deposits |   |
| Balance at December 31, 2009   |   | $        | 5,439  |   |
| Amortization expense           |   |     | (106   | ) |
|                           |   |     |   |   |
| Balance at March 31, 2010      |   | $        | 5,333  |   |
|                           |   |     |   |   |
| Balance at December 31, 2010   |   | $        | 5,013  |   |
| Amortization expense           |   |     | (107   | ) |
|                           |   |     |   |   |
| Balance at March 31, 2011      |   | $        | 4,906  |   |
|                           |   |     |   |   |
| Estimated amortization expense |   |     |   |   |
| Remainder of 2011              |   | $        | 320    |   |
| 2012                           |   |     | 427    |   |
| 2013                           |   |     | 427    |   |
| 2014                           |   |     | 427    |   |
| 2015                           |   |     | 427    |   |
| 2016                           |   |     | 427    |   |

----

| (Dollars in thousands)                                                                                                                                                                                      |   | March 31 |   |   | December 31 |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------|--------|--------|------------------|--------|
|                                                                                                                                                                                                                  |   | 2011          |   |   | 2010             |   |
| Company’s line of credit in the amount of $5,000,000, maturing in March 2012; secured by approximately 51% of the Bank’s common stock; interest payable quarterly at the prime rate with a floor of 3.50% |   | $             | 3,417  |   |             | $      | 3,417 |   |
|                                                                                                                                                                                                                  |   |          |   |   |             |   |   |   |
| Bank’s advances from Federal Home Loan Banks                                                                                                                                                                    |   |          | 45,110 |   |             |   | 46,999 |   |
|                                                                                                                                                                                                                  |   |          |   |   |             |   |   |   |
|                                                                                                                                                                                                                  |   | $             | 48,527 |   |             | $      | 50,416 |   |
|                                                                                                                                                                                                                  |   |          |   |   |             |   |   |   |
| Company’s junior subordinated debentures, interest payable quarterly at 90-day LIBOR plus 1.33% through March 2036; redeemable after March 2011                                                                 |   | $             | 30,928 |   |             | $      | 30,928 |   |

----

----

| (Dollars in thousands) |   | Balance  |   |   | 2011         |   |   | Balance  |   |
|----------------------------------|--------|----------|--------|--------|--------------|--------|--------|----------|--------|
|                             |   | 12/31/10 |   |   | Amortization |   |   | 03/31/11 |   |
| Unamortized prior service cost   |   | $        | (25    | )      |         | $      | 6      |     |   | $ | (19 | ) |
| Unamortized actuarial loss       |   |     | 2,952  |   |         |   | (246   | )        |   |   | 2,706 |   |
|                             |   |     | 2,927  |   |         |   | (240   | )        |   |   | 2,687 |   |
| Deferred taxes                   |   |     | (1,092 | )      |         |   | 89     |     |   |   | (1,003 | ) |
| Net unamortized pension costs    |   | $        | 1,835  |   |         | $      | (151   | )        |   | $ | 1,684 |   |

| (Dollars in thousands)    |   | Three Months Ended March 31 |   |
|-------------------------------------|--------|-------------------------------------------------|--------|
|                                |   | 2011                                            |   |   | 2010 |   |
| Interest cost                       |   | $                                               | 112    |   |   | $ | 117 |   |
| Expected return on plan assets      |   |                                            | (141   | ) |   |   | (132 | ) |
| Amortization of prior service costs |   |                                            | (6     | ) |   |   | (9 | ) |
| Recognized actuarial loss           |   |                                            | 246    |   |   |   | 221 |   |
|                                |   |                                            |   |   |   |   |   |   |
| Net pension cost                    |   | $                                               | 211    |   |   | $ | 197 |   |

----

|                                 |   | 2005 Plan |    |   | 1999 Plan        |   |
|--------------------------------------|--------|----------------|---------|--------|-----------------------|--------|
|                                 |   |           |    |   | Restricted Stock |   |   | Stock Options |   |   | Stock Options |   |
|                                 |   |           |    |   |                  |   |   | Weighted |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                 |   |           |    |   |                  |   |   | Average |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                 |   | Shares         |    |   |                  |   |   | Grant |   |   |   |   |   | Weighted |   |   |   |   |   | Weighted |   |
|                                 |   | Available      |    |   | Number                |   |   | Date |   |   | Number |   |   | Average |   |   | Number |   |   | Average |   |
|                                 |   | For            |    |   | of                    |   |   | Fair |   |   | Of |   |   | Exercise |   |   | Of |   |   | Exercise |   |
|                                 |   | Grant          |    |   | Shares                |   |   | Value |   |   | Shares |   |   | Price |   |   | Shares |   |   | Price |   |
| January 1, 2010            |   |           | 590,234 |   |                  |   | 77,000 |   |   | $ | 16.841 |   |   |   | 16,000 |   |   | $ | 13.288 |   |   |   | 21,600 |   |   | $ | 15.087 |   |
| Awards Granted                  |   |           | -       |   |                  |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Vested                               |   |           | -       |   |                  |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Forfeitures                          |   |           | -       |   |                  |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Expired                              |   |           | -       |   |                  |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| March 31, 2010                       |   |           | 590,234 |   |                  |   | 77,000 |   |   | $ | 16.841 |   |   |   | 16,000 |   |   | $ | 13.288 |   |   |   | 21,600 |   |   | $ | 15.087 |   |
|                                 |   |           |    |   |                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| January 1, 2011                      |   |           | 603,634 |   |                  |   | 63,000 |   |   | $ | 16.966 |   |   |   | 16,600 |   |   | $ | 12.043 |   |   |   | 15,800 |   |   | $ | 16.018 |   |
| Awards Granted                       |   |           | -       |   |                  |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Vested                               |   |           | -       |   |                  |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Forfeitures                          |   |           | 3,000   |   |                  |   | (3,000 | ) |   |   | 17.075 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Expired                              |   |           | -       |   |                  |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| March 31, 2011                       |   |           | 606,634 |   |                  |   | 60,000 |   |   | $ | 16.961 |   |   |   | 16,600 |   |   | $ | 12.043 |   |   |   | 15,800 |   |   | $ | 16.018 |   |
|                                 |   |           |    |   |                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Shares exercisable at March 31, 2011 |   |           |    |   |                  |   | - |   |   |   | - |   |   |   | 6,800 |   |   | $ | 15.416 |   |   |   | 15,800 |   |   | $ | 16.018 |   |

----

| (Dollarsin thousands)                                                                |   | Gross  |   |   | Tax    |   |   | Net    |   |
|--------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
|                                                                                 |   |   |   |   |   |   |   |   |   |
| March 31, 2011:                                                                      |   |   |   |   |   |   |   |   |   |
| Net unrealized gain on securities available for sale                                 |   | $      | 4,497  |   |   | $      | 1,678  |   |   | $ | 2,819 |   |
| Net unrealized loss on other-than-temporarily impaired securities available for sale |   |   | (2,606 | )      |   |   | (972   | )      |   |   | (1,634 | ) |
| Net unamortized pension costs                                                        |   |   | (2,687 | )      |   |   | (1,003 | )      |   |   | (1,684 | ) |
| Net unrealized gain on cash flow hedge                                               |   |   | 988    |   |   |   | 369    |   |   |   | 619 |   |
|                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                 |   | $      | 192    |   |   | $      | 72     |   |   | $ | 120 |   |
|                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |
| December 31, 2010:                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net unrealized gain on securities available for sale                                 |   | $      | 5,342  |   |   | $      | 1,993  |   |   | $ | 3,349 |   |
| Net unrealized loss on other-than-temporarily impaired securities available for sale |   |   | (2,834 | )      |   |   | (1,057 | )      |   |   | (1,777 | ) |
| Net unamortized pension costs                                                        |   |   | (2,927 | )      |   |   | (1,092 | )      |   |   | (1,835 | ) |
| Net unrealized gain on cash flow hedge                                               |   |   | 817    |   |   |   | 305    |   |   |   | 512 |   |
|                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                 |   | $      | 398    |   |   | $      | 149    |   |   | $ | 249 |   |
|                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |
| March 31, 2010:                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |
| Net unrealized gain on securities available for sale                                 |   | $      | 6,271  |   |   | $      | 2,340  |   |   | $ | 3,931 |   |
| Net unrealized loss on other-than-temporarily impaired securities available for sale |   |   | (2,766 | )      |   |   | (1,032 | )      |   |   | (1,734 | ) |
| Net unamortized pension costs                                                        |   |   | (3,264 | )      |   |   | (1,218 | )      |   |   | (2,046 | ) |
|                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                 |   | $      | 241    |   |   | $      | 90     |   |   | $ | 151 |   |

