|        |        |        |        |        |
|--------|--------|--------|--------|--------|
|   |   |   |   |   |

|        |           |        |
|--------|-----------|--------|
|   |      |   |
|   | FORM 10-Q |   |
|   |      |   |

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

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

|        |                                  |        |
|--------|----------------------------------|--------|
|   | Commission file number 000-24630 |   |

|        |        |        |
|--------|--------|--------|
|   |   |   |

|        |        |        |
|--------|--------|--------|
|   |   |   |

|        |        |        |
|--------|--------|--------|
|   |   |   |

|                          |                                      |
|--------------------------|--------------------------------------|
| Iowa                     | 42-1206172                           |
| (State of Incorporation) | (I.R.S. Employer Identification No.) |

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

|        |        |        |        |        |
|--------|--------|--------|--------|--------|
|   |   |   |   |   |

----

Table of Contents

|          |        |                                                                                       |        |          |
|----------|--------|---------------------------------------------------------------------------------------|--------|----------|
|     |   |                                                                                  |   | Page No. |
| PART I   |   |                                                                                  |   |     |
|     |   |                                                                                  |   |     |
| Item 1.  |   | Financial Statements                                                                  |   | 1        |
|     |   |                                                                                  |   |     |
|     |   | Consolidated Balance Sheets                                                           |   | 1        |
|     |   |                                                                                  |   |     |
|     |   | Consolidated Statements of Operations                                                 |   | 2        |
|     |   |                                                                                  |   |     |
|     |   | Consolidated Statements of Shareholders' Equity and Other Comprehensive Income (Loss) |   | 3        |
|     |   |                                                                                  |   |     |
|     |   | Consolidated Statements of Cash Flows                                                 |   | 4        |
|     |   |                                                                                  |   |     |
|     |   | Notes to Consolidated Financial Statements                                            |   | 6        |
|     |   |                                                                                  |   |     |
| Item 2.  |   | Management's Discussion and Analysis of Financial Condition and Results of Operations |   | 21       |
|     |   |                                                                                  |   |     |
| Item 3.  |   | Quantitative and Qualitative Disclosures about Market Risk                            |   | 40       |
|     |   |                                                                                  |   |     |
| Item 4.  |   | Controls and Procedures                                                               |   | 42       |
|     |   |                                                                                  |   |     |
| Part II  |   |                                                                                  |   |     |
|     |   |                                                                                  |   |     |
| Item 1.  |   | Legal Proceedings                                                                     |   | 43       |
|     |   |                                                                                  |   |     |
| Item 1A. |   | Risk Factors                                                                          |   | 43       |
|     |   |                                                                                  |   |     |
| Item 2.  |   | Unregistered Sales of Equity Securities and Use of Proceeds                           |   | 43       |
|     |   |                                                                                  |   |     |
| Item 3.  |   | Defaults Upon Senior Securities                                                       |   | 44       |
|     |   |                                                                                  |   |     |
| Item 4.  |   | [Removed and Reserved]                                                                |   | 44       |
|     |   |                                                                                  |   |     |
| Item 5.  |   | Other Information                                                                     |   | 44       |
|     |   |                                                                                  |   |     |
| Item 6.  |   | Exhibits                                                                              |   | 45       |
|     |   |                                                                                  |   |     |
|     |   | Signatures                                                                            |   | 46       |

----

Table of Contents

|                                                                                                            |                         |              |                        |              |        |           |        |
|------------------------------------------------------------------------------------------------------------|-------------------------|--------------|------------------------|--------------|--------|-----------|--------|
|                                                                                                       | September 30, 2010 |         | December 31, 2009 |
| (dollars in thousands)                                                                                     | (unaudited)             |         |                   |
| ASSETS                                                                                                     |                    |         |                   |
| Cash and due from banks                                                                                    | $                       | 20,372       |                   |    | $      | 25,452    |   |
| Interest-bearing deposits in banks                                                                         | 5,375                   |         |              | 2,136        |   |
| Federal funds sold                                                                                         | —                 |         |              | —      |   |
| Cash and cash equivalents                                                                                  | 25,747                  |         |              | 27,588       |   |
| Investment securities:                                                                                     |               |         |                   |
| Available for sale                                                                                         | 407,808                 |         |              | 362,903      |   |
| Held to maturity (fair value of $4,307 as of  September 30, 2010 and $8,118 as of December 31, 2009)  | 4,231                   |         |              | 8,009        |   |
| Loans held for sale                                                                                        | 4,936                   |         |              | 1,208        |   |
| Loans                                                                                                      | 956,324                 |         |              | 966,998      |   |
| Allowance for loan losses                                                                                  | (14,859                 | )            |                   | (13,957      | )      |
| Net loans                                                                                                  | 941,465                 |         |              | 953,041      |   |
| Loan pool participations, net                                                                              | 71,160                  |         |              | 83,052       |   |
| Premises and equipment, net                                                                                | 27,431                  |         |              | 28,969       |   |
| Accrued interest receivable                                                                                | 11,796                  |         |              | 11,534       |   |
| Other intangible assets, net                                                                               | 11,406                  |         |              | 12,172       |   |
| Bank-owned life insurance                                                                                  | 18,559                  |         |              | 18,118       |   |
| Other real estate owned                                                                                    | 4,738                   |         |              | 3,635        |   |
| Deferred income taxes                                                                                      | 4,131                   |         |              | 5,163        |   |
| Other assets                                                                                               | 20,120                  |         |              | 19,391       |   |
| Total assets                                                                                               | $                       | 1,553,528    |                   |    | $      | 1,534,783 |   |
| LIABILITIES AND SHAREHOLDERS' EQUITY                                                                       |               |         |                   |
| Deposits:                                                                                                  |               |         |                   |
| Non-interest-bearing demand                                                                                | $                       | 137,260      |                   |    | $      | 133,990   |   |
| Interest-bearing checking                                                                                  | 422,684                 |         |              | 401,264      |   |
| Savings                                                                                                    | 65,182                  |         |              | 62,989       |   |
| Certificates of deposit under $100,000                                                                     | 378,892                 |         |              | 394,369      |   |
| Certificates of deposit $100,000 and over                                                                  | 179,038                 |         |              | 187,256      |   |
| Total deposits                                                                                             | 1,183,056               |         |              | 1,179,868    |   |
| Federal funds purchased                                                                                    | 1,700                   |         |              | 1,875        |   |
| Securities sold under agreements to repurchase                                                             | 42,779                  |         |              | 43,098       |   |
| Federal Home Loan Bank borrowings                                                                          | 136,200                 |         |              | 130,200      |   |
| Deferred compensation liability                                                                            | 3,761                   |         |              | 3,832        |   |
| Long-term debt                                                                                             | 15,552                  |         |              | 15,588       |   |
| Accrued interest payable                                                                                   | 2,021                   |         |              | 2,248        |   |
| Other liabilities                                                                                          | 7,343                   |         |              | 5,866        |   |
| Total liabilities                                                                                          | 1,392,412               |         |              | 1,382,575    |   |
|                                                                                                       |                    |         |                   |
| Shareholders' equity:                                                                                      |               |         |                   |
| Preferred stock, no par value, with a liquidation preference of $1,000 per share; authorized 500,000       |                    |    |                   |
|  shares; issued 16,000 shares as of September 30, 2010 and December 31, 2009                     | $                       | 15,749       |                   |         | $      | 15,699    |   |
| Common stock, $1 par value; authorized 15,000,000 shares at September 30, 2010 and December 31, 2009; |                    |         |                   |
| issued 8,690,398 shares at September 30, 2010 and December 31, 2009; outstanding 8,613,982 shares     |                    |         |                   |
| at September 30, 2010 and 8,605,333 shares at December 31, 2009                                       | 8,690                   |         |              | 8,690        |   |
| Additional paid-in capital                                                                                 | 81,229                  |         |              | 81,179       |   |
| Treasury stock at cost, 76,416 shares as of September 30, 2010 and 85,065 shares at December 31, 2009 | (1,063                  | )            |                   | (1,183       | )      |
| Retained earnings                                                                                          | 53,531                  |         |              | 48,079       |   |
| Accumulated other comprehensive income (loss)                                                              | 2,980                   |         |              | (256         | )      |
| Total shareholders' equity                                                                                 | 161,116                 |         |              | 152,208      |   |
| Total liabilities and shareholders' equity                                                                 | $                       | 1,553,528    |                   |    | $      | 1,534,783 |   |

