|        |
|--------|
|        |  |  |
| x      | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OFTHE SECURITIES EXCHANGE ACT OF 1934For the quarterly period ended June 30, 2012Or |   |
|   |   |   |
| o      | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OFTHE SECURITIES EXCHANGE ACT OF 1934For the transition period from __________ to __________ |   |

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

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

|                                                |
|------------------------------------------------|
|                                                |  |  |
| Common stock, $5 par value |   | 9,172,098 Shares |
| Title of Class                                 |   | Shares Outstanding at July 31, 2012 |

----

|                |
|----------------|
|                |  |  |
|           |   | Page |
| PART I:        | 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 | 50 |
|           |   |   |
| Item 3         | Quantitative and Qualitative Disclosures About Market Risk | 76 |
|           |   |   |
| Item 4         | Controls and Procedures | 77 |
|           |   |   |
| PART II:       | OTHER INFORMATION |   |
|           |   |   |
| Item 1         | Legal Proceedings | 78 |
|           |   |   |
| Item 1A        | Risk Factors | 78 |
|           |   |   |
| Item 2         | Unregistered Sales of Equity Securities and Use of Proceeds | 78 |
|           |   |   |
| Item 3         | Defaults upon Senior Securities | 78 |
|           |   |   |
| Item 4         | Mine Safety Disclosures | 78 |
|           |   |   |
| Item 5         | Other Information | 78 |
|           |   |   |
| Item 6         | Exhibits | 79 |
|           |   |   |
| SIGNATURES     |   | 80 |
|           |   |   |
| EXHIBIT INDEX  |   | 81 |
|           |   |   |
| CERTIFICATIONS |   |   |

----

|                                                                                                                      |
|----------------------------------------------------------------------------------------------------------------------|
|                                                                                                                      |  |  |  |  |  |  |  |  |
| (Dollars in thousands)                                                                                     |   |   |   |   |
|                                                                                                                 |   | June 30, 2012 |   | December 31, 2011 |
|                                                                                                                 |   |   |
|                                                                                                                 |   | (Unaudited) |   | (Note 1) |
| Assets                                                                                                               |   |   |   |   |
| Cash and due from banks                                                                                              |   | $ | 37,147 |  |   | $ | 39,976 |  |
| Interest bearing bank balances                                                                                       |   | 20,708 |  |   | 39,391 |  |
| Federal funds sold                                                                                                   |   | 6,750 |  |   | 25,000 |  |
| Securities available for sale, amortized cost of $371,424 and $315,890                                               |   | 377,670 |  |   | 320,774 |  |
| Loans held for sale                                                                                                  |   | 22,291 |  |   | 26,073 |  |
| Loans, net of unearned income                                                                                        |   | 982,596 |  |   | 996,340 |  |
| Allowance for loan losses                                                                                            |   | (15,310 | ) |   | (14,953 | ) |
| Net loans                                                                                                            |   | 967,286 |  |   | 981,387 |  |
| Bank premises and equipment                                                                                          |   | 37,529 |  |   | 37,989 |  |
| Accrued interest receivable                                                                                          |   | 6,060 |  |   | 6,122 |  |
| Other real estate                                                                                                    |   | 31,077 |  |   | 36,952 |  |
| Other intangible assets                                                                                              |   | 4,373 |  |   | 4,586 |  |
| Bank owned life insurance                                                                                            |   | 22,866 |  |   | 22,477 |  |
| Other assets                                                                                                         |   | 27,739 |  |   | 27,924 |  |
|                                                                                                                 |   | $ | 1,561,496 |  |   | $ | 1,568,651 |  |
| Liabilities and Stockholders’ Equity                                                                           |   |   |  |   |   |  |
| Liabilities:                                                                                                         |   |   |  |   |   |  |
| Noninterest-bearing deposits                                                                                         |   | $ | 236,145 |  |   | $ | 231,718 |  |
| Interest-bearing deposits                                                                                            |   | 1,125,193 |  |   | 1,139,745 |  |
| Total deposits                                                                                                       |   | 1,361,338 |  |   | 1,371,463 |  |
| Federal funds purchased and repurchase agreements                                                                    |   | 3,224 |  |   | 4,398 |  |
| Other borrowings                                                                                                     |   | 40,333 |  |   | 43,001 |  |
| Junior subordinated debt                                                                                             |   | 30,928 |  |   | 30,928 |  |
| Accrued interest payable                                                                                             |   | 844 |  |   | 1,023 |  |
| Other liabilities                                                                                                    |   | 10,912 |  |   | 8,242 |  |
| Total liabilities                                                                                                    |   | 1,447,579 |  |   | 1,459,055 |  |
| Commitments and contingencies                                                                                        |   |  |  |   |  |  |
| Stockholders’ equity:                                                                                          |   |   |  |   |   |  |
| Preferred stock; 2,000,000 shares authorized; 30,000 shares issued and outstanding                                   |   | 18,198 |  |   | 17,564 |  |
| Common stock of $5.00 par value; 50,000,000 shares authorized: 9,172,098 and 9,154,936 shares issued and outstanding |   | 45,860 |  |   | 45,775 |  |
| Additional paid-in capital                                                                                           |   | 31,890 |  |   | 31,895 |  |
| Nonvested restricted stock awards                                                                                    |   | 836 |  |   | 674 |  |
| Retained earnings                                                                                                    |   | 16,699 |  |   | 14,456 |  |
| Accumulated other comprehensive income (loss)                                                                        |   | 434 |  |   | (768 | ) |
| Total equity                                                                                                         |   | 113,917 |  |   | 109,596 |  |
|                                                                                                                 |   | $ | 1,561,496 |  |   | $ | 1,568,651 |  |

----

|                                                                                             |
|---------------------------------------------------------------------------------------------|
|                                                                                             |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| (Dollars in thousands, except per share data)                 |   | Three Months Ended |   | Six Months Ended |
|                                                                                        |   | June 30 |   | June 30 |
|                                                                                        |   | 2012 |   | 2011 |   | 2012 |   | 2011 |
| Interest income:                                                                       |   |   |   |   |   |   |   |   |
| Interest and fees on loans                                                                  |   | $ | 13,741 |  |   | $ | 15,281 |  |   | $ | 27,899 |  |   | $ | 30,656 |  |
| Interest on loans held for sale                                                             |   | 244 |  |   | 27 |  |   | 417 |  |   | 68 |  |
| Taxable investments                                                                         |   | 1,563 |  |   | 1,931 |  |   | 3,053 |  |   | 3,702 |  |
| Tax-exempt investments                                                                      |   | 319 |  |   | 302 |  |   | 637 |  |   | 616 |  |
| Federal funds sold                                                                          |   | 11 |  |   | 15 |  |   | 26 |  |   | 31 |  |
| Interest bearing bank balances                                                              |   | 28 |  |   | 46 |  |   | 79 |  |   | 98 |  |
| Total interest income                                                                       |   | 15,906 |  |   | 17,602 |  |   | 32,111 |  |   | 35,171 |  |
| Interest expense:                                                                           |   |   |  |   |   |  |   |   |  |   |   |  |
| Deposits                                                                                    |   | 2,233 |  |   | 3,523 |  |   | 4,746 |  |   | 7,370 |  |
| Federal funds purchased and repurchase agreements                                           |   | 5 |  |   | 7 |  |   | 11 |  |   | 22 |  |
| Other borrowings                                                                            |   | 437 |  |   | 509 |  |   | 888 |  |   | 1,033 |  |
| Junior subordinated debt                                                                    |   | 315 |  |   | 292 |  |   | 586 |  |   | 750 |  |
| Total interest expense                                                                      |   | 2,990 |  |   | 4,331 |  |   | 6,231 |  |   | 9,175 |  |
| Net interest income                                                                         |   | 12,916 |  |   | 13,271 |  |   | 25,880 |  |   | 25,996 |  |
| Provision for loan losses                                                                   |   | 2,280 |  |   | 2,280 |  |   | 4,560 |  |   | 4,860 |  |
| Net interest income after provision for loan losses                                         |   | 10,636 |  |   | 10,991 |  |   | 21,320 |  |   | 21,136 |  |
| Noninterest income:                                                                         |   |   |  |   |   |   |   |  |   |   |  |
| Deposit account income                                                                      |   | 2,548 |  |   | 2,473 |  |   | 5,005 |  |   | 4,931 |  |
| Mortgage banking income                                                                     |   | 1,806 |  |   | 323 |  |   | 2,373 |  |   | 679 |  |
| Agency commission income                                                                    |   | 848 |  |   | 936 |  |   | 1,677 |  |   | 1,828 |  |
| Trust and brokerage income                                                                  |   | 163 |  |   | 152 |  |   | 303 |  |   | 285 |  |
| Bank owned life insurance income                                                            |   | 182 |  |   | 176 |  |   | 369 |  |   | 359 |  |
| Other income                                                                                |   | 491 |  |   | 396 |  |   | 1,141 |  |   | 1,052 |  |
| Securities gains, net                                                                       |   | 1 |  |   | 341 |  |   | 592 |  |   | 1,690 |  |
| Total investment other-than-temporary impairment losses                                     |   | (8 | ) |   | 2 |  |   | (8 | ) |   | (239 | ) |
| Portion of loss recognized in (reclassified from) other comprehensive income (before taxes) |   | 4 |  |   | (87 | ) |   | 4 |  |   | (142 | ) |
| Net investment impairment losses recognized                                                 |   | (4 | ) |   | (85 | ) |   | (4 | ) |   | (381 | ) |
| Total noninterest income                                                                    |   | 6,035 |  |   | 4,712 |  |   | 11,456 |  |   | 10,443 |  |
| Noninterest expenses:                                                                       |   |   |  |   |   |  |   |   |  |   |   |  |
| Salaries and employee benefits                                                              |   | 6,737 |  |   | 7,157 |  |   | 13,600 |  |   | 14,113 |  |
| Net occupancy expenses                                                                      |   | 932 |  |   | 951 |  |   | 1,840 |  |   | 1,940 |  |
| Equipment expenses                                                                          |   | 423 |  |   | 451 |  |   | 886 |  |   | 916 |  |
| Software and processing expenses                                                            |   | 346 |  |   | 395 |  |   | 708 |  |   | 794 |  |
| Telecommunication expenses                                                                  |   | 221 |  |   | 229 |  |   | 466 |  |   | 454 |  |
| Marketing and business development expenses                                                 |   | 267 |  |   | 272 |  |   | 504 |  |   | 477 |  |
| Foreclosed property expenses                                                                |   | 1,282 |  |   | 1,468 |  |   | 2,738 |  |   | 3,821 |  |
| FDIC insurance assessments                                                                  |   | 553 |  |   | 577 |  |   | 1,067 |  |   | 1,351 |  |
| Intangible asset amortization                                                               |   | 106 |  |   | 107 |  |   | 213 |  |   | 214 |  |
| Other expenses                                                                              |   | 3,452 |  |   | 2,696 |  |   | 6,283 |  |   | 5,034 |  |
| Total noninterest expenses                                                                  |   | 14,319 |  |   | 14,303 |  |   | 28,305 |  |   | 29,114 |  |
| Income before income taxes                                                                  |   | 2,352 |  |   | 1,400 |  |   | 4,471 |  |   | 2,465 |  |
| Income tax expense                                                                          |   | 599 |  |   | 294 |  |   | 1,111 |  |   | 409 |  |
| Net income                                                                                  |   | 1,753 |  |   | 1,106 |  |   | $ | 3,360 |  |   | $ | 2,056 |  |
| Dividends and accretion on preferred stock                                                  |   | 471 |  |   | 440 |  |   | 934 |  |   | 872 |  |
| Net income applicable to common stock                                                       |   | $ | 1,282 |  |   | $ | 666 |  |   | $ | 2,426 |  |   | $ | 1,184 |  |
| Net income allocated to common shareholders                                                 |   | $ | 1,226 |  |   | $ | 661 |  |   | $ | 2,365 |  |   | $ | 1,176 |  |
| Earnings per share:                                                                         |   |   |  |   |   |  |   |   |  |   |   |  |
| Basic                                                                                       |   | 0.14 |  |   | 0.07 |  |   | $ | 0.26 |  |   | $ | 0.13 |  |
| Diluted                                                                                     |   | 0.14 |  |   | 0.07 |  |   | $ | 0.26 |  |   | $ | 0.13 |  |

----

|                                                                                                                                                                                                                                                             |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                             |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| (Dollars in thousands)                                                                                                                                                                                                                            |   | Three Months Ended |   | Six Months Ended |
|                                                                                                                                                                                                                                                        |   | June 30 |   | June 30 |
|                                                                                                                                                                                                                                                        |   | 2012 |   | 2011 |   | 2012 |   | 2011 |
| Net income                                                                                                                                                                                                                                                  |   | $ | 1,753 |  |   | $ | 1,106 |  |   | $ | 3,360 |  |   | $ | 2,056 |  |
| Other comprehensive income (loss):                                                                                                                                                                                                                          |   |   |  |   |   |  |   |   |  |   |   |  |
| Unrealized gains (losses) on securities:                                                                                                                                                                                                               |   |   |  |   |   |  |   |   |  |   |   |  |
| Unrealized gains on securities available for sale arising during the period, net of tax of $557 and $1,161 for the three months ended June 30 and $713 and $1,349 for the six months ended June 30                                                          |   | 936 |  |   | 1,953 |  |   | 1,205 |  |   | 2,269 |  |
| Unrealized gains (losses) on other-than-temporarily impaired securities available for sale arising during the period, net of tax of $7 and $30 for the three months ended June 30 and $13 and $5 for the six months ended June 30                           |   | (14 | ) |   | 50 |  |   | 19 |  |   | 7 |  |
| Reclassification adjustment for gains on securities available for sale included in net income, net of tax of $0 and $127 for the three months ended June 30 and $220 and $630 for the six months ended June 30                                              |   | (1 | ) |   | (214 | ) |   | (372 | ) |   | (1,060 | ) |
| Reclassification adjustment for credit related other-than-temporary impairment losses on securities available for sale included in net income, net of tax of $1 and $32 for the three months ended June 30 and $1 and $142 for the six months ended June 30 |   | 3 |  |   | 53 |  |   | 3 |  |   | 239 |  |
| Unrealized losses net of settlements on cash flow hedge arising during the period, net of tax of $232 and $330 for the three months ended June 30 and $192 and $266 for the six months ended June 30                                                        |   | (389 | ) |   | (555 | ) |   | (323 | ) |   | (448 | ) |
| Defined benefit pension plans:                                                                                                                                                                                                                              |   |   |  |   |   |  |   |   |  |   |   |  |
| Amortization of prior service cost, net of tax of $0 and $2 for the three months ended June 30 and $0 and $4 for the six months ended June 30                                                                                                               |   | — |  |   | (4 | ) |   | — |  |   | (8 | ) |
| Amortization of actuarial loss, net of tax of $199 and $92 for the three months ended June 30 and $398 and $183 for the six months ended June 30                                                                                                            |   | 335 |  |   | 154 |  |   | 670 |  |   | 309 |  |
| Other comprehensive income                                                                                                                                                                                                                                  |   | 870 |  |   | 1,437 |  |   | 1,202 |  |   | 1,308 |  |
| Total comprehensive income                                                                                                                                                                                                                                  |   | $ | 2,623 |  |   | $ | 2,543 |  |   | $ | 4,562 |  |   | $ | 3,364 |  |

----

|                                               |
|-----------------------------------------------|
|                                               |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| (Dollars in thousands, except per share data) |   |   |   |   |   |   |   |   |   |   |
|                                          |   | Preferred Stock |   | Common Stock |   | Additional Paid-In Capital |   | Nonvested Restricted Stock Awards |   | Retained Earnings |   | Accumulated Other Comprehensive Income (Loss) |   | Total |
| January 1, 2011                          |   | $ | 16,390 |  |   | $ | 45,534 |  |   | $ | 31,883 |  |   | $ | 784 |  |   | $ | 12,225 |  |   | $ | 249 |  |   | $ | 107,065 |  |
| Net income                                    |   | — |  |   | — |  |   | — |  |   | — |  |   | 2,056 |  |   | — |  |   | 2,056 |  |
| Cash dividends ($.02 per share)               |   | — |  |   | — |  |   | — |  |   | — |  |   | (185 | ) |   | — |  |   | (185 | ) |
| 18,584 shares granted to directors            |   | — |  |   | 93 |  |   | (23 | ) |   | — |  |   | — |  |   |  |  |   | 70 |  |
| Dividends and accretion on preferred stock    |   | 572 |  |   | — |  |   | — |  |   | — |  |   | (872 | ) |   | — |  |   | (300 | ) |
| 6,000 restricted share awards vested          |   | — |  |   | 30 |  |   | 71 |  |   | (101 | ) |   | — |  |   | — |  |   | — |  |
| Share-based compensation expense recognized   |   | — |  |   | — |  |   | 4 |  |   | 35 |  |   | — |  |   | — |  |   | 39 |  |
| Net change                                    |   | — |  |   | — |  |   | — |  |   | — |  |   | — |  |   | 1,308 |  |   | 1,308 |  |
| June 30, 2011                            |   | $ | 16,962 |  |   | $ | 45,657 |  |   | $ | 31,935 |  |   | $ | 718 |  |   | $ | 13,224 |  |   | $ | 1,557 |  |   | $ | 110,053 |  |
| January 1, 2012                          |   | $ | 17,564 |  |   | $ | 45,775 |  |   | $ | 31,895 |  |   | $ | 674 |  |   | $ | 14,456 |  |   | $ | (768 | ) |   | $ | 109,596 |  |
| Net income                                    |   | — |  |   | — |  |   | — |  |   | — |  |   | 3,360 |  |   | — |  |   | 3,360 |  |
| Cash dividends ($.02 per share)               |   | — |  |   | — |  |   | — |  |   | — |  |   | (189 | ) |   | — |  |   | (189 | ) |
| 17,162 shares granted to directors            |   | — |  |   | 85 |  |   | (8 | ) |   | — |  |   | — |  |   | — |  |   | 77 |  |
| Dividends and accretion on preferred stock    |   | 634 |  |   | — |  |   | — |  |   | — |  |   | (934 | ) |   | — |  |   | (300 | ) |
| Share-based compensation expense recognized   |   | — |  |   | — |  |   | 3 |  |   | 162 |  |   | 6 |  |   | — |  |   | 171 |  |
| Net change                                    |   | — |  |   | — |  |   | — |  |   | — |  |   | — |  |   | 1,202 |  |   | 1,202 |  |
| June 30, 2012                            |   | $ | 18,198 |  |   | $ | 45,860 |  |   | $ | 31,890 |  |   | $ | 836 |  |   | $ | 16,699 |  |   | $ | 434 |  |   | $ | 113,917 |  |

----

|                                                                                   |
|-----------------------------------------------------------------------------------|
|                                                                                   |  |  |  |  |  |  |  |  |
| (Dollars in thousands)                                                  |   | Six Months Ended |
|                                                                              |   | June 30 |
|                                                                              |   | 2012 |   | 2011 |
| Cash flows from operating activities:                                             |   |   |   |   |
| Net income                                                                        |   | $ | 3,360 |  |   | $ | 2,056 |  |
| Adjustments to reconcile net income to net cash provided by operating activities: |   |   |  |   |   |  |
| Share-based compensation                                                          |   | 248 |  |   | 109 |  |
| Amortization of pension costs                                                     |   | 901 |  |   | 366 |  |
| Depreciation and amortization                                                     |   | 1,170 |  |   | 1,290 |  |
| Provision for loan losses                                                         |   | 4,560 |  |   | 4,860 |  |
| Net investment amortization                                                       |   | 2,112 |  |   | 1,017 |  |
| Net change in unearned fees/deferred costs on loans                               |   | (992 | ) |   | (421 | ) |
| Capitalized dividends on FHLB stock                                               |   | (14 | ) |   | (14 | ) |
| Gain on securities available for sale                                             |   | (592 | ) |   | (1,690 | ) |
| Impairment loss on securities available for sale                                  |   | 4 |  |   | 381 |  |
| Gain on loans held for sale                                                       |   | (1,497 | ) |   | (438 | ) |
| Other real estate losses                                                          |   | 2,254 |  |   | 3,195 |  |
| Other asset sales losses                                                          |   | 95 |  |   | 140 |  |
| Deferred income taxes                                                             |   | 1,109 |  |   | 407 |  |
| Originations of loans held for sale, net of repayments                            |   | (69,201 | ) |   | (24,746 | ) |
| Sales proceeds of loans held for sale                                             |   | 70,376 |  |   | 29,132 |  |
| (Increase) decrease in:                                                           |   |   |  |   |   |  |
| Accrued interest receivable                                                       |   | 62 |  |   | 410 |  |
| Cash surrender value of bank owned life insurance                                 |   | (369 | ) |   | (359 | ) |
| Other assets                                                                      |   | (1,785 | ) |   | (655 | ) |
| Increase (decrease) in:                                                           |   |   |  |   |   |  |
| Accrued interest payable                                                          |   | (180 | ) |   | (164 | ) |
| Other liabilities                                                                 |   | 2,649 |  |   | 718 |  |
| Net cash provided by operating activities                                         |   | 14,270 |  |   | 15,594 |  |
| Cash flows from investing activities:                                             |   |   |  |   |   |  |
| Purchases of securities available for sale                                        |   | (136,027 | ) |   | (101,320 | ) |
| Sales of securities available for sale                                            |   | 42,837 |  |   | 61,074 |  |
| Maturities of securities available for sale                                       |   | 36,131 |  |   | 26,655 |  |
| Purchases of loans held for investment                                            |   | (2,259 | ) |   | (821 | ) |
| Net decrease in other loans held for investment                                   |   | 13,534 |  |   | 7,483 |  |
| Net (increase) decrease in:                                                       |   |   |  |   |   |  |
| Interest bearing bank balances                                                    |   | 18,682 |  |   | (31,744 | ) |
| Federal funds sold                                                                |   | 18,250 |  |   | — |  |
| Bank premises and equipment                                                       |   | (449 | ) |   | (944 | ) |
| Net purchases of bank owned life insurance                                        |   | (19 | ) |   | (25 | ) |
| Proceeds from sales of other real estate and other repossessed assets             |   | 6,688 |  |   | 4,863 |  |
| Net cash used in investing activities                                             |   | (2,632 | ) |   | (34,779 | ) |