----

| (Dollars in thousands)          |   | Actual |    |   | Minimum Capital |   |   | Well Capitalized |   |
|-------------------------------------------|--------|--------|---------|--------|----------------------|--------|--------|-----------------------|--------|
|                                      |   | Amount |    |   | Ratio                |   |   | Amount                |   |   | Ratio |   |   | Amount |   |   | Ratio |   |
|                                      |   |   |    |   |                 |   |   |                  |   |   |   |   |   |   |   |   |   |   |
| March 31, 2011:                           |   |   |    |   |                 |   |   |                  |   |   |   |   |   |   |   |   |   |   |
| Total capital (to risk weighted assets):  |   |   |    |   |                 |   |   |                  |   |   |   |   |   |   |   |   |   |   |
| Company                                   |   | $      | 135,993 |   |                 |   | 11.48  | %                     |   | $ | 94,779 |   |   |   | 8.00 | % |   | $ | - |   |   |   | - |   |
| Bank                                      |   |   | 135,453 |   |                 |   | 11.46  | %                     |   |   | 94,533 |   |   |   | 8.00 | % |   |   | 118,166 |   |   |   | 10.00 | % |
|                                      |   |   |    |   |                 |   |   |                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Tier I capital (to risk weighted assets): |   |   |    |   |                 |   |   |                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Company                                   |   |   | 121,156 |   |                 |   | 10.23  | %                     |   |   | 47,389 |   |   |   | 4.00 | % |   |   | - |   |   |   | - |   |
| Bank                                      |   |   | 120,654 |   |                 |   | 10.21  | %                     |   |   | 47,266 |   |   |   | 4.00 | % |   |   | 70,900 |   |   |   | 6.00 | % |
|                                      |   |   |    |   |                 |   |   |                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Tier I capital (to average assets):       |   |   |    |   |                 |   |   |                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Company                                   |   |   | 121,156 |   |                 |   | 7.55   | %                     |   |   | 64,225 |   |   |   | 4.00 | % |   |   | - |   |   |   | - |   |
| Bank                                      |   |   | 120,651 |   |                 |   | 7.53   | %                     |   |   | 64,122 |   |   |   | 4.00 | % |   |   | 80,152 |   |   |   | 5.00 | % |
|                                      |   |   |    |   |                 |   |   |                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| December 31, 2010:                        |   |   |    |   |                 |   |   |                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total capital (to risk weighted assets):  |   |   |    |   |                 |   |   |                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Company                                   |   | $      | 135,291 |   |                 |   | 11.30  | %                     |   | $ | 95,790 |   |   |   | 8.00 | % |   | $ | - |   |   |   | - |   |
| Bank                                      |   |   | 134,020 |   |                 |   | 11.22  | %                     |   |   | 95,568 |   |   |   | 8.00 | % |   |   | 119,460 |   |   |   | 10.00 | % |
|                                      |   |   |    |   |                 |   |   |                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Tier I capital (to risk weighted assets): |   |   |    |   |                 |   |   |                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Company                                   |   |   | 120,310 |   |                 |   | 10.05  | %                     |   |   | 47,895 |   |   |   | 4.00 | % |   |   | - |   |   |   | - |   |
| Bank                                      |   |   | 119,074 |   |                 |   | 9.97   | %                     |   |   | 47,784 |   |   |   | 4.00 | % |   |   | 71,676 |   |   |   | 6.00 | % |
|                                      |   |   |    |   |                 |   |   |                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Tier I capital (to average assets):       |   |   |    |   |                 |   |   |                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Company                                   |   |   | 120,310 |   |                 |   | 7.74   | %                     |   |   | 62,211 |   |   |   | 4.00 | % |   |   | - |   |   |   | - |   |
| Bank                                      |   |   | 119,074 |   |                 |   | 7.66   | %                     |   |   | 62,155 |   |   |   | 4.00 | % |   |   | 77,693 |   |   |   | 5.00 | % |

----

| (Dollars in thousands) |   | Three Months Ended March 31 |   |
|----------------------------------|--------|-------------------------------------------------|--------|
|                             |   | 2011                                            |   |   | 2010 |   |
| Current income tax expense       |   | $                                               | 1      |   |   | $ | 88 |   |
| Deferred income tax expense      |   |                                            | 114    |   |   |   | 213 |   |
| Total income tax expense         |   | $                                               | 115    |   |   | $ | 301 |   |

| (Dollars in thousands)                 |   |   |   |   |             |   |
|----------------------------------------|--------|--------|--------|--------|------------------|--------|
|                                   |   | Amount |   |   | Expiration Dates |   |
| Net operating loss from 2009           |   | $      | 14,700 |   |             |   | 2029 |   |
| Estimated net operating loss from 2010 |   |   | 3,500  |   |             |   | 2030 |   |
| Tax credits from 2009                  |   |   | 207    |   |             |   | 2029 |   |
| Estimated tax credits from 2010        |   |   | 480    |   |             |   | 2030 |   |

----

| (Dollars in thousands, except per share data)                                                                      |   | Three Months Ended March 31 |      |
|--------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------------|-----------|
|                                                                                                                                             |   | 2011                                            |      |   | 2010 |   |
| Net income                                                                                                                                       |   | $                                               | 950       |   |   | $ | 853 |   |
| Less: Preferred dividends                                                                                                                        |   |                                            | 432       |   |   |   | 437 |   |
| Net income attributable to common stock                                                                                                          |   |                                            | 518       |   |   |   | 416 |   |
|                                                                                                                                             |   |                                            |      |   |   |   |   |   |
| Net income allocated to common stockholders:                                                                                                     |   |                                            |      |   |   |   |   |   |
| Distributed                                                                                                                                      |   |                                            | 91        |   |   |   | 91 |   |
| Undistributed                                                                                                                                    |   |                                            | 424       |   |   |   | 322 |   |
|                                                                                                                                             |   | $                                               | 515       |   |   | $ | 413 |   |
|                                                                                                                                             |   |                                            |      |   |   |   |   |   |
| Weighted-average basic common and participating shares outstanding                                                                               |   |                                            | 9,169,528 |   |   |   | 9,146,346 |   |
| Less: weighted average participating restricted shares outstanding                                                                               |   |                                            | 60,433    |   |   |   | 77,000 |   |
| Weighted-average basic shares outstanding                                                                                                        |   |                                            | 9,109,095 |   |   |   | 9,069,346 |   |
|                                                                                                                                             |   |                                            |      |   |   |   |   |   |
| Basic net income per share                                                                                                                       |   | $                                               | .06       |   |   | $ | .05 |   |
|                                                                                                                                             |   |                                            |      |   |   |   |   |   |
|                                                                                                                                             |   |                                            |      |   |   |   |   |   |
| Weighted-average basic common and participating shares outstanding                                                                               |   |                                            | 9,169,528 |   |   |   | 9,146,346 |   |
| Add: share-based options and stock warrant                                                                                                       |   |                                            | -         |   |   |   | - |   |
|                                                                                                                                             |   |                                            | 9,169,528 |   |   |   | 9,146,346 |   |
| Less: weighted average participating restricted shares outstanding                                                                               |   |                                            | 60,433    |   |   |   | 77,000 |   |
| Weighted-average dilutive shares outstanding                                                                                                     |   |                                            | 9,109,095 |   |   |   | 9,069,346 |   |
|                                                                                                                                             |   |                                            |      |   |   |   |   |   |
| Dilutive net income per share                                                                                                                    |   | $                                               | .06       |   |   | $ | .05 |   |
|                                                                                                                                             |   |                                            |      |   |   |   |   |   |
| Weighted-average shares of potentially dilutive instruments that are not included in the dilutive share calculation due to anti-dilutive effect: |   |                                            |      |   |   |   |   |   |
| Compensation plan-related stock options                                                                                                          |   |                                            | 39,600    |   |   |   | 37,600 |   |
| Common stock warrant                                                                                                                             |   |                                            | 513,113   |   |   |   | 513,113 |   |

----

| (Dollars in thousands)      |   | March 31, 2011 |   |   | December 31, 2010 |   |
|---------------------------------------|--------|--------------------------|--------|--------|-----------------------------|--------|
|                                  |   |                     |   |   | Positive                    |   |   | Negative |   |   |   |   |   | Positive |   |   | Negative |   |
|                                  |   | Notional                 |   |   | Fair Value             |   |   | Fair Value |   |   | Notional |   |   | Fair Value |   |   | Fair Value |   |
| Instrument                            |   | Amount                   |   |   | Other Assets           |   |   | Other Liabilities |   |   | Amount |   |   | Other Assets |   |   | Other Liabilities |   |
| Forward sale agreements               |   | $                        | 3,885  |   |                        | $      | 43 |   |   | $ | 4 |   |   | $ | 7,745 |   |   | $ | 245 |   |   | $ | - |   |
| Written interest rate options (locks) |   |                     | 3,596  |   |                        |   | 4 |   |   |   | 12 |   |   |   | 4,398 |   |   |   | 1 |   |   |   | 28 |   |

| (Dollars in thousands)       |   | Three Months Ended March 31 |   |
|----------------------------------------|--------|-------------------------------------------------|--------|
|                                   |   | 2011                                            |   |   | 2010 |   |
| Forward sale agreements:               |   |                                            |   |   |   |   |
| Recorded in mortgage banking income    |   | $                                               | (205   | ) |   | $ | (8 | ) |
| Written interest rate options (locks): |   |                                            |   |   |   |   |   |   |
| Recorded in mortgage banking income    |   |                                            | (8     | ) |   |   | 3 |   |

| (Dollars in thousands) |   |     |   |   |                     |   |   |                        |   |   |         |   |   |            |   |
|----------------------------------|--------|----------|--------|--------|--------------------------|--------|--------|-----------------------------|--------|--------|--------------|--------|--------|-----------------|--------|
|                             |   |     |   |   | March 31, 2011 |   |   | December 31, 2010 |   |
|                             |   |     |   |   | Positive                 |   |   | Balance In             |   |   | Positive     |   |   | Balance In |   |
|                             |   |     |   |   | Fair                     |   |   | Other                       |   |   | Fair         |   |   | Other           |   |
|                             |   | Notional |   |   | Value                    |   |   | Comprehensive               |   |   | Value        |   |   | Comprehensive   |   |
| Instrument                       |   | Amount   |   |   | Other Assets             |   |   | Income (1)                  |   |   | Other Assets |   |   | Income (1)      |   |
| Interest rate swap               |   | $        | 30,000 |   |                     | $      | 988    |                        |   | $      | 619          |   |   | $               | 817    |   |   | $ | 512 |   |

|   | (1) | The balances in other comprehensive income at March 31, 2011 and December 31, 2010 are stated net of deferred income taxes of $369 thousand and $305 thousand respectively. |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

|   | · | A significant weakening of the economy. |
|--------|--------|-----------------------------------------|

|   | · | A collapse of real estate values or the values of other assets that may serve as collateral on customers’ borrowings. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------|

|   | · | Adverse changes in interest rates that could destabilize the Company’s net interest margins. |
|--------|--------|----------------------------------------------------------------------------------------------------|

|   | · | An unanticipated inflationary spike or deflationary decline. |
|--------|--------|--------------------------------------------------------------|

|   | · | A market crash or a highly volatile market. |
|--------|--------|---------------------------------------------|

|   | · | A loss of market liquidity for financial products. |
|--------|--------|----------------------------------------------------|