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Table of Contents

|                                                             |              |                                 |        |                                |           |              |        |           |        |        |           |        |        |   |        |        |
|-------------------------------------------------------------|--------------|---------------------------------|--------|--------------------------------|-----------|--------------|--------|-----------|--------|--------|-----------|--------|--------|---|--------|--------|
| (unaudited)(dollars in thousands, except per share amounts) |    | Three Months EndedSeptember 30, |   | Nine Months EndedSeptember 30, |
|                                                        |    | 2010                            |   | 2009                           |      | 2010         |   | 2009      |
| Interest income:                                            |    |                            |   |                           |      |         |   |      |
| Interest and fees on loans                                  |    | $                               | 13,777 |                           |      | $            | 14,669 |      |   | $      | 41,242    |   |   | $ | 44,365 |   |
| Interest and discount on loan pool participations           |    | 552                             |   |                           | 28        |         |   | 2,360     |   |   | 1,707     |   |
| Interest on bank deposits                                   |    | 2                               |   |                           | 3         |         |   | 29        |   |   | 4         |   |
| Interest on federal funds sold                              |    | —                         |   |                           | 6         |         |   | 4         |   |   | 44        |   |
| Interest on investment securities:                          |    |                       |   |                           |      |         |   |      |
| Taxable securities                                          |    | 2,445                           |   |                           | 2,307     |         |   | 7,115     |   |   | 6,429     |   |
| Tax-exempt securities                                       |    | 946                             |   |                           | 1,018     |         |   | 2,922     |   |   | 2,988     |   |
| Total interest income                                       |    | 17,722                          |   |                           | 18,031    |         |   | 53,672    |   |   | 55,537    |   |
|                                                        |         |                            |   |                           |      |         |   |      |
| Interest expense:                                           |    |                            |   |                           |      |         |   |      |
| Interest on deposits:                                       |    |                            |   |                           |      |         |   |      |
| Interest-bearing checking                                   |    | 1,010                           |   |                           | 1,078     |         |   | 3,213     |   |   | 3,450     |   |
| Savings                                                     |    | 47                              |   |                           | 49        |         |   | 126       |   |   | 174       |   |
| Certificates of deposit under $100,000                      |    | 2,311                           |   |                           | 2,909     |         |   | 7,309     |   |   | 9,255     |   |
| Certificates of deposit $100,000 and over                   |    | 859                             |   |                           | 1,266     |         |   | 2,744     |   |   | 3,905     |   |
| Total interest expense on deposits                          |    | 4,227                           |   |                           | 5,302     |         |   | 13,392    |   |   | 16,784    |   |
| Interest on federal funds purchased                         |    | 4                               |   |                           | 1         |         |   | 6         |   |   | 11        |   |
| Interest on securities sold under agreements to repurchase  |    | 75                              |   |                           | 97        |         |   | 221       |   |   | 348       |   |
| Interest on Federal Home Loan Bank borrowings               |    | 1,170                           |   |                           | 1,533     |         |   | 3,560     |   |   | 4,115     |   |
| Interest on notes payable                                   |    | 10                              |   |                           | 13        |         |   | 34        |   |   | 49        |   |
| Interest on long-term debt                                  |    | 157                             |   |                           | 158       |         |   | 457       |   |   | 505       |   |
| Total interest expense                                      |    | 5,643                           |   |                           | 7,104     |         |   | 17,670    |   |   | 21,812    |   |
| Net interest income                                         |    | 12,079                          |   |                           | 10,927    |         |   | 36,002    |   |   | 33,725    |   |
| Provision for loan losses                                   |    | 1,250                           |   |                           | 2,125     |         |   | 4,250     |   |   | 5,975     |   |
| Net interest income after provision for loan losses         |    | 10,829                          |   |                           | 8,802     |         |   | 31,752    |   |   | 27,750    |   |
|                                                        |         |                            |   |                           |      |         |   |      |
| Noninterest income:                                         |    |                            |   |                           |      |         |   |      |
| Trust and investment fees                                   |    | 1,049                           |   |                           | 1,050     |         |   | 3,497     |   |   | 3,121     |   |
| Service charges and fees on deposit accounts                |    | 1,118                           |   |                           | 1,074     |         |   | 3,016     |   |   | 2,975     |   |
| Mortgage origination and loan servicing fees                |    | 958                             |   |                           | 613       |         |   | 1,983     |   |   | 2,244     |   |
| Other service charges, commissions and fees                 |    | 633                             |   |                           | 568       |         |   | 1,793     |   |   | 1,603     |   |
| Bank-owned life insurance income                            |    | 158                             |   |                           | 154       |         |   | 472       |   |   | 576       |   |
| Investment securities losses, net:                          |    |                       |   |                           |      |    |   |      |
| Impairment losses on investment securities                  |    | —                         |   |                           | (1,388    | )            |   | (189      | )      |   | (2,002    | )      |
| Less non-credit-related losses                              |    | —                         |   |                           | —   |         |   | —   |   |   | —   |   |
| Net impairment losses                                       |    | —                         |   |                           | (1,388    | )            |   | (189      | )      |   | (2,002    | )      |
| Gain (loss) on sale of available for sale securities        |    | (158                            | )      |                           | 491       |         |   | 312       |   |   | 491       |   |
| Loss on sale of premises and equipment                      |    | (1                              | )      |                           | (9        | )            |   | (282      | )      |   | (3        | )      |
| Total noninterest income                                    |    | 3,757                           |   |                           | 2,553     |         |   | 10,602    |   |   | 9,005     |   |
|                                                        |         |                            |   |                           |      |         |   |      |
| Noninterest expense:                                        |    |                            |   |                           |      |         |   |      |
| Salaries and employee benefits                              |    | 5,838                           |   |                           | 5,863     |         |   | 17,319    |   |   | 17,463    |   |
| Net occupancy and equipment expense                         |    | 1,598                           |   |                           | 1,729     |         |   | 5,004     |   |   | 5,083     |   |
| Professional fees                                           |    | 696                             |   |                           | 727       |         |   | 2,104     |   |   | 2,651     |   |
| Data processing expense                                     |    | 421                             |   |                           | 438       |         |   | 1,292     |   |   | 1,445     |   |
| FDIC Insurance expense                                      |    | 726                             |   |                           | 615       |         |   | 2,123     |   |   | 2,568     |   |
| Other operating expense                                     |    | 1,605                           |   |                           | 1,785     |         |   | 4,752     |   |   | 5,195     |   |
| Total noninterest expense                                   |    | 10,884                          |   |                           | 11,157    |         |   | 32,594    |   |   | 34,405    |   |
| Income before income tax expense                            |    | 3,702                           |   |                           | 198       |         |   | 9,760     |   |   | 2,350     |   |
| Income tax expense                                          |    | 916                             |   |                           | (636      | )            |   | 2,365     |   |   | (443      | )      |
| Net income                                                  |    | $                               | 2,786  |                           |      | $            | 834    |      |   | $      | 7,395     |   |   | $ | 2,793  |   |
| Less: Preferred stock dividends and discount accretion      |    | $                               | 216    |                           |      | $            | 216    |      |   | $      | 650       |   |   | $ | 563    |   |
| Net income available to common shareholders                 |    | $                               | 2,570  |                           |      | $            | 618    |      |   | $      | 6,745     |   |   | $ | 2,230  |   |
| Share and Per share information:                            |    |                            |   |                           |      |         |   |      |
| Ending number of shares outstanding                         |    | 8,613,982                       |   |                           | 8,605,333 |         |   | 8,613,982 |   |   | 8,605,333 |   |
| Average number of shares outstanding                        |    | 8,613,754                       |   |                           | 8,605,312 |         |   | 8,611,418 |   |   | 8,604,531 |   |
| Diluted average number of shares                            |    | 8,642,424                       |   |                           | 8,605,732 |         |   | 8,633,509 |   |   | 8,604,557 |   |
| Earnings per common share - basic                           |    | $                               | 0.30   |                           |      | $            | 0.07   |      |   | $      | 0.78      |   |   | $ | 0.26   |   |
| Earnings per common share - diluted                         |    | 0.30                            |   |                           | 0.07      |         |   | 0.78      |   |   | 0.26      |   |
| Dividends paid per common share                             |    | 0.05                            |   |                           | 0.05      |         |   | 0.15      |   |   | 0.25      |   |