----

|                                                              |
|--------------------------------------------------------------|
|                                                              |  |  |  |  |  |  |  |  |
| (Dollars in thousands)                             |   | Six Months Ended |
|                                                         |   | June 30 |
|                                                         |   | 2012 |   | 2011 |
| Cash flows from financing activities:                        |   |   |   |   |
| Net increase (decrease) in deposits                          |   | $ | (10,136 | ) |   | $ | 49,075 |  |
| Net decrease in short-term borrowings                        |   | (1,174 | ) |   | (28,434 | ) |
| Proceeds from other borrowings                               |   | — |  |   | 686 |  |
| Repayments of other borrowings                               |   | (2,668 | ) |   | (5,610 | ) |
| Common dividends paid                                        |   | (189 | ) |   | (185 | ) |
| Preferred dividends paid                                     |   | (300 | ) |   | (300 | ) |
| Net cash provided by (used in) financing activities          |   | (14,467 | ) |   | 15,232 |  |
| Net decrease in cash and due from banks                      |   | (2,829 | ) |   | (3,953 | ) |
| Cash and due from banks at January 1                         |   | 39,976 |  |   | 45,099 |  |
| Cash and due from banks at June 30                           |   | $ | 37,147 |  |   | $ | 41,146 |  |
| Supplemental disclosures:                                    |   |   |  |   |   |  |
| Total interest paid                                          |   | $ | 6,417 |  |   | $ | 9,346 |  |
| Total income taxes paid                                      |   | 192 |  |   | 3 |  |
|                                                         |   |   |   |   |
| Transfers of loans from held for sale to held for investment |   | 4,199 |  |   | 454 |  |
| Transfers of loans to foreclosed property                    |   | 3,182 |  |   | 7,618 |  |
| U. S. Treasury preferred dividend accrued but unpaid         |   | 75 |  |   | 75 |  |
| Accretion on U. S. Treasury preferred stock                  |   | 634 |  |   | 572 |  |

----

----

----

----

|                                                  |
|--------------------------------------------------|
|                                                  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|                                             |   |   |   | Fair Value Measurements atJune 30, 2012, Using |   |
|                                             |   | Assets/LiabilitiesMeasured at FairValue |   | QuotedPrices InActiveMarketsForIdenticalAssets |   | SignificantOtherObservableInputs |   | SignificantUnobservableInputs |
| (Dollars in thousands)                 |   | June 30, 2012 |   | (Level 1) |   | (Level 2) |   | (Level 3) |
| U.S. Government sponsored entities               |   | $ | 79,269 |  |   | $ | — |  |   | $ | 79,269 |  |   | $ | — |  |
| Mortgage-backed investments                      |   | 221,589 |  |   | — |  |   | 223,560 |  |   | — |  |
| Obligations of states and political subdivisions |   | 63,180 |  |   | — |  |   | 63,180 |  |   | — |  |
| Collateralized debt obligations                  |   | 850 |  |   | — |  |   | — |  |   | 850 |  |
| Other debt securities                            |   | 12,782 |  |   | — |  |   | 10,811 |  |   | — |  |
| Total securities available for sale              |   | $ | 377,670 |  |   | $ | — |  |   | $ | 376,820 |  |   | $ | 850 |  |
| Mortgage derivative assets                       |   | 576 |  |   | — |  |   | — |  |   | 576 |  |
|                                             |   | $ | 378,246 |  |   | $ | — |  |   | $ | 376,820 |  |   | $ | 1,426 |  |
|                                             |   |   |   |   |   |   |   |   |
| Interest rate swap liability                     |   | $ | 2,349 |  |   | $ | — |  |   | $ | — |  |   | $ | 2,349 |  |
| Mortgage derivative liabilities                  |   | 304 |  |   | — |  |   | — |  |   | 304 |  |
|                                             |   | $ | 2,653 |  |   | $ | — |  |   | $ | — |  |   | $ | 2,653 |  |

|                                                  |
|--------------------------------------------------|
|                                                  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|                                             |   |   |   | Fair Value Measurements atDecember 31, 2011, Using |   |
|                                             |   | Assets/LiabilitiesMeasured at FairValue |   | QuotedPrices InActiveMarketsForIdenticalAssets |   | SignificantOtherObservableInputs |   | SignificantUnobservableInputs |
| (Dollars in thousands)                 |   | December 31, 2011 |   | (Level 1) |   | (Level 2) |   | (Level 3) |
| U.S. Government sponsored entities               |   | $ | 58,792 |  |   | $ | — |  |   | $ | 58,792 |  |   | $ | — |  |
| Mortgage-backed investments                      |   | 203,686 |  |   | — |  |   | 203,686 |  |   | — |  |
| Obligations of states and political subdivisions |   | 54,142 |  |   | — |  |   | 54,142 |  |   | — |  |
| Collateralized debt obligations                  |   | 819 |  |   | — |  |   | — |  |   | 819 |  |
| Other debt securities                            |   | 3,335 |  |   | — |  |   | 3,335 |  |   | — |  |
| Total available for sale securities              |   | $ | 320,774 |  |   | $ | — |  |   | $ | 319,955 |  |   | $ | 819 |  |
| Mortgage derivative assets                       |   | 269 |  |   | — |  |   | — |  |   | 269 |  |
|                                             |   | $ | 321,043 |  |   | $ | — |  |   | $ | 319,955 |  |   | $ | 1,088 |  |
|                                             |   |   |   |   |   |   |   |   |
| Interest rate swap liability                     |   | $ | 1,834 |  |   | $ | — |  |   | $ | — |  |   | $ | 1,834 |  |
| Mortgage derivative liabilities                  |   | 291 |  |   | — |  |   | — |  |   | 291 |  |
|                                             |   | $ | 2,125 |  |   | $ | — |  |   | $ | — |  |   | $ | 2,125 |  |

----

----

|                                                                                                                                                                                      |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                      |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| (Dollars in thousands)                                                                                                                                                     |   | Three Months Ended |   | Six Months Ended |
|                                                                                                                                                                                 |   | June 30, 2012 |   | June 30, 2012 |
|                                                                                                                                                                                 |   | Collateralized Debt Obligations |   | Mortgage Derivatives |   | Interest Rate Swap |   | Collateralized Debt Obligations |   | Mortgage Derivatives |   | Interest Rate Swap |
| Beginning Balance                                                                                                                                                                    |   | $ | 872 |  |   | $ | 81 |  |   | $ | (1,728 | ) |   | $ | 819 |  |   | $ | (22 | ) |   | $ | (1,834 | ) |
| Total gains or losses (realized/unrealized):                                                                                                                                         |   |   |  |   |   |  |   |   |  |   |   |  |   |   |  |   |   |  |
| Other-than-temporary impairment included in earnings                                                                                                                                 |   | (4 | ) |   | — |  |   | — |  |   | (4 | ) |   | — |  |   | — |  |
| Other-than-temporary impairment (included in) transferred from other comprehensive income                                                                                            |   | (4 | ) |   | — |  |   | — |  |   | (4 | ) |   | — |  |   | — |  |
| Other gains/losses included in other comprehensive income                                                                                                                            |   | (14 | ) |   | — |  |   | (772 | ) |   | 39 |  |   | — |  |   | (812 | ) |
| Net swap settlement recorded                                                                                                                                                         |   | — |  |   | — |  |   | 151 |  |   | — |  |   | — |  |   | 297 |  |
| IRLC and FSA issuances                                                                                                                                                               |   | — |  |   | 448 |  |   | — |  |   | — |  |   | 95 |  |   | — |  |
| IRLC and FSA expirations and fair value changes included in earnings                                                                                                                 |   | — |  |   | (180 | ) |   | — |  |   | — |  |   | 50 |  |   | — |  |
| IRLC transfers into closed loans/FSA transferred on sales                                                                                                                            |   | — |  |   | (77 | ) |   | — |  |   | — |  |   | 149 |  |   | — |  |
| Ending Balance                                                                                                                                                                       |   | $ | 850 |  |   | $ | 272 |  |   | $ | (2,349 | ) |   | $ | 850 |  |   | $ | 272 |  |   | $ | (2,349 | ) |
| 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 |   | $ | (4 | ) |   | $ | — |  |   | $ | (151 | ) |   | $ | — |  |   | $ | — |  |   | $ | (297 | ) |

|                                                                                                                                                                                      |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                      |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|                                                                                                                                                                                 |   | Three Months Ended |   | Six Months Ended |
| (Dollars in thousands)                                                                                                                                                     |   | June 30, 2011 |   | June 30, 2011 |
|                                                                                                                                                                                 |   | Collateralized Debt Obligations |   | Mortgage Derivatives |   | Interest Rate Swap |   | Collateralized Debt Obligations |   | Mortgage Derivatives |   | Interest Rate Swap |
| Beginning Balance                                                                                                                                                                    |   | $ | 866 |  |   | $ | 31 |  |   | $ | 988 |  |   | $ | 934 |  |   | 218 |  |   | $ | 817 |  |
| Total gains or losses (realized/unrealized):                                                                                                                                         |   |   |  |   |   |  |   |   |  |   |   |  |   |   |  |   |   |  |
| Other-than-temporary impairment included in earnings                                                                                                                                 |   | (85 | ) |   | — |  |   | — |  |   | (381 | ) |   | — |  |   | — |  |
| Other-than-temporary impairment (included in) transferred from other comprehensive income                                                                                            |   | 87 |  |   | — |  |   | — |  |   | 143 |  |   | — |  |   | — |  |
| Other gains/losses included in other comprehensive income                                                                                                                            |   | 78 |  |   | — |  |   | (1,049 | ) |   | 250 |  |   | — |  |   | (907 | ) |
| Net swap settlement recorded                                                                                                                                                         |   | — |  |   | — |  |   | 164 |  |   | — |  |   | — |  |   | 193 |  |
| IRLC and FSA issuances                                                                                                                                                               |   | — |  |   | 39 |  |   | — |  |   | — |  |   | 206 |  |   | — |  |
| IRLC and FSA expirations and fair value changes included in earnings                                                                                                                 |   | — |  |   | (22 | ) |   | — |  |   | — |  |   | (65 | ) |   | — |  |
| IRLC transfers into closed loans/FSA transferred on sales                                                                                                                            |   | — |  |   | (14 | ) |   | — |  |   | — |  |   | (325 | ) |   | — |  |
| Ending Balance                                                                                                                                                                       |   | $ | 946 |  |   | $ | 34 |  |   | $ | 103 |  |   | $ | 946 |  |   | 34 |  |   | $ | 103 |  |
| 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 |   | $ | (85 | ) |   | $ | — |  |   | $ | (164 | ) |   | $ | — |  |   | — |  |   | $ | (193 | ) |

----

|                                        |
|----------------------------------------|
|                                        |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|                                   |   | Fair Value at |   | Valuation |   | Unobservable |   |   |   | Weighted |
| (Dollars in thousands)       |   | June 30, 2012 |   | Techniques |   | Inputs |   | Range |   | Average |
| Collateralized debt obligations        |   | $ | 850 |  |   | Discounted cash flow |   | Discount marginDefault rates |   | 15.00% - 25.00%  0.25% -   1.76% |  |   | 18.63%.74% |  |
| Mortgage interest rate lock agreements |   | 309 |  |   | Discounted cash flow |   | Pull-through rates |   | 85.00 | % |   | 85.00 | % |
| Mortgage forward sale agreements       |   | (37 | ) |   | Consensus pricing |   | Pull-through rates |   | 85.00 | % |   | 85.00 | % |
| Interest rate swap                     |   | (2,349 | ) |   | Discounted cash flow |   | Discount rate |   | .52% - 1.10% |  |   | 0.68 | % |

|                        |
|------------------------|
|                        |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|                   |   |   |   | Fair Value Measurements Using |
|                   |   |   |   | QuotedPrices inActiveMarkets forIdenticalAssets |   | SignificantOtherObservableInputs |   | SignificantUnobservableInputs |
| (Dollars in thousands) |   | 06/30/12 (a) |   | (Level 1) |   | (Level 2) |   | (Level 3) |
| Impaired loans         |   | $ | 8,245 |  |   | $ | — |  |   | $ | — |  |   | $ | 8,245 |  |
| Loan foreclosures      |   | 1,855 |  |   | — |  |   | — |  |   | 1,855 |  |
| Other real estate      |   | 8,732 |  |   | — |  |   | — |  |   | 8,732 |  |

----

|                        |
|------------------------|
|                        |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|                   |   |   |   | Fair Value Measurements Using |
|                   |   |   |   | QuotedPrices inActiveMarkets forIdenticalAssets |   | SignificantOtherObservableInputs |   | SignificantUnobservableInputs |
| (Dollars in thousands) |   | 12/31/11 (a) |   | (Level 1) |   | (Level 2) |   | (Level 3) |
| Impaired loans         |   | $ | 15,533 |  |   | $ | — |  |   | $ | — |  |   | $ | 15,533 |  |
| Loan foreclosures      |   | 11,304 |  |   | — |  |   | — |  |   | 11,304 |  |
| Other real estate      |   | 13,788 |  |   | — |  |   | — |  |   | 13,788 |  |

|     |                                                                                                                                                                                                                                                                                                                                                                                                                   |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (a) | These amounts represent the resulting carrying amounts on the consolidated statement of condition 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. |

|                                  |
|----------------------------------|
|                                  |  |  |  |  |  |  |  |  |  |  |  |  |
|                             |   | Fair Value at |   | Valuation |   | Unobservable |   |   |   | Weighted |
| (Dollars in thousands) |   | June 30, 2012 |   | Techniques |   | Inputs |   | Range |   | Average |
| Impaired loans                   |   | $ | 8,245 |  |   | Appraisals from comparable properties |   | Adjustments for market conditions since appraisal |   | $1 thousand -   $559 thousand |   | $51 thousand |
| Loan foreclosures                |   | 1,855 |  |   | Appraisals from comparable properties |   | Adjustments for market conditions since appraisal |   | $1 thousand -   $68 thousand |   | $25 thousand |
| Other real estate                |   | 8,732 |  |   | Appraisals from comparable properties |   | Adjustments for market conditions since appraisal |   | $9 thousand -   $116 thousand |   | $55 thousand |

----

|                                  |
|----------------------------------|
|                                  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|                             |   | Three Months Ended |   | Six Months Ended |
|                             |   | June 30 |   | June 30 |
| (Dollars in thousands) |   | 2012 |   | 2011 |   | 2012 |   | 2011 |
| Impaired loans (a)               |   | $ | 2,595 |  |   | $ | 2,356 |  |   | $ | 5,442 |  |   | $ | 4,416 |  |
| Loan foreclosures (b)            |   | 1,124 |  |   | 345 |  |   | 1,503 |  |   | 817 |  |
| Other real estate (c)            |   | 536 |  |   | 1,053 |  |   | 1,636 |  |   | 3,107 |  |

|     |                                                                                                                                                                                                                     |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (a) | Represents additional impairments on loans which are based on the appraised value of the collateral. These impairments are accrued in the allowance for loan losses and charged to provision for loan loss expense. |

|     |                                                                                                                                                                                                                                                                                |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (b) | Represents foreclosures of loans secured by real estate when the foreclosed value is lower than the carrying value of the loan. These amounts are charged to the allowance for loan losses with the fair value of the foreclosed property being recorded in other real estate. |

|     |                                                                                                                              |
|-----|------------------------------------------------------------------------------------------------------------------------------|
| (c) | Represents related losses of foreclosed properties that were measured at fair value subsequent to their initial acquisition. |

----

|                                                    |
|----------------------------------------------------|
|                                                    |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|                                               |   |   |   |   |   | Fair Value Measurements atJune 30, 2012, Using |
|                                               |   | June 30, 2012 |   | Quoted Prices In Active Markets For Identical Assets |   | Significant Other Observable Inputs |   | Significant Unobservable Inputs |
| (Dollars in thousands)                   |   | Carrying |   | Estimated |   |   |   |
|                                               |   | Amount |   | Fair Value |   | (Level 1) |   | (Level 2) |   | (Level 3) |
| Financial assets:                                  |   |   |   |   |   |   |   |   |   |   |
| Cash and short-term investments                    |   | $ | 64,605 |  |   | $ | 64,605 |  |   | $ | 64,605 |  |   | $ | — |  |   | $ | — |  |
| Securities available for sale                      |   | 377,670 |  |   | 377,670 |  |   | — |  |   | 376,820 |  |   | 850 |  |
| Loans held for sale                                |   | 22,291 |  |   | 22,893 |  |   | — |  |   | — |  |   | 22,893 |  |
| Loans held for investment                          |   | 967,286 |  |   | 909,021 |  |   | — |  |   | — |  |   | 909,021 |  |
| Agency accounts receivable                         |   | 201 |  |   | 201 |  |   | 201 |  |   | — |  |   | — |  |
| Accrued interest receivable                        |   | 6,060 |  |   | 6,060 |  |   | 6 |  |   | 1,745 |  |   | 4,309 |  |
| Nonmarketable equity investments                   |   | 7,394 |  |   | 7,394 |  |   | — |  |   | — |  |   | 7,394 |  |
| Investments in unconsolidated VIEs                 |   | 3,281 |  |   | 3,281 |  |   | — |  |   | — |  |   | 3,281 |  |
| Mortgage derivative assets                         |   | 576 |  |   | 576 |  |   | — |  |   | — |  |   | 576 |  |
| Financial liabilities:                             |   |   |  |   |   |  |   |   |   |   |   |   |
| Noninterest-bearing deposits                       |   | 236,145 |  |   | 236,145 |  |   | 236,145 |  |   | — |  |   | — |  |
| NOW, MMDA and savings deposits                     |   | 719,771 |  |   | 719,771 |  |   | 719,771 |  |   | — |  |   | — |  |
| Certificates of deposit                            |   | 405,422 |  |   | 412,408 |  |   | — |  |   | — |  |   | 412,408 |  |
| Short-term borrowings                              |   | 3,224 |  |   | 3,224 |  |   | 3,224 |  |   | — |  |   | — |  |
| Other borrowings                                   |   | 40,333 |  |   | 42,130 |  |   | — |  |   | — |  |   | 42,130 |  |
| Junior subordinated debt                           |   | 30,928 |  |   | 25,250 |  |   | — |  |   | — |  |   | 25,250 |  |
| Agency accounts payable                            |   | 1,518 |  |   | 1,518 |  |   | 1,518 |  |   | — |  |   | — |  |
| Accrued interest payable                           |   | 844 |  |   | 844 |  |   | 844 |  |   | — |  |   | 844 |  |
| Mortgage derivative liabilities                    |   | 304 |  |   | 304 |  |   | — |  |   | — |  |   | 304 |  |
| Other financial instruments:                       |   |   |  |   |   |  |   |   |   |   |   |   |
| Commitments to extend credit and letters of credit |   | (2 | ) |   | (319 | ) |   | — |  |   | — |  |   | (319 | ) |
| Interest rate swap                                 |   | (2,349 | ) |   | (2,349 | ) |   | — |  |   | — |  |   | (2,349 | ) |

----

|                                                    |
|----------------------------------------------------|
|                                                    |  |  |  |  |  |  |  |  |
|                                               |   | December 31, 2011 |
| (Dollars in thousands)                   |   | Carrying Amount |   | Estimated Fair Value |
| Financial assets:                                  |   |   |   |   |
| Cash and short-term investments                    |   | $ | 104,367 |  |   | $ | 104,367 |  |
| Securities available for sale                      |   | 320,774 |  |   | 320,774 |  |
| Loans held for sale                                |   | 26,073 |  |   | 27,053 |  |
| Loans held for investment                          |   | 981,387 |  |   | 921,351 |  |
| Agency accounts receivable                         |   | 217 |  |   | 217 |  |
| Accrued interest receivable                        |   | 6,122 |  |   | 6,122 |  |
| Nonmarketable equity investments                   |   | 7,380 |  |   | 7,380 |  |
| Investments in unconsolidated VIEs                 |   | 3,425 |  |   | 3,425 |  |
| Mortgage derivative assets                         |   | 269 |  |   | 269 |  |
| Financial liabilities:                             |   |   |   |   |
| Noninterest-bearing deposits                       |   | 231,718 |  |   | 231,718 |  |
| NOW, MMDA and savings deposits                     |   | 707,798 |  |   | 707,798 |  |
| Certificates of deposit                            |   | 431,947 |  |   | 439,518 |  |
| Short-term borrowings                              |   | 4,398 |  |   | 4,398 |  |
| Other borrowings                                   |   | 43,001 |  |   | 45,193 |  |
| Junior subordinated debt                           |   | 30,928 |  |   | 25,204 |  |
| Agency accounts payable                            |   | 641 |  |   | 641 |  |
| Accrued interest payable                           |   | 1,023 |  |   | 1,023 |  |
| Mortgage derivative liabilities                    |   | 291 |  |   | 291 |  |
| Other financial instruments:                       |   |   |   |   |
| Commitments to extend credit and letters of credit |   | (4 | ) |   | (320 | ) |
| Interest rate swap                                 |   | (1,834 | ) |   | (1,834 | ) |