|   | · | Unfavorable judgments in ongoing litigation. |
|--------|--------|----------------------------------------------|

|   | · | Technological disruptions or breaches. |
|--------|--------|----------------------------------------|

|   | · | Unanticipated catastrophic events or natural disasters. |
|--------|--------|---------------------------------------------------------|

|   | · | Unforeseen new competition from outside the traditional financial services industry. |
|--------|--------|--------------------------------------------------------------------------------------|

|   | · | Unanticipated changes in laws and regulations related to businesses that the Company is in or anticipates entering into or related to transactions that the Company engages in or anticipates engaging in. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | · | Debit card revenues increased by 29.29% for the first quarter of 2011 from the first quarter of 2010 |
|--------|--------|------------------------------------------------------------------------------------------------------|

|   | · | The net interest margin increased to 3.59% in the first quarter of 2011 from 3.16% in the first quarter of 2010 |
|--------|--------|-----------------------------------------------------------------------------------------------------------------|

|   | · | Loans held for investment were up by $8.832 million over the March 31, 2010 balance |
|--------|--------|-------------------------------------------------------------------------------------|

|   | · | Nonaccrual loans were 3.55% of total loans at March 31, 2011 as compared to 4.01% at March 31, 2010 |
|--------|--------|-----------------------------------------------------------------------------------------------------|

|   | · | Annualized net charge-offs were .60% for the first quarter of 2011 as compared to 1.99% for the first quarter of 2010 |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------|

|   | · | Closed a full-service branch in Memphis, Tennessee in February 2010 |
|--------|--------|---------------------------------------------------------------------|

|   | · | Closed a full-service branch in Germantown, Tennessee in February 2010 |
|--------|--------|------------------------------------------------------------------------|

|   | · | Closed a full-service branch in Birmingham, Alabama in February 2010 |
|--------|--------|----------------------------------------------------------------------|

----

|         |   |   |    |   | Non-Interest          |   |    | Interest              |   |
|--------------|--------|--------|---------|--------|-----------------------|--------|---------|-----------------------|--------|
|         |   | Loans  |    |   | Bearing Deposits |   |    | Bearing Deposits |   |
| 1st Qtr 2010 |   | $      | (15,911 | )      |                  | $      | (10,896 | )                     |   | $ | (3,369 | ) |
| 2nd Qtr 2010 |   |   | (4,314  | )      |                  |   | 10,142  |                  |   |   | (40,329 | ) |
| 3rd Qtr 2010 |   |   | 8,898   |   |                  |   | (7,269  | )                     |   |   | (14,663 | ) |
| 4th Qtr 2010 |   |   | 13,133  |   |                  |   | (8,357  | )                     |   |   | 61,890 |   |
| 1st Qtr 2011 |   |   | (8,885  | )      |                  |   | (3,742  | )                     |   |   | 28,406 |   |

|         |   |              |   |   |           |   |   |         |   |   |         |   |
|--------------|--------|-------------------|--------|--------|----------------|--------|--------|--------------|--------|--------|--------------|--------|
|         |   | Net Interest |   |   | Loan Loss |   |   | Non-Interest |   |   | Non-Interest |   |
|         |   | Income            |   |   | Accruals       |   |   | Income       |   |   | Expense      |   |
| 1st Qtr 2010 |   | $                 | 11,241 |   |           | $      | 2,280  |         |   | $      | 5,603        |   |   | $ | 13,409 |   |
| 2nd Qtr 2010 |   |              | 11,898 |   |           |   | 2,380  |         |   |   | 5,216        |   |   |   | 13,342 |   |
| 3rd Qtr 2010 |   |              | 12,294 |   |           |   | 2,280  |         |   |   | 4,746        |   |   |   | 13,111 |   |
| 4th Qtr 2010 |   |              | 12,368 |   |           |   | 2,280  |         |   |   | 4,956        |   |   |   | 14,628 |   |
| 1st Qtr 2011 |   |              | 12,725 |   |           |   | 2,580  |         |   |   | 5,731        |   |   |   | 14,811 |   |

|                               |   | 1st Qtr 2011 |   |   | 4th Qtr 2010 |   |   | 3rd Qtr 2010 |   |   | 2nd Qtr 2010 |   |   | 1st Qtr 2010 |   |
|------------------------------------|--------|------------------------|--------|--------|------------------------|--------|--------|------------------------|--------|--------|------------------------|--------|--------|------------------------|--------|
| Net interest income                |   | $                      | 1.39   |   |                   | $      | 1.36   |                   |   | $      | 1.35                   |   |   | $                      | 1.31   |   |   | $ | 1.24 |   |
| Loan loss expense                  |   |                   | .28    |   |                   |   | .25    |                   |   |   | .25                    |   |   |                   | .26    |   |   |   | .25 |   |
| Noninterest income                 |   |                   | .63    |   |                   |   | .55    |                   |   |   | .52                    |   |   |                   | .57    |   |   |   | .62 |   |
| Noninterest expense                |   |                   | 1.62   |   |                   |   | 1.61   |                   |   |   | 1.44                   |   |   |                   | 1.47   |   |   |   | 1.48 |   |
| Net income  before taxes |   | $                      | .12    |   |                   | $      | .05    |                   |   | $      | .18                    |   |   | $                      | .15    |   |   | $ | .13 |   |

----

|                                                     |   | 1st Qtr 2011 |   |   | 4th Qtr 2010 |   |   | 3rd Qtr 2010 |   |   | 2nd Qtr 2010 |   |   | 1st Qtr 2010 |   |
|----------------------------------------------------------|--------|------------------------|--------|--------|------------------------|--------|--------|------------------------|--------|--------|------------------------|--------|--------|------------------------|--------|
| Net interest margin                                      |   |                   | 3.59   | %      |                   |   | 3.57   | %                      |   |   | 3.60                   | %      |   |                   | 3.40   | % |   |   | 3.16 | % |
| Efficiency ratio                                         |   |                   | 79.26  |   |                   |   | 83.22  |                   |   |   | 75.75                  |   |   |                   | 76.69  |   |   |   | 78.16 |   |
| Return on assets                                         |   |                   | .24    |   |                   |   | .16    |                   |   |   | .32                    |   |   |                   | .32    |   |   |   | .21 |   |
| Return on  total equity                        |   |                   | 3.58   |   |                   |   | 2.33   |                   |   |   | 4.55                   |   |   |                   | 4.84   |   |   |   | 3.28 |   |
| Return on common equity                                  |   |                   | 2.31   |   |                   |   | 1.16   |                   |   |   | 4.02                   |   |   |                   | 4.37   |   |   |   | 2.20 |   |
| Noninterest income to avg. assets                        |   |                   | 1.43   |   |                   |   | 1.25   |                   |   |   | 1.21                   |   |   |                   | 1.31   |   |   |   | 1.39 |   |
| Noninterest income to revenues (1)                       |   |                   | 30.67  |   |                   |   | 28.19  |                   |   |   | 27.42                  |   |   |                   | 29.98  |   |   |   | 32.66 |   |
| Noninterest expense to avg assets                        |   |                   | 3.70   |   |                   |   | 3.69   |                   |   |   | 3.35                   |   |   |                   | 3.35   |   |   |   | 3.32 |   |
| Salaries and benefits to total noninterest expense       |   |                   | 46.97  |   |                   |   | 46.02  |                   |   |   | 52.27                  |   |   |                   | 51.67  |   |   |   | 50.89 |   |
| Nonaccrual loans to loans                                |   |                   | 3.55   |   |                   |   | 3.11   |                   |   |   | 3.53                   |   |   |                   | 3.41   |   |   |   | 4.01 |   |
| 90 day past due loans to loans                           |   |                   | .03    |   |                   |   | .09    |                   |   |   | .08                    |   |   |                   | .13    |   |   |   | .20 |   |
| Annualized net charge offs as a percent of average loans |   |                   | .60    |   |                   |   | 2.41   |                   |   |   | .19                    |   |   |                   | 2.01   |   |   |   | 1.99 |   |

|   | (1) | Revenues equal tax-equivalent net interest income before loan loss expense, plus noninterest income. |
|--------|-----|------------------------------------------------------------------------------------------------------|

| (Dollars in thousands)               |   | 1st Qtr 2011 |   |   | 4th Qtr 2010 |   |   | 3rd Qtr 2010 |   |   | 2nd Qtr 2010 |   |   | 1st Qtr 2010 |   |
|------------------------------------------------|--------|------------------------|--------|--------|------------------------|--------|--------|------------------------|--------|--------|------------------------|--------|--------|------------------------|--------|
| Mortgage originations                          |   | $                      | 12,559 |   |                   | $      | 22,874 |                   |   | $      | 19,630                 |   |   | $                      | 19,788 |   |   | $ | 17,847 |   |
| Trust revenues                                 |   |                   | 46     |   |                   |   | 50     |                   |   |   | 48                     |   |   |                   | 55     |   |   |   | 59 |   |
| Retail investment revenues                     |   |                   | 87     |   |                   |   | 70     |                   |   |   | 93                     |   |   |                   | 89     |   |   |   | 62 |   |
| Revenues per FTE employee                      |   |                   | 38     |   |                   |   | 35     |                   |   |   | 35                     |   |   |                   | 35     |   |   |   | 34 |   |
| Agency commissions per agency FTE employee (1) |   |                   | 23     |   |                   |   | 22     |                   |   |   | 29                     |   |   |                   | 24     |   |   |   | 24 |   |

|                                           |   | 1st Qtr 2011 |   |   | 4th Qtr 2010 |   |   | 3rd Qtr 2010 |   |   | 2nd Qtr 2010 |   |   | 1st Qtr 2010 |   |
|------------------------------------------------|--------|------------------------|--------|--------|------------------------|--------|--------|------------------------|--------|--------|------------------------|--------|--------|------------------------|--------|
| Full-time equivalent employees                 |   |                   | 489    |   |                   |   | 499    |                   |   |   | 497                    |   |   |                   | 498    |   |   |   | 499 |   |
| Number of noninterest-bearing deposit accounts |   |                   | 32,821 |   |                   |   | 32,882 |                   |   |   | 33,040                 |   |   |                   | 33,085 |   |   |   | 33,209 |   |