----

Table of Contents

|                                                                                                       |              |                |              |              |              |                          |              |               |              |                  |         |                                            |        |         |        |        |         |        |        |         |        |   |        |        |        |   |         |        |
|-------------------------------------------------------------------------------------------------------|--------------|----------------|--------------|--------------|--------------|--------------------------|--------------|---------------|--------------|------------------|---------|--------------------------------------------|--------|---------|--------|--------|---------|--------|--------|---------|--------|---|--------|--------|--------|---|---------|--------|
| (unaudited)(dollars in thousands, except per share amounts)                                           |    | PreferredStock |    | CommonStock  |    | AdditionalPaid-inCaptial |         | TreasuryStock |         | RetainedEarnings |    | AccumulatedOtherComprehensiveIncome (loss) |   | Total   |
| Balance at December 31, 2008                                                                     |    | $              | —      |         |    | $                        | 8,690        |          |    | $                | 80,757  |                                       |   | $       | (1,215 | )      |    | $      | 43,683 |    |   | $ | (1,573 | )      |   | $ | 130,342 |   |
| Cumulative effect of FAS ASC 320, net of tax                                                          |         | —        |         |         | —      |                     |         | —       |         |             | — |                                       |   | 3,266   |   |   | (3,266  | )      |   | — |   |
| Comprehensive income:                                                                                 |    |           |    |         |    |                     |         |          |         |             |    |                                       |   |    |
| Net income                                                                                            |    | —        |         |    | —      |                     |    | —       |         |             | — |                                       |   | 2,793   |   |   | — |   |   | 2,793   |   |
| Change in net unrealized gains arising during the period on securities available for sale, net of tax |    | —        |         |    | —      |                     |    | —       |         |             | — |                                       |   | — |   |   | 5,328   |   |   | 5,328   |   |
| Total comprehensive income                                                                            |    | —        |         |         | —      |                     |         | —       |         |             | — |                                       |   | 6,059   |   |   | 2,062   |   |   | 8,121   |   |
| Dividends paid on common stock ($0.20 per share)                                                      |    | —        |         |         | —      |                     |         | —       |         |             | — |                                       |   | (2,172  | )      |   | — |   |   | (2,172  | )      |
| Dividends paid on preferred stock                                                                     |         | —        |         |         | —      |                     |         | —       |         |             | — |                                       |   | (420    | )      |   | — |   |   | (420    | )      |
| Release/lapse of restriction of 2,147 RSUs                                                            |         | —        |         |         | —      |                     |         | (32           | )            |             | 32      |                                       |   | — |   |   | — |   |   | — |   |
| Issuance of preferred shares (16,000 shares)                                                          |    | 15,642         |         |         | —      |                     |         | —       |         |             | — |                                       |   | — |   |   | — |   |   | 15,642  |   |
| Common warrants issued                                                                                |    | —        |         |         | —      |                     |         | 358           |         |             | — |                                       |   | — |   |   | — |   |   | 358     |   |
| Preferred stock discount accretion                                                                    |    | 41             |         |         | —      |                     |         | —       |         |             | — |                                       |   | (41     | )      |   | — |   |   | — |   |
| Stock compensation                                                                                    |    | —        |         |         | —      |                     |         | 39            |         |             | — |                                       |   | — |   |   | — |   |   | 39      |   |
| Balance at September 30, 2009                                                                         |    | $              | 15,683       |         |         | $                        | 8,690        |          |         | $                | 81,122  |                                       |   | $       | (1,183 | )      |    | $      | 47,109 |    |   | $ | 489    |   |   | $ | 151,910 |   |
| Balance at December 31, 2009                                                                     |    | $              | 15,699       |         |    | $                        | 8,690        |          |    | $                | 81,179  |                                       |   | $       | (1,183 | )      |    | $      | 48,079 |    |   | $ | (256   | )      |   | $ | 152,208 |   |
| Comprehensive income:                                                                                 |    |           |    |         |    |                     |         |          |         |             |    |                                       |   |    |
| Net income                                                                                            |    | —        |         |    | —      |                     |    | —       |         |             | — |                                       |   | 7,395   |   |   | — |   |   | 7,395   |   |
| Change in net unrealized gains arising during the period on securities available for sale, net of tax |    | —        |         |    | —      |                     |    | —       |         |             | — |                                       |   | — |   |   | 3,236   |   |   | 3,236   |   |
| Total comprehensive income                                                                            |    | —        |         |    | —      |                     |    | —       |         |             | — |                                       |   | 7,395   |   |   | 3,236   |   |   | 10,631  |   |
| Dividends paid on common stock ($0.15 per share)                                                      |    | —        |         |    | —      |                     |    | —       |         |             | — |                                       |   | (1,293  | )      |   | — |   |   | (1,293  | )      |
| Dividends paid on preferred stock                                                                     |    | —        |         |    | —      |                     |    | —       |         |             | — |                                       |   | (600    | )      |   | — |   |   | (600    | )      |
| Stock options exercised (3,145 shares)                                                                |    | —        |         |    | —      |                     |    | (19           | )            |             | 42      |                                       |   | — |   |   | — |   |   | 23      |   |
| Release/lapse of restriction on 5,604 RSUs                                                            |    | —        |         |    | —      |                     |    | (78           | )            |             | 78      |                                       |   | — |   |   | — |   |   | — |   |
| Preferred stock discount accretion                                                                    |    | 50             |         |    | —      |                     |    | —       |         |             | — |                                       |   | (50     | )      |   | — |   |   | — |   |
| Stock compensation                                                                                    |    | —        |         |    | —      |                     |    | 147           |         |             | — |                                       |   | — |   |   | — |   |   | 147     |   |
| Balance at September 30, 2010                                                                         |    | $              | 15,749       |         |    | $                        | 8,690        |          |    | $                | 81,229  |                                       |   | $       | (1,063 | )      |    | $      | 53,531 |    |   | $ | 2,980  |   |   | $ | 161,116 |   |

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Table of Contents

|                                                                                   |                                |        |        |          |        |       |        |
|-----------------------------------------------------------------------------------|--------------------------------|--------|--------|----------|--------|-------|--------|
| (unaudited)(dollars in thousands)                                                 | Nine Months EndedSeptember 30, |
|                                                                              | 2010                           |   | 2009   |
| Cash flows from operating activities:                                             |                           |   |   |
| Net income                                                                        | $                              | 7,395  |   |     | $      | 2,793 |   |
| Adjustments to reconcile net income to net cash provided by operating activities: |                           |   |   |
| Provision for loan losses                                                         | 4,250                          |   |   | 5,975    |   |
| Depreciation, amortization and accretion                                          | 4,423                          |   |   | 3,328    |   |
| Loss on sale of premises and equipment                                            | 282                            |   |   | 3        |   |
| Deferred income taxes                                                             | (895                           | )      |   | 1,800    |   |
| Stock-based compensation                                                          | 147                            |   |   | 39       |   |
| Net gains on sale of available for sale securities                                | (312                           | )      |   | (491     | )      |
| Net (gains) losses on sale of other real estate owned                             | (23                            | )      |   | 9        |   |
| Writedown of other real estate owned                                              | 112                            |   |   | 230      |   |
| Other-than-temporary impairment of investment securities                          | 189                            |   |   | 2,002    |   |
| (Increase) decrease in loans held for sale                                        | (3,728                         | )      |   | 4,164    |   |
| Net change in:                                                                    |                           |   |   |
| Increase in accrued interest receivable                                           | (262                           | )      |   | (646     | )      |
| Decrease (increase) in other assets                                               | (821                           | )      |   | 2,547    |   |
| (Decrease) increase in deferred compensation liability                            | (71                            | )      |   | 2,253    |   |
| (Decrease) increase in accounts payable, accrued expenses, and other liabilities  | 1,342                          |   |   | (7,277   | )      |
| Net cash provided by operating activities                                         | 12,028                         |   |   | 16,729   |   |
|                                                                              |                           |   |   |
| Cash flows from investing activities:                                             |                           |   |   |
| Available for sale securities:                                                    |                           |   |   |
| Sales                                                                             | 16,742                         |   |   | 34,741   |   |
| Maturities                                                                        | 70,628                         |   |   | 60,938   |   |
| Purchases                                                                         | (128,595                       | )      |   | (165,677 | )      |
| Held to maturity securities:                                                      |                           |   |   |
| Maturities                                                                        | 3,766                          |   |   | 1,522    |   |
| Purchases                                                                         | —                        |   |   | (950     | )      |
| Loans made to customers, net of collections                                       | 3,997                          |   |   | 35,727   |   |
| Loan pool participations, net                                                     | 11,892                         |   |   | 4,225    |   |
| Purchases of premises and equipment                                               | (2,676                         | )      |   | (2,776   | )      |
| Proceeds from sale of other real estate owned                                     | 2,137                          |   |   | 322      |   |
| Proceeds from sale of premises and equipment                                      | 1,893                          |   |   | 28       |   |
| Activity in bank-owned life insurance:                                            |                           |   |   |
| Purchases                                                                         | —                        |   |   | —  |   |
| Increase in cash value                                                            | (441                           | )      |   | (577     | )      |
| Net cash used in investing activities                                             | (20,657                        | )      |   | (32,477  | )      |