----

----

|                                                  |
|--------------------------------------------------|
|                                                  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|                                             |   |   |   | Gross Unrealized |   |   |
| (Dollars in thousands)                 |   | Amortized Cost |   | Gains |   | Losses |   | Fair Value |
| June 30, 2012:                                   |   |   |   |   |   |   |   |   |
| U.S. Government sponsored entities               |   | $ | 78,698 |  |   | $ | 625 |  |   | $ | 54 |  |   | $ | 79,269 |  |
| Mortgage-backed investments                      |   | 216,506 |  |   | 5,236 |  |   | 153 |  |   | 221,589 |  |
| Obligations of states and political subdivisions |   | 60,287 |  |   | 2,980 |  |   | 87 |  |   | 63,180 |  |
| Collateralized debt obligations                  |   | 3,132 |  |   | — |  |   | 2,282 |  |   | 850 |  |
| Other debt securities                            |   | 12,801 |  |   | 38 |  |   | 57 |  |   | 12,782 |  |
|                                             |   | $ | 371,424 |  |   | $ | 8,879 |  |   | $ | 2,633 |  |   | $ | 377,670 |  |
| December 31, 2011:                               |   |   |  |   |   |  |   |   |  |   |   |  |
| U.S. Government sponsored entities               |   | $ | 58,714 |  |   | $ | 174 |  |   | $ | 96 |  |   | $ | 58,792 |  |
| Mortgage-backed investments                      |   | 198,832 |  |   | 5,016 |  |   | 162 |  |   | 203,686 |  |
| Obligations of states and political subdivisions |   | 51,763 |  |   | 2,459 |  |   | 80 |  |   | 54,142 |  |
| Collateralized debt obligations                  |   | 3,137 |  |   | — |  |   | 2,318 |  |   | 819 |  |
| Other debt securities                            |   | 3,444 |  |   | 25 |  |   | 134 |  |   | 3,335 |  |
|                                             |   | $ | 315,890 |  |   | $ | 7,674 |  |   | $ | 2,790 |  |   | $ | 320,774 |  |

|                                                  |
|--------------------------------------------------|
|                                                  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| (Dollars in thousands)                 |   | Less Than 12 Months |   | 12 Months or More |   | Total |
|                                             |   | Fair Value |   | Unrealized Losses |   | Fair Value |   | Unrealized Losses |   | Fair Value |   | Unrealized Losses |
| June 30, 2012:                                   |   |   |  |   |   |  |   |   |  |   |   |  |   |   |  |   |   |  |
| U.S. Government sponsored entities               |   | $ | 20,506 |  |   | $ | 54 |  |   | $ | — |  |   | $ | — |  |   | $ | 20,506 |  |   | $ | 54 |  |
| Mortgage-backed investments                      |   | 20,184 |  |   | 153 |  |   | — |  |   | — |  |   | 20,184 |  |   | 153 |  |
| Obligations of states and political subdivisions |   | 7,122 |  |   | 87 |  |   | — |  |   | — |  |   | 7,122 |  |   | 87 |  |
| Collateralized debt obligations                  |   | — |  |   | — |  |   | 850 |  |   | 2,282 |  |   | 850 |  |   | 2,282 |  |
| Other debt securities                            |   | 9,304 |  |   | 32 |  |   | 2,437 |  |   | 25 |  |   | 11,741 |  |   | 57 |  |
|                                             |   | $ | 57,116 |  |   | $ | 326 |  |   | $ | 3,287 |  |   | $ | 2,307 |  |   | $ | 60,403 |  |   | $ | 2,633 |  |
| December 31, 2011:                               |   |   |  |   |   |  |   |   |  |   |   |  |   |   |  |   |   |  |
| U.S. Government sponsored entities               |   | $ | 23,734 |  |   | $ | 96 |  |   | $ | — |  |   | $ | — |  |   | $ | 23,734 |  |   | $ | 96 |  |
| Mortgage-backed investments                      |   | 32,280 |  |   | 162 |  |   | — |  |   | — |  |   | 32,280 |  |   | 162 |  |
| Obligations of states and political subdivisions |   | 7,613 |  |   | 80 |  |   | — |  |   | — |  |   | 7,613 |  |   | 80 |  |
| Collateralized debt obligations                  |   | — |  |   | — |  |   | 819 |  |   | 2,318 |  |   | 819 |  |   | 2,318 |  |
| Other debt securities                            |   | 2,317 |  |   | 134 |  |   | — |  |   | — |  |   | 2,317 |  |   | 134 |  |
|                                             |   | $ | 65,944 |  |   | $ | 472 |  |   | $ | 819 |  |   | $ | 2,318 |  |   | $ | 66,763 |  |   | $ | 2,790 |  |

----

|                                                      |
|------------------------------------------------------|
|                                                      |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|                                                 |   | Three Months Ended |   | Six Months Ended |
| (Dollars in thousands)                     |   | June 30 |   | June 30 |
|                                                 |   | 2012 |   | 2011 |   | 2012 |   | 2011 |
| Beginning balance                                    |   | $ | 1,863 |  |   | $ | 1,528 |  |   | $ | 1,863 |  |   | $ | 1,232 |  |
| OTTI credit losses on previously impaired securities |   | 4 |  |   | 85 |  |   | 4 |  |   | 381 |  |
| Ending balance                                       |   | $ | 1,867 |  |   | $ | 1,613 |  |   | $ | 1,867 |  |   | $ | 1,613 |  |

----

|                                                                                             |
|---------------------------------------------------------------------------------------------|
|                                                                                             |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|                                                                                        |   | Three Months Ended |   | Six Months Ended |
| (Dollars in thousands)                                                            |   | June 30 |   | June 30 |
|                                                                                        |   | 2012 |   | 2011 |   | 2012 |   | 2011 |
| Proceeds from sales                                                                         |   | $ | 8,855 |  |   | $ | 19,653 |  |   | $ | 42,837 |  |   | $ | 61,074 |  |
| Gross realized gains                                                                        |   | 6 |  |   | 388 |  |   | 688 |  |   | 1,746 |  |
| Gross realized losses                                                                       |   | 5 |  |   | 47 |  |   | 96 |  |   | 56 |  |
| Net gains from sales                                                                        |   | $ | 1 |  |   | $ | 341 |  |   | $ | 592 |  |   | $ | 1,690 |  |
| Gross recognized losses related to the credit component of other-than-temporary impairments |   | $ | 4 |  |   | $ | 85 |  |   | $ | 4 |  |   | $ | 381 |  |

|                              |
|------------------------------|
|                              |  |  |  |  |  |  |  |  |
| (Dollars in thousands)       |   | Amortized Cost |   | Fair Value |
| One year or less             |   | $ | 20,830 |  |   | $ | 20,928 |  |
| After one through five years |   | 80,289 |  |   | 81,765 |  |
| After five through ten years |   | 38,256 |  |   | 39,740 |  |
| After ten years              |   | 15,543 |  |   | 13,648 |  |
|                         |   | 154,918 |  |   | 156,081 |  |
| Mortgage-backed investments  |   | 216,506 |  |   | 221,589 |  |
|                         |   | $ | 371,424 |  |   | $ | 377,670 |  |

----

|                                         |
|-----------------------------------------|
|                                         |  |  |  |  |  |  |  |  |
| (Dollars in thousands)        |   | June 30, 2012 |   | December 31, 2011 |
| Construction and land development loans |   | $ | 67,814 |  |   | $ | 69,325 |  |
| Other commercial real estate loans      |   | 499,370 |  |   | 505,180 |  |
| Asset-based loans                       |   | 36,689 |  |   | 37,540 |  |
| Other commercial loans                  |   | 111,084 |  |   | 117,790 |  |
| Home equity loans                       |   | 36,183 |  |   | 37,024 |  |
| Other 1-4 family residential loans      |   | 189,927 |  |   | 186,815 |  |
| Consumer loans                          |   | 41,529 |  |   | 42,666 |  |
| Total loans                             |   | $ | 982,596 |  |   | $ | 996,340 |  |

|                                         |
|-----------------------------------------|
|                                         |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| (Dollars in thousands)        |   | 30-59 Days Past Due |   | 60-89 Days Past Due |   | Greater Than 90 Days |   | Total Past Due |   | Current |   | Total Loans Receivable |   | Total Loans > 90 Days and Accruing |
| Construction and land development loans |   | $ | 556 |  |   | $ | 64 |  |   | $ | 1,078 |  |   | $ | 1,698 |  |   | $ | 66,116 |  |   | $ | 67,814 |  |   | $ | — |  |
| Other commercial real estate loans      |   | 1,155 |  |   | 499 |  |   | 2,832 |  |   | 4,486 |  |   | 494,884 |  |   | 499,370 |  |   | 1,368 |  |
| Asset based loans                       |   | — |  |   | — |  |   | — |  |   | — |  |   | 36,689 |  |   | 36,689 |  |   | — |  |
| Other commercial loans                  |   | 433 |  |   | 53 |  |   | 289 |  |   | 775 |  |   | 110,309 |  |   | 111,084 |  |   | 80 |  |
| Home equity loans                       |   | 209 |  |   | 80 |  |   | 17 |  |   | 306 |  |   | 35,877 |  |   | 36,183 |  |   | — |  |
| Other 1-4 family residential loans      |   | 1,641 |  |   | 567 |  |   | 708 |  |   | 2,916 |  |   | 187,011 |  |   | 189,927 |  |   | 81 |  |
| Consumer loans                          |   | 188 |  |   | 37 |  |   | 14 |  |   | 239 |  |   | 41,290 |  |   | 41,529 |  |   | 8 |  |
| Total                                   |   | $ | 4,182 |  |   | $ | 1,300 |  |   | $ | 4,938 |  |   | $ | 10,420 |  |   | $ | 972,176 |  |   | $ | 982,596 |  |   | $ | 1,537 |  |

----

|                                         |
|-----------------------------------------|
|                                         |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| (Dollars in thousands)                  |   | 30-59 Days Past Due |   | 60-89 Days Past Due |   | Greater Than 90 Days |   | Total Past Due |   | Current |   | Total Loans Receivable |   | Total Loans > 90 Days and Accruing |
| Construction and land development loans |   | $ | 603 |  |   | $ | — |  |   | $ | 4,172 |  |   | $ | 4,775 |  |   | $ | 64,550 |  |   | $ | 69,325 |  |   | $ | 72 |  |
| Other commercial real estate loans      |   | 2,194 |  |   | 679 |  |   | 9,792 |  |   | 12,665 |  |   | 492,515 |  |   | 505,180 |  |   | 279 |  |
| Asset based loans                       |   | — |  |   | — |  |   | — |  |   | — |  |   | 37,540 |  |   | 37,540 |  |   | — |  |
| Other commercial loans                  |   | 546 |  |   | 442 |  |   | 419 |  |   | 1,407 |  |   | 116,383 |  |   | 117,790 |  |   | 50 |  |
| Home equity loans                       |   | 121 |  |   | 37 |  |   | 141 |  |   | 299 |  |   | 36,725 |  |   | 37,024 |  |   | — |  |
| Other 1-4 family residential loans      |   | 2,978 |  |   | 303 |  |   | 981 |  |   | 4,262 |  |   | 182,553 |  |   | 186,815 |  |   | 174 |  |
| Consumer loans                          |   | 214 |  |   | 67 |  |   | 41 |  |   | 322 |  |   | 42,344 |  |   | 42,666 |  |   | 27 |  |
| Total                                   |   | $ | 6,656 |  |   | $ | 1,528 |  |   | $ | 15,546 |  |   | $ | 23,730 |  |   | $ | 972,610 |  |   | $ | 996,340 |  |   | $ | 602 |  |

|                                           |
|-------------------------------------------|
|                                           |  |  |  |  |  |  |  |  |
| (Dollars in thousands)          |   | June 30, 2012 |   | December 31, 2011 |
| Construction and land development loans   |   | $ | 1,373 |  |   | $ | 4,398 |  |
| Other commercial real estate loans        |   | 2,557 |  |   | 9,937 |  |
| Asset based loans                         |   | — |  |   | — |  |
| Other commercial loans                    |   | 629 |  |   | 913 |  |
| Home equity loans                         |   | 116 |  |   | 474 |  |
| Other 1-4 family residential loans        |   | 1,748 |  |   | 1,422 |  |
| Consumer loans                            |   | 20 |  |   | 33 |  |
| Total nonaccrual loans                    |   | $ | 6,443 |  |   | $ | 17,177 |  |
| Other real estate owned                   |   | 31,077 |  |   | 36,952 |  |
| Total nonperforming credit-related assets |   | $ | 37,520 |  |   | $ | 54,129 |  |

----

----

|                                  |
|----------------------------------|
|                                  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| (Dollars in thousands) |   |   |   |   |   |   |   |   |
|                             |   | Construction |   | Other Commercial Real Estate |   | Asset-Based |   | Other Commercial |
| 10 and 20                        |   | $ | — |  |   | $ | — |  |   | $ | — |  |   | $ | 20,919 |  |
| 30-32                            |   | 43,604 |  |   | 403,986 |  |   | 24,065 |  |   | 86,496 |  |
| 40                               |   | 12,838 |  |   | 65,839 |  |   | 11,572 |  |   | 2,298 |  |
| 50                               |   | 10,772 |  |   | 29,545 |  |   | 1,052 |  |   | 1,296 |  |
| 60                               |   | 600 |  |   | — |  |   | — |  |   | 75 |  |
| Total                            |   | $ | 67,814 |  |   | $ | 499,370 |  |   | $ | 36,689 |  |   | $ | 111,084 |  |

|                                  |
|----------------------------------|
|                                  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| (Dollars in thousands) |   |   |   |   |   |   |   |   |
|                             |   | Home Equity |   | Other 1-4 Family |   | Consumer |   | Total |
| 10 and 20                        |   | $ | — |  |   | $ | 114 |  |   | $ | 13,291 |  |   | $ | 34,324 |  |
| 30-32                            |   | 34,033 |  |   | 174,642 |  |   | 27,427 |  |   | 794,253 |  |
| 40                               |   | 977 |  |   | 8,745 |  |   | 605 |  |   | 102,874 |  |
| 50                               |   | 1,173 |  |   | 6,335 |  |   | 203 |  |   | 50,376 |  |
| 60                               |   | — |  |   | 91 |  |   | 3 |  |   | 769 |  |
| Total                            |   | $ | 36,183 |  |   | $ | 189,927 |  |   | $ | 41,529 |  |   | $ | 982,596 |  |

----

|                                  |
|----------------------------------|
|                                  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| (Dollars in thousands) |   |   |   |   |   |   |   |   |
|                             |   | Construction |   | Other Commercial Real Estate |   | Asset-Based |   | Other Commercial |
| 10 and 20                        |   | $ | — |  |   | $ | — |  |   | $ | — |  |   | $ | 11,085 |  |
| 30-32                            |   | 45,982 |  |   | 406,498 |  |   | 29,296 |  |   | 103,359 |  |
| 40                               |   | 5,185 |  |   | 57,912 |  |   | 7,096 |  |   | 1,802 |  |
| 50                               |   | 13,059 |  |   | 40,770 |  |   | 1,148 |  |   | 1,466 |  |
| 60                               |   | 5,099 |  |   | — |  |   | — |  |   | 78 |  |
| Total                            |   | $ | 69,325 |  |   | $ | 505,180 |  |   | $ | 37,540 |  |   | $ | 117,790 |  |

|                                  |
|----------------------------------|
|                                  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| (Dollars in thousands) |   |   |   |   |   |   |   |   |
|                             |   | Home Equity |   | Other 1-4 Family |   | Consumer |   | Total |
| 10 and 20                        |   | $ | — |  |   | $ | 119 |  |   | $ | 13,486 |  |   | $ | 24,690 |  |
| 30-32                            |   | 35,824 |  |   | 172,182 |  |   | 28,471 |  |   | 821,612 |  |
| 40                               |   | 585 |  |   | 8,205 |  |   | 544 |  |   | 81,329 |  |
| 50                               |   | 615 |  |   | 6,216 |  |   | 162 |  |   | 63,436 |  |
| 60                               |   | — |  |   | 93 |  |   | 3 |  |   | 5,273 |  |
| Total                            |   | $ | 37,024 |  |   | $ | 186,815 |  |   | $ | 42,666 |  |   | $ | 996,340 |  |

----

|                                               |
|-----------------------------------------------|
|                                               |  |  |  |  |  |  |  |  |  |  |  |  |
| (Dollars in thousands)              |   |   |   |   |   |   |
|                                          |   | Recorded Balance |   | Unpaid Principal Balance |   | Specific Allowance |
| Loans without a specific valuation allowance: |   |   |   |   |   |   |
| Construction and land development loans       |   | $ | 7,028 |  |   | $ | 9,382 |  |   | $ | — |  |
| Other commercial real estate loans            |   | 37,763 |  |   | 39,601 |  |   | — |  |
| Asset based loans                             |   | — |  |   | — |  |   | — |  |
| Other commercial loans                        |   | 687 |  |   | 713 |  |   | — |  |
| Home equity loans                             |   | 1,099 |  |   | 1,099 |  |   | — |  |
| Other 1-4 family residential loans            |   | 4,187 |  |   | 4,245 |  |   | — |  |
| Consumer loans                                |   | 112 |  |   | 124 |  |   | — |  |
| Loans with a specific valuation allowance:    |   |   |  |   |   |  |   |   |  |
| Construction and land development loans       |   | $ | 4,344 |  |   | $ | 4,344 |  |   | $ | 1,120 |  |
| Other commercial real estate loans            |   | 6,933 |  |   | 6,962 |  |   | 1,372 |  |
| Asset based loans                             |   | — |  |   | — |  |   | — |  |
| Other commercial loans                        |   | 684 |  |   | 813 |  |   | 496 |  |
| Home equity loans                             |   | 74 |  |   | 74 |  |   | 36 |  |
| Other 1-4 family residential loans            |   | 2,239 |  |   | 2,239 |  |   | 520 |  |
| Consumer loans                                |   | 94 |  |   | 95 |  |   | 94 |  |
| Total:                                        |   |   |  |   |   |  |   |   |  |
| Construction and land development loans       |   | $ | 11,372 |  |   | $ | 13,726 |  |   | $ | 1,120 |  |
| Other commercial real estate loans            |   | 44,696 |  |   | 46,563 |  |   | 1,372 |  |
| Asset based loans                             |   | — |  |   | — |  |   | — |  |
| Other commercial loans                        |   | 1,371 |  |   | 1,526 |  |   | 496 |  |
| Home equity loans                             |   | 1,173 |  |   | 1,173 |  |   | 36 |  |
| Other 1-4 family residential loans            |   | 6,426 |  |   | 6,484 |  |   | 520 |  |
| Consumer loans                                |   | 206 |  |   | 219 |  |   | 94 |  |

----

|                                               |
|-----------------------------------------------|
|                                               |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| (Dollars in thousands)              |   | Average Investment In Impaired Loans |   | Interest Income Recognized |   | Average Investment In Impaired Loans |   | Interest Income Recognized |
|                                          |   | Quarter-to-Date |   | Quarter-to-Date |   | Year-to-Date |   | Year-to-Date |
| Loans without a specific valuation allowance: |   |   |   |   |   |   |   |   |
| Construction and land development loans       |   | $ | 11,818 |  |   | $ | 77 |  |   | $ | 12,856 |  |   | $ | 228 |  |
| Other commercial real estate loans            |   | 35,435 |  |   | 435 |  |   | 34,911 |  |   | 844 |  |
| Asset based loans                             |   | — |  |   | — |  |   | — |  |   | — |  |
| Other commercial loans                        |   | 664 |  |   | 13 |  |   | 669 |  |   | 22 |  |
| Home equity loans                             |   | 1,135 |  |   | 13 |  |   | 732 |  |   | 14 |  |
| Other 1-4 family residential loans            |   | 4,159 |  |   | 65 |  |   | 4,716 |  |   | 118 |  |
| Consumer loans                                |   | 108 |  |   | 3 |  |   | 119 |  |   | 5 |  |
| Loans with a specific valuation allowance:    |   |   |  |   |   |  |   |   |  |   |   |  |
| Construction and land development loans       |   | $ | 4,351 |  |   | $ | 70 |  |   | $ | 4,491 |  |   | $ | 101 |  |
| Other commercial real estate loans            |   | 11,178 |  |   | 168 |  |   | 10,400 |  |   | 229 |  |
| Asset based loans                             |   | — |  |   | — |  |   | — |  |   | — |  |
| Other commercial loans                        |   | 576 |  |   | 1 |  |   | 698 |  |   | 7 |  |
| Home equity loans                             |   | 76 |  |   | 4 |  |   | 201 |  |   | 6 |  |
| Other 1-4 family residential loans            |   | 2,561 |  |   | 18 |  |   | 2,460 |  |   | 49 |  |
| Consumer loans                                |   | 126 |  |   | 2 |  |   | 87 |  |   | 3 |  |
| Total:                                        |   |   |  |   |   |  |   |   |  |   |   |  |
| Construction and land development loans       |   | $ | 16,169 |  |   | $ | 147 |  |   | $ | 17,347 |  |   | $ | 329 |  |
| Other commercial real estate loans            |   | 46,613 |  |   | 603 |  |   | 45,311 |  |   | 1,073 |  |
| Asset based loans                             |   | — |  |   | — |  |   | — |  |   | — |  |
| Other commercial loans                        |   | 1,240 |  |   | 14 |  |   | 1,367 |  |   | 29 |  |
| Home equity loans                             |   | 1,211 |  |   | 17 |  |   | 933 |  |   | 20 |  |
| Other 1-4 family residential loans            |   | 6,720 |  |   | 83 |  |   | 7,176 |  |   | 167 |  |
| Consumer loans                                |   | 234 |  |   | 5 |  |   | 206 |  |   | 8 |  |