----

----

----

|                                    |   | Yields/Costs                |   |   | Yields/Costs                |   |
|-----------------------------------------|--------|-----------------------------|--------|--------|-----------------------------|--------|
|                                    |   | 1st Quarter, 2011 |   |   | 4th Quarter, 2010 |   |   | 1st Quarter, 2010 |   |   | 4th Quarter, 2009 |   |
| Interest bearing bank balances          |   |                        | 0.22   | %      |                        |   | 0.21 | % |   |   | 0.22 | % |   |   | 0.20 | % |
| Federal funds sold                      |   |                        | 0.25   |   |                        |   | 0.25 |   |   |   | 0.21 |   |   |   | 0.20 |   |
| Taxable investments                     |   |                        | 2.88   |   |                        |   | 2.91 |   |   |   | 3.51 |   |   |   | 3.69 |   |
| Tax-exempt investments                  |   |                        | 5.98   |   |                        |   | 5.95 |   |   |   | 5.98 |   |   |   | 5.91 |   |
| Loans held for sale                     |   |                        | 3.85   |   |                        |   | 3.75 |   |   |   | 2.76 |   |   |   | 3.71 |   |
| Loans held for investment               |   |                        | 5.92   |   |                        |   | 5.91 |   |   |   | 5.93 |   |   |   | 6.06 |   |
| Earning asset yield                     |   |                        | 4.93   |   |                        |   | 5.04 |   |   |   | 5.02 |   |   |   | 5.18 |   |
|                                    |   |                        |   |   |                        |   |   |   |   |   |   |   |   |   |   |   |
| Interest checking                       |   |                        | 0.81   |   |                        |   | 1.02 |   |   |   | 1.07 |   |   |   | 1.18 |   |
| Money market deposits                   |   |                        | 0.85   |   |                        |   | 1.14 |   |   |   | 1.08 |   |   |   | 1.14 |   |
| Savings deposits                        |   |                        | 1.21   |   |                        |   | 1.26 |   |   |   | 1.33 |   |   |   | 1.36 |   |
| Certificates of deposit                 |   |                        | 1.86   |   |                        |   | 1.95 |   |   |   | 2.50 |   |   |   | 2.54 |   |
| Short-term borrowings                   |   |                        | 0.25   |   |                        |   | 0.20 |   |   |   | 0.56 |   |   |   | 0.56 |   |
| Other borrowings                        |   |                        | 4.97   |   |                        |   | 5.10 |   |   |   | 4.80 |   |   |   | 4.45 |   |
| Cost of interest-bearing liabilities    |   |                        | 1.51   |   |                        |   | 1.69 |   |   |   | 2.09 |   |   |   | 2.18 |   |
|                                    |   |                        |   |   |                        |   |   |   |   |   |   |   |   |   |   |   |
| Net interest spread                     |   |                        | 3.42   |   |                        |   | 3.35 |   |   |   | 2.92 |   |   |   | 3.00 |   |
| Effect of non-interest bearing deposits |   |                        | .21    |   |                        |   | .26 |   |   |   | .29 |   |   |   | .29 |   |
| Effect of leverage                      |   |                        | (.04   | )      |                        |   | (.04 | ) |   |   | (.05 | ) |   |   | (.01 | ) |
| Net interest margin, tax-equivalent     |   |                        | 3.59   |   |                        |   | 3.57 |   |   |   | 3.16 |   |   |   | 3.28 |   |
| Less: Tax equivalent adjustments:       |   |                        |   |   |                        |   |   |   |   |   |   |   |   |   |   |   |
| Investments                             |   |                        | .05    |   |                        |   | .06 |   |   |   | .07 |   |   |   | .08 |   |
| Loans                                   |   |                        | .01    |   |                        |   | .02 |   |   |   | .01 |   |   |   | .02 |   |
| Reported book net interest margin       |   |                        | 3.53   | %      |                        |   | 3.49 | % |   |   | 3.08 | % |   |   | 3.18 | % |

| (Dollars in thousands)           |   |                        |      |   |                        |   |
|--------------------------------------------|--------|-----------------------------|-----------|--------|-----------------------------|--------|
|                                       |   | 1st Quarter, 2011 |      |   | 4th Quarter, 2010 |   |   | 1st Quarter, 2010 |   |   | 4th Quarter, 2009 |   |
| Interest bearing bank balances             |   | $                           | 93,864    |   |                        | $      | 65,302 |   |   | $ | 81,226 |   |   | $ | 59,852 |   |
| Federal funds sold                         |   |                        | 25,000    |   |                        |   | 25,000 |   |   |   | 49,848 |   |   |   | 65,479 |   |
| Taxable investments                        |   |                        | 249,061   |   |                        |   | 228,935 |   |   |   | 236,038 |   |   |   | 237,842 |   |
| Tax-exempt investments                     |   |                        | 33,939    |   |                        |   | 37,525 |   |   |   | 46,541 |   |   |   | 52,275 |   |
| Loans held for sale                        |   |                        | 4,265     |   |                        |   | 6,551 |   |   |   | 11,506 |   |   |   | 9,229 |   |
| Loans held for investment                  |   |                        | 1,056,903 |   |                        |   | 1,041,453 |   |   |   | 1,056,177 |   |   |   | 1,093,694 |   |
| Earning assets                             |   |                        | 1,463,032 |   |                        |   | 1,404,766 |   |   |   | 1,481,336 |   |   |   | 1,518,371 |   |
| Other assets                               |   |                        | 159,331   |   |                        |   | 169,660 |   |   |   | 157,425 |   |   |   | 158,133 |   |
| Total assets                               |   | $                           | 1,622,363 |   |                        | $      | 1,574,426 |   |   | $ | 1,638,761 |   |   | $ | 1,676,504 |   |
|                                       |   |                        |      |   |                        |   |   |   |   |   |   |   |   |   |   |   |
| Interest checking                          |   | $                           | 402,801   |   |                        | $      | 319,309 |   |   | $ | 330,094 |   |   | $ | 296,806 |   |
| Money market deposits                      |   |                        | 161,581   |   |                        |   | 167,154 |   |   |   | 147,128 |   |   |   | 169,439 |   |
| Savings deposits                           |   |                        | 115,815   |   |                        |   | 115,806 |   |   |   | 112,260 |   |   |   | 112,482 |   |
| Certificates of deposit                    |   |                        | 514,184   |   |                        |   | 512,012 |   |   |   | 576,885 |   |   |   | 576,285 |   |
| Short-term borrowings                      |   |                        | 23,917    |   |                        |   | 34,194 |   |   |   | 13,733 |   |   |   | 10,036 |   |
| Other borrowings                           |   |                        | 80,261    |   |                        |   | 80,946 |   |   |   | 131,820 |   |   |   | 163,422 |   |
| Interest-bearing liabilities               |   |                        | 1,298,559 |   |                        |   | 1,229,421 |   |   |   | 1,311,920 |   |   |   | 1,328,470 |   |
| Noninterest-bearing deposits               |   |                        | 209,352   |   |                        |   | 227,457 |   |   |   | 213,143 |   |   |   | 206,037 |   |
| Other liabilities                          |   |                        | 6,819     |   |                        |   | 8,438 |   |   |   | 8,114 |   |   |   | 8,757 |   |
| Stockholders’ equity                 |   |                        | 107,633   |   |                        |   | 109,110 |   |   |   | 105,584 |   |   |   | 133,240 |   |
| Liabilities and stockholders’ equity |   | $                           | 1,622,363 |   |                        | $      | 1,574,426 |   |   | $ | 1,638,761 |   |   | $ | 1,676,504 |   |
|                                       |   |                        |      |   |                        |   |   |   |   |   |   |   |   |   |   |   |
| Loans to earning assets                    |   |                        | 72.24     | %      |                        |   | 74.14 | % |   |   | 71.30 | % |   |   | 72.03 | % |
| Loans to assets                            |   |                        | 65.15     | %      |                        |   | 66.15 | % |   |   | 64.45 | % |   |   | 65.24 | % |
| Earning assets to assets                   |   |                        | 90.18     | %      |                        |   | 89.22 | % |   |   | 90.39 | % |   |   | 90.57 | % |
| Noninterest-bearing deposits to assets     |   |                        | 12.90     | %      |                        |   | 14.45 | % |   |   | 13.01 | % |   |   | 12.29 | % |
| Equity to assets                           |   |                        | 6.63      | %      |                        |   | 6.93 | % |   |   | 6.44 | % |   |   | 7.95 | % |

----

----

|                                |   | Three Months Ended |   |
|-------------------------------------|--------|------------------------------|--------|
| (Dollars in thousands)    |   | March 31                |   |
|                                |   | 2011                         |   |   | 2010 |   |
| Service charge revenues             |   | $                            | 303    |   |   | $ | 323 |   |
| Debit/ATM card revenues             |   |                         | 821    |   |   |   | 635 |   |
| Overdraft fee revenues              |   |                         | 1,334  |   |   |   | 1,522 |   |
| Service charges on deposit accounts |   | $                            | 2,458  |   |   | $ | 2,480 |   |