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|                                                                           |                                |        |        |         |        |        |        |
|---------------------------------------------------------------------------|--------------------------------|--------|--------|---------|--------|--------|--------|
| (unaudited)(dollars in thousands)                                         | Nine Months EndedSeptember 30, |
|                                                                      | 2010                           |   | 2009   |
| Cash flows from financing activities:                                     |                           |   |   |
| Net increase in deposits                                                  | 3,188                          |   |   | 24,625  |   |
| Net decrease in federal funds purchased                                   | (175                           | )      |   | (13,050 | )      |
| Net (decrease) increase in securities sold under agreements to repurchase | (319                           | )      |   | 6,148   |   |
| Proceeds from Federal Home Loan Bank borrowings                           | 35,000                         |   |   | 24,000  |   |
| Repayment of Federal Home Loan Bank borrowings                            | (29,000                        | )      |   | (45,000 | )      |
| Stock options exercised                                                   | 23                             |   |   | — |   |
| Payments on long-term debt                                                | (36                            | )      |   | (39     | )      |
| Dividends paid                                                            | (1,893                         | )      |   | (2,592  | )      |
| Issuance of preferred stock and warrants                                  | —                        |   |   | 16,000  |   |
| Net cash provided by financing activities                                 | 6,788                          |   |   | 10,092  |   |
|                                                                      |                           |   |   |
| Net decrease in cash and cash equivalents                                 | (1,841                         | )      |   | (5,656  | )      |
| Cash and cash equivalents at beginning of period                          | 27,588                         |   |   | 32,926  |   |
| Cash and cash equivalents at end of period                                | $                              | 25,747 |   |    | $      | 27,270 |   |
|                                                                      |                           |   |   |
| Supplemental disclosures of cash flow information:                        |                           |   |   |
| Cash paid during the period for:                                          |                           |   |   |
| Interest                                                                  | $                              | 17,897 |   |    | $      | 24,607 |   |
| Income taxes                                                              | $                              | 3,725  |   |    | $      | 846    |   |
|                                                                      |                           |   |   |
| Supplemental schedule of non-cash investing activities:                   |                           |   |   |
| Transfer of loans to other real estate owned                              | $                              | 3,329  |   |    | $      | 2,173  |   |

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Table of Contents

|                            |                   |
|----------------------------|-------------------|
| 1.     | Introductory Note |

|                            |                       |
|----------------------------|-----------------------|
| 2.     | Basis of Presentation |

|                            |                                       |
|----------------------------|---------------------------------------|
| 3.     | Consolidated Statements of Cash Flows |

|                            |              |
|----------------------------|--------------|
| 4.     | Income Taxes |

|                            |                                                    |
|----------------------------|----------------------------------------------------|
| 5.     | Shareholders' Equity and Earnings per Common Share |

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Table of Contents

|        |                                  |        |         |        |        |        |
|--------|----------------------------------|--------|---------|--------|--------|--------|
|   | Number of warrants granted       |   | 198,675 |   |   |
|   | Exercise price                   |   | $       | 12.08  |   |   |
|   | Grant date fair market value     |   | $       | 7.32   |   |   |
|   | Estimated forfeiture rate        |   | 0%      |   |   |
|   | Risk-free interest rate          |   | 2.93    | %      |   |
|   | Expected life, in years          |   | 10      |   |   |
|   | Expected volatility              |   | 40.7    | %      |   |
|   | Expected dividend yield          |   | 3.86    | %      |   |
|   | Estimated fair value per warrant |   | $       | 1.39   |   |   |

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Table of Contents

|        |                                                                                                         |              |                                 |        |                                |           |        |        |           |        |              |           |              |              |        |        |        |        |
|--------|---------------------------------------------------------------------------------------------------------|--------------|---------------------------------|--------|--------------------------------|-----------|--------|--------|-----------|--------|--------------|-----------|--------------|--------------|--------|--------|--------|--------|
|   | Earnings per Share Information                                                                          |    | Three Months EndedSeptember 30, |   | Nine Months EndedSeptember 30, |      |
|   | (dollars in thousands, except per share amounts)                                                        |    | 2010                            |   | 2009                           |      | 2010   |   | 2009      |   |
|   | Weighted average number of shares outstanding during the period                                         |    | 8,613,754                       |   |                           | 8,605,312 |   |   | 8,611,418 |   |    | 8,604,531 |         |         |
|   | Weighted average number of shares outstanding during the period including all dilutive potential shares |    | 8,642,424                       |   |                           | 8,605,732 |   |   | 8,633,509 |   |    | 8,604,557 |         |         |
|   | Net income                                                                                              |    | $                               | 2,786  |                           |      | $      | 834    |      |   | 7,395        |      |    | $            | 2,793  |   |   |
|   | Preferred stock dividend accrued and discount accretion                                                 |    | (216                            | )      |                           | (216      | )      |   | (650      | )      |    | (563      | )            |         |
|   | Net income available to common stockholders                                                             |    | $                               | 2,570  |                           |      | $      | 618    |      |   | $            | 6,745     |         |    | $      | 2,230  |   |   |
|   | Earnings per share - basic                                                                              |    | $                               | 0.30   |                           |      | $      | 0.07   |      |   | 0.78         |      |    | 0.26         |   |   |
|   | Earnings per share - diluted                                                                            |    | $                               | 0.30   |                           |      | $      | 0.07   |      |   | 0.78         |      |    | 0.26         |   |   |

|                            |             |
|----------------------------|-------------|
| 6.     | Investments |

|        |                                                                    |                          |              |                      |              |                       |              |                     |              |        |         |        |        |   |         |        |        |
|--------|--------------------------------------------------------------------|--------------------------|--------------|----------------------|--------------|-----------------------|--------------|---------------------|--------------|--------|---------|--------|--------|---|---------|--------|--------|
|   |                                                               | As of September 30, 2010 |         |
|   |                                                               | AmortizedCost            |    | GrossUnrealizedGains |    | GrossUnrealizedLosses |         | EstimatedFair Value |         |
|   | (in thousands)                                                     |                     |    |                 |    |                  |         |                |         |
|   | U.S. Government agencies and corporations                          | $                        | 91,167       |                 |    | $                     | 2,289        |                |    | $      | — |   |   | $ | 93,456  |   |   |
|   | State and political subdivisions                                   | 170,226                  |         |            | 7,362        |                  |    | (333                | )            |   | 177,255 |   |   |
|   | Mortgage-backed securities and collateralized mortgage obligations | 121,549                  |         |            | 4,023        |                  |    | (31                 | )            |   | 125,541 |   |   |
|   | Corporate debt securities                                          | 10,927                   |         |            | 460          |                  |    | (1,186              | )            |   | 10,201  |   |   |
|   |                                                               | 393,869                  |         |            | 14,134       |                  |    | (1,550              | )            |   | 406,453 |   |   |
|   | Common stocks                                                      | 1,177                    |         |            | 183          |                  |    | (5                  | )            |   | 1,355   |   |   |
|   | Total                                                              | $                        | 395,046      |                 |    | $                     | 14,317       |                |    | $      | (1,555  | )      |   | $ | 407,808 |   |   |

|        |                                                                    |                              |              |                      |              |                       |              |                     |              |        |         |        |        |   |         |        |        |
|--------|--------------------------------------------------------------------|------------------------------|--------------|----------------------|--------------|-----------------------|--------------|---------------------|--------------|--------|---------|--------|--------|---|---------|--------|--------|
|   |                                                               | As of December 31, 2009 |         |
|   |                                                               | AmortizedCost                |    | GrossUnrealizedGains |    | GrossUnrealizedLosses |         | EstimatedFair Value |         |
|   | (in thousands)                                                     |                         |    |                 |    |                  |         |                |         |
|   | U.S. Government agencies and corporations                          | $                            | 79,503       |                 |    | $                     | 1,789        |                |    | $      | (101    | )      |   | $ | 81,191  |   |   |
|   | State and political subdivisions                                   | 151,628                      |         |            | 3,801        |                  |    | (205                | )            |   | 155,224 |   |   |
|   | Mortgage-backed securities and collateralized mortgage obligations | 105,865                      |         |            | 2,760        |                  |    | (49                 | )            |   | 108,576 |   |   |
|   | Corporate debt securities                                          | 16,778                       |         |            | 488          |                  |    | (1,104              | )            |   | 16,162  |   |   |
|   |                                                               | 353,774                      |         |            | 8,838        |                  |    | (1,459              | )            |   | 361,153 |   |   |
|   | Common stocks                                                      | 1,529                        |         |            | 298          |                  |    | (77                 | )            |   | 1,750   |   |   |
|   | Total                                                              | $                            | 355,303      |                 |    | $                     | 9,136        |                |    | $      | (1,536  | )      |   | $ | 362,903 |   |   |

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Table of Contents

|        |                                  |                          |              |                      |              |                       |              |                          |              |              |         |        |              |   |       |        |        |
|--------|----------------------------------|--------------------------|--------------|----------------------|--------------|-----------------------|--------------|--------------------------|--------------|--------------|---------|--------|--------------|---|-------|--------|--------|
|   |                             | As of September 30, 2010 |         |
|   |                             | AmortizedCost            |    | GrossUnrealizedGains |    | GrossUnrealizedLosses |    | EstimatedFair Value |         |
|   | (in thousands)                   |                     |    |                 |    |                  |    |                     |         |
|   | Mortgage-backed securities       | $                        | 51           |                 |    | $                     | 4            |                     |    | $            | — |   |    | $ | 55    |   |   |
|   | State and political subdivisions | 3,314                    |         |            | 72           |                  |    | —                  |         |    | 3,386   |   |         |
|   | Corporate debt securities        | 866                      |         |            | —      |                  |    | —                  |         |    | 866     |   |         |
|   | Total                            | $                        | 4,231        |                 |    | $                     | 76           |                     |    | $            | — |   |    | $ | 4,307 |   |   |

|        |                                  |                              |              |                      |              |                       |              |                          |              |              |         |        |              |   |       |        |        |
|--------|----------------------------------|------------------------------|--------------|----------------------|--------------|-----------------------|--------------|--------------------------|--------------|--------------|---------|--------|--------------|---|-------|--------|--------|
|   |                             | As of December 31, 2009 |         |
|   |                             | AmortizedCost                |    | GrossUnrealizedGains |    | GrossUnrealizedLosses |    | EstimatedFair Value |         |
|   | (in thousands)                   |                         |    |                 |    |                  |    |                     |         |
|   | Mortgage-backed securities       | $                            | 71           |                 |    | $                     | 5            |                     |    | $            | — |   |    | $ | 76    |   |   |
|   | State and political subdivisions | 7,074                        |         |            | 104          |                  |    | —                  |         |    | 7,178   |   |         |
|   | Corporate debt securities        | 864                          |         |            | —      |                  |    | —                  |         |    | 864     |   |         |
|   | Total                            | $                            | 8,009        |                 |    | $                     | 109          |                     |    | $            | — |   |    | $ | 8,118 |   |   |