----

|                                               |
|-----------------------------------------------|
|                                               |  |  |  |  |  |  |  |  |  |  |  |  |
| (Dollars in thousands)              |   |   |   |   |   |   |
|                                          |   | Recorded Balance |   | Unpaid Principal Balance |   | Specific Allowance |
| Loans without a specific valuation allowance: |   |   |   |   |   |   |
| Construction and land development loans       |   | $ | 13,493 |  |   | $ | 18,319 |  |   | $ | — |  |
| Other commercial real estate loans            |   | 34,100 |  |   | 36,754 |  |   | — |  |
| Asset based loans                             |   | — |  |   | — |  |   | — |  |
| Other commercial loans                        |   | 728 |  |   | 754 |  |   | — |  |
| Home equity loans                             |   | 721 |  |   | 721 |  |   | — |  |
| Other 1-4 family residential loans            |   | 2,835 |  |   | 2,836 |  |   | — |  |
| Consumer loans                                |   | 452 |  |   | 462 |  |   | — |  |
| Loans with a specific valuation allowance:    |   |   |   |   |   |   |
| Construction and land development loans       |   | $ | 14,209 |  |   | $ | 18,046 |  |   | $ | 3,333 |  |
| Other commercial real estate loans            |   | 16,459 |  |   | 18,129 |  |   | 2,658 |  |
| Asset based loans                             |   | — |  |   | — |  |   | — |  |
| Other commercial loans                        |   | 3,393 |  |   | 3,545 |  |   | 1,341 |  |
| Home equity loans                             |   | — |  |   | — |  |   | — |  |
| Other 1-4 family residential loans            |   | 3,286 |  |   | 3,307 |  |   | 1,261 |  |
| Consumer loans                                |   | 54 |  |   | 54 |  |   | 40 |  |
| Total:                                        |   |   |   |   |   |   |
| Construction and land development loans       |   | $ | 27,702 |  |   | $ | 36,365 |  |   | $ | 3,333 |  |
| Other commercial real estate loans            |   | 50,559 |  |   | 54,883 |  |   | 2,658 |  |
| Asset based loans                             |   | — |  |   | — |  |   | — |  |
| Other commercial loans                        |   | 4,121 |  |   | 4,299 |  |   | 1,341 |  |
| Home equity loans                             |   | 721 |  |   | 721 |  |   | — |  |
| Other 1-4 family residential loans            |   | 6,121 |  |   | 6,143 |  |   | 1,261 |  |
| Consumer loans                                |   | 506 |  |   | 516 |  |   | 40 |  |

----

|                                               |
|-----------------------------------------------|
|                                               |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| (Dollars in thousands)              |   | Average Investment In Impaired Loans |   | Interest Income Recognized |   | Average Investment In Impaired Loans |   | Interest Income Recognized |
|                                          |   | Quarter-to-Date |   | Quarter-to-Date |   | Year-to-Date |   | Year-to-Date |
| Loans without a specific valuation allowance: |   |   |   |   |   |   |   |   |
| Construction and land development loans       |   | $ | 9,294 |  |   | $ | 115 |  |   | $ | 14,894 |  |   | $ | 247 |  |
| Other commercial real estate loans            |   | 19,933 |  |   | 290 |  |   | 34,179 |  |   | 774 |  |
| Asset based loans                             |   | — |  |   | — |  |   | — |  |   | — |  |
| Other commercial loans                        |   | — |  |   | — |  |   | 3,156 |  |   | 79 |  |
| Home equity loans                             |   | 730 |  |   | 4 |  |   | 719 |  |   | 4 |  |
| Other 1-4 family residential loans            |   | 2,905 |  |   | 31 |  |   | 3,000 |  |   | 65 |  |
| Consumer loans                                |   | 416 |  |   | 7 |  |   | 471 |  |   | 14 |  |
| Loans with a specific valuation allowance:    |   |   |   |   |   |   |   |   |
| Construction and land development loans       |   | $ | 16,583 |  |   | $ | 97 |  |   | $ | 14,700 |  |   | $ | 193 |  |
| Other commercial real estate loans            |   | 23,563 |  |   | 1 |  |   | 16,656 |  |   | 47 |  |
| Asset based loans                             |   | — |  |   | — |  |   | — |  |   | — |  |
| Other commercial loans                        |   | 5,490 |  |   | 53 |  |   | 3,413 |  |   | 62 |  |
| Home equity loans                             |   | — |  |   | — |  |   | — |  |   | — |  |
| Other 1-4 family residential loans            |   | 3,725 |  |   | 40 |  |   | 3,291 |  |   | 44 |  |
| Consumer loans                                |   | 7 |  |   | 1 |  |   | 56 |  |   | 1 |  |
| Total:                                        |   |   |   |   |   |   |   |   |
| Construction and land development loans       |   | $ | 25,877 |  |   | $ | 212 |  |   | $ | 29,594 |  |   | $ | 440 |  |
| Other commercial real estate loans            |   | 43,496 |  |   | 291 |  |   | 50,835 |  |   | 821 |  |
| Asset based loans                             |   | — |  |   | — |  |   | — |  |   | — |  |
| Other commercial loans                        |   | 5,490 |  |   | 53 |  |   | 6,569 |  |   | 141 |  |
| Home equity loans                             |   | 730 |  |   | 4 |  |   | 719 |  |   | 4 |  |
| Other 1-4 family residential loans            |   | 6,630 |  |   | 71 |  |   | 6,291 |  |   | 109 |  |
| Consumer loans                                |   | 423 |  |   | 8 |  |   | 527 |  |   | 15 |  |

----

|                                               |
|-----------------------------------------------|
|                                               |  |  |  |  |  |  |  |  |  |  |  |  |
| (Dollars in thousands)                        |   |   |   |   |   |   |
|                                          |   | Recorded Balance |   | Unpaid Principal Balance |   | Specific Allowance |
| Loans without a specific valuation allowance: |   |   |   |   |   |   |
| Construction and land development loans       |   | $ | 9,539 |  |   | $ | 13,915 |  |   | $ | — |  |
| Other commercial real estate loans            |   | 33,048 |  |   | 36,117 |  |   | — |  |
| Asset based loans                             |   | — |  |   | — |  |   | — |  |
| Other commercial loans                        |   | 433 |  |   | 460 |  |   | — |  |
| Home equity loans                             |   | 159 |  |   | 159 |  |   | — |  |
| Other 1-4 family residential loans            |   | 4,466 |  |   | 4,732 |  |   | — |  |
| Consumer loans                                |   | 128 |  |   | 154 |  |   | — |  |
| Loans with a specific valuation allowance:    |   |   |  |   |   |  |   |   |  |
| Construction and land development loans       |   | $ | 8,620 |  |   | $ | 11,294 |  |   | $ | 1,750 |  |
| Other commercial real estate loans            |   | 7,722 |  |   | 8,471 |  |   | 894 |  |
| Asset based loans                             |   | — |  |   | — |  |   | — |  |
| Other commercial loans                        |   | 1,111 |  |   | 1,111 |  |   | 485 |  |
| Home equity loans                             |   | 456 |  |   | 456 |  |   | 166 |  |
| Other 1-4 family residential loans            |   | 1,843 |  |   | 1,843 |  |   | 397 |  |
| Consumer loans                                |   | 37 |  |   | 37 |  |   | 37 |  |
| Total:                                        |   |   |  |   |   |  |   |   |  |
| Construction and land development loans       |   | $ | 18,159 |  |   | $ | 25,209 |  |   | $ | 1,750 |  |
| Other commercial real estate loans            |   | 40,770 |  |   | 44,588 |  |   | 894 |  |
| Asset based loans                             |   | — |  |   | — |  |   | — |  |
| Other commercial loans                        |   | 1,544 |  |   | 1,571 |  |   | 485 |  |
| Home equity loans                             |   | 615 |  |   | 615 |  |   | 166 |  |
| Other 1-4 family residential loans            |   | 6,309 |  |   | 6,575 |  |   | 397 |  |
| Consumer loans                                |   | 165 |  |   | 191 |  |   | 37 |  |

----

|                                                 |
|-------------------------------------------------|
|                                                 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| (Dollars in thousands)                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                            |   | Construction |   | Other CRE |   | Commercial |   | Residential |   | Consumer |   | Unallocated |   | Total |
| Allowance for loan losses:                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance, beginning of period                    |   | $ | 4,131 |  |   | $ | 4,073 |  |   | $ | 3,347 |  |   | $ | 2,607 |  |   | $ | 795 |  |   | $ | — |  |   | $ | 14,953 |  |
| Provision charged to expense                    |   | 935 |  |   | 3,146 |  |   | 51 |  |   | 426 |  |   | 2 |  |   | — |  |   | 4,560 |  |
| Losses charged off                              |   | (1,506 | ) |   | (2,584 | ) |   | (479 | ) |   | (596 | ) |   | (356 | ) |   | — |  |   | (5,521 | ) |
| Recoveries                                      |   | 588 |  |   | 141 |  |   | 104 |  |   | 355 |  |   | 130 |  |   | — |  |   | 1,318 |  |
| Balance, end of period                          |   | $ | 4,148 |  |   | $ | 4,776 |  |   | $ | 3,023 |  |   | $ | 2,792 |  |   | $ | 571 |  |   | $ | — |  |   | $ | 15,310 |  |
| Ending balance:                                 |   |   |  |   |   |  |   |   |  |   |   |  |   |   |  |   |   |  |   |   |  |
| Individually evaluated for impairment           |   | $ | 1,120 |  |   | $ | 1,372 |  |   | $ | 496 |  |   | $ | 556 |  |   | $ | 94 |  |   | $ | — |  |   | $ | 3,638 |  |
| Ending balance:                                 |   |   |  |   |   |  |   |   |  |   |   |  |   |   |  |   |   |  |   |   |  |
| Collectively evaluated for impairment           |   | $ | 3,028 |  |   | $ | 3,404 |  |   | $ | 2,527 |  |   | $ | 2,236 |  |   | $ | 477 |  |   | $ | — |  |   | $ | 11,672 |  |
| Ending balance:                                 |   |   |  |   |   |  |   |   |  |   |   |  |   |   |  |   |   |  |   |   |  |
| Loans acquired with deteriorated credit quality |   | $ | — |  |   | $ | — |  |   | $ | — |  |   | $ | — |  |   | $ | — |  |   | $ | — |  |   | $ | — |  |
| Loans:                                          |   |   |  |   |   |  |   |   |  |   |   |  |   |   |  |   |   |  |   |   |  |
| Ending balance                                  |   | $ | 67,814 |  |   | $ | 499,370 |  |   | $ | 147,773 |  |   | $ | 226,110 |  |   | $ | 41,529 |  |   | $ | — |  |   | $ | 982,596 |  |
| Ending balance:                                 |   |   |  |   |   |  |   |   |  |   |   |  |   |   |  |   |   |  |   |   |  |
| Individually evaluated for impairment           |   | $ | 11,372 |  |   | $ | 44,696 |  |   | $ | 1,371 |  |   | $ | 7,599 |  |   | $ | 206 |  |   | $ | — |  |   | $ | 65,244 |  |
| Ending balance:                                 |   |   |  |   |   |  |   |   |  |   |   |  |   |   |  |   |   |  |   |   |  |
| Collectively evaluated for impairment           |   | $ | 56,442 |  |   | $ | 454,674 |  |   | $ | 146,402 |  |   | $ | 218,511 |  |   | $ | 41,323 |  |   | $ | — |  |   | $ | 917,352 |  |
| Ending balance:                                 |   |   |  |   |   |  |   |   |  |   |   |  |   |   |  |   |   |  |   |   |  |
| Loans acquired with deteriorated credit quality |   | $ | — |  |   | $ | — |  |   | $ | — |  |   | $ | — |  |   | $ | — |  |   | $ | — |  |   | $ | — |  |

|                              |
|------------------------------|
|                              |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| (Dollars in thousands)       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                         |   | Construction |   | Other CRE |   | Commercial |   | Residential |   | Consumer |   | Unallocated |   | Total |
| Allowance for loan losses:   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance, beginning of period |   | $ | 4,426 |  |   | $ | 5,280 |  |   | $ | 2,856 |  |   | $ | 2,946 |  |   | $ | 576 |  |   | $ | — |  |   | $ | 16,084 |  |
| Provision charged to expense |   | 903 |  |   | 700 |  |   | 406 |  |   | 168 |  |   | 103 |  |   | — |  |   | 2,280 |  |
| Losses charged off           |   | (1,414 | ) |   | (1,231 | ) |   | (271 | ) |   | (357 | ) |   | (187 | ) |   | — |  |   | (3,460 | ) |
| Recoveries                   |   | 233 |  |   | 27 |  |   | 32 |  |   | 35 |  |   | 79 |  |   | — |  |   | 406 |  |
| Balance, end of period       |   | $ | 4,148 |  |   | $ | 4,776 |  |   | $ | 3,023 |  |   | $ | 2,792 |  |   | $ | 571 |  |   | $ | — |  |   | $ | 15,310 |  |

----

|                                                 |
|-------------------------------------------------|
|                                                 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| (Dollars in thousands)                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                            |   | Construction |   | Other CRE |   | Commercial |   | Residential |   | Consumer |   | Unallocated |   | Total |
| Allowance for loan losses:                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance, beginning of period                    |   | $ | 3,942 |  |   | $ | 2,763 |  |   | $ | 4,442 |  |   | $ | 3,701 |  |   | $ | 1,177 |  |   | $ | — |  |   | $ | 16,025 |  |
| Provision charged to expense                    |   | 127 |  |   | 2,092 |  |   | 1,798 |  |   | 566 |  |   | 277 |  |   | — |  |   | 4,860 |  |
| Losses charged off                              |   | (331 | ) |   | (1,017 | ) |   | (1,095 | ) |   | (706 | ) |   | (440 | ) |   | — |  |   | (3,589 | ) |
| Recoveries                                      |   | 882 |  |   | 264 |  |   | 137 |  |   | 121 |  |   | 105 |  |   | — |  |   | 1,509 |  |
| Balance, end of period                          |   | $ | 4,620 |  |   | $ | 4,102 |  |   | $ | 5,282 |  |   | $ | 3,682 |  |   | $ | 1,119 |  |   | $ | — |  |   | $ | 18,805 |  |
| Ending balance:                                 |   |   |  |   |   |  |   |   |  |   |   |  |   |   |  |   |   |  |   |   |  |
| Individually evaluated for impairment           |   | $ | 3,333 |  |   | $ | 2,658 |  |   | $ | 1,341 |  |   | $ | 1,261 |  |   | $ | 40 |  |   | $ | — |  |   | $ | 8,633 |  |
| Ending balance:                                 |   |   |  |   |   |  |   |   |  |   |   |  |   |   |  |   |   |  |   |   |  |
| Collectively evaluated for impairment           |   | $ | 1,287 |  |   | $ | 1,444 |  |   | $ | 3,941 |  |   | $ | 2,421 |  |   | $ | 1,079 |  |   | $ | — |  |   | $ | 10,172 |  |
| Ending balance:                                 |   |   |  |   |   |  |   |   |  |   |   |  |   |   |  |   |   |  |   |   |  |
| Loans acquired with deteriorated credit quality |   | $ | — |  |   | $ | — |  |   | $ | — |  |   | $ | — |  |   | $ | — |  |   | $ | — |  |   | $ | — |  |
| Loans:                                          |   |   |  |   |   |  |   |   |  |   |   |  |   |   |  |   |   |  |   |   |  |
| Ending balance                                  |   | $ | 87,826 |  |   | $ | 533,720 |  |   | $ | 152,063 |  |   | $ | 226,823 |  |   | $ | 44,163 |  |   | $ | — |  |   | $ | 1,044,595 |  |
| Ending balance:                                 |   |   |  |   |   |  |   |   |  |   |   |  |   |   |  |   |   |  |   |   |  |
| Individually evaluated for impairment           |   | $ | 27,702 |  |   | $ | 50,559 |  |   | $ | 4,121 |  |   | $ | 6,842 |  |   | $ | 506 |  |   | $ | — |  |   | $ | 89,730 |  |
| Ending balance:                                 |   |   |  |   |   |  |   |   |  |   |   |  |   |   |  |   |   |  |   |   |  |
| Collectively evaluated for impairment           |   | $ | 60,124 |  |   | $ | 483,161 |  |   | $ | 147,942 |  |   | $ | 219,981 |  |   | $ | 43,657 |  |   | $ | — |  |   | $ | 954,865 |  |
| Ending balance:                                 |   |   |  |   |   |  |   |   |  |   |   |  |   |   |  |   |   |  |   |   |  |
| Loans acquired with deteriorated credit quality |   | $ | — |  |   | $ | — |  |   | $ | — |  |   | $ | — |  |   | $ | — |  |   | $ | — |  |   | $ | — |  |

|                              |
|------------------------------|
|                              |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| (Dollars in thousands)       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                         |   | Construction |   | Other CRE |   | Commercial |   | Residential |   | Consumer |   | Unallocated |   | Total |
| Allowance for loan losses:   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance, beginning of period |   | $ | 4,124 |  |   | $ | 3,165 |  |   | $ | 5,023 |  |   | $ | 3,606 |  |   | $ | 1,125 |  |   | $ | — |  |   | $ | 17,043 |  |
| Provision charged to expense |   | 13 |  |   | 1,295 |  |   | 421 |  |   | 366 |  |   | 185 |  |   | — |  |   | 2,280 |  |
| Losses charged off           |   | (111 | ) |   | (515 | ) |   | (255 | ) |   | (326 | ) |   | (235 | ) |   | — |  |   | (1,442 | ) |
| Recoveries                   |   | 594 |  |   | 157 |  |   | 93 |  |   | 36 |  |   | 44 |  |   | — |  |   | 924 |  |
| Balance, end of period       |   | $ | 4,620 |  |   | $ | 4,102 |  |   | $ | 5,282 |  |   | $ | 3,682 |  |   | $ | 1,119 |  |   | $ | — |  |   | $ | 18,805 |  |