----

| (Dollars in thousands) |   |                                 |   |   | Other-Than-Temporary Impairment          |   |
|----------------------------------|--------|--------------------------------------|--------|--------|-----------------------------------------------|--------|
|                             |   | Other-Than-Temporary Impairment |   |   | Charged To (Reclassified From) |   |
| Name of Issuer         |   | Charged Against Earnings   |   |   | Other Comprehensive Income          |   |
| Trapeza V                        |   | $                                    | 224    |   |                                          | $      | 35 |   |
| Tpref Funding II                 |   |                                 | 69     |   |                                          |   | (72 | ) |
| MM Community Funding IX          |   |                                 | 3      |   |                                          |   | (19 | ) |
| Total                            |   | $                                    | 296    |   |                                          | $      | (56 | ) |

| (Dollars in thousands) |   |                                 |   |   | Other-Than-Temporary Impairment          |   |
|----------------------------------|--------|--------------------------------------|--------|--------|-----------------------------------------------|--------|
|                             |   | Other-Than-Temporary Impairment |   |   | Charged To (Reclassified From) |   |
| Name of Issuer         |   | Charged Against Earnings   |   |   | Other Comprehensive Income          |   |
| Trapeza I 2002-1A                |   | $                                    | 101    |   |                                          | $      | 156 |   |
| MM Community Funding IX          |   |                                 | 101    |   |                                          |   | (86 | ) |
| Total                            |   | $                                    | 202    |   |                                          | $      | 70 |   |

| As of March 31, 2011 |   |
|------------------------------------------|--------|
| (Dollars in thousands)         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | Deferrals and |   |   |   |   |
|                                     |   |   |   |   |   |   |   |   |   |   |   |   |   | Moody’s |   |   | Number of |   |   | Defaults as |   |   |   |   |
|                                     |   |   |   |   | Book |   |   | Fair |   |   | Unrealized |   |   | Credit |   |   | Banks in |   |   | a Percent |   |   | Excess |   |
| Name of Issuer                 |   | Class |   |   | Value |   |   | Value |   |   | Loss |   |   | Rating |   |   | Issuance |   |   | of Collateral |   |   | Subordination |   |
| Trapeza I 2002-1A                        |   |   | C1 |   |   | $ | 474 |   |   | $ | 118 |   |   | $ | 356 |   |   | C |   |   |   | 25 |   |   |   | 43.09 | % |   |   | 0.00 | % |
| Trapeza II 2003-2A                       |   |   | C1 |   |   |   | 989 |   |   |   | 244 |   |   |   | 745 |   |   | Ca |   |   |   | 37 |   |   |   | 37.04 |   |   |   | 0.00 |   |
| Tpref Funding II                         |   |   | B |   |   |   | 768 |   |   |   | 227 |   |   |   | 541 |   |   | Caa3 |   |   |   | 34 |   |   |   | 37.66 |   |   |   | 0.00 |   |
| Trapeza V 2003-5A                        |   |   | C1 |   |   |   | 609 |   |   |   | 72 |   |   |   | 537 |   |   | Ca |   |   |   | 42 |   |   |   | 33.97 |   |   |   | 0.00 |   |
| MM Community Funding IX                  |   |   | B1 |   |   |   | 632 |   |   |   | 205 |   |   |   | 427 |   |   | Caa3 |   |   |   | 33 |   |   |   | 38.83 |   |   |   | 0.00 |   |
|                                     |   |   |   |   |   | $ | 3,472 |   |   | $ | 866 |   |   | $ | 2,606 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

| (Dollars in thousands) |   | 1Q2011 |   |   | 4Q2010 |   |   | 1Q2010 |   |   | 4Q2009 |   |
|----------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Agency profit-sharing revenues   |   | $      | 254    |   |   | $      | -      |   |   | $      | 233    |   |   | $ | - |   |
| Loan fees                        |   |   | 101    |   |   |   | 89     |   |   |   | 100    |   |   |   | 93 |   |
| Gains on student loan sales      |   |   | -      |   |   |   | -      |   |   |   | 93     |   |   |   | 26 |   |
| All other income                 |   |   | 301    |   |   |   | 175    |   |   |   | 363    |   |   |   | 503 |   |
| Total other income               |   | $      | 656    |   |   | $      | 264    |   |   | $      | 789    |   |   | $ | 622 |   |

| (Dollars in thousands)              |   | 1Q2011 |   |   | 4Q2010 |   |   | 1Q2010 |   |   | 4Q2009 |   |
|-----------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Losses (gains) on sales of other real estate  |   | $      | (36    | )      |   | $      | (474   | )      |   | $      | 15     |   |   | $ | 682 |   |
| Write-downs of other real estate              |   |   | 2,054  |   |   |   | 1,428  |   |   |   | 197    |   |   |   | 3,178 |   |
| Other real estate expenses                    |   |   | 359    |   |   |   | 1,078  |   |   |   | 310    |   |   |   | 637 |   |
| Rental income on other real estate properties |   |   | (24    | )      |   |   | (126   | )      |   |   | (66    | )      |   |   | (4 | ) |
| Total foreclosed property expenses            |   | $      | 2,353  |   |   | $      | 1,906  |   |   | $      | 456    |   |   | $ | 4,493 |   |

----

| (Dollars in thousands)         |   | 1Q2011 |   |   | 4Q2010 |   |   | 1Q2010 |   |   | 4Q2009 |   |
|--------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Postage and shipping           |   | $      | 239    |   |   | $      | 209    |   |   | $      | 227    |   |   | $ | 224 |   |
| Supplies                       |   |   | 180    |   |   |   | 181    |   |   |   | 162    |   |   |   | 179 |   |
| Legal expenses                 |   |   | 174    |   |   |   | 348    |   |   |   | 251    |   |   |   | 638 |   |
| Other professional expenses    |   |   | 205    |   |   |   | 314    |   |   |   | 339    |   |   |   | 377 |   |
| Insurance expenses             |   |   | 248    |   |   |   | 246    |   |   |   | 238    |   |   |   | 238 |   |
| Debit card processing expenses |   |   | 192    |   |   |   | 169    |   |   |   | 166    |   |   |   | 184 |   |
| All other expenses             |   |   | 1,100  |   |   |   | 1,195  |   |   |   | 1,285  |   |   |   | 1,777 |   |
| Total other expense            |   | $      | 2,338  |   |   | $      | 2,662  |   |   | $      | 2,668  |   |   | $ | 3,617 |   |

| (Dollars in thousands)                                                   |   | Three Months Ended March 31 |   |
|--------------------------------------------------------------------------|--------|-----------------------------|--------|
|                                                                     |   | 2011                        |   |   | 2010 |   |
| Amount computed using the Federal statutory rates on income before taxes |   | $                           | 362    |   |   | $ | 393 |   |
| Increase (decrease) resulting from:                                      |   |                        |   |   |   |   |   |   |
| State income tax expense, net of Federal effect                          |   |                        | 12     |   |   |   | 175 |   |
| Tax exempt income, net of disallowed interest deduction                  |   |                        | (124   | ) |   |   | (164 | ) |
| Life insurance income                                                    |   |                        | (62    | ) |   |   | (58 | ) |
| Low income housing tax credits                                           |   |                        | (83    | ) |   |   | - |   |
| Other, net                                                               |   |                        | 105    |   |   |   | (45 | ) |
| Total income tax expense                                                 |   | $                           | 115    |   |   | $ | 301 |   |

----

| (Dollars in thousands) |   | QTD Net Change |    |   | QTD Net Change |   |    | Year-Over-Year           |   |
|----------------------------------|--------|--------------------------|---------|--------|--------------------------|--------|---------|--------------------------|--------|
|                             |   | March 31, 2011 |    |   | March 31, 2010 |   |    | March 31, 2011 |   |
| Cash and due from banks          |   | $                        | (8,915  | )      |                     | $      | (4,612  | )                        |   | $ | (1,650 | ) |
| Interest-bearing bank balances   |   |                     |    |   |                     |   |    |                     |   |   |   |   |
| and Federal funds sold           |   |                     | 8,305   |   |                     |   | (30,684 | )                        |   |   | (18,718 | ) |
| Securities available for sale    |   |                     | 19,313  |   |                     |   | 4,804   |                     |   |   | 6,888 |   |
| Loans held for sale              |   |                     | (3,656  | )      |                     |   | (1,568  | )                        |   |   | (6,112 | ) |
| Loans held for investment, net   |   |                     | (9,903  | )      |                     |   | (13,012 | )                        |   |   | 12,904 |   |
| Other real estate                |   |                     | (1,465  | )      |                     |   | 7,882   |                     |   |   | (1,800 | ) |
| Other assets                     |   |                     | (143    | )      |                     |   | (2,677  | )                        |   |   | (7,113 | ) |
| Total assets                     |   | $                        | 3,536   |   |                     | $      | (39,867 | )                        |   | $ | (15,601 | ) |
|                             |   |                     |    |   |                     |   |    |                     |   |   |   |   |
| Total deposits                   |   | $                        | 24,664  |   |                     | $      | (14,265 | )                        |   | $ | 26,078 |   |
| Total borrowings                 |   |                     | (20,809 | )      |                     |   | (25,687 | )                        |   |   | (42,377 | ) |
| Other liabilities                |   |                     | (933    | )      |                     |   | (121    | )                        |   |   | (2,145 | ) |
| Stockholders’ equity       |   |                     | 614     |   |                     |   | 206     |                     |   |   | 2,843 |   |
| Total liabilities and equity     |   | $                        | 3,536   |   |                     | $      | (39,867 | )                        |   | $ | (15,601 | ) |