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Table of Contents

|        |                                                                    |                    |                     |                              |                        |                   |              |              |                        |              |              |              |                        |         |        |              |        |         |              |              |        |         |        |              |   |         |        |        |
|--------|--------------------------------------------------------------------|--------------------|---------------------|------------------------------|------------------------|-------------------|--------------|--------------|------------------------|--------------|--------------|--------------|------------------------|---------|--------|--------------|--------|---------|--------------|--------------|--------|---------|--------|--------------|---|---------|--------|--------|
|   |                                                               |               |           | As of September 30, 2010     |                   |
|   | NumberofSecurities                                                 |          | Less than 12 Months |                    | 12 Months or More      |         | Total        |         |
|   |                                                               |          | FairValue           |                    | UnrealizedLosses  |         | FairValue    |    | UnrealizedLosses  |    | FairValue    |    | UnrealizedLosses  |    |
|   | (in thousands, except number of securities)                        |               |           |                         |              |              |    |         |              |         |    |         |              |    |   |
|   | U.S. Government agencies and corporations                          | —            |                |                    | $                      | —           |         |    | $                      | —      |         |    | $                      | — |   |    | $      | — |         |    | $      | — |   |    | $ | — |   |   |
|   | State and political subdivisions                                   | 13                 |                |                    | 12,180                 |              |    | 332          |                   |    | 114          |         |              | 1       |   |    | 12,294 |    |    | 333          |   |    |
|   | Mortgage-backed securities and collateralized mortgage obligations | 1                  |                |                    | 6,249                  |              |    | 31           |                   |    | —      |         |              | — |   |    | 6,249  |    |    | 31           |   |    |
|   | Corporate debt securities                                          | 5                  |                |                    | —                |              |    | —      |                   |    | 586          |         |              | 1,186   |   |    | 586    |    |    | 1,186        |   |    |
|   | Common stocks                                                      | 3                  |                |                    | 76                     |              |    | 5            |                   |    | —      |         |              | — |   |    | 76     |    |    | 5            |   |    |
|   | Total                                                              | 22                 |                |                    | $                      | 18,505            |         |    | $                      | 368          |         |    | $                      | 700     |   |    | $      | 1,187   |         |    | $      | 19,205  |   |    | $ | 1,555   |   |   |
|   |                                                               |               |                |                         |                   |              |         |         |                   |         |         |         |                   |    |   |
|   |                                                               |               |                |                         |                   |              |         |         |                   |         |         |         |                   |    |   |
|   |                                                               |               |           | As of December 31, 2009 |                   |
|   |                                                               | NumberofSecurities |           | Less than 12 Months          |              | 12 Months or More |    | Total        |                   |
|   |                                                               |          | FairValue           |                    | UnrealizedLosses  |         | FairValue    |    | UnrealizedLosses  |    | FairValue    |    | UnrealizedLosses  |    |
|   | (in thousands, except number of securities)                        |               |           |                         |              |              |    |         |              |         |    |         |              |    |   |
|   | U.S. Government agencies and corporations                          | 3                  |                |                    | $                      | 10,120            |         |    | $                      | 101          |         |    | $                      | — |   |    | $      | — |         |    | $      | 10,120  |   |    | $ | 101     |   |   |
|   | State and political subdivisions                                   | 65                 |                |                    | 11,709                 |              |    | 116          |                   |    | 4,616        |         |              | 89      |   |    | 16,325 |    |    | 205          |   |    |
|   | Mortgage-backed securities and collateralized mortgage obligations | 1                  |                |                    | 4,972                  |              |    | 49           |                   |    | —      |         |              | — |   |    | 4,972  |    |    | 49           |   |    |
|   | Corporate debt securities                                          | 4                  |                |                    | —                |              |    | —      |                   |    | 857          |         |              | 1,104   |   |    | 857    |    |    | 1,104        |   |    |
|   | Common stocks                                                      | 4                  |                |                    | 218                    |              |    | 77           |                   |    | —      |         |              | — |   |    | 218    |    |    | 77           |   |    |
|   | Total                                                              | 77                 |                |                    | $                      | 27,019            |         |    | $                      | 343          |         |    | $                      | 5,473   |   |    | $      | 1,193   |         |    | $      | 32,492  |   |    | $ | 1,536   |   |   |

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Table of Contents

|        |                                                             |              |                                               |        |                                         |         |        |         |        |        |
|--------|-------------------------------------------------------------|--------------|-----------------------------------------------|--------|-----------------------------------------|---------|--------|---------|--------|--------|
|   | (in thousands)                                              |    | Three MonthsEndedSeptember 30, 2010 |   | Nine MonthsEndedSeptember 30, 2010 |    |
|   | Beginning balance                                           |    | $                                             | 189    |                                    |    | $      | — |   |   |
|   | Additional credit losses:                                   |    |                                          |   |                                    |    |
|   | Securities with no previous other than temporary impairment |    | —                                       |   |                                    | — |   |    |
|   | Securities with previous other than temporary impairments   |    | —                                       |   |                                    | 189     |   |    |
|   | Ending balance                                              |    | $                                             | 189    |                                    |    | $      | 189     |   |   |

|        |                                                                    |                    |              |                  |              |               |              |                 |              |              |         |        |              |   |       |        |        |
|--------|--------------------------------------------------------------------|--------------------|--------------|------------------|--------------|---------------|--------------|-----------------|--------------|--------------|---------|--------|--------------|---|-------|--------|--------|
|   |                                                               | Available For Sale |    | Held to Maturity |         |
|   |                                                               | AmortizedCost      |    | Fair Value  |    | AmortizedCost |    | Fair Value |         |
|   | (in thousands)                                                     |               |    |             |    |          |    |            |         |
|   | Due in one year or less                                            | $                  | 41,922       |             |    | $             | 42,360       |            |    | $            | 1,065   |   |    | $ | 1,078 |   |   |
|   | Due after one year through five years                              | 112,107            |         |        | 116,055      |          |    | 2,249           |         |    | 2,308   |   |         |
|   | Due after five years through ten years                             | 82,669             |         |        | 86,269       |          |    | —         |         |    | — |   |         |
|   | Due after ten years                                                | 35,622             |         |        | 36,229       |          |    | 866             |         |    | 866     |   |         |
|   | Mortgage-backed securities and collateralized mortgage obligations | 121,549            |         |        | 125,540      |          |    | 51              |         |    | 55      |   |         |
|   | Total                                                              | $                  | 393,869      |             |    | $             | 406,453      |            |    | $            | 4,231   |   |    | $ | 4,307 |   |   |

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Table of Contents

|        |                                               |                                           |        |                                     |        |        |        |        |        |        |        |        |        |   |        |        |        |
|--------|-----------------------------------------------|-------------------------------------------|--------|-------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|---|--------|--------|--------|
|   |                                          | Three Months EndedSeptember 30, |   | Nine Months EndedSeptember 30, |   |
|   |                                          | 2010                                      |   | 2009                                |   | 2010   |   | 2009   |   |
|   | (in thousands)                                |                                      |   |                                |   |   |   |   |   |
|   | Available for sale fixed maturity securities: |                                      |   |                                |   |   |   |   |   |
|   | Gross realized gains                          | $                                         | 44     |                                |   | $      | 466    |   |   | $      | 474    |   |   | $ | 466    |   |   |
|   | Gross realized losses                         | —                                   |   |                                | (1,319 | )      |   | (189   | )      |   | (1,319 | )      |   |
|   |                                          | 44                                        |   |                                | (853   | )      |   | 285    |   |   | (853   | )      |   |
|   | Equity securities:                            |                                      |   |                                |   |   |   |   |   |
|   | Gross realized gains                          | 1                                         |   |                                | 25     |   |   | 50     |   |   | 25     |   |   |
|   | Gross realized losses                         | (203                                      | )      |                                | (69    | )      |   | (212   | )      |   | (683   | )      |   |
|   |                                          | (202                                      | )      |                                | (44    | )      |   | (162   | )      |   | (658   | )      |   |
|   |                                          | $                                         | (158   | )                                   |   | $      | (897   | )      |   | $      | 123    |   |   | $ | (1,511 | )      |   |

|                            |                         |
|----------------------------|-------------------------|
| 7.     | Fair Value Measurements |