----

|                                                 |
|-------------------------------------------------|
|                                                 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| (Dollars in thousands)                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                            |   | Construction |   | Other CRE |   | Commercial |   | Residential |   | Consumer |   | Unallocated |   | Total |
| Balance December 31, 2011                       |   | $ | 4,131 |  |   | $ | 4,073 |  |   | $ | 3,347 |  |   | $ | 2,607 |  |   | $ | 795 |  |   | $ | — |  |   | $ | 14,953 |  |
| Balance December 31, 2011:                      |   |   |  |   |   |  |   |   |  |   |   |  |   |   |  |   |   |  |   |   |  |
| Individually evaluated for impairment           |   | $ | 1,750 |  |   | $ | 894 |  |   | $ | 485 |  |   | $ | 563 |  |   | $ | 37 |  |   | $ | — |  |   | $ | 3,729 |  |
| Balance December 31, 2011:                      |   |   |  |   |   |  |   |   |  |   |   |  |   |   |  |   |   |  |   |   |  |
| Collectively evaluated for impairment           |   | $ | 2,381 |  |   | $ | 3,179 |  |   | $ | 2,862 |  |   | $ | 2,044 |  |   | $ | 758 |  |   | $ | — |  |   | $ | 11,224 |  |
| Balance December 31, 2011:                      |   |   |  |   |   |  |   |   |  |   |   |  |   |   |  |   |   |  |   |   |  |
| Loans acquired with deteriorated credit quality |   | $ | — |  |   | $ | — |  |   | $ | — |  |   | $ | — |  |   | $ | — |  |   | $ | — |  |   | $ | — |  |
| Loans:                                          |   |   |  |   |   |  |   |   |  |   |   |  |   |   |  |   |   |  |   |   |  |
| Balance December 31, 2011:                      |   | $ | 69,325 |  |   | $ | 505,180 |  |   | $ | 155,330 |  |   | $ | 223,839 |  |   | $ | 42,666 |  |   | $ | — |  |   | $ | 996,340 |  |
| Balance December 31, 2011:                      |   |   |  |   |   |  |   |   |  |   |   |  |   |   |  |   |   |  |   |   |  |
| Individually evaluated for impairment           |   | $ | 18,159 |  |   | $ | 40,770 |  |   | $ | 1,544 |  |   | $ | 6,924 |  |   | $ | 165 |  |   | $ | — |  |   | $ | 67,562 |  |
| Balance December 31, 2011:                      |   |   |  |   |   |  |   |   |  |   |   |  |   |   |  |   |   |  |   |   |  |
| Collectively evaluated for impairment           |   | $ | 51,166 |  |   | $ | 464,410 |  |   | $ | 153,786 |  |   | $ | 216,915 |  |   | $ | 42,501 |  |   | $ | — |  |   | $ | 928,778 |  |
| Balance December 31, 2011:                      |   |   |  |   |   |  |   |   |  |   |   |  |   |   |  |   |   |  |   |   |  |
| Loans acquired with deteriorated credit quality |   | $ | — |  |   | $ | — |  |   | $ | — |  |   | $ | — |  |   | $ | — |  |   | $ | — |  |   | $ | — |  |

|                                          |
|------------------------------------------|
|                                          |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| (Dollars in thousands)         |   | June 30, 2012 |   | December 31, 2011 |
|                                     |   | Recorded Balance |   | Allowance |   | Recorded Balance |   | Allowance |
| Restructured loans with an allowance:    |   |   |   |   |   |   |   |   |
| Construction and land development loans  |   | $ | 295 |  |   | $ | 16 |  |   | $ | 136 |  |   | $ | 61 |  |
| Other commercial real estate loans       |   | 4,447 |  |   | 603 |  |   | 4,018 |  |   | 320 |  |
| Other commercial loans                   |   | 238 |  |   | 238 |  |   | 387 |  |   | 117 |  |
| Other 1-4 family residential loans       |   | 198 |  |   | 80 |  |   | 199 |  |   | 76 |  |
| Restructured loans without an allowance: |   |   |  |   |   |  |   |   |  |   |   |  |
| Construction and land development loans  |   | 2,282 |  |   | — |  |   | 2,725 |  |   | — |  |
| Other commercial real estate loans       |   | 11,707 |  |   | — |  |   | 17,002 |  |   | — |  |
| Other commercial loans                   |   | 92 |  |   | — |  |   | 119 |  |   | — |  |
| Other 1-4 family residential loans       |   | 469 |  |   | — |  |   | 1,194 |  |   | — |  |
| Total restructured loans                 |   | $ | 19,728 |  |   | $ | 937 |  |   | $ | 25,780 |  |   | $ | 574 |  |

----

|                                         |
|-----------------------------------------|
|                                         |  |  |  |  |  |  |  |  |  |  |  |
| (Dollars in thousands)        |   | Number of Loans Modified |   |  Pre Modification Balance |   | Post Modification Balance |
| Interest Rate Modifications:            |   |   |   |   |   |   |
| Construction and land development loans |   | 2 |  |   | $ | 662 |  |   | $ | 662 |  |
| Total rate modifications                |   | 2 |  |   | $ | 662 |  |   | $ | 662 |  |
|                                    |   |   |   |   |   |   |
| Term Extensions and Renewals:           |   |   |   |   |   |   |
| Construction and land development loans |   | 2 |  |   | $ | 1,004 |  |   | $ | 949 |  |
| Other commercial real estate loans      |   | 5 |  |   | 4,188 |  |   | 4,175 |  |
| Other commercial loans                  |   | 1 |  |   | 1,828 |  |   | 1,797 |  |
| Other 1-4 family residential loans      |   | 1 |  |   | 153 |  |   | 152 |  |
| Total extensions and renewals           |   | 9 |  |   | $ | 7,173 |  |   | $ | 7,073 |  |
| Total loans restructured                |   | 11 |  |   | $ | 7,835 |  |   | $ | 7,735 |  |

|                                    |
|------------------------------------|
|                                    |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| (Dollars in thousands)   |   | Three Months Ended June 30, 2012 |   | Six Months Ended June 30, 2012 |
|                               |   | Number of Loans |   | Amortized Cost |   | Number of Loans |   | Amortized Cost |
| Other commercial loans             |   | — |  |   | $ | — |  |   | 1 |  |   | $ | 335 |  |
| Other 1-4 family residential loans |   | 1 |  |   | 152 |  |   | 2 |  |   | 304 |  |
| Total subsequent defaults          |   | 1 |  |   | $ | 152 |  |   | 3 |  |   | $ | 639 |  |

----

|                                       |
|---------------------------------------|
|                                       |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Core Deposit Intangible     |   |   |
|                                  |   | Three Months Ended |   | Six Months Ended |
| (Dollars in thousands)      |   | June 30 |   | June 30 |
|                                  |   | 2012 |   | 2011 |   | 2012 |   | 2011 |
| Beginning Balance                     |   | $ | 4,479 |  |   | $ | 4,906 |  |   | $ | 4,586 |  |   | $ | 5,013 |  |
| Amortization expense                  |   | (106 | ) |   | (107 | ) |   | (213 | ) |   | (214 | ) |
| Ending Balance                        |   | $ | 4,373 |  |   | $ | 4,799 |  |   | $ | 4,373 |  |   | $ | 4,799 |  |
|                                  |   |   |   |   |   |   |   |   |
| Estimated future amortization expense |   |   |  |   |   |  |   |   |  |   |   |  |
| Remainder of 2012                     |   | $ | 214 |  |   |   |   |   |   |   |  |
| 2013                                  |   | 427 |  |   |   |   |   |   |   |  |
| 2014                                  |   | 427 |  |   |   |   |   |   |   |  |
| 2015                                  |   | 427 |  |   |   |   |   |   |   |  |
| 2016                                  |   | 427 |  |   |   |   |   |   |   |  |
| 2017                                  |   | 427 |  |   |   |   |   |   |   |  |

|                                                                                                                                                                                                                       |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                       |  |  |  |  |  |  |  |  |
| (Dollars in thousands)                                                                                                                                                                                      |   | June 30 2012 |   | December 31 2011 |
| Company’s line of credit in the amount of $5,000,000, maturing in March 2013; secured by approximately 51% of the Bank’s common stock; interest payable quarterly at the prime rate with a floor of 3.50% |   | $ | 3,042 |  |   | $ | 3,292 |  |
| Bank’s advances from Federal Home Loan Banks                                                                                                                                                                    |   | 37,291 |  |   | 39,709 |  |
|                                                                                                                                                                                                                  |   | $ | 40,333 |  |   | $ | 43,001 |  |
| Company’s junior subordinated debentures, interest payable quarterly at 90-day LIBOR plus 1.33% through March 2036; currently redeemable                                                                        |   | $ | 30,928 |  |   | $ | 30,928 |  |

----

----

|                             |
|-----------------------------|
|                             |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| (Dollars in thousands) |   |   |   | Shares at |   | Shares at |   | Carrying Value |
|                        |   |   | June 30, 2012 |   | December 31, 2011 |   | June 30, 2012 |   | December 31, 2011 |
|                        |   | Rate |   | Authorized |   | Outstanding |   | Authorized |   | Outstanding |   |   |
| Class A                     |   | — |  |   | 1,000,000 |  |   | — |  |   | 1,000,000 |  |   | — |  |   | $ | — |  |   | $ | — |  |
| Class B:                    |   |   |  |   | 1,000,000 |  |   |   |  |   | 1,000,000 |  |   |   |  |   |   |  |   |   |  |
| Series A                    |   | 5 | % |   |   |  |   | — |  |   |   |  |   | — |  |   | — |  |   | — |  |
| Series CD                   |   | 2 | % |   |   |  |   | 30,000 |  |   |   |  |   | 30,000 |  |   | 18,198 |  |   | 17,564 |  |
|                        |   |   |  |   |   |  |   |   |  |   |   |  |   |   |  |   | $ | 18,198 |  |   | $ | 17,564 |  |

----

|                                  |
|----------------------------------|
|                                  |  |  |  |  |  |  |  |  |  |  |  |  |
| (Dollars in thousands) |   | Balance |   | 2012 |   | Balance |
|                             |   | 12/31/11 |   | Amortization |   | 06/30/12 |
| Unamortized actuarial loss       |   | $ | 4,272 |  |   | $ | (1,068 | ) |   | $ | 3,204 |  |
| Deferred taxes                   |   | (1,593 | ) |   | 398 |  |   | (1,195 | ) |
| Net unamortized pension costs    |   | $ | 2,679 |  |   | $ | (670 | ) |   | $ | 2,009 |  |

|                                     |
|-------------------------------------|
|                                     |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|                                |   | Three Months Ended |   | Six Months Ended |
| (Dollars in thousands)    |   | June 30 |   | June 30 |
|                                |   | 2012 |   | 2011 |   | 2012 |   | 2011 |
| Interest cost                       |   | $ | 102 |  |   | $ | 112 |  |   | $ | 204 |  |   | $ | 224 |  |
| Expected return on plan assets      |   | (132 | ) |   | (141 | ) |   | (263 | ) |   | (282 | ) |
| Amortization of prior service costs |   | — |  |   | (6 | ) |   | — |  |   | (12 | ) |
| Recognized actuarial loss           |   | 534 |  |   | 246 |  |   | 1,068 |  |   | 492 |  |
| Net pension cost                    |   | $ | 504 |  |   | $ | 211 |  |   | $ | 1,009 |  |   | $ | 422 |  |

----

|                                     |
|-------------------------------------|
|                                     |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|                                |   | 2005 Plan |   | 1999 Plan |
|                                |   |   |   | Restricted Stock |   | Stock Options |   | Stock Options |
|                                |   | SharesAvailableForGrant |   | NumberofShares |   | WeightedAverageGrantDateFairValue |   | NumberOfShares |   | WeightedAverageExercisePrice |   | NumberOfShares |   | WeightedAverageExercisePrice |
| January 1, 2011                     |   | 603,634 |  |   | 63,000 |  |   | $ | 16.995 |  |   | 16,600 |  |   | $ | 12.043 |  |   | 15,800 |  |   | $ | 16.018 |  |
| Awards Granted                      |   | (3,000 | ) |   | — |  |   | — |  |   | 3,000 |  |   | 4.120 |  |   | — |  |   | — |  |
| Vested                              |   | — |  |   | (6,000 | ) |   | 16.855 |  |   | — |  |   | — |  |   | — |  |   | — |  |
| Forfeitures                         |   | 4,800 |  |   | (3,000 | ) |   | 17.075 |  |   | (1,800 | ) |   | 13.840 |  |   | — |  |   | — |  |
| Expired                             |   | — |  |   | — |  |   | — |  |   | — |  |   | — |  |   | — |  |   | — |  |
| June 30, 2011                  |   | 605,434 |  |   | 54,000 |  |   | $ | 17.006 |  |   | 17,800 |  |   | $ | 10.526 |  |   | 15,800 |  |   | $ | 16.018 |  |
| January 1, 2012                     |   | 613,434 |  |   | 46,000 |  |   | $ | 17.032 |  |   | 17,800 |  |   | $ | 10.526 |  |   | 15,800 |  |   | $ | 16.018 |  |
| Awards Granted                      |   | (428,746 | ) |   | 428,746 |  |   | 4.510 |  |   | — |  |   | — |  |   | — |  |   | — |  |
| Vested                              |   | — |  |   | — |  |   | — |  |   | — |  |   | — |  |   | — |  |   | — |  |
| Forfeitures                         |   | — |  |   | — |  |   | — |  |   | — |  |   | — |  |   | (600 | ) |   | 5.140 |  |
| Expired                             |   | — |  |   | — |  |   | — |  |   | — |  |   | — |  |   | (5,000 | ) |   | 12.625 |  |
| June 30, 2012                  |   | 184,688 |  |   | 474,746 |  |   | $ | 5.723 |  |   | 17,800 |  |   | $ | 10.526 |  |   | 10,200 |  |   | $ | 18.322 |  |
| Shares exercisable at June 30, 2012 |   | — |  |   | — |  |   | 12,400 |  |   | $ | 12.672 |  |   | 10,200 |  |   | $ | 18.322 |  |

----

|                                                                                      |
|--------------------------------------------------------------------------------------|
|                                                                                      |  |  |  |  |  |  |  |  |  |  |  |  |
| (Dollars in thousands)                                                               |   | Gross |   | Tax |   | Net |
| June 30, 2012:                                                                       |   |   |   |   |   |   |
| Net unrealized gain on securities available for sale                                 |   | $ | 8,528 |  |   | $ | 3,181 |  |   | $ | 5,347 |  |
| Net unrealized loss on other-than-temporarily impaired securities available for sale |   | (2,282 | ) |   | (851 | ) |   | (1,431 | ) |
| Net unamortized pension costs                                                        |   | (3,204 | ) |   | (1,195 | ) |   | (2,009 | ) |
| Net unrealized loss on cash flow hedge                                               |   | (2,349 | ) |   | (876 | ) |   | (1,473 | ) |
|                                                                                 |   | $ | 693 |  |   | $ | 259 |  |   | $ | 434 |  |
| December 31, 2011:                                                                   |   |   |  |   |   |  |   |   |  |
| Net unrealized gain on securities available for sale                                 |   | $ | 7,202 |  |   | $ | 2,688 |  |   | $ | 4,514 |  |
| Net unrealized loss on other-than-temporarily impaired securities available for sale |   | (2,318 | ) |   | (865 | ) |   | (1,453 | ) |
| Net unamortized pension costs                                                        |   | (4,272 | ) |   | (1,593 | ) |   | (2,679 | ) |
| Net unrealized loss on cash flow hedge                                               |   | (1,834 | ) |   | (684 | ) |   | (1,150 | ) |
|                                                                                 |   | $ | (1,222 | ) |   | $ | (454 | ) |   | $ | (768 | ) |
| June 30, 2011:                                                                       |   |   |  |   |   |  |   |   |  |
| Net unrealized gain on securities available for sale                                 |   | $ | 7,270 |  |   | $ | 2,712 |  |   | $ | 4,558 |  |
| Net unrealized loss on other-than-temporarily impaired securities available for sale |   | (2,441 | ) |   | (910 | ) |   | (1,531 | ) |
| Net unamortized pension costs                                                        |   | (2,447 | ) |   | (913 | ) |   | (1,534 | ) |
| Net unrealized gain on cash flow hedge                                               |   | 103 |  |   | 39 |  |   | 64 |  |
|                                                                                 |   | $ | 2,485 |  |   | $ | 928 |  |   | $ | 1,557 |  |

----

|                                           |
|-------------------------------------------|
|                                           |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| (Dollars in thousands)          |   | Actual |   | Minimum Capital |   | Well Capitalized |
|                                      |   | Amount |   | Ratio |   | Amount |   | Ratio |   | Amount |   | Ratio |
| June 30, 2012:                            |   |   |   |   |   |   |   |   |   |   |   |   |
| Total capital (to risk weighted assets):  |   |   |   |   |   |   |   |   |   |   |   |   |
| Company                                   |   | $ | 146,734 |  |   | 12.49 | % |   | $ | 93,985 |  |   | 8.00 | % |   | $ | — |  |   | — | % |
| Bank                                      |   | 146,579 |  |   | 12.50 | % |   | 93,830 |  |   | 8.00 | % |   | 117,287 |  |   | 10.00 | % |
| Tier I capital (to risk weighted assets): |   |   |  |   |   |  |   |   |  |   |   |  |   |   |  |   |   |  |
| Company                                   |   | 132,041 |  |   | 11.24 | % |   | 46,992 |  |   | 4.00 | % |   | — |  |   | — | % |
| Bank                                      |   | 131,910 |  |   | 11.25 | % |   | 46,915 |  |   | 4.00 | % |   | 70,372 |  |   | 6.00 | % |
| Tier I capital (to average assets):       |   |   |  |   |   |  |   |   |  |   |   |  |   |   |  |   |   |  |
| Company                                   |   | 132,041 |  |   | 8.43 | % |   | 62,633 |  |   | 4.00 | % |   | — |  |   | — | % |
| Bank                                      |   | 131,910 |  |   | 8.44 | % |   | 62,483 |  |   | 4.00 | % |   | 78,104 |  |   | 5.00 | % |
| December 31, 2011:                        |   |   |  |   |   |  |   |   |  |   |   |  |   |   |  |   |   |  |
| Total capital (to risk weighted assets):  |   |   |  |   |   |  |   |   |  |   |   |  |   |   |  |   |   |  |
| Company                                   |   | $ | 141,434 |  |   | 12.09 | % |   | $ | 93,564 |  |   | 8.00 | % |   | $ | — |  |   | — | % |
| Bank                                      |   | 141,088 |  |   | 12.08 | % |   | 93,410 |  |   | 8.00 | % |   | 116,762 |  |   | 10.00 | % |
| Tier I capital (to risk weighted assets): |   |   |  |   |   |  |   |   |  |   |   |  |   |   |  |   |   |  |
| Company                                   |   | 126,810 |  |   | 10.84 | % |   | 46,782 |  |   | 4.00 | % |   | — |  |   | — | % |
| Bank                                      |   | 126,488 |  |   | 10.83 | % |   | 46,705 |  |   | 4.00 | % |   | 70,057 |  |   | 6.00 | % |
| Tier I capital (to average assets):       |   |   |  |   |   |  |   |   |  |   |   |  |   |   |  |   |   |  |
| Company                                   |   | 126,810 |  |   | 8.17 | % |   | 62,072 |  |   | 4.00 | % |   | — |  |   | — | % |
| Bank                                      |   | 126,488 |  |   | 8.17 | % |   | 61,933 |  |   | 4.00 | % |   | 77,416 |  |   | 5.00 | % |

----

|                                  |
|----------------------------------|
|                                  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|                             |   | Three Months Ended |   | Six Months Ended |
| (Dollars in thousands) |   | June 30 |   | June 30 |
|                             |   | 2012 |   | 2011 |   | 2012 |   | 2011 |
| Current income tax expense       |   | $ | — |  |   | $ | 1 |  |   | $ | 2 |  |   | $ | 2 |  |
| Deferred income tax expense      |   | 599 |  |   | 293 |  |   | 1,109 |  |   | 407 |  |
| Total income tax expense         |   | $ | 599 |  |   | $ | 294 |  |   | $ | 1,111 |  |   | $ | 409 |  |

|                                  |
|----------------------------------|
|                                  |  |  |  |  |  |  |
| (Dollars in thousands) |   |   |   |   |
|                             |   | Amount |   | Expiration Dates |
| Net operating loss from 2009     |   | $ | 8,700 |  |   | 2029 |
| Net operating loss from 2010     |   | 4,321 |  |   | 2030 |
| Tax credits from 2009            |   | 208 |  |   | 2029 |
| Tax credits from 2010            |   | 299 |  |   | 2030 |
| Tax credits from 2011            |   | 475 |  |   | 2031 |

----

|                                                                                                                                                  |
|--------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|                                                                                                                                             |   | Three Months Ended |   | Six Months Ended |
| (Dollars in thousands, except per share data)                                                                                                    |   | June 30 |   | June 30 |
|                                                                                                                                             |   | 2012 |   | 2011 |   | 2012 |   | 2011 |
| Net income                                                                                                                                       |   | $ | 1,753 |  |   | $ | 1,106 |  |   | $ | 3,360 |  |   | $ | 2,056 |  |
| Preferred dividends                                                                                                                              |   | 471 |  |   | 440 |  |   | 934 |  |   | 872 |  |
| Net income attributable to common stock                                                                                                          |   | 1,282 |  |   | 666 |  |   | 2,426 |  |   | 1,184 |  |
| Net income allocated to common stockholders:                                                                                                     |   |   |  |   |   |  |   |   |  |   |   |  |
| Distributed                                                                                                                                      |   | 92 |  |   | 93 |  |   | 184 |  |   | 185 |  |
| Undistributed                                                                                                                                    |   | 1,134 |  |   | 568 |  |   | 2,181 |  |   | 991 |  |
|                                                                                                                                             |   | $ | 1,226 |  |   | $ | 661 |  |   | $ | 2,365 |  |   | $ | 1,176 |  |
| Weighted-average basic common and participating shares outstanding                                                                               |   | 9,596,919 |  |   | 9,178,201 |  |   | 9,399,697 |  |   | 9,173,888 |  |
| Less: weighted average participating restricted shares outstanding                                                                               |   | 432,343 |  |   | 59,934 |  |   | 239,171 |  |   | 60,182 |  |
| Weighted-average basic shares outstanding                                                                                                        |   | 9,164,576 |  |   | 9,118,267 |  |   | 9,160,526 |  |   | 9,113,706 |  |
| Basic net income per share                                                                                                                       |   | 0.14 |  |   | 0.07 |  |   | 0.26 |  |   | 0.13 |  |
| Weighted-average basic common and participating shares outstanding                                                                               |   | 9,596,919 |  |   | 9,178,201 |  |   | 9,399,697 |  |   | 9,173,888 |  |
| Add: share-based options and stock warrant                                                                                                       |   | — |  |   | — |  |   | — |  |   | — |  |
|                                                                                                                                             |   | 9,596,919 |  |   | 9,178,201 |  |   | 9,399,697 |  |   | 9,173,888 |  |
| Less: weighted average participating restricted shares outstanding                                                                               |   | 432,343 |  |   | 59,934 |  |   | 239,171 |  |   | 60,182 |  |
| Weighted-average dilutive shares outstanding                                                                                                     |   | 9,164,576 |  |   | 9,118,267 |  |   | 9,160,526 |  |   | 9,113,706 |  |
| Dilutive net income per share                                                                                                                    |   | 0.14 |  |   | 0.07 |  |   | 0.26 |  |   | 0.13 |  |
| 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                                                                                                          |   | 29,714 |  |   | 32,848 |  |   | 31,657 |  |   | 32,625 |  |
| Common stock warrant                                                                                                                             |   | 513,113 |  |   | 513,113 |  |   | 513,113 |  |   | 513,113 |  |