----

| (Dollars in thousands)       |   | March 31, 2011 |      |   | December 31, 2010 |   |      | March 31, 2010 |   |
|----------------------------------------|--------|--------------------------|-----------|--------|-----------------------------|--------|-----------|--------------------------|--------|
| Commercial real estate                 |   | $                        | 642,373   |   |                        | $      | 646,731   |                     |   | $ | 626,025 |   |
| Residential real estate                |   |                     | 189,289   |   |                        |   | 195,184   |                     |   |   | 195,862 |   |
| Home equity lines                      |   |                     | 38,622    |   |                        |   | 40,305    |                     |   |   | 43,043 |   |
| Commercial, financial and agricultural |   |                     | 137,620   |   |                        |   | 133,226   |                     |   |   | 132,310 |   |
| Consumer                               |   |                     | 43,357    |   |                        |   | 44,700    |                     |   |   | 45,189 |   |
| Total                                  |   | $                        | 1,051,261 |   |                        | $      | 1,060,146 |                     |   | $ | 1,042,429 |   |
|                                   |   |                     |      |   |                        |   |      |                     |   |   |   |   |
| Mortgages held for sale                |   | $                        | 2,586     |   |                        | $      | 6,242     |                     |   | $ | 4,558 |   |
| Student loans held for sale            |   |                     | -         |   |                        |   | -         |                     |   |   | 4,140 |   |

|                             |   | Core Customers      |    |   | Public Funds        |   |   | Total Deposits      |   |
|----------------------------------|--------|--------------------------|---------|--------|--------------------------|--------|--------|--------------------------|--------|
| (Dollars in thousands) |   | Increase (Decrease) |    |   | Increase (Decrease) |   |   | Increase (Decrease) |   |
|                             |   | Amt.                     |    |   | Pct.                     |   |   | Amt.                     |   |   | Pct. |   |   | Amt. |   |   | Pct. |   |
| Noninterest-bearing              |   | $                        | (4,307  | )      |                     |   | (2.09  | )%                       |   | $ | 565 |   |   |   | 9.15 | % |   | $ | (3,742 | ) |   |   | (1.76 | )% |
| NOW                              |   |                     | (475    | )      |                     |   | (0.22  | )                        |   |   | 48,164 |   |   |   | 33.49 |   |   |   | 47,689 |   |   |   | 13.09 |   |
| MMDA                             |   |                     | (6,286  | )      |                     |   | (4.12  | )                        |   |   | 1,790 |   |   |   | 12.96 |   |   |   | (4,496 | ) |   |   | (2.70 | ) |
| Savings                          |   |                     | 1,934   |   |                     |   | 1.69   |                     |   |   | 11 |   |   |   | 3.28 |   |   |   | 1,945 |   |   |   | 1.69 |   |
| Customer CDs                     |   |                     | (15,078 | )      |                     |   | (3.13  | )                        |   |   | (3,990 | ) |   |   | (18.93 | ) |   |   | (19,068 | ) |   |   | (3.79 | ) |
| Brokered CDs                     |   |                     | 2,119   |   |                     |   | 22.55  |                     |   |   | 217 |   |   |   | 3.87 |   |   |   | 2,336 |   |   |   | 15.57 |   |
| Total                            |   | $                        | (22,093 | )      |                     |   | (1.86  | )%                       |   | $ | 46,757 |   |   |   | 24.51 | % |   | $ | 24,664 |   |   |   | 1.79 | % |

----

| (Dollars in thousands) |   | March 31, 2011 |      |   | December 31, 2010 |   |      | March 31, 2010 |   |
|----------------------------------|--------|--------------------------|-----------|--------|-----------------------------|--------|-----------|--------------------------|--------|
| Noninterest-bearing demand       |   | $                        | 208,457   |   |                        | $      | 212,199   |                     |   | $ | 217,683 |   |
| NOW deposits                     |   |                     | 411,898   |   |                        |   | 364,209   |                     |   |   | 331,066 |   |
| Money market deposits            |   |                     | 161,959   |   |                        |   | 166,455   |                     |   |   | 141,203 |   |
| Savings deposits                 |   |                     | 116,714   |   |                        |   | 114,769   |                     |   |   | 113,367 |   |
| Certificates of deposit          |   |                     | 483,704   |   |                        |   | 502,772   |                     |   |   | 551,860 |   |
| Brokered certificates of deposit |   |                     | 17,344    |   |                        |   | 15,008    |                     |   |   | 18,819 |   |
| Total                            |   | $                        | 1,400,076 |   |                        | $      | 1,375,412 |                     |   | $ | 1,373,998 |   |

| (Dollars in thousands) |   | March 31, 2011 |    |   | December 31, 2010 |   |    | March 31, 2010 |   |
|----------------------------------|--------|--------------------------|---------|--------|-----------------------------|--------|---------|--------------------------|--------|
| Noninterest-bearing demand       |   | $                        | 6,739   |   |                        | $      | 6,174   |                     |   | $ | 24,237 |   |
| NOW deposits                     |   |                     | 191,945 |   |                        |   | 143,781 |                     |   |   | 119,623 |   |
| Money market deposits            |   |                     | 15,604  |   |                        |   | 13,814  |                     |   |   | 15,067 |   |
| Savings deposits                 |   |                     | 346     |   |                        |   | 335     |                     |   |   | 242 |   |
| Certificates of deposit          |   |                     | 17,086  |   |                        |   | 21,076  |                     |   |   | 36,315 |   |
| Brokered certificates of deposit |   |                     | 5,827   |   |                        |   | 5,610   |                     |   |   | 4,995 |   |
| Total                            |   | $                        | 237,547 |   |                        | $      | 190,790 |                     |   | $ | 200,479 |   |

----

----

----

----

| (Dollars in thousands) |   |                      |   |   |   |   |
|----------------------------------|--------|---------------------------|--------|--------|--------|--------|
|                             |   | Number of Loans |   |   | Amount |   |
| Balance at 03/31/11              |   | 7                         |   |   | $      | 10,139 |   |
|                             |   |                      |   |   |   |   |   |
| Balance at 12/31/10              |   | 7                         |   |   |   | 10,553 |   |
|                             |   |                      |   |   |   |   |   |
| Balance at 09/30/10              |   | 7                         |   |   |   | 8,581  |   |
|                             |   |                      |   |   |   |   |   |
| Balance at 06/30/10              |   | 9                         |   |   |   | 13,213 |   |
|                             |   |                      |   |   |   |   |   |
| Balance at 03/31/10              |   | 10                   |   |   |   | 14,980 |   |

| (Dollars in thousands) |   |                      |   |   |   |   |
|----------------------------------|--------|---------------------------|--------|--------|--------|--------|
|                             |   | Number of Loans |   |   | Amount |   |
| Balance at 03/31/11              |   |  7                   |   |   | $      | 15,467 |   |
|                             |   |                      |   |   |   |   |   |
| Balance at 12/31/10              |   |  6                   |   |   |   | 10,152 |   |
|                             |   |                      |   |   |   |   |   |
| Balance at 09/30/10              |   |  7                   |   |   |   | 13,451 |   |
|                             |   |                      |   |   |   |   |
| Balance at 06/30/10              |   |  8                   |   |   |   | 8,899  |   |
|                             |   |                      |   |   |   |   |
| Balance at 03/31/10              |   |  8                   |   |   |   | 11,291 |   |

----

|                                                     |   | March 31, 2011      |   |   | December 31, 2010   |   |
|----------------------------------------------------------|--------|-------------------------------|--------|--------|-------------------------------|--------|
|                                                     |   | Seven Largest Loans |   |   | Seven Largest Loans |   |
| (Dollars in thousands)                         |   | Nonaccrual                    |   |   | Impairment                    |   |   | Nonaccrual |   |   | Impairment |   |
| Note                                                     |   | Balance                       |   |   | Allowance                     |   |   | Balance |   |   | Allowance |   |
| 1.                                                       |   | $                             | 2,925  |   |                          | $      | - |   |   | $ | 2,925 |   |   | $ | - |   |
| 2.                                                       |   |                          | 1,634  |   |                          |   | 200 |   |   |   | 1,634 |   |   |   | - |   |
| 3.                                                       |   |                          | 1,465  |   |                          |   | - |   |   |   | 1,465 |   |   |   | - |   |
| 4.                                                       |   |                          | 1,413  |   |                          |   | 125 |   |   |   | 1,393 |   |   |   | 125 |   |
| 5.                                                       |   |                          | 1,325  |   |                          |   | - |   |   |   | 1,325 |   |   |   | - |   |
| 6.                                                       |   |                          | 874    |   |                          |   | - |   |   |   | 1,008 |   |   |   | - |   |
| 7.                                                       |   |                          | 503    |   |                          |   | - |   |   |   | 803 |   |   |   | - |   |
| Totals                                                   |   | $                             | 10,139 |   |                          | $      | 325 |   |   | $ | 10,553 |   |   | $ | 125 |   |
|                                                     |   |                          |   |   |                          |   |   |   |   |   |   |   |   |   |   |   |
| Total nonaccrual construction and land development loans |   | $                             | 13,608 |   |                          | $      | 435 |   |   | $ | 13,993 |   |   | $ | 175 |   |

|                                          |   | March 31, 2011      |   |   | December 31, 2010 |   |
|-----------------------------------------------|--------|-------------------------------|--------|--------|-----------------------------|--------|
|                                          |   | Seven Largest Loans |   |   | Six Largest Loans |   |
| (Dollars in thousands)              |   | Nonaccrual                    |   |   | Impairment                  |   |   | Nonaccrual |   |   | Impairment |   |
| Note                                          |   | Balance                       |   |   | Allowance                   |   |   | Balance |   |   | Allowance |   |
| 8.                                            |   | $                             | 5,379  |   |                        | $      | - |   |   | $ | - |   |   | $ | - |   |
| 9.                                            |   |                          | 2,455  |   |                        |   | 300 |   |   |   | 2,455 |   |   |   | 300 |   |
| 10.                                           |   |                          | 2,444  |   |                        |   | - |   |   |   | 2,469 |   |   |   | - |   |
| 11.                                           |   |                          | 2,086  |   |                        |   | 551 |   |   |   | 2,093 |   |   |   | - |   |
| 12.                                           |   |                          | 1,550  |   |                        |   | - |   |   |   | 1,582 |   |   |   | - |   |
| 13.                                           |   |                          | 880    |   |                        |   | - |   |   |   | 880 |   |   |   | - |   |
| 14.                                           |   |                          | 673    |   |                        |   | 255 |   |   |   | 673 |   |   |   | 255 |   |
| Totals                                        |   | $                             | 15,467 |   |                        | $      | 1,106 |   |   | $ | 10,152 |   |   | $ | 555 |   |
|                                          |   |                          |   |   |                        |   |   |   |   |   |   |   |   |   |   |   |
| Total nonaccrual commercial real estate loans |   | $                             | 19,111 |   |                        | $      | 1,491 |   |   | $ | 13,027 |   |   | $ | 765 |   |