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Table of Contents

|                                |                                                                                                                                                                                    |
|--------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| •     | Level 1 Inputs – Unadjusted quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at measurement the date. |

|                                |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|--------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| •     | Level 2 Inputs – Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These might include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset (such as interest rates, volatilities, prepayment speeds, credit risks, etc.) or inputs that are derived principally from or corroborated by market data by correlation or other means. |

|                                |                                                                                                                                                                                                                                             |
|--------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| •     | Level 3 Inputs – Unobservable inputs for determining the fair values of assets or liabilities that reflect an entity's own assumptions about the assumptions that market participants would use in pricing the assets or liabilities. |

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|        |                                            |                                                        |         |                                                                                 |         |                                                       |         |                                        |        |        |         |        |        |   |         |        |
|--------|--------------------------------------------|--------------------------------------------------------|---------|---------------------------------------------------------------------------------|---------|-------------------------------------------------------|---------|----------------------------------------|--------|--------|---------|--------|--------|---|---------|--------|
|   |                                       | Fair Value Measurement at September 30, 2010 Using     |
|   | (in thousands)                             | Total                                                  |    | Quoted Prices inActive Markets forIdentical Assets(Level 1) |    | Significant  OtherObservableInputs(Level 2)      |    | SignificantUnobservableInputs(Level 3) |
|   | Assets:                                    |                                                   |    |                                                                            |    |                                                  |    |                                   |
|   | Available for sale debt securities:        |                                                   |    |                                                                            |    |                                                  |    |                                   |
|   | U.S. Government agencies and corporations  | $                                                      | 93,456  |                                                                            |    | $                                                     | — |                                   |   | $      | 93,456  |   |   | $ | — |   |
|   | State and political subdivisions           | 177,255                                                |    |                                                                            | — |                                                  |    | 177,255                                |   |   | — |   |
|   | Residential mortgage-backed securities     | 125,541                                                |    |                                                                            | — |                                                  |    | 125,541                                |   |   | — |   |
|   | Corporate debt securities                  | 9,615                                                  |    |                                                                            | — |                                                  |    | 9,615                                  |   |   | — |   |
|   | Collateralized debt obligations            | 586                                                    |    |                                                                            | — |                                                  |    | —                                |   |   | 586     |   |
|   | Total available for sale debt securities   | 406,453                                                |    |                                                                            | — |                                                  |    | 405,867                                |   |   | 586     |   |
|   | Available for sale equity securities:      |                                                   |    |                                                                            |    |                                                  |    |                                   |
|   | Financial services industry                | 1,355                                                  |    |                                                                            | 1,355   |                                                  |    | —                                |   |   | — |   |
|   | Total available for sale equity securities | 1,355                                                  |    |                                                                            | 1,355   |                                                  |    | —                                |   |   | — |   |
|   | Total securities available for sale        | $                                                      | 407,808 |                                                                            |    | $                                                     | 1,355   |                                   |   | $      | 405,867 |   |   | $ | 586     |   |
|   |                                       |                                                   |    |                                                                            |    |                                                  |    |                                   |
|   |                                       |                                                   |    |                                                                            |    |                                                  |    |                                   |
|   |                                       | Fair Value Measurement at December 31, 2009 Using |
|   | (in thousands)                             | Total                                                  |    | Quoted Prices inActive Markets forIdentical Assets(Level 1)           |    | Significant OtherObservable Inputs(Level 2) |    | SignificantUnobservableInputs(Level 3) |
|   | Assets:                                    |                                                   |    |                                                                            |    |                                                  |    |                                   |
|   | Available for sale debt securities:        |                                                   |    |                                                                            |    |                                                  |    |                                   |
|   | U.S. Government agencies and corporations  | $                                                      | 81,191  |                                                                            |    | $                                                     | — |                                   |   | $      | 81,191  |   |   | $ | — |   |
|   | State and political subdivisions           | 155,224                                                |    |                                                                            | — |                                                  |    | 155,224                                |   |   | — |   |
|   | Residential mortgage-backed securities     | 108,576                                                |    |                                                                            | — |                                                  |    | 108,576                                |   |   | — |   |
|   | Corporate debt securities                  | 15,305                                                 |    |                                                                            | — |                                                  |    | 15,305                                 |   |   | — |   |
|   | Collateralized debt obligations            | 857                                                    |    |                                                                            | — |                                                  |    | —                                |   |   | 857     |   |
|   | Total available for sale debt securities   | 361,153                                                |    |                                                                            | — |                                                  |    | 360,296                                |   |   | 857     |   |
|   | Available for sale equity securities:      |                                                   |    |                                                                            |    |                                                  |    |                                   |
|   | Financial services industry                | 1,750                                                  |    |                                                                            | 1,750   |                                                  |    | —                                |   |   | — |   |
|   | Total available for sale equity securities | 1,750                                                  |    |                                                                            | 1,750   |                                                  |    | —                                |   |   | — |   |
|   | Total securities available for sale        | $                                                      | 362,903 |                                                                            |    | $                                                     | 1,750   |                                   |   | $      | 360,296 |   |   | $ | 857     |   |

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Table of Contents

|        |                                               |              |                               |        |        |        |
|--------|-----------------------------------------------|--------------|-------------------------------|--------|--------|--------|
|   |                                          |    | CollateralizedDebtObligations |   |
|   | (in thousands)                                |    |                          |   |
|   | Level 3 fair value at December 31, 2009  |    | $                             | 857    |   |   |
|   | Transfers into Level 3                        |    | —                       |   |   |
|   | Transfers out of Level 3                      |    | —                       |   |   |
|   | Total gains (losses):                         |    |                          |   |
|   | Included in earnings                          |    | (189                          | )      |   |
|   | Included in other comprehensive income        |    | (82                           | )      |   |
|   | Purchases, issuances, sales, and settlements: |    |                          |   |
|   | Purchases                                     |    | —                       |   |   |
|   | Issuances                                     |    | —                       |   |   |
|   | Sales                                         |    | —                       |   |   |
|   | Settlements                                   |    | —                       |   |   |
|   | Level 3 fair value at September 30, 2010      |    | $                             | 586    |   |   |

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Table of Contents

|        |                                     |                                                         |              |                                                                                  |              |                                                  |              |                                        |              |              |         |        |              |   |       |        |
|--------|-------------------------------------|---------------------------------------------------------|--------------|----------------------------------------------------------------------------------|--------------|--------------------------------------------------|--------------|----------------------------------------|--------------|--------------|---------|--------|--------------|---|-------|--------|
|   |                                | Fair Value Measurements at September 30, 2010 Using     |
|   | (in thousands)                      | Total                                                   |    | Quoted Prices inActive Markets  forIdentical Assets(Level 1) |    | Significant  OtherObservableInputs(Level 2) |    | SignificantUnobservableInputs(Level 3) |
|   | Assets:                             |                                                    |    |                                                                             |    |                                             |    |                                   |
|   | Collateral dependent impaired loans | $                                                       | 683          |                                                                             |    | $                                                | —      |                                   |    | $            | — |   |    | $ | 683   |   |
|   | Loans held for sale                 | 4,936                                                   |         |                                                                        | —      |                                             |    | 4,936                                  |         |    | — |   |
|   | Federal Home Loan Bank stock        | 10,478                                                  |         |                                                                        | —      |                                             |    | —                                |         |    | 10,478  |   |
|   | Other real estate owned             | 4,738                                                   |         |                                                                        | —      |                                             |    | —                                |         |    | 4,738   |   |
|   |                                |                                                    |         |                                                                             |         |                                             |         |                                   |
|   |                                |                                                    |         |                                                                             |         |                                             |         |                                   |
|   |                                | Fair Value Measurements at December 31, 2009 Using |
|   | (in thousands)                      | Total                                                   |    | Quoted Prices inActive Markets forIdentical  Assets(Level 1)      |    | Significant  OtherObservableInputs(Level 2) |    | SignificantUnobservableInputs(Level 3) |
|   | Assets:                             |                                                    |    |                                                                             |    |                                             |    |                                   |
|   | Collateral dependent impaired loans | $                                                       | 2,818        |                                                                             |    | $                                                | —      |                                   |    | $            | — |   |    | $ | 2,818 |   |
|   | Loans held for sale                 | 1,208                                                   |         |                                                                        | —      |                                             |    | 1,208                                  |         |    | — |   |
|   | Federal Home Loan Bank stock        | 8,973                                                   |         |                                                                        | —      |                                             |    | —                                |         |    | 8,973   |   |
|   | Other real estate owned             | 3,635                                                   |         |                                                                        | —      |                                             |    | —                                |         |    | 3,635   |   |