----

|                                                            |
|------------------------------------------------------------|
|                                                            |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|                                                  |   | As of June 30, 2012 |
|                                                       |   | Asset Derivatives |   | Liability Derivatives |
| (Dollars in thousands)                                     |   | Balance Sheet Classification |   | Notional Amount |   | Fair Value |   | Balance Sheet Classification |   | Notional Amount |   | Fair Value |
| Derivatives designated in cash flow hedging relationships: |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest rate swap                                         |   | Other assets |   | $ | — |  |   | $ | — |  |   | Other liabilities |   | $ | 30,000 |  |   | $ | 2,349 |  |
| Derivatives not designated as hedging instruments:         |   |   |   |   |  |   |   |  |   |   |   |   |  |   |   |  |
| Forward sale agreements                                    |   | Other assets |   | 22,167 |  |   | 137 |  |   | Other liabilities |   | 25,484 |  |   | 174 |  |
| Written interest rate options (locks)                      |   | Other assets |   | 17,972 |  |   | 439 |  |   | Other liabilities |   | 6,955 |  |   | 130 |  |
| Total derivatives                                          |   |   |   | $ | 40,139 |  |   | $ | 576 |  |   |   |   | $ | 62,439 |  |   | $ | 2,653 |  |

|                                                            |
|------------------------------------------------------------|
|                                                            |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|                                                       |   | As of December 31, 2011 |
|                                                       |   | Asset Derivatives |   | Liability Derivatives |
| (Dollars in thousands)                                     |   | Balance Sheet Classification |   | Notional Amount |   | Fair Value |   | Balance Sheet Classification |   | Notional Amount |   | Fair Value |
| Derivatives designated in cash flow hedging relationships: |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest rate swap                                         |   | Other assets |   | $ | — |  |   | $ | — |  |   | Other liabilities |   | $ | 30,000 |  |   | $ | 1,834 |  |
| Derivatives not designated as hedging instruments:         |   |   |   |   |  |   |   |  |   |   |   |   |  |   |   |  |
| Forward sale agreements                                    |   | Other assets |   | 22,220 |  |   | 135 |  |   | Other liabilities |   | 15,287 |  |   | 124 |  |
| Written interest rate options (locks)                      |   | Other assets |   | 4,225 |  |   | 134 |  |   | Other liabilities |   | 7,021 |  |   | 167 |  |
| Total derivatives                                          |   |   |   | $ | 26,445 |  |   | $ | 269 |  |   |   |   | $ | 52,308 |  |   | $ | 2,125 |  |

|                                                    |
|----------------------------------------------------|
|                                                    |  |  |  |  |  |  |  |  |  |  |
|                                          |   | Three Months Ended June 30, 2012 |
| (Dollars in thousands)                   |   | Amount of pre-tax gain (loss) recognized in OCI (Effective Portion) |   | Classification of gain (loss) reclassified from AOCI into earnings (Effective Portion) |   | Amount of pre-tax gain (loss) reclassified from AOCI into earnings (Effective Portion) |
| Derivatives in cash flow hedging relationships:    |   |   |   |   |   |   |
| Interest rate swap                                 |   | $ | (772 | ) |   | Interest on junior subordinated debt |   | $ | (151 | ) |
|                                               |   | Classification of gain (loss) recognized in earnings |   | Amount of pre-tax gain (loss) recognized in earnings |
| Derivatives not designated as hedging instruments: |   |   |  |   |   |   |   |  |
| Forward sale agreements                            |   | Mortgage banking income |   | $ | (299 | ) |
| Written interest rate options (locks)              |   | Mortgage banking income |   | 567 |  |
| Total                                              |   |   |  |   |   |   | $ | 268 |  |

----

|                                                    |
|----------------------------------------------------|
|                                                    |  |  |  |  |  |  |  |  |  |  |
|                                          |   | Six Months Ended June 30, 2012 |
| (Dollars in thousands)                   |   | Amount of pre-tax gain (loss) recognized in OCI (Effective Portion) |   | Classification of gain (loss) reclassified from AOCI into earnings (Effective Portion) |   | Amount of pre-tax gain (loss) reclassified from AOCI into earnings (Effective Portion) |
| Derivatives in cash flow hedging relationships:    |   |   |   |   |   |   |
| Interest rate swap                                 |   | $ | (812 | ) |   | Interest on junior subordinated debt |   | $ | (297 | ) |
|                                               |   | Classification of gain (loss) recognized in earnings |   | Amount of pre-tax gain (loss) recognized in earnings |
| Derivatives not designated as hedging instruments: |   |   |  |   |   |   |   |  |
| Forward sale agreements                            |   | Mortgage banking income |   | $ | (51 | ) |
| Written interest rate options (locks)              |   | Mortgage banking income |   | 196 |  |
| Total                                              |   |   |  |   |   |   | $ | 145 |  |

|                                                    |
|----------------------------------------------------|
|                                                    |  |  |  |  |  |  |  |  |  |  |
|                                               |   | Three Months Ended June 30, 2011 |
| (Dollars in thousands)                   |   | Amount of pre-tax gain (loss) recognized in OCI (Effective Portion) |   | Classification of gain (loss) reclassified from AOCI into earnings (Effective Portion) |   | Amount of pre-tax gain (loss) reclassified from AOCI into earnings (Effective Portion) |
| Derivatives in cash flow hedging relationships:    |   |   |   |   |   |   |
| Interest rate swap                                 |   | $ | (1,049 | ) |   | Interest on junior subordinated debt |   | $ | (164 | ) |
|                                               |   | Classification of gain (loss) recognized in earnings |   | Amount of pre-tax gain (loss) recognized in earnings |
| Derivatives not designated as hedging instruments: |   |   |  |   |   |   |   |  |
| Forward sale agreements                            |   | Mortgage banking income |   | $ | 32 |  |
| Written interest rate options (locks)              |   | Mortgage banking income |   | (15 | ) |
| Total                                              |   |   |  |   |   |   | $ | 17 |  |

|                                                    |
|----------------------------------------------------|
|                                                    |  |  |  |  |  |  |  |  |  |  |
|                                               |   | Six Months Ended June 30, 2011 |
| (Dollars in thousands)                   |   | Amount of pre-tax gain (loss) recognized in OCI (Effective Portion) |   | Classification of gain (loss) reclassified from AOCI into earnings (Effective Portion) |   | Amount of pre-tax gain (loss) reclassified from AOCI into earnings (Effective Portion) |
| Derivatives in cash flow hedging relationships:    |   |   |   |   |   |   |
| Interest rate swap                                 |   | $ | (851 | ) |   | Interest on junior subordinated debt |   | $ | (165 | ) |
|                                               |   | Classification of gain (loss) recognized in earnings |   | Amount of pre-tax gain (loss) recognized in earnings |
| Derivatives not designated as hedging instruments: |   |   |  |   |   |   |   |  |
| Forward sale agreements                            |   | Mortgage banking income |   | $ | 165 |  |
| Written interest rate options (locks)              |   | Mortgage banking income |   | (24 | ) |
| Total                                              |   |   |  |   |   |   | $ | 141 |  |

----

----

|         |                                         |
|---------|-----------------------------------------|
| • | 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 15.75% for the second quarter of 2012 from the second quarter of 2011 |

|         |                                                                                                                                       |
|---------|---------------------------------------------------------------------------------------------------------------------------------------|
| • | The net interest margin decreased to 3.72% in the second quarter of 2012 from 3.75% in the second quarter of 2011 |

|         |                                                                                                    |
|---------|----------------------------------------------------------------------------------------------------|
| • | Loans held for investment were down by $61.999 million from the June 30, 2011 balance |

|         |                                                                                                                         |
|---------|-------------------------------------------------------------------------------------------------------------------------|
| • | Nonaccrual loans were 0.64% of total loans at June 30, 2012 as compared to 3.13% at June 30, 2011 |

|         |                                                                                                                                          |
|---------|------------------------------------------------------------------------------------------------------------------------------------------|
| • | Annualized net charge-offs were 1.26% for the second quarter of 2012 as compared to 0.20% for the second quarter of 2011 |

|         |                                                                                                                               |
|---------|-------------------------------------------------------------------------------------------------------------------------------|
| • | The lease was transferred and fixed assets sold of the Niceville, Florida branch to another financial institution in May 2012 |

|         |                                                                                                                                                                                                      |
|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • | As a result of branch closings and other cost-saving initiatives, full-time equivalent employees dropped from 510 employees at June 30, 2011 to 468 employees at June 30, 2012 |

----

|              |
|--------------|
|              |  |  |  |  |  |  |  |  |  |  |  |  |
|         |   | Loans |   | Non-InterestBearing Deposits |   | InterestBearing Deposits |
| 2nd Qtr 2011 |   | $ | (6,666 | ) |   | $ | 35,169 |  |   | $ | (10,746 | ) |
| 3rd Qtr 2011 |   | (29,629 | ) |   | (21,584 | ) |   | (19,056 | ) |
| 4th Qtr 2011 |   | (18,626 | ) |   | 9,676 |  |   | (22,072 | ) |
| 1st Qtr 2012 |   | (16,845 | ) |   | 6,885 |  |   | 32,160 |  |
| 2nd Qtr 2012 |   | 3,101 |  |   | (2,458 | ) |   | (46,712 | ) |

|              |
|--------------|
|              |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|         |   | Net InterestIncome |   | Loan LossAccruals |   | Non-InterestIncome |   | Non-InterestExpense |
| 2nd Qtr 2011 |   | $ | 13,271 |  |   | $ | 2,280 |  |   | $ | 4,712 |  |   | $ | 14,303 |  |
| 3rd Qtr 2011 |   | 13,225 |  |   | 2,580 |  |   | 5,219 |  |   | 14,143 |  |
| 4th Qtr 2011 |   | 12,643 |  |   | 2,280 |  |   | 5,912 |  |   | 15,077 |  |
| 1st Qtr 2012 |   | 12,964 |  |   | 2,280 |  |   | 5,421 |  |   | 13,986 |  |
| 2nd Qtr 2012 |   | 12,916 |  |   | 2,280 |  |   | 6,035 |  |   | 14,319 |  |

|                         |
|-------------------------|
|                         |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|                    |   | 2nd Qtr 2012 |   | 1st Qtr 2012 |   | 4th Qtr 2011 |   | 3rd Qtr 2011 |   | 2nd Qtr 2011 |
| Net interest income     |   | $ | 1.41 |  |   | $ | 1.42 |  |   | $ | 1.38 |  |   | $ | 1.45 |  |   | $ | 1.45 |  |
| Loan loss expense       |   | 0.25 |  |   | 0.25 |  |   | 0.25 |  |   | 0.28 |  |   | 0.25 |  |
| Noninterest income      |   | 0.66 |  |   | 0.59 |  |   | 0.65 |  |   | 0.57 |  |   | 0.52 |  |
| Noninterest expense     |   | 1.56 |  |   | 1.53 |  |   | 1.65 |  |   | 1.55 |  |   | 1.57 |  |
| Net income before taxes |   | $ | 0.26 |  |   | $ | 0.23 |  |   | $ | 0.13 |  |   | $ | 0.19 |  |   | $ | 0.15 |  |

----

|                                                          |
|----------------------------------------------------------|
|                                                          |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|                                                     |   | 2nd Qtr 2012 |   | 1st Qtr 2012 |   | 4th Qtr 2011 |   | 3rd Qtr 2011 |   | 2nd Qtr 2011 |
| Net interest margin                                      |   | 3.72 | % |   | 3.67 | % |   | 3.64 | % |   | 3.72 | % |   | 3.75 | % |
| Efficiency ratio                                         |   | 74.70 | % |   | 75.18 | % |   | 80.29 | % |   | 75.76 | % |   | 78.56 | % |
| Return on assets                                         |   | 0.45 | % |   | 0.40 | % |   | 0.25 | % |   | 0.33 | % |   | 0.28 | % |
| Return on  total equity                        |   | 6.27 | % |   | 5.84 | % |   | 3.54 | % |   | 4.78 | % |   | 4.07 | % |
| Return on common equity                                  |   | 5.46 | % |   | 4.95 | % |   | 2.27 | % |   | 3.76 | % |   | 2.90 | % |
| Noninterest income to avg. assets                        |   | 1.54 | % |   | 1.36 | % |   | 1.50 | % |   | 1.30 | % |   | 1.18 | % |
| Noninterest income to revenues (1)                       |   | 31.48 | % |   | 29.14 | % |   | 31.48 | % |   | 27.96 | % |   | 25.88 | % |
| Noninterest expense to avg assets                        |   | 3.65 | % |   | 3.50 | % |   | 3.82 | % |   | 3.52 | % |   | 3.59 | % |
| Salaries and benefits to total noninterest expense       |   | 47.05 | % |   | 49.07 | % |   | 45.76 | % |   | 52.72 | % |   | 50.04 | % |
| Nonaccrual loans to loans                                |   | 0.64 | % |   | 1.45 | % |   | 1.68 | % |   | 2.59 | % |   | 3.13 | % |
| 90 day past due loans to loans                           |   | 0.15 | % |   | 0.02 | % |   | 0.06 | % |   | 0.02 | % |   | 0.07 | % |
| Annualized net charge offs as a percent of average loans |   | 1.26 | % |   | 0.47 | % |   | 1.37 | % |   | 2.03 | % |   | 0.20 | % |

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

|                                                |
|------------------------------------------------|
|                                                |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| (Dollars in thousands)                         |   | 2nd Qtr 2012 |   | 1st Qtr 2012 |   | 4th Qtr 2011 |   | 3rd Qtr 2011 |   | 2nd Qtr 2011 |
| Mortgage originations                          |   | $ | 38,693 |  |   | $ | 30,508 |  |   | $ | 41,297 |  |   | $ | 25,863 |  |   | $ | 12,194 |  |
| Trust revenues                                 |   | 46 |  |   | 41 |  |   | 43 |  |   | 56 |  |   | 43 |  |
| Retail investment revenues                     |   | 117 |  |   | 99 |  |   | 110 |  |   | 90 |  |   | 109 |  |
| Revenues per FTE employee                      |   | 41 |  |   | 40 |  |   | 39 |  |   | 37 |  |   | 37 |  |
| Agency commissions per agency FTE employee (1) |   | 22 |  |   | 22 |  |   | 20 |  |   | 26 |  |   | 24 |  |

|                                                |
|------------------------------------------------|
|                                                |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|                                           |   | 2nd Qtr 2012 |   | 1st Qtr 2012 |   | 4th Qtr 2011 |   | 3rd Qtr 2011 |   | 2nd Qtr 2011 |
| Full-time equivalent employees                 |   | 468 |  |   | 460 |  |   | 460 |  |   | 496 |  |   | 510 |  |
| Number of noninterest-bearing deposit accounts |   | 31,980 |  |   | 32,081 |  |   | 32,332 |  |   | 32,587 |  |   | 32,609 |  |

----

----

----

|                                                                                                                |
|----------------------------------------------------------------------------------------------------------------|
|                                                                                                                |  |  |  |  |  |  |  |  |  |  |  |  |
|                                                                                                           |   | Yields/Costs |   | Yields/Costs |
|                                                                                                           |   | 2nd Quarter, 2012 |   | 1st Quarter, 2012 |   | 2nd Quarter, 2011 |   | 1st Quarter, 2011 |
| Interest bearing bank balances                                                                                 |   | 0.37 |  % |   | 0.26 |  % |   | 0.26 |  % |   | 0.22 |  % |
| Federal funds sold                                                                                             |   | 0.27 |  |   | 0.25 |  |   | 0.25 |  |   | 0.25 |  |
| Taxable investments                                                                                            |   | 1.88 |  |   | 2.00 |  |   | 2.95 |  |   | 2.88 |  |
| Tax-exempt investments                                                                                         |   | 5.59 |  |   | 5.83 |  |   | 5.98 |  |   | 5.98 |  |
| Loans held for sale                                                                                            |   | 3.22 |  |   | 3.06 |  |   | 3.75 |  |   | 3.85 |  |
| Loans held for investment                                                                                      |   | 5.69 |  |   | 5.80 |  |   | 5.85 |  |   | 5.92 |  |
| Earning asset yield                                                                                            |   | 4.57 |  |   | 4.57 |  |   | 5.00 |  |   | 4.93 |  |
| Interest checking                                                                                              |   | 0.43 |  |   | 0.46 |  |   | 0.71 |  |   | 0.81 |  |
| Money market deposits                                                                                          |   | 0.37 |  |   | 0.52 |  |   | 0.77 |  |   | 0.85 |  |
| Savings deposits                                                                                               |   | 0.95 |  |   | 0.99 |  |   | 1.12 |  |   | 1.21 |  |
| Certificates of deposit                                                                                        |   | 1.31 |  |   | 1.39 |  |   | 1.76 |  |   | 1.86 |  |
| Short-term borrowings                                                                                          |   | 0.62 |  |   | 0.48 |  |   | 0.34 |  |   | 0.25 |  |
| Other borrowings                                                                                               |   | 4.21 |  |   | 3.97 |  |   | 4.15 |  |   | 4.97 |  |
| Cost of interest-bearing liabilities                                                                           |   | 0.98 |  |   | 1.03 |  |   | 1.37 |  |   | 1.51 |  |
| Net interest spread                                                                                            |   | 3.59 |  |   | 3.54 |  |   | 3.63 |  |   | 3.42 |  |
| Effect of non-interest bearing deposits                                                                        |   | 0.16 |  |   | 0.16 |  |   | 0.20 |  |   | 0.21 |  |
| Effect of leverage                                                                                             |   | (0.03 | ) |   | (0.03 | ) |   | (0.08 | ) |   | (0.04 | ) |
| Net interest margin, tax-equivalent                                                                            |   | 3.72 |  |   | 3.67 |  |   | 3.75 |  |   | 3.59 |  |
| Less: Tax equivalent adjustments:                                                                              |   |   |  |   |   |  |   |   |  |   |   |  |
| Investments                                                                                                    |   | 0.05 |  |   | 0.05 |  |   | 0.05 |  |   | 0.05 |  |
| Loans                                                                                                          |   | 0.01 |  |   | 0.01 |  |   | 0.02 |  |   | 0.01 |  |
| Reported book net interest margin                                                                              |   | 3.66 |  % |   | 3.61 |  % |   | 3.68 |  % |   | 3.53 |  % |
|                                                                                                           |   |   |   |   |   |   |   |   |
| The following table shows the components of the net interest margin for the first six months of 2012 and 2011: |
|                                                                                                           |   | Yields/Costs |   |   |  |   |   |  |
|                                                                                                           |   | YTD June 2012 |   | YTD June 2011 |   |   |  |   |   |  |
| Interest bearing bank balances                                                                                 |   | 0.29 |  % |   | 0.24 |  % |   |   |  |   |   |  |
| Federal funds sold                                                                                             |   | 0.26 |  |   | 0.25 |  |   |   |  |   |   |  |
| Taxable investments                                                                                            |   | 1.94 |  |   | 2.92 |  |   |   |  |   |   |  |
| Tax-exempt investments                                                                                         |   | 5.71 |  |   | 5.98 |  |   |   |  |   |   |  |
| Loans held for sale                                                                                            |   | 3.15 |  |   | 3.81 |  |   |   |  |   |   |  |
| Loans held for investment                                                                                      |   | 5.74 |  |   | 5.88 |  |   |   |  |   |   |  |
| Earning asset yield                                                                                            |   | 4.57 |  |   | 4.94 |  |   |   |  |   |   |  |
| Interest checking                                                                                              |   | 0.45 |  |   | 0.76 |  |   |   |  |   |   |  |
| Money market deposits                                                                                          |   | 0.45 |  |   | 0.81 |  |   |   |  |   |   |  |
| Savings                                                                                                        |   | 0.97 |  |   | 1.17 |  |   |   |  |   |   |  |
| Certificates of deposit                                                                                        |   | 1.35 |  |   | 1.81 |  |   |   |  |   |   |  |
| Short-term borrowings                                                                                          |   | 0.53 |  |   | 0.27 |  |   |   |  |   |   |  |
| Other borrowings                                                                                               |   | 4.09 |  |   | 4.56 |  |   |   |  |   |   |  |
| Cost of interest-bearing liabilities                                                                           |   | 1.01 |  |   | 1.44 |  |   |   |  |   |   |  |
| Net interest spread                                                                                            |   | 3.56 |  |   | 3.50 |  |   |   |  |   |   |  |
| Effect of non-interest bearing deposits                                                                        |   | 0.16 |  |   | 0.21 |  |   |   |  |   |   |  |
| Effect of leverage                                                                                             |   | (0.03 | ) |   | (0.04 | ) |   |   |  |   |   |  |
| Net interest margin, tax-equivalent                                                                            |   | 3.69 |  |   | 3.67 |  |   |   |  |   |   |  |
| Less: Tax equivalent adjustments:                                                                              |   |   |  |   |   |  |   |   |  |   |   |  |
| Investments                                                                                                    |   | 0.05 |  |   | 0.05 |  |   |   |  |   |   |  |
| Loans                                                                                                          |   | 0.01 |  |   | 0.01 |  |   |   |  |   |   |  |
| Reported book net interest margin                                                                              |   | 3.63 |  % |   | 3.61 |  % |   |   |  |   |   |  |