----

|                             |   |                  |   |                     |   | Nonaccrual |   |   | Impairment |   | Information |   |
|----------------------------------|--------|-----------------------|--------|--------------------------|--------|------------|--------|--------|------------|--------|-------------|--------|
| (Dollars in thousands) |   | Type of          |   | Type of             |   | Balance    |   |   | Allowance  |   | Supporting  |   |
| Note                             |   | Borrower              |   | Collateral               |   | 03/31/11   |   |   | 03/31/11   |   | Allowance   |   |
| 1.                               |   | Commercial            |   | Land                     |   | $          | 2,925  |   |       | $      | -           |   | Appraisal dated 07/07/08 |   |
|                             |   |                  |   |                     |   |       |   |   |       |   |        |   |   |   |
| 2.                               |   | Commercial Developer  |   | Commercial Subdivision   |   |       | 1,634  |   |       |   | 200         |   | Appraisal dated 02/25/11 |   |
|                             |   |                  |   |                     |   |       |   |   |       |   |        |   |   |   |
| 3.                               |   | Residential Developer |   | Residential Subdivision  |   |       | 1,465  |   |       |   | -           |   | Appraisal dated 11/23/09 |   |
|                             |   |                  |   |                     |   |       |   |   |       |   |        |   |   |   |
| 4.                               |   | Commercial Developer  |   | Commercial - Retail      |   |       | 1,413  |   |       |   | 125         |   | Appraisal dated 10/03/08 |   |
|                             |   |                  |   |                     |   |       |   |   |       |   |        |   |   |   |
| 5.                               |   | Commercial Developer  |   | Commercial Subdivision   |   |       | 1,325  |   |       |   | -           |   | Appraisal dated 09/29/10 |   |
|                             |   |                  |   |                     |   |       |   |   |       |   |        |   |   |   |
| 6.                               |   | Residential Developer |   | Residential Subdivision  |   |       | 874    |   |       |   | -           |   | Appraisal dated 10/14/10 |   |
|                             |   |                  |   |                     |   |       |   |   |       |   |        |   |   |   |
| 7.                               |   | Residential Developer |   | Residential Subdivision  |   |       | 503    |   |       |   | -           |   | Appraisal dated 09/30/09 |   |
|                             |   |                  |   |                     |   |       |   |   |       |   |        |   |   |   |
| 8.                               |   | Commercial            |   | Assisted Living Facility |   |       | 5,379  |   |       |   | -           |   | Appraisal dated 08/25/09 |   |
|                             |   |                  |   |                     |   |       |   |   |       |   |        |   |   |   |
| 9.                               |   | Commercial            |   | Retailer                 |   |       | 2,455  |   |       |   | 300         |   | Appraisal dated 10/05/10 |   |
|                             |   |                  |   |                     |   |       |   |   |       |   |        |   |   |   |
| 10.                              |   | Commercial            |   | Office                   |   |       | 2,444  |   |       |   | -           |   | Appraisal dated 02/01/10 |   |
|                             |   |                  |   |                     |   |       |   |   |       |   |        |   |   |   |
| 11.                              |   | Commercial            |   | Office/Warehouse         |   |       | 2,086  |   |       |   | 551         |   | Appraisal dated 03/02/11 |   |
|                             |   |                  |   |                     |   |       |   |   |       |   |        |   |   |   |
| 12.                              |   | Commercial            |   | Self Storage             |   |       | 1,550  |   |       |   | -           |   | Appraisal dated 12/06/10 |   |
|                             |   |                  |   |                     |   |       |   |   |       |   |        |   |   |   |
| 13.                              |   | Commercial            |   | Commercial Office        |   |       | 880    |   |       |   | -           |   | Appraisal dated 07/08/10 |   |
|                             |   |                  |   |                     |   |       |   |   |       |   |        |   |   |   |
| 14.                              |   | Commercial            |   | Self Storage             |   |       | 673    |   |       |   | 255         |   | In-house evaluation dated 07/22/09 |   |

----

|                                |   | March 31, 2011 |   |   | December 31, 2010 |   |
|-------------------------------------|--------|--------------------------|--------|--------|-----------------------------|--------|
| (Dollars in thousands)    |   | Loan                     |   |   | Impairment                  |   |   | Loan |   |   | Impairment |   |
|                                |   | Balance                  |   |   | Allowance                   |   |   | Balance |   |   | Allowance |   |
| Non-accrual loans              |   | $                        | 13,608 |   |                        | $      | 435 |   |   | $ | 13,993 |   |   | $ | 175 |   |
| Accruing loans with an allowance    |   |                     | 9,383  |   |                        |   | 2,386 |   |   |   | 11,327 |   |   |   | 2,696 |   |
| Accruing loans without an allowance |   |                     | 9,901  |   |                        |   | - |   |   |   | 8,111 |   |   |   | - |   |
| Total                               |   | $                        | 32,892 |   |                        | $      | 2,821 |   |   | $ | 33,431 |   |   | $ | 2,871 |   |

|                                |   | March 31, 2011 |   |   | December 31, 2010 |   |
|-------------------------------------|--------|----------------|--------|--------|-------------------|--------|
| (Dollars in thousands)              |   | Loan           |   |   | Impairment        |   |   | Loan |   |   | Impairment |   |
|                                |   | Balance        |   |   | Allowance         |   |   | Balance |   |   | Allowance |   |
| Non-accrual loans                   |   | $              | 19,111 |   |              | $      | 1,491 |   |   | $ | 13,027 |   |   | $ | 765 |   |
| Accruing loans with an allowance    |   |           | 2,823  |   |              |   | 637 |   |   |   | 5,025 |   |   |   | 817 |   |
| Accruing loans without an allowance |   |           | 36,223 |   |              |   | - |   |   |   | 36,275 |   |   |   | - |   |
| Total                               |   | $              | 58,157 |   |              | $      | 2,128 |   |   | $ | 54,327 |   |   | $ | 1,582 |   |

----

|                                    |   |        |    |   | Past Due           |   |   | Past Due  |   |   |       |   |   |          |   |
|-----------------------------------------|--------|-------------|---------|--------|-------------------------|--------|--------|----------------|--------|--------|------------|--------|--------|---------------|--------|
|                                    |   |        |    |   | 30 – 89 |   |   | 90 Days   |   |   |       |   |   |          |   |
|                                    |   |        |    |   | Days                    |   |   | Or More   |   |   |       |   |   | Year-To-      |   |
| (Dollars in thousands)        |   | Outstanding |    |   | And Still          |   |   | And Still |   |   |       |   |   | Date Net |   |
|                                    |   | Balances    |    |   | Accruing                |   |   | Accruing       |   |   | Nonaccrual |   |   | Charge-Offs   |   |
| Construction and development loans:     |   |        |    |   |                    |   |   |           |   |   |       |   |   |          |   |   |
| 03/31/11                                |   | $           | 92,744  |   |                    | $      | 1,218  |           |   | $      | 101        |   |   | $             | 13,608 |   |   | $ | (69 | ) |
| 12/31/10                                |   |        | 89,093  |   |                    |   | 1,257  |           |   |   | 274        |   |   |          | 13,993 |   |   |   | 4,167 |   |
| 09/30/10                                |   |        | 96,848  |   |                    |   | 979    |           |   |   | 430        |   |   |          | 11,887 |   |   |   | 2,628 |   |
| 06/30/10                                |   |        | 106,015 |   |                    |   | 2,495  |           |   |   | 79         |   |   |          | 17,092 |   |   |   | 2,816 |   |
| 03/31/10                                |   |        | 108,574 |   |                    |   | 2,434  |           |   |   | 352        |   |   |          | 20,363 |   |   |   | 852 |   |
|                                    |   |        |    |   |                    |   |   |           |   |   |       |   |   |          |   |   |   |   |   |   |
| Loans secured by 1-4 family properties: |   |        |    |   |                    |   |   |           |   |   |       |   |   |          |   |   |   |   |   |   |
| 03/31/11                                |   | $           | 227,912 |   |                    | $      | 2,378  |           |   | $      | 102        |   |   | $             | 3,144  |   |   | $ | 295 |   |
| 12/31/10                                |   |        | 235,489 |   |                    |   | 3,020  |           |   |   | 564        |   |   |          | 3,863  |   |   |   | 1,733 |   |
| 09/30/10                                |   |        | 236,822 |   |                    |   | 2,422  |           |   |   | 319        |   |   |          | 5,001  |   |   |   | 936 |   |
| 06/30/10                                |   |        | 237,801 |   |                    |   | 2,538  |           |   |   | 123        |   |   |          | 4,106  |   |   |   | 812 |   |
| 03/31/10                                |   |        | 238,904 |   |                    |   | 2,984  |           |   |   | 440        |   |   |          | 4,545  |   |   |   | 288 |   |
|                                    |   |        |    |   |                    |   |   |           |   |   |       |   |   |          |   |   |   |   |   |   |
| Commercial real estate-secured loans:   |   |        |    |   |                    |   |   |           |   |   |       |   |   |          |   |   |   |   |   |   |
| 03/31/11                                |   | $           | 549,628 |   |                    | $      | 4,940  |           |   | $      | 65         |   |   | $             | 19,111 |   |   | $ | 397 |   |
| 12/31/10                                |   |        | 557,638 |   |                    |   | 2,091  |           |   |   | -          |   |   |          | 13,027 |   |   |   | 7,360 |   |
| 09/30/10                                |   |        | 529,899 |   |                    |   | 3,824  |           |   |   | 44         |   |   |          | 16,306 |   |   |   | 4,917 |   |
| 06/30/10                                |   |        | 509,556 |   |                    |   | 6,359  |           |   |   | 1,080      |   |   |          | 11,890 |   |   |   | 4,667 |   |
| 03/31/10                                |   |        | 517,450 |   |                    |   | 8,120  |           |   |   | 1,268      |   |   |          | 12,444 |   |   |   | 3,848 |   |

| (Dollars in thousands)                            |   | March 31 |   |   | December 31 |   |   | March 31 |   |
|-------------------------------------------------------------|--------|---------------|--------|--------|------------------|--------|--------|---------------|--------|
|                                                        |   | 2011          |   |   | 2010             |   |   | 2010          |   |
| Nonaccrual loans                                            |   | $             | 37,407 |   |             | $      | 33,127 |          |   | $ | 42,148 |   |
| Other real estate                                           |   |          | 29,660 |   |             |   | 31,125 |          |   |   | 31,460 |   |
| Nonaccrual investment securities                            |   |          | 639    |   |             |   | 698    |          |   |   | 795 |   |
|                                                        |   |          |   |   |             |   |   |          |   |   |   |   |
| Total non-performing assets                                 |   | $             | 67,706 |   |             | $      | 64,950 |          |   | $ | 74,403 |   |
|                                                        |   |          |   |   |             |   |   |          |   |   |   |   |
| Past due 90 days or more and still                          |   |          |   |   |             |   |   |          |   |   |   |   |
|    accruing interest                         |   | $             | 338    |   |             | $      | 951    |          |   | $ | 2,092 |   |
| Restructured loans (accruing)                               |   |          | 16,320 |   |             |   | 18,052 |          |   |   | 6,759 |   |
|                                                        |   |          |   |   |             |   |   |          |   |   |   |   |
| Ratios:                                                     |   |          |   |   |             |   |   |          |   |   |   |   |
| Nonaccrual loans to loans                                   |   |          | 3.55   | %      |             |   | 3.11   | %             |   |   | 4.01 | % |
| Past due 90 day loans to loans                              |   |          | .03    | %      |             |   | .09    | %             |   |   | .20 | % |
| Non-performing credit assets to loans and other real estate |   |          | 6.19   | %      |             |   | 5.85   | %             |   |   | 6.80 | % |
| Non-performing assets to assets                             |   |          | 4.21   | %      |             |   | 4.05   | %             |   |   | 4.58 | % |