|        |                                                                            |                    |              |                          |              |                |              |                          |              |              |           |        |              |   |        |        |
|--------|----------------------------------------------------------------------------|--------------------|--------------|--------------------------|--------------|----------------|--------------|--------------------------|--------------|--------------|-----------|--------|--------------|---|--------|--------|
|   |                                                                       | September 30, 2010 |    | December 31, 2009   |
|   |                                                                       | CarryingAmount     |    | EstimatedFair Value |    | CarryingAmount |    | EstimatedFair Value |
|   | (in thousands)                                                             |               |    |                     |    |           |    |                     |
|   | Financial assets:                                                          |               |    |                     |    |           |    |                     |
|   | Cash and cash equivalents                                                  | $                  | 25,747       |                     |    | $              | 25,747       |                     |    | $            | 27,588    |   |    | $ | 27,588 |   |
|   | Investment securities                                                      | 412,039            |         |                | 412,115      |           |    | 370,912                  |         |    | 371,021   |   |
|   | Loans held for sale                                                        | 4,936              |         |                | 4,936        |           |    | 1,208                    |         |    | 1,208     |   |
|   | Loans, net                                                                 | 941,465            |         |                | 941,304      |           |    | 953,041                  |         |    | 953,647   |   |
|   | Loan pool participations, net                                              | 71,160             |         |                | 71,160       |           |    | 83,052                   |         |    | 83,052    |   |
|   | Other real estate owned                                                    | 4,738              |         |                | 4,738        |           |    | 3,635                    |         |    | 3,635     |   |
|   | Accrued interest receivable                                                | 11,796             |         |                | 11,796       |           |    | 11,534                   |         |    | 11,534    |   |
|   | Federal Home Loan Bank stock                                               | 10,478             |         |                | 10,478       |           |    | 8,973                    |         |    | 8,973     |   |
|   | Financial liabilities:                                                     |               |    |                     |    |           |    |                     |
|   | Deposits                                                                   | 1,183,056          |         |                | 1,187,445    |           |    | 1,179,868                |         |    | 1,185,450 |   |
|   | Federal funds purchased and securities sold under agreements to repurchase | 44,479             |         |                | 44,479       |           |    | 44,973                   |         |    | 44,973    |   |
|   | Federal Home Loan Bank borrowings                                          | 136,200            |         |                | 140,604      |           |    | 130,200                  |         |    | 133,098   |   |
|   | Long-term debt                                                             | 15,552             |         |                | 10,107       |           |    | 15,588                   |         |    | 10,070    |   |
|   | Accrued interest payable                                                   | 2,021              |         |                | 2,021        |           |    | 2,248                    |         |    | 2,248     |   |

|                                |                                                                                                                                                                                                                               |
|--------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| •     | Cash and cash equivalents, non-interest-bearing demand deposits, federal funds purchased, securities sold under repurchase agreements, and accrued interest are instruments with carrying values that approximate fair value. |

|                                |                                                                                                                                                                                                                   |
|--------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| •     | Investment securities available for sale are recorded at fair value on a recurring basis. Fair value measurement is based upon quoted prices, if available. If a quoted price is not available, the fair value is |

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Table of Contents

|                                |                                                                                                                               |
|--------------------------------|-------------------------------------------------------------------------------------------------------------------------------|
| •     | Loans held for sale have an estimated fair value based on quoted market prices of similar loans sold on the secondary market. |

|                                |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|--------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| •     | For variable-rate loans that reprice frequently and with no significant change in credit risk, fair values are based on carrying values. The fair values for other loans are determined using estimated future cash flows, discounted at the interest rates currently being offered for loans with similar terms to borrowers with similar credit quality. The Company does record nonrecurring fair value adjustments to loans to reflect (1) partial write-downs that are based on the observable market price or appraised value of the collateral or (2) the full charge-off of the loan carrying value. |

|                                |                                                                                                                                                                                             |
|--------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| •     | Loan pool participation carrying values represent the discounted price paid by us to acquire our participation interests in the various loan pools purchased, which approximate fair value. |

|                                |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|--------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| •     | Deposit liabilities are carried at historical cost. The fair value of demand deposits, savings accounts and certain money market account deposits is the amount payable on demand at the reporting date. The fair value of fixed maturity certificates of deposit is estimated using the rates currently offered for deposits of similar remaining maturities. If the fair value of the fixed maturity certificates of deposit is calculated at less than the carrying amount, the carrying value of these deposits is reported as the fair value. |

|                                |                                                                                                                                                                                                                                                                                |
|--------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| •     | Federal Home Loan Bank borrowings and long-term debt are recorded at historical cost. The fair value of these items are estimated using discounted cash flow analysis, based on the Company's current incremental borrowing rates for similar types of borrowing arrangements. |

|                            |                                                    |
|----------------------------|----------------------------------------------------|
| 8.     | Allowance for Loan Losses and Nonperforming Assets |

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Table of Contents

|        |                                                                               |                                           |         |                                          |         |        |         |         |        |         |         |        |         |        |
|--------|-------------------------------------------------------------------------------|-------------------------------------------|---------|------------------------------------------|---------|--------|---------|---------|--------|---------|---------|--------|---------|--------|
|   |                                                                          | Three Months EndedSeptember 30, |    | Nine Months EndedSeptember 30, |
|   |                                                                          | 2010                                      |    | 2009                                     |    | 2010   |    | 2009    |
|   | (dollars in thousands)                                                        |                                      |    |                                     |    |   |    |    |
|   | Amount of loans outstanding at end of period (net of unearned interest) (1)   | $                                         | 956,324 |                                     |    | $      | 973,468 |    |   | 956,324 |    |   | 973,468 |   |
|   | Average amount of loans outstanding for the period (net of unearned interest) | $                                         | 960,037 |                                     |    | $      | 983,999 |    |   | 958,971 |    |   | 999,313 |   |
|   | Allowance for loan losses at beginning of period                              | $                                         | 14,823  |                                     |    | $      | 13,465  |    |   | 13,957  |    |   | 10,977  |   |
|   |                                                                          |                                      |    |                                     |    |   |    |    |
|   | Charge-offs:                                                                  |                                      |    |                                     |    |   |    |    |
|   | Agricultural                                                                  | 197                                       |    |                                     | 17      |   |    | 1,197   |   |    | 75      |   |
|   | Commercial and financial                                                      | 311                                       |    |                                     | 831     |   |    | 1,416   |   |    | 1,640   |   |
|   | Real estate:                                                                  |                                      |    |                                     |    |   |    |    |
|   | Construction, one- to four- family residential                                | —                                   |    |                                     | — |   |    | — |   |    | — |   |
|   | Construction, land development and commercial                                 | 406                                       |    |                                     | 278     |   |    | 431     |   |    | 373     |   |
|   | Mortgage, farmland                                                            | —                                   |    |                                     | — |   |    | — |   |    | 120     |   |
|   | Mortgage, one- to four- family first liens                                    | 82                                        |    |                                     | 918     |   |    | 133     |   |    | 1,160   |   |
|   | Mortgage, one- to four- family junior liens                                   | 85                                        |    |                                     | 46      |   |    | 100     |   |    | 78      |   |
|   | Mortgage, multifamily                                                         | —                                   |    |                                     | — |   |    | — |   |    | 5       |   |
|   | Mortgage, commercial                                                          | 104                                       |    |                                     | 3       |   |    | 187     |   |    | 55      |   |
|   | Loans to individuals                                                          | 82                                        |    |                                     | 47      |   |    | 148     |   |    | 105     |   |
|   | Obligations of state and political subdivisions                               | —                                   |    |                                     | — |   |    | — |   |    | — |   |
|   | Total charge-offs                                                             | 1,267                                     |    |                                     | 2,140   |   |    | 3,612   |   |    | 3,611   |   |
|   |                                                                          |                                      |    |                                     |    |   |    |    |
|   | Recoveries:                                                                   |                                      |    |                                     |    |   |    |    |
|   | Agricultural                                                                  | —                                   |    |                                     | — |   |    | 5       |   |    | 19      |   |
|   | Commercial and financial                                                      | 32                                        |    |                                     | 24      |   |    | 56      |   |    | 69      |   |
|   | Real estate:                                                                  |                                      |    |                                     |    |   |    |    |
|   | Construction, one- to four- family residential                                | —                                   |    |                                     | — |   |    | — |   |    | — |   |
|   | Construction, land development and commercial                                 | 4                                         |    |                                     | — |   |    | 4       |   |    | — |   |
|   | Mortgage, farmland                                                            | —                                   |    |                                     | — |   |    | — |   |    | — |   |
|   | Mortgage, one- to four- family first liens                                    | —                                   |    |                                     | 21      |   |    | 2       |   |    | 30      |   |
|   | Mortgage, one- to four- family junior liens                                   | 1                                         |    |                                     | 3       |   |    | 56      |   |    | 14      |   |
|   | Mortgage, multifamily                                                         | —                                   |    |                                     | — |   |    | — |   |    | 15      |   |
|   | Mortgage, commercial                                                          | 8                                         |    |                                     | — |   |    | 116     |   |    | — |   |
|   | Loans to individuals                                                          | 8                                         |    |                                     | 8       |   |    | 25      |   |    | 18      |   |
|   | Obligations of state and political subdivisions                               | —                                   |    |                                     | — |   |    | — |   |    | — |   |
|   | Total recoveries                                                              | 53                                        |    |                                     | 56      |   |    | 264     |   |    | 165     |   |
|   | Net loans charged off                                                         | 1,214                                     |    |                                     | 2,084   |   |    | 3,348   |   |    | 3,446   |   |
|   | Provision for loan losses                                                     | 1,250                                     |    |                                     | 2,125   |   |    | 4,250   |   |    | 5,975   |   |
|   | Allowance for loan losses at end of period                                    | $                                         | 14,859  |                                     |    | $      | 13,506  |    |   | 14,859  |    |   | 13,506  |   |
|   |                                                                          |                                      |    |                                     |    |   |    |    |   |
|   | Net loans charged off to average loans                                        | 0.50                                      | %       |                                     | 0.84    | %      |    | 0.48    | %      |    | 0.47    | %      |
|   | Allowance for loan losses to total loans at end of period                     | 1.55                                      | %       |                                     | 1.39    | %      |    | 1.55    | %      |    | 1.39    | %      |