----

|                                            |
|--------------------------------------------|
|                                            |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| (Dollars in thousands)                     |   |   |   |   |
|                                       |   | 2nd Quarter, |   | 1st Quarter, |   | 2nd Quarter, |   | 1st Quarter, |
|                                       |   | 2012 |   | 2012 |   | 2011 |   | 2011 |
| Interest bearing bank balances             |   | $ | 30,923 |  |   | $ | 79,212 |  |   | $ | 71,291 |  |   | $ | 93,864 |  |
| Federal funds sold                         |   | 15,082 |  |   | 25,000 |  |   | 25,000 |  |   | 25,000 |  |
| Taxable investments                        |   | 333,794 |  |   | 299,622 |  |   | 262,915 |  |   | 249,061 |  |
| Tax-exempt investments                     |   | 36,610 |  |   | 34,969 |  |   | 32,407 |  |   | 33,939 |  |
| Loans held for sale                        |   | 30,416 |  |   | 22,729 |  |   | 2,928 |  |   | 4,265 |  |
| Loans held for investment                  |   | 973,545 |  |   | 983,800 |  |   | 1,050,136 |  |   | 1,056,903 |  |
| Earning assets                             |   | 1,420,370 |  |   | 1,445,332 |  |   | 1,444,677 |  |   | 1,463,032 |  |
| Other assets                               |   | 157,050 |  |   | 161,681 |  |   | 154,194 |  |   | 159,331 |  |
| Total assets                               |   | $ | 1,577,420 |  |   | $ | 1,607,013 |  |   | $ | 1,598,871 |  |   | $ | 1,622,363 |  |
| Interest checking                          |   | $ | 404,958 |  |   | $ | 419,260 |  |   | $ | 400,942 |  |   | $ | 402,801 |  |
| Money market deposits                      |   | 217,533 |  |   | 226,602 |  |   | 167,657 |  |   | 161,581 |  |
| Savings deposits                           |   | 121,778 |  |   | 120,835 |  |   | 117,783 |  |   | 115,815 |  |
| Certificates of deposit                    |   | 402,703 |  |   | 417,086 |  |   | 493,722 |  |   | 514,184 |  |
| Short-term borrowings                      |   | 2,974 |  |   | 5,054 |  |   | 8,637 |  |   | 23,917 |  |
| Other borrowings                           |   | 71,771 |  |   | 73,107 |  |   | 77,440 |  |   | 80,261 |  |
| Interest-bearing liabilities               |   | 1,221,717 |  |   | 1,261,944 |  |   | 1,266,181 |  |   | 1,298,559 |  |
| Noninterest-bearing deposits               |   | 232,744 |  |   | 225,610 |  |   | 216,227 |  |   | 209,352 |  |
| Other liabilities                          |   | 10,493 |  |   | 8,714 |  |   | 7,552 |  |   | 6,819 |  |
| Stockholders’ equity                 |   | 112,466 |  |   | 110,745 |  |   | 108,911 |  |   | 107,633 |  |
| Liabilities and stockholders’ equity |   | $ | 1,577,420 |  |   | $ | 1,607,013 |  |   | $ | 1,598,871 |  |   | $ | 1,622,363 |  |
| Loans to earning assets                    |   | 68.54 | % |   | 68.07 | % |   | 72.69 | % |   | 72.24 | % |
| Loans to assets                            |   | 61.72 | % |   | 61.22 | % |   | 65.68 | % |   | 65.15 | % |
| Earning assets to assets                   |   | 90.04 | % |   | 89.94 | % |   | 90.36 | % |   | 90.18 | % |
| Noninterest-bearing deposits to assets     |   | 14.75 | % |   | 14.04 | % |   | 13.52 | % |   | 12.90 | % |
| Equity to assets                           |   | 7.13 | % |   | 6.89 | % |   | 6.81 | % |   | 6.63 | % |

----

|                                            |
|--------------------------------------------|
|                                            |  |  |  |  |  |  |  |  |
| (Dollars in thousands)                     |   |   |
|                                       |   | YTD June 2012 |   | YTD June 2011 |
| Interest bearing bank balances             |   | $ | 55,067 |  |   | $ | 82,515 |  |
| Federal funds sold                         |   | 20,041 |  |   | 25,000 |  |
| Taxable investments                        |   | 316,708 |  |   | 256,026 |  |
| Tax-exempt investments                     |   | 35,790 |  |   | 33,169 |  |
| Loans held for sale                        |   | 26,573 |  |   | 3,593 |  |
| Loans held for investment                  |   | 978,672 |  |   | 1,053,501 |  |
| Earning assets                             |   | 1,432,851 |  |   | 1,453,804 |  |
| Other assets                               |   | 159,365 |  |   | 156,748 |  |
| Total assets                               |   | $ | 1,592,216 |  |   | $ | 1,610,552 |  |
| Interest checking                          |   | $ | 412,108 |  |   | $ | 401,866 |  |
| Money market deposits                      |   | 222,067 |  |   | 164,635 |  |
| Savings deposits                           |   | 121,307 |  |   | 116,805 |  |
| Certificates of deposit                    |   | 409,895 |  |   | 503,896 |  |
| Short-term borrowings                      |   | 4,014 |  |   | 16,235 |  |
| Other borrowings                           |   | 72,439 |  |   | 78,843 |  |
| Interest-bearing liabilities               |   | 1,241,830 |  |   | 1,282,280 |  |
| Noninterest-bearing deposits               |   | 229,177 |  |   | 212,809 |  |
| Other liabilities                          |   | 9,603 |  |   | 7,188 |  |
| Stockholders’ equity                 |   | 111,606 |  |   | 108,275 |  |
| Liabilities and stockholders’ equity |   | $ | 1,592,216 |  |   | $ | 1,610,552 |  |
| Loans to earning assets                    |   | 68.30 | % |   | 72.47 | % |
| Loans to assets                            |   | 61.47 | % |   | 65.41 | % |
| Earning assets to assets                   |   | 89.99 | % |   | 90.27 | % |
| Noninterest-bearing deposits to assets     |   | 14.39 | % |   | 13.21 | % |
| Equity to assets                           |   | 7.01 | % |   | 6.72 | % |

----

|                                     |
|-------------------------------------|
|                                     |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|                                |   | Three Months Ended |   | Six Months Ended |
| (Dollars in thousands)              |   | June 30 |   | June 30 |
|                                |   | 2012 |   | 2011 |   | 2012 |   | 2011 |
| Service charge revenues             |   | $ | 284 |  |   | $ | 299 |  |   | $ | 570 |  |   | $ | 602 |  |
| Debit/ATM card revenues             |   | 948 |  |   | 819 |  |   | 1,795 |  |   | 1,640 |  |
| Overdraft fee revenues              |   | 1,316 |  |   | 1,355 |  |   | 2,640 |  |   | 2,689 |  |
| Service charges on deposit accounts |   | $ | 2,548 |  |   | $ | 2,473 |  |   | $ | 5,005 |  |   | $ | 4,931 |  |

----

|                                     |
|-------------------------------------|
|                                     |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| (Dollars in thousands)              |   |   |   |   |   |   |   | YTD |   | YTD |
|                                |   | 2Q12 |   | 1Q12 |   | 2Q11 |   | June 2012 |   | June 2011 |
| Non-interest income:                |   |   |   |   |   |   |   |   |   |   |
| Retail revenues                     |   | $ | 1,110 |  |   | $ | 280 |  |   | $ | 323 |  |   | $ | 1,390 |  |   | $ | 679 |  |
| Selected non-interest expenses: (a) |   |   |   |   |   |   |   |   |   |   |
| Recourse expenses                   |   | 74 |  |   | 6 |  |   | — |  |   | 80 |  |   | — |  |
| Closing and shipping expenses       |   | 182 |  |   | 143 |  |   | 94 |  |   | 325 |  |   | 196 |  |
| Origination-related expenses        |   | 256 |  |   | 149 |  |   | 94 |  |   | 405 |  |   | 196 |  |
| Adjusted revenues                   |   | $ | 854 |  |   | $ | 131 |  |   | $ | 229 |  |   | $ | 985 |  |   | $ | 483 |  |
|                                |   |   |   |   |   |   |   |   |   |   |
| Retail originations                 |   | $ | 23,898 |  |   | $ | 17,434 |  |   | $ | 12,194 |  |   | $ | 41,332 |  |   | $ | 24,746 |  |
| Retail sales                        |   | $ | 25,123 |  |   | $ | 16,095 |  |   | $ | 12,478 |  |   | $ | 41,218 |  |   | $ | 28,695 |  |
|                                |   |   |   |   |   |   |   |   |   |   |
| Adjusted revenues / dollar sales    |   | 3.40 | % |   | 0.81 | % |   | 1.84 | % |   | 2.39 | % |   | 1.68 | % |
|                                |   |   |   |   |   |   |   |   |   |   |
| Non-interest income:                |   |   |   |   |   |   |   |   |   |   |
| Wholesale revenues                  |   | $ | 696 |  |   | $ | 287 |  |   | $ | — |  |   | $ | 983 |  |   | $ | — |  |
| Selected non-interest expenses: (a) |   |   |   |   |   |   |   |   |   |   |
| Broker fees                         |   | 368 |  |   | 203 |  |   |   |   | 571 |  |   | — |  |
| Recourse expenses                   |   | 86 |  |   | — |  |   | — |  |   | 86 |  |   | — |  |
| Closing and shipping expenses       |   | 132 |  |   | 70 |  |   | — |  |   | 202 |  |   | — |  |
| Origination-related expenses        |   | 586 |  |   | 273 |  |   | — |  |   | 859 |  |   | — |  |
| Adjusted revenues                   |   | $ | 110 |  |   | $ | 14 |  |   | $ | — |  |   | $ | 124 |  |   | $ | — |  |
|                                |   |   |   |   |   |   |   |   |   |   |
| Wholesale originations              |   | $ | 14,795 |  |   | $ | 13,074 |  |   | $ | — |  |   | $ | 27,869 |  |   | $ | — |  |
| Wholesale sales                     |   | $ | 18,055 |  |   | $ | 9,605 |  |   | $ | — |  |   | $ | 27,660 |  |   | $ | — |  |
|                                |   |   |   |   |   |   |   |   |   |   |
| Adjusted revenues / dollar sales    |   | 0.61 | % |   | 0.15 | % |   | — |  |   | 0.45 | % |   | — |  |

----

|                                  |
|----------------------------------|
|                                  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| (Dollars in thousands) |   | Other-Than-Temporary Impairment Charged Against Earnings |   | Other-Than-Temporary Impairment Charged To (Reclassified From) Other Comprehensive Income |
| Name of Issuer         |   | 1st Quarter |   | 2nd Quarter |   | 1st Quarter |   | 2nd Quarter |
| Tpref Funding II                 |   | $ | — |  |   | $ | 4 |  |   | $ | — |  |   | $ | 4 |  |
| Total                            |   | $ | — |  |   | $ | 4 |  |   | $ | — |  |   | $ | 4 |  |

|                                  |
|----------------------------------|
|                                  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| (Dollars in thousands) |   | Other-Than-Temporary Impairment Charged Against Earnings |   | Other-Than-Temporary Impairment Charged To (Reclassified From) Other Comprehensive Income |
| Name of Issuer         |   | 1st Quarter |   | 2nd Quarter |   | 1st Quarter |   | 2nd Quarter |
| Tpref Funding II                 |   | $ | 69 |  |   | $ | — |  |   | $ | (72 | ) |   | $ | — |  |
| Trapeza V 2003-5A                |   | 224 |  |   | — |  |   | 35 |  |   | — |  |
| MM Community Funding IX          |   | 3 |  |   | 85 |  |   | (18 | ) |   | (87 | ) |
| Total                            |   | $ | 296 |  |   | $ | 85 |  |   | $ | (55 | ) |   | $ | (87 | ) |

----

|                         |
|-------------------------|
|                         |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| As of June 30, 2012     |
| (Dollars in thousands)  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Name of Issuer          |   | Class |   | Book Value |   | Fair Value |   | Unrealized Loss |   | Moody's Credit Rating |   | Number of Banks in Issuance |   | Deferrals and Defaults as a Percent of Collateral |   | Excess Subordination |
| Trapeza I 2002-1A       |   | C1 |   | $ | 474 |  |   | $ | 103 |  |   | $ | 371 |  |   | C |   | 22 |  |   | 43.33 | % |   | — | % |
| Trapeza II 2003-2A      |   | C1 |   | 988 |  |   | 267 |  |   | 721 |  |   | Ca |   | 36 |  |   | 38.43 | % |   | — | % |
| Tpref Funding II        |   | B |   | 710 |  |   | 211 |  |   | 499 |  |   | Caa3 |   | 34 |  |   | 38.81 |  |   | — | % |
| Trapeza V 2003-5A       |   | C1 |   | 608 |  |   | 128 |  |   | 480 |  |   | Ca |   | 42 |  |   | 33.97 | % |   | — | % |
| MM Community Funding IX |   | B1 |   | 352 |  |   | 141 |  |   | 211 |  |   | Caa3 |   | 31 |  |   | 50.68 |  |   | — | % |
|                    |   |   |   | $ | 3,132 |  |   | $ | 850 |  |   | $ | 2,282 |  |   |   |   |   |  |   |   |  |   |   |  |

|                                         |
|-----------------------------------------|
|                                         |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| (Dollars in thousands)                  |   | 2Q2012 |   | 1Q2012 |   | 2Q2011 |   | 1Q2011 |
| Agency profit-sharing revenues          |   | $ | 10 |  |   | $ | 132 |  |   | $ | 3 |  |   | $ | 254 |  |
| Loan fees                               |   | 76 |  |   | 178 |  |   | 100 |  |   | 101 |  |
| Gains on disposals of branch properties |   | 44 |  |   | — |  |   | — |  |   | — |  |
| All other income                        |   | 361 |  |   | 340 |  |   | 293 |  |   | 301 |  |
| Total other income                      |   | $ | 491 |  |   | $ | 650 |  |   | $ | 396 |  |   | $ | 656 |  |

----

|                                               |
|-----------------------------------------------|
|                                               |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| (Dollars in thousands)                        |   | 2Q2012 |   | 1Q2012 |   | 2Q2011 |   | 1Q2011 |
| Losses (gains) on sales of other real estate  |   | $ | 495 |  |   | $ | 123 |  |   | $ | 124 |  |   | $ | (36 | ) |
| Write-downs of other real estate              |   | 536 |  |   | 1,100 |  |   | 1,053 |  |   | 2,054 |  |
| Other real estate expenses                    |   | 288 |  |   | 304 |  |   | 327 |  |   | 359 |  |
| Rental income on other real estate properties |   | (37 | ) |   | (71 | ) |   | (36 | ) |   | (24 | ) |
| Total foreclosed property expenses            |   | $ | 1,282 |  |   | $ | 1,456 |  |   | $ | 1,468 |  |   | $ | 2,353 |  |

----

|                                |
|--------------------------------|
|                                |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| (Dollars in thousands)         |   | 2Q2012 |   | 1Q2012 |   | 2Q2011 |   | 1Q2011 |
| Postage and shipping           |   | $ | 224 |  |   | $ | 234 |  |   | $ | 232 |  |   | $ | 239 |  |
| Supplies                       |   | 214 |  |   | 185 |  |   | 182 |  |   | 180 |  |
| Legal expenses                 |   | 274 |  |   | 292 |  |   | 250 |  |   | 174 |  |
| Other professional expenses    |   | 324 |  |   | 334 |  |   | 267 |  |   | 205 |  |
| Insurance expenses             |   | 141 |  |   | 275 |  |   | 104 |  |   | 248 |  |
| Debit card processing expenses |   | 220 |  |   | 205 |  |   | 194 |  |   | 192 |  |
| Mortgage processing expenses   |   | 842 |  |   | 422 |  |   | 94 |  |   | 102 |  |
| All other expenses             |   | 1,213 |  |   | 884 |  |   | 1,373 |  |   | 998 |  |
| Total other expense            |   | $ | 3,452 |  |   | $ | 2,831 |  |   | $ | 2,696 |  |   | $ | 2,338 |  |

|                                                                          |
|--------------------------------------------------------------------------|
|                                                                          |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| (Dollars in thousands)                                                   |   | Three Months Ended |   | Six Months Ended |
|                                                                     |   | June 30 |   | June 30 |
|                                                                     |   | 2012 |   | 2011 |   | 2012 |   | 2011 |
| Amount computed using the Federal statutory rates on income before taxes |   | $ | 800 |  |   | $ | 476 |  |   | $ | 1,520 |  |   | $ | 838 |  |
| Increase (decrease) resulting from:                                      |   |   |  |   |   |  |   |   |  |   |   |  |
| State income tax expense, net of Federal effect                          |   | 56 |  |   | 24 |  |   | 102 |  |   | 36 |  |
| Tax exempt income, net of disallowed interest deduction                  |   | (119 | ) |   | (121 | ) |   | (239 | ) |   | (245 | ) |
| Life insurance income                                                    |   | (62 | ) |   | (60 | ) |   | (126 | ) |   | (122 | ) |
| Low income housing tax credits                                           |   | (82 | ) |   | (27 | ) |   | (165 | ) |   | (110 | ) |
| Other, net                                                               |   | 6 |  |   | 2 |  |   | 19 |  |   | 12 |  |
| Total income tax expense                                                 |   | $ | 599 |  |   | $ | 294 |  |   | $ | 1,111 |  |   | $ | 409 |  |

----

|                                                       |
|-------------------------------------------------------|
|                                                       |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|                                                  |   | June 30, 2012 |   | June 30, 2011 |   | June 30, 2012 |
| (Dollars in thousands)                      |   | Net Change |   | Net Change |   | Net Change |
|                                                  |   | QTD |   | YTD |   | QTD |   | YTD |   | Year-Over-Year |
| Cash and due from banks                               |   | $ | (1,541 | ) |   | $ | (2,829 | ) |   | $ | 4,962 |  |   | $ | (3,953 | ) |   | $ | (3,999 | ) |
| Interest-bearing bank balances and Federal funds sold |   | (49,442 | ) |   | (36,933 | ) |   | 23,439 |  |   | 31,744 |  |   | (101,389 | ) |
| Securities available for sale                         |   | 11,700 |  |   | 56,896 |  |   | (3,109 | ) |   | 16,204 |  |   | 84,537 |  |
| Loans held for sale                                   |   | (6,393 | ) |   | (3,782 | ) |   | (469 | ) |   | (4,125 | ) |   | 20,174 |  |
| Loans held for investment                             |   | 3,101 |  |   | (13,744 | ) |   | (6,666 | ) |   | (15,551 | ) |   | (61,999 | ) |
| Allowance for loan losses                             |   | 774 |  |   | (357 | ) |   | (1,762 | ) |   | (2,780 | ) |   | 3,495 |  |
| Other real estate                                     |   | (3,559 | ) |   | (5,875 | ) |   | 990 |  |   | (475 | ) |   | 427 |  |
| Other assets                                          |   | (286 | ) |   | (531 | ) |   | (1,795 | ) |   | (1,938 | ) |   | (2,840 | ) |
| Total assets                                          |   | $ | (45,646 | ) |   | $ | (7,155 | ) |   | $ | 15,590 |  |   | $ | 19,126 |  |   | $ | (61,594 | ) |
| Total deposits                                        |   | (49,170 | ) |   | (10,125 | ) |   | 24,423 |  |   | 49,087 |  |   | (63,161 | ) |
| Total borrowings                                      |   | (1,854 | ) |   | (3,842 | ) |   | (12,549 | ) |   | (33,358 | ) |   | (6,982 | ) |
| Other liabilities                                     |   | 2,816 |  |   | 2,491 |  |   | 1,342 |  |   | 409 |  |   | 4,685 |  |
| Stockholders’ equity                            |   | 2,562 |  |   | 4,321 |  |   | 2,374 |  |   | 2,988 |  |   | 3,864 |  |
| Total liabilities and equity                          |   | $ | (45,646 | ) |   | $ | (7,155 | ) |   | $ | 15,590 |  |   | $ | 19,126 |  |   | $ | (61,594 | ) |