----

----

----

----

----

----

----

----

----

| 3.1    |   | Articles of Incorporation of the Registrant.  Incorporated herein by reference to (1) Exhibit 3 to the Company's Form S-1 (File No. 33-08751) September 15, 1986, incorporated herein by reference, and (2) Exhibit 3.1 to the Registrant’s Current Report on Form 8-K, filed on March 5, 2009. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                                                            |
| 3.2    |   | Articles of Amendment of the Registrant. Incorporated herein by reference to Exhibit 3.2 to the Registrant’s Current Report on Form 8-K, filed on March 5, 2009.                                                                                                                                          |
|   |   |                                                                                                                                                                                                                                                                                                            |
| 3.3    |   | By-laws of the Registrant, as amended. Filed as Exhibit 3-b to the Company’s Form S-1 (File No. 33-08751) September 15, 1986, incorporated herein by reference.                                                                                                                                           |
|   |   |                                                                                                                                                                                                                                                                                                            |
| 3.4    |   | Articles of Amendment of the Registrant. Incorporated herein by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K, filed on October 5, 2010.                                                                                                                                        |
|   |   |                                                                                                                                                                                                                                                                                                            |
| 3.5    |   | Amended and Restated Bylaws of the Registrant. Incorporated herein by reference to Exhibit 3.5 to the Company’s Annual Report on Form 10-K filed on March 15, 2011.                                                                                                                                       |
|   |   |                                                                                                                                                                                                                                                                                                            |
| 4.1    |   | Warrant to Purchase up to 513,113 Shares of Common Stock of the Registrant. Incorporated herein by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K, filed on March 5, 2009.                                                                                                       |
|   |   |                                                                                                                                                                                                                                                                                                            |
| 10.1   |   | First M&F Corporation 2005 Equity Incentive Plan. Filed as Appendix A to the Company’s Proxy Statement, March 15, 2005, incorporated herein by reference.                                                                                                                                             |
|   |   |                                                                                                                                                                                                                                                                                                            |
| 10.2   |   | Merchants and Farmers Bank Profit and Savings Plan, as amended. Filed as Exhibit 10(B) to the Company’s Form 10-Q on August 9, 2005, incorporated herein by reference.                                                                                                                                    |
|   |   |                                                                                                                                                                                                                                                                                                            |
| 10.3   |   | Letter Agreement, including as Exhibit A thereto, Securities Purchase Agreement. Incorporated herein by reference to Exhibit A to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, filed on March 5, 2009.                                                                                    |
|   |   |                                                                                                                                                                                                                                                                                                            |
| 10.4   |   | Form of Preferred Stock Certificate.  Incorporated herein by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K, filed on March 5, 2009.                                                                                                                                  |
|   |   |                                                                                                                                                                                                                                                                                                            |
| 10.5   |   | Side Letter Agreement.  Incorporated herein by reference to Exhibit 10.3 to the Registrant’s Current Report on Form 8-K, filed on March 5, 2009.                                                                                                                                                |
|   |   |                                                                                                                                                                                                                                                                                                            |
| 10.6   |   | CDCI Letter Agreement dated September 29, 2010. Incorporated herein by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, filed on October 5, 2010.                                                                                                                                |
|   |   |                                                                                                                                                                                                                                                                                                            |
| 11     |   | Computation of Earnings Per Share – Filed herewith as Note 13 to the consolidated financial statements.                                                                                                                                                                                                   |
|   |   |                                                                                                                                                                                                                                                                                                            |
| 31     |   | Rule 13a-14(a) Certification of Hugh S. Potts, Jr., Chief Executive Officer and Rule 13a-14(a) Certification of John G. Copeland, Chief Financial Officer.                                                                                                                                                      |
|   |   |                                                                                                                                                                                                                                                                                                            |
| 32     |   | Section 1350 Certification of Hugh S. Potts, Jr., Chief Executive Officer and Section 1350 Certification of John G. Copeland, Chief Financial Officer.                                                                                                                                                          |

----

| BY:    | /s/ Hugh S. Potts, Jr.        |   | BY:    | /s/ John G. Copeland                     |
|--------|-------------------------------|--------|--------|------------------------------------------|
|   | Hugh S. Potts, Jr.            |   |   | John G. Copeland                         |
|   | Chairman of the Board and     |   |   | Executive Vice President and             |
|   | Chief Executive Officer       |   |   | Chief Financial Officer                  |
|   | (principal executive officer) |   |   | (principal financial officer)            |
|   |                          |   |   |                                     |
|   |                          |   | BY:    | /s/ Robert C. Thompson, III              |
|   |                          |   |   | Robert C. Thompson, III                  |
|   |                          |   |   | Vice President – Accounting Policy |
|   |                          |   |   | (principal accounting officer)           |

----

| 3.1    |   | Articles of Incorporation of the Registrant.  Incorporated herein by reference to (1) Exhibit 3 to the Company's Form S-1 (File No. 33-08751) September 15, 1986, incorporated herein by reference, and (2) Exhibit 3.1 to the Registrant’s Current Report on Form 8-K, filed on March 5, 2009. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                                                            |
| 3.2    |   | Articles of Amendment of the Registrant. Incorporated herein by reference to Exhibit 3.2 to the Registrant’s Current Report on Form 8-K, filed on March 5, 2009.                                                                                                                                          |
|   |   |                                                                                                                                                                                                                                                                                                            |
| 3.3    |   | By-laws of the Registrant, as amended. Filed as Exhibit 3-b to the Company’s Form S-1 (File No. 33-08751) September 15, 1986, incorporated herein by reference.                                                                                                                                           |
|   |   |                                                                                                                                                                                                                                                                                                            |
| 3.4    |   | Articles of Amendment of the Registrant. Incorporated herein by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K, filed on October 5, 2010.                                                                                                                                        |
|   |   |                                                                                                                                                                                                                                                                                                            |
| 3.5    |   | Amended and Restated Bylaws of the Registrant. Incorporated herein by reference to Exhibit 3.5 to the Company’s Annual Report on Form 10-K filed on March 15, 2011.                                                                                                                                       |
|   |   |                                                                                                                                                                                                                                                                                                            |
| 4.1    |   | Warrant to Purchase up to 513,113 Shares of Common Stock of the Registrant. Incorporated herein by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K, filed on March 5, 2009.                                                                                                       |
|   |   |                                                                                                                                                                                                                                                                                                            |
| 10.1   |   | First M&F Corporation 2005 Equity Incentive Plan. Filed as Appendix A to the Company’s Proxy Statement, March 15, 2005, incorporated herein by reference.                                                                                                                                             |
|   |   |                                                                                                                                                                                                                                                                                                            |
| 10.2   |   | Merchants and Farmers Bank Profit and Savings Plan, as amended. Filed as Exhibit 10(B) to the Company’s Form 10-Q on August 9, 2005, incorporated herein by reference.                                                                                                                                    |
|   |   |                                                                                                                                                                                                                                                                                                            |
| 10.3   |   | Letter Agreement, including as Exhibit A thereto, Securities Purchase Agreement. Incorporated herein by reference to Exhibit A to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, filed on March 5, 2009.                                                                                    |
|   |   |                                                                                                                                                                                                                                                                                                            |
| 10.4   |   | Form of Preferred Stock Certificate.  Incorporated herein by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K, filed on March 5, 2009.                                                                                                                                  |
|   |   |                                                                                                                                                                                                                                                                                                            |
| 10.5   |   | Side Letter Agreement.  Incorporated herein by reference to Exhibit 10.3 to the Registrant’s Current Report on Form 8-K, filed on March 5, 2009.                                                                                                                                                |
|   |   |                                                                                                                                                                                                                                                                                                            |
| 10.6   |   | CDCI Letter Agreement dated September 29, 2010. Incorporated herein by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, filed on October 5, 2010.                                                                                                                                |
|   |   |                                                                                                                                                                                                                                                                                                            |
| 11     |   | Computation of Earnings Per Share – Filed herewith as Note 13 to the consolidated financial statements.                                                                                                                                                                                                   |
|   |   |                                                                                                                                                                                                                                                                                                            |
| 31     |   | Rule 13a-14(a) Certification of Hugh S. Potts, Jr., Chief Executive Officer and Rule 13a-14(a) Certification of John G. Copeland, Chief Financial Officer.                                                                                                                                                      |
|   |   |                                                                                                                                                                                                                                                                                                            |
| 32     |   | Section 1350 Certification of Hugh S. Potts, Jr., Chief Executive Officer and Section 1350 Certification of John G. Copeland, Chief Financial Officer.                                                                                                                                                          |

----