|        |     |        |                                                                                                     |
|--------|-----|--------|-----------------------------------------------------------------------------------------------------|
|   | (1) |   | Loans do not include, and the allowance for loan losses does not include, loan pool participations. |

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|        |                                                                                               |                         |        |                                |         |             |        |                                |         |        |         |        |        |   |         |        |
|--------|-----------------------------------------------------------------------------------------------|-------------------------|--------|--------------------------------|---------|-------------|--------|--------------------------------|---------|--------|---------|--------|--------|---|---------|--------|
|   |                                                                                          | September 30, 2010 |   | December 31, 2009         |
|   |                                                                                          | Non-Accrual             |   | Troubled DebtRestructures |    | Non-Accrual |   | Troubled DebtRestructures |
|   | (in thousands)                                                                                |                    |   |                           |    |        |   |                           |
|   | Nonperforming loans:                                                                          |                    |   |                           |    |        |   |                           |
|   | Agricultural                                                                                  | $                       | 3,494  |                           |    | $           | 3,323  |                           |    | $      | 3,498   |   |   | $ | — |   |
|   | Commercial and financial                                                                      | 1,381                   |   |                           | 597     |        |   | 2,386                          |    |   | 676     |   |
|   | Real estate:                                                                                  |                    |   |                           |    |        |   |                           |
|   | Construction, one- to four- family residential                                                | —                 |   |                           | — |        |   | 463                            |    |   | — |   |
|   | Construction, land development and commercial                                                 | 879                     |   |                           | — |        |   | —                        |    |   | 434     |   |
|   | Mortgage, farmland                                                                            | 3,126                   |   |                           | 348     |        |   | 43                             |    |   | — |   |
|   | Mortgage, one- to four- family first liens                                                    | 1,643                   |   |                           | 48      |        |   | 2,073                          |    |   | 49      |   |
|   | Mortgage, one- to four- family junior liens                                                   | 58                      |   |                           | 50      |        |   | 157                            |    |   | — |   |
|   | Mortgage, multifamily                                                                         | 610                     |   |                           | — |        |   | —                        |    |   | — |   |
|   | Mortgage, commercial                                                                          | 1,373                   |   |                           | 1,913   |        |   | 1,168                          |    |   | 1,368   |   |
|   | Loans to individuals                                                                          | 146                     |   |                           | — |        |   | 97                             |    |   | 28      |   |
|   | Obligations of state and political subdivisions                                               | —                 |   |                           | — |        |   | —                        |    |   | — |   |
|   |                                                                                          | $                       | 12,710 |                           |    | $           | 6,279  |                           |    | $      | 9,885   |   |   | $ | 2,555   |   |
|   | Total impaired loans                                                                          |                    |   | $                              | 18,989  |        |   |                           |    | $      | 12,440  |   |
|   |                                                                                          |                    |   |                           |    |        |   |                           |
|   | 90 days or more past due and still accruing:                                                  |                    |   |                           |    |        |   |                           |
|   | Agricultural                                                                                  |                    |   | 149                            |    |        |   |                           | — |   |
|   | Commercial and financial                                                                      |                    |   | 57                             |    |        |   |                           | 256     |   |
|   | Real estate:                                                                                  |                    |   |                           |    |        |   |                           |
|   | Construction, one- to four- family residential                                                |                    |   | —                        |    |        |   |                           | 138     |   |
|   | Construction, land development and commercial                                                 |                    |   | —                        |    |        |   |                           | — |   |
|   | Mortgage, farmland                                                                            |                    |   | 222                            |    |        |   |                           | — |   |
|   | Mortgage, one- to four- family first liens                                                    |                    |   | 365                            |    |        |   |                           | 927     |   |
|   | Mortgage, one- to four- family junior liens                                                   |                    |   | 75                             |    |        |   |                           | 85      |   |
|   | Mortgage, multifamily                                                                         |                    |   | 79                             |    |        |   |                           | — |   |
|   | Mortgage, commercial                                                                          |                    |   | 115                            |    |        |   |                           | — |   |
|   | Loans to individuals                                                                          |                    |   | 117                            |    |        |   |                           | 33      |   |
|   | Obligations of state and political subdivisions                                               |                    |   | —                        |    |        |   |                           | — |   |
|   | Total 90 days or more past due and still accruing                                             |                    |   | $                              | 1,179   |        |   |                           |    | $      | 1,439   |   |
|   | Total nonperforming loans                                                                     |                    |   | $                              | 20,168  |        |   |                           |    | $      | 13,879  |   |
|   |                                                                                          |                    |   |                           |    |        |   |                           |
|   | Other real estate owned and repossessed assets                                                |                    |   | 4,738                          |    |        |   |                           | 3,635   |   |
|   |                                                                                          |                    |   |                           |    |        |   |                           |
|   | Total nonperforming loans and nonperforming other assets                                      |                    |   | $                              | 24,906  |        |   |                           |    | $      | 17,514  |   |
|   |                                                                                          |                    |   |                           |    |        |   |                           |
|   | Ratios:                                                                                       |                    |   |                           |    |        |   |                           |
|   | Nonperforming loans to loans, before allowance for loan losses                                |                    |   | 2.11                           | %       |        |   |                           | 1.44    | %      |
|   | Nonperforming loans and nonperforming other assets to loans, before allowance for loan losses |                    |   | 2.60                           | %       |        |   |                           | 1.81    | %      |

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Table of Contents

|                            |                                              |
|----------------------------|----------------------------------------------|
| 9.     | Effect of New Financial Accounting Standards |

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Table of Contents

|                             |                                                             |
|-----------------------------|-------------------------------------------------------------|
| 10.     | Use of Estimates in the Preparation of Financial Statements |

|                             |                   |
|-----------------------------|-------------------|
| 11.     | Subsequent Events |

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Table of Contents

|                                |                                                                                                                        |
|--------------------------------|------------------------------------------------------------------------------------------------------------------------|
| •     | Create a Financial Services Oversight Council to identify emerging systemic risks and improve interagency cooperation; |

|                                |                                                                                                                                                                                                                                        |
|--------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| •     | Centralize responsibility for consumer financial protection by creating a new agency, the Consumer Financial Protection Bureau, responsible for implementing, examining and enforcing compliance with federal consumer financial laws; |

|                                |                                                                                                                                                                                                                                                                   |
|--------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| •     | Establish strengthened capital standards for banks and bank holding companies, and disallow trust preferred securities from being included in a bank's Tier 1 capital determination (subject to a grandfather provision for existing trust preferred securities); |

|                                |                                                                                                                                                                                  |
|--------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| •     | Contain a series of provisions covering mortgage loan origination standards affecting, among other things, originator compensation, minimum repayment standards and prepayments; |

|                                |                                                                                                                                                                                                                                                                              |
|--------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| •     | Require financial holding companies, such as the Company, to be well-capitalized and well-managed as of July 21, 2011. Bank holding companies and banks must also be both well-capitalized and well-managed in order to acquire banks located outside their home state; |

|                                |                                                                              |
|--------------------------------|------------------------------------------------------------------------------|
| •     | Grant the Federal Reserve the power to regulate debit card interchange fees; |

|                                |                                                                                                                                                                                                  |
|--------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| •     | Implement corporate governance revisions, including with regard to executive compensation and proxy access by shareholders, that apply to all public companies, not just financial institutions; |

|                                |                                                                                                                                                                                                                                                                                                                                                        |
|--------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| •     | Make permanent the $250,000 limit for federal deposit insurance and increase the cash limit of Securities Investor Protection Corporation protection from $100,000 to $250,000 and provide unlimited federal deposit insurance until January 1, 2013 for non-interest bearing demand transaction accounts at all insured depository institutions; |

|                                |                                                                                                                                                                                           |
|--------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| •     | Repeal