----

|                                        |
|----------------------------------------|
|                                        |  |  |  |  |  |  |  |  |  |  |  |  |
| (Dollars in thousands)       |   | June 30, 2012 |   | December 31, 2011 |   | June 30, 2011 |
| Commercial real estate                 |   | $ | 567,184 |  |   | $ | 574,505 |  |   | $ | 621,546 |  |
| Residential real estate                |   | 189,927 |  |   | 186,815 |  |   | 187,932 |  |
| Home equity lines                      |   | 36,183 |  |   | 37,024 |  |   | 38,891 |  |
| Commercial, financial and agricultural |   | 147,773 |  |   | 155,330 |  |   | 152,063 |  |
| Consumer                               |   | 41,529 |  |   | 42,666 |  |   | 44,163 |  |
| Total                                  |   | $ | 982,596 |  |   | $ | 996,340 |  |   | $ | 1,044,595 |  |
| Mortgages held for sale                |   | $ | 22,291 |  |   | $ | 26,073 |  |   | $ | 2,117 |  |

|                        |
|------------------------|
|                        |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|                   |   | Core Customers |   | Public Funds |   | Total Deposits |
| (Dollars in thousands) |   | Increase (Decrease) |   | Increase (Decrease) |   | Increase (Decrease) |
|                   |   | Amt. |   | Pct. |   | Amt. |   | Pct. |   | Amt. |   | Pct. |
| Noninterest-bearing    |   | $ | 4,463 |  |   | 1.99 |  % |   | $ | (36 | ) |   | (0.51 | )% |   | $ | 4,427 |  |   | 1.91 |  % |
| NOW                    |   | 1,682 |  |   | 0.75 |  % |   | (212 | ) |   | (0.13 | )% |   | 1,470 |  |   | 0.38 |  % |
| MMDA                   |   | 17,406 |  |   | 9.76 |  % |   | (3,808 | ) |   | (19.55 | )% |   | 13,598 |  |   | 6.87 |  % |
| Savings                |   | (3,010 | ) |   | (2.52 | )% |   | (85 | ) |   | (25.30 | )% |   | (3,095 | ) |   | (2.59 | )% |
| Customer CDs           |   | (25,952 | ) |   | (6.47 | )% |   | (1,818 | ) |   | (12.70 | )% |   | (27,770 | ) |   | (6.69 | )% |
| Brokered CDs           |   | 1,479 |  |   | 13.71 |  % |   | (234 | ) |   | (4.05 | )% |   | 1,245 |  |   | 7.51 |  % |
| Total                  |   | $ | (3,932 | ) |   | (0.34 | )% |   | $ | (6,193 | ) |   | (2.91 | )% |   | $ | (10,125 | ) |   | (0.74 | )% |

|                                  |
|----------------------------------|
|                                  |  |  |  |  |  |  |  |  |  |  |  |  |
| (Dollars in thousands)           |   | June 30, 2012 |   | December 31, 2011 |   | June 30, 2011 |
| Noninterest-bearing demand       |   | $ | 236,145 |  |   | $ | 231,718 |  |   | $ | 243,626 |  |
| NOW deposits                     |   | 391,726 |  |   | 390,256 |  |   | 397,281 |  |
| Money market deposits            |   | 211,447 |  |   | 197,849 |  |   | 174,127 |  |
| Savings deposits                 |   | 116,598 |  |   | 119,693 |  |   | 117,830 |  |
| Certificates of deposit          |   | 387,610 |  |   | 415,380 |  |   | 473,387 |  |
| Brokered certificates of deposit |   | 17,812 |  |   | 16,567 |  |   | 18,248 |  |
| Total                            |   | $ | 1,361,338 |  |   | $ | 1,371,463 |  |   | $ | 1,424,499 |  |

----

|                                  |
|----------------------------------|
|                                  |  |  |  |  |  |  |  |  |  |  |  |  |
| (Dollars in thousands)           |   | June 30, 2012 |   | December 31, 2011 |   | June 30, 2011 |
| Noninterest-bearing demand       |   | $ | 7,085 |  |   | $ | 7,121 |  |   | $ | 6,887 |  |
| NOW deposits                     |   | 165,499 |  |   | 165,711 |  |   | 171,933 |  |
| Money market deposits            |   | 15,670 |  |   | 19,478 |  |   | 19,595 |  |
| Savings deposits                 |   | 251 |  |   | 336 |  |   | 320 |  |
| Certificates of deposit          |   | 12,497 |  |   | 14,315 |  |   | 17,184 |  |
| Brokered certificates of deposit |   | 5,549 |  |   | 5,783 |  |   | 5,261 |  |
| Total                            |   | $ | 206,551 |  |   | $ | 212,744 |  |   | $ | 221,180 |  |

----

|                                       |
|---------------------------------------|
|                                       |  |  |  |  |  |  |  |  |  |  |  |  |
| (Dollars in thousands)                |   | June 30, 2012 |   | December 31, 2011 |   | June 30, 2011 |
| Tier 1 capital                        |   | $ | 132,041 |  |   | $ | 126,810 |  |   | $ | 124,625 |  |
| Total risk-based capital              |   | 146,734 |  |   | 141,434 |  |   | 139,435 |  |
| Risk-weighted assets                  |   | 1,174,807 |  |   | 1,169,553 |  |   | 1,180,785 |  |
| Tier 1 common equity:                 |   |   |   |   |   |   |
| Tier 1 capital                        |   | 132,041 |  |   | 126,810 |  |   | 124,625 |  |
| Qualifying trust preferred securities |   | (30,000 | ) |   | (30,000 | ) |   | (30,000 | ) |
| Preferred stock                       |   | (18,198 | ) |   | (17,564 | ) |   | (16,962 | ) |
| Tier 1 common equity                  |   | $ | 83,843 |  |   | $ | 79,246 |  |   | $ | 77,663 |  |
| Risk-based ratios:                    |   |   |   |   |   |   |
| Tier 1 capital                        |   | 11.24 | % |   | 10.84 | % |   | 10.55 | % |
| Total risk-based capital              |   | 12.49 | % |   | 12.09 | % |   | 11.81 | % |
| Tier 1 leverage                       |   | 8.43 | % |   | 8.17 | % |   | 7.87 | % |
| Tier 1 common equity                  |   | 7.14 | % |   | 6.78 | % |   | 6.58 | % |
|                                  |   |   |   |   |   |   |
| Total capital to assets ratio         |   | 7.30 | % |   | 6.99 | % |   | 6.78 | % |

----

----

----

|                                           |
|-------------------------------------------|
|                                           |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| (Dollars in thousands)                    |   | 06/30/12 |   | 12/31/11 |   | 06/30/11 |   | 12/31/10 |   | 12/31/09 |
| Construction and land development:        |   |   |   |   |   |   |   |   |   |   |
| Total number                              |   | 4 |  |   | 10 |  |   | 21 |  |   | 22 |  |   | 54 |  |
| Total balance                             |   | $ | 1,373 |  |   | $ | 4,398 |  |   | $ | 9,735 |  |   | $ | 13,993 |  |   | $ | 25,655 |  |
| Number, $500 thousand or more             |   | 1 |  |   | 3 |  |   | 7 |  |   | 7 |  |   | 13 |  |
| Balance, $500 thousand or more            |   | $ | 600 |  |   | $ | 2,989 |  |   | $ | 8,035 |  |   | $ | 10,553 |  |   | $ | 19,297 |  |
|                                      |   |   |   |   |   |   |   |   |   |   |
| Other commercial real estate:             |   |   |   |   |   |   |   |   |   |   |
| Total number                              |   | 12 |  |   | 14 |  |   | 20 |  |   | 26 |  |   | 18 |  |
| Total balance                             |   | $ | 2,557 |  |   | $ | 9,937 |  |   | $ | 18,506 |  |   | $ | 13,027 |  |   | $ | 9,789 |  |
| Number, $500 thousand or more             |   | — |  |   | 4 |  |   | 8 |  |   | 6 |  |   | 2 |  |
| Balance, $500 thousand or more            |   | $ | — |  |   | $ | 8,185 |  |   | $ | 16,221 |  |   | $ | 10,152 |  |   | $ | 3,496 |  |
|                                      |   |   |   |   |   |   |   |   |   |   |
| 1-4 family residential:                   |   |   |   |   |   |   |   |   |   |   |
| Total number                              |   | 30 |  |   | 28 |  |   | 34 |  |   | 40 |  |   | 57 |  |
| Total balance                             |   | $ | 1,864 |  |   | $ | 1,896 |  |   | $ | 3,272 |  |   | $ | 3,863 |  |   | $ | 4,490 |  |
| Number, $500 thousand or more             |   | — |  |   | — |  |   | 1 |  |   | 1 |  |   | 1 |  |
| Balance, $500 thousand or more            |   | $ | — |  |   | $ | — |  |   | $ | 564 |  |   | $ | 941 |  |   | $ | 1,024 |  |
|                                      |   |   |   |   |   |   |   |   |   |   |
| Total real estate:                        |   |   |   |   |   |   |   |   |   |   |
| Total number                              |   | 46 |  |   | 52 |  |   | 75 |  |   | 88 |  |   | 129 |  |
| Total balance                             |   | $ | 5,794 |  |   | $ | 16,231 |  |   | $ | 31,513 |  |   | $ | 30,883 |  |   | $ | 39,934 |  |
| Number, $500 thousand or more             |   | 1 |  |   | 7 |  |   | 16 |  |   | 14 |  |   | 16 |  |
| Balance, $500 thousand or more            |   | $ | 600 |  |   | $ | 11,174 |  |   | $ | 24,820 |  |   | $ | 21,646 |  |   | $ | 23,817 |  |
|                                      |   |   |   |   |   |   |   |   |   |   |
| Commercial, financial & agricultural: |   |   |   |   |   |   |   |   |   |   |
| Total number                              |   | 11 |  |   | 17 |  |   | 15 |  |   | 23 |  |   | 33 |  |
| Total balance                             |   | $ | 629 |  |   | $ | 913 |  |   | $ | 1,141 |  |   | $ | 2,151 |  |   | $ | 4,459 |  |
| Number, $500 thousand or more             |   | — |  |   | — |  |   | — |  |   | 1 |  |   | 2 |  |
| Balance, $500 thousand or more            |   | $ | — |  |   | $ | — |  |   | $ | — |  |   | $ | 784 |  |   | $ | 2,411 |  |
|                                      |   |   |   |   |   |   |   |   |   |   |
| Consumer:                                 |   |   |   |   |   |   |   |   |   |   |
| Total number                              |   | 4 |  |   | 5 |  |   | 7 |  |   | 10 |  |   | 10 |  |
| Total balance                             |   | $ | 20 |  |   | $ | 33 |  |   | $ | 146 |  |   | $ | 93 |  |   | $ | 156 |  |
| Number, $500 thousand or more             |   | — |  |   | — |  |   | — |  |   | — |  |   | — |  |
| Balance, $500 thousand or more            |   | $ | — |  |   | $ | — |  |   | $ | — |  |   | $ | — |  |   | $ | — |  |
|                                      |   |   |   |   |   |   |   |   |   |   |
| Total portfolio:                          |   |   |   |   |   |   |   |   |   |   |
| Total number                              |   | 61 |  |   | 74 |  |   | 97 |  |   | 121 |  |   | 172 |  |
| Total balance                             |   | $ | 6,443 |  |   | $ | 17,177 |  |   | $ | 32,800 |  |   | $ | 33,127 |  |   | $ | 44,549 |  |
| Number, $500 thousand or more             |   | 1 |  |   | 7 |  |   | 16 |  |   | 15 |  |   | 18 |  |
| Balance, $500 thousand or more            |   | $ | 600 |  |   | $ | 11,174 |  |   | $ | 24,820 |  |   | $ | 22,430 |  |   | $ | 26,228 |  |

----

|                                     |
|-------------------------------------|
|                                     |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|                                |   | June 30, 2012 |   | December 31, 2011 |
| (Dollars in thousands)              |   | Loan Balance |   | Impairment Allowance |   | Loan Balance |   | Impairment Allowance |
| Non-accrual loans                   |   | $ | 1,373 |  |   | $ | 31 |  |   | $ | 4,398 |  |   | $ | 400 |  |
| Accruing loans with an allowance    |   | 4,024 |  |   | 1,089 |  |   | 7,155 |  |   | 1,350 |  |
| Accruing loans without an allowance |   | 5,975 |  |   | — |  |   | 6,606 |  |   | — |  |
| Total                               |   | $ | 11,372 |  |   | $ | 1,120 |  |   | $ | 18,159 |  |   | $ | 1,750 |  |

|                                     |
|-------------------------------------|
|                                     |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|                                |   | June 30, 2012 |   | December 31, 2011 |
| (Dollars in thousands)              |   | Loan Balance |   | Impairment Allowance |   | Loan Balance |   | Impairment Allowance |
| Non-accrual loans                   |   | $ | 2,557 |  |   | $ | 222 |  |   | $ | 9,937 |  |   | $ | 477 |  |
| Accruing loans with an allowance    |   | 6,130 |  |   | 1,150 |  |   | 4,495 |  |   | 417 |  |
| Accruing loans without an allowance |   | 36,009 |  |   | — |  |   | 26,338 |  |   | — |  |
| Total                               |   | $ | 44,696 |  |   | $ | 1,372 |  |   | $ | 40,770 |  |   | $ | 894 |  |

|                                         |
|-----------------------------------------|
|                                         |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| (Dollars in thousands)                  |   | Outstanding Balances |   | Past Due 30-89 Days And Still Accruing |   | Past Due 90 Days Or More And Still Accruing |   | Nonaccrual |   | Year-To-Date Net Charge-Offs (Recoveries) |
| Construction and development loans:     |   |   |   |   |   |   |   |   |   |   |
| 06/30/12                                |   | $ | 67,814 |  |   | $ | 325 |  |   | $ | — |  |   | $ | 1,373 |  |   | $ | 918 |  |
| 03/31/12                                |   | 70,087 |  |   | 254 |  |   | 23 |  |   | 4,519 |  |   | (263 | ) |
| 12/31/11                                |   | 69,325 |  |   | 603 |  |   | 72 |  |   | 4,398 |  |   | 1,970 |  |
| 09/30/11                                |   | 83,100 |  |   | 1,147 |  |   | — |  |   | 8,801 |  |   | 743 |  |
| 06/30/11                                |   | 87,826 |  |   | 1,514 |  |   | 307 |  |   | 9,735 |  |   | (551 | ) |
| Loans secured by 1-4 family properties: |   |   |  |   |   |  |   |   |  |   |   |  |   |   |  |
| 06/30/12                                |   | $ | 226,110 |  |   | $ | 2,232 |  |   | $ | 81 |  |   | $ | 1,864 |  |   | $ | 241 |  |
| 03/31/12                                |   | 224,989 |  |   | 2,810 |  |   | 87 |  |   | 2,352 |  |   | (81 | ) |
| 12/31/11                                |   | 223,839 |  |   | 3,288 |  |   | 174 |  |   | 1,896 |  |   | 1,998 |  |
| 09/30/11                                |   | 223,884 |  |   | 2,334 |  |   | 3 |  |   | 2,166 |  |   | 1,790 |  |
| 06/30/11                                |   | 226,823 |  |   | 2,067 |  |   | 285 |  |   | 3,272 |  |   | 585 |  |
| Commercial real estate-secured loans:   |   |   |  |   |   |  |   |   |  |   |   |  |   |   |  |
| 06/30/12                                |   | $ | 499,370 |  |   | $ | 1,177 |  |   | $ | 1,368 |  |   | $ | 2,557 |  |   | $ | 2,443 |  |
| 03/31/12                                |   | 498,724 |  |   | 3,061 |  |   | 75 |  |   | 7,125 |  |   | 1,239 |  |
| 12/31/11                                |   | 505,180 |  |   | 2,952 |  |   | 279 |  |   | 9,937 |  |   | 3,998 |  |
| 09/30/11                                |   | 520,804 |  |   | 2,958 |  |   | 189 |  |   | 14,804 |  |   | 2,229 |  |
| 06/30/11                                |   | 533,720 |  |   | 3,746 |  |   | 67 |  |   | 18,506 |  |   | 753 |  |

----

|                                                             |
|-------------------------------------------------------------|
|                                                             |  |  |  |  |  |  |  |  |  |  |  |  |
| (Dollars in thousands)                                      |   | June 30 |   | December 31 |   | June 30 |
|                                                        |   | 2012 |   | 2011 |   | 2011 |
| Nonaccrual loans                                            |   | $ | 6,443 |  |   | $ | 17,177 |  |   | $ | 32,800 |  |
| Other real estate                                           |   | 31,077 |  |   | 36,952 |  |   | 30,650 |  |
| Nonaccrual investment securities                            |   | 639 |  |   | 599 |  |   | 693 |  |
| Total non-performing assets                                 |   | $ | 38,159 |  |  | $ | 54,728 |  |   | $ | 64,143 |  |
| Past due 90 days or more and still accruing interest        |   | $ | 1,537 |  |   | $ | 602 |  |   | $ | 784 |  |
| Restructured loans (accruing)                               |   | 18,372 |  |   | 19,662 |  |   | 22,988 |  |
| Ratios:                                                     |   |   |  |   |   |  |   |   |  |
| Nonaccrual loans to loans                                   |   | 0.64 | % |   | 1.68 | % |   | 3.13 | % |
| Past due 90 day loans to loans                              |   | 0.15 | % |   | 0.06 | % |   | 0.07 | % |
| Non-performing credit assets to loans and other real estate |   | 3.62 | % |   | 5.11 | % |   | 5.89 | % |
| Non-performing assets to assets                             |   | 2.44 | % |   | 3.49 | % |   | 3.95 | % |

|                                |
|--------------------------------|
|                                |  |  |  |  |  |  |  |  |  |  |  |  |
|                           |   | QTD |   | QTD |   | YTD |
| (Dollars in thousands)         |   | June 30, 2012 |   | June 30, 2011 |   | June 30, 2012 |
| Balance at beginning of period |   | $ | 34,636 |  |   | $ | 29,660 |  |   | $ | 36,952 |  |
| Foreclosures                   |   | 1,499 |  |   | 4,436 |  |   | 3,064 |  |
| Third-party lien pay-offs      |   | — |  |   | 250 |  |   | — |  |
| Improvements                   |   | 265 |  |   | — |  |   | 323 |  |
| Write downs                    |   | (536 | ) |   | (1,053 | ) |   | (1,636 | ) |
| Properties sold                |   | (4,787 | ) |   | (2,643 | ) |   | (7,626 | ) |
| Balance at end of period       |   | $ | 31,077 |  |   | $ | 30,650 |  |   | $ | 31,077 |  |

|                                   |
|-----------------------------------|
|                                   |  |  |  |  |  |  |  |  |  |  |  |  |
| (Dollars in thousands)            |   | June 30, 2012 |   | December 31, 2011 |   | June 30, 2011 |
| Construction and land development |   | $ | 24,691 |  |   | $ | 22,773 |  |   | $ | 20,169 |  |
| Farmland                          |   | 137 |  |   | 2,618 |  |   | 1,823 |  |
| 1-4 family residential            |   | 1,122 |  |   | 2,136 |  |   | 2,798 |  |
| Multifamily residential           |   | — |  |   | 950 |  |   | 2,036 |  |
| Nonfarm nonresidential            |   | 5,127 |  |   | 8,475 |  |   | 3,824 |  |
|                              |   | $ | 31,077 |  |   | $ | 36,952 |  |   | $ | 30,650 |  |

----

----

|     |                           |
|-----|---------------------------|
| (1) | Allowance for loan losses |

|     |            |
|-----|------------|
| (2) | Fair value |

|     |                        |
|-----|------------------------|
| (3) | Contingent liabilities |

|     |              |
|-----|--------------|
| (4) | Income taxes |

----

----

----

----

----

|        |
|--------|
|        |  |
| 3.1    | Articles of Incorporation of the Registrant.  Incorporated herein by reference to Exhibit 3 to the Company's Form S-1 (File No. 33-08751) September 15, 1986, incorporated herein by reference. |
|   |   |
| 3.2    | Amended and Restated Articles of Incorporation of the Registrant. Incorporated herein by reference to Exhibit 3.2 to the Company's Annual Report on Form 10-K filed on March 14, 2012. |
|   |   |
| 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    | Amended and Restated Bylaws of the Registrant. Incorporated herein by reference to Exhibit 3.4 to the Company's Annual Report on Form 10-K filed on March 14, 2012. |
|   |   |
| 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. |
|   |   |
| 10.7   | Form of Change in Control Agreement between the Company and John G. Copeland, effective May 3, 2004. Incorporated herein by reference to Exhibit 10.7 to the Company's Annual Report on Form 10-K filed on March 14, 2012. |
|   |   |
| 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 andChief Executive Officer(principal executive officer) |   |   | Executive Vice President andChief Financial 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 Exhibit 3 to the Company's Form S-1 (File No. 33-08751) September 15, 1986, incorporated herein by reference. |
|   |   |
| 3.2    | Amended and Restated Articles of Incorporation of the Registrant. Incorporated herein by reference to Exhibit 3.2 to the Company's Annual Report on Form 10-K filed on March 14, 2012. |
|   |   |
| 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    | Amended and Restated Bylaws of the Registrant. Incorporated herein by reference to Exhibit 3.4 to the Company's Annual Report on Form 10-K filed on March 14, 2012. |
|   |   |
| 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. |
|   |   |
| 10.7   | Form of Change in Control Agreement between the Company and John G. Copeland, effective May 3, 2004. Incorporated herein by reference to Exhibit 10.7 to the Company's Annual Report on Form 10-K filed on March 14, 2012. |
|   |   |
| 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. |
|   |   |
|   |   |
|   |   |
|   |   |
|   |   |
|   |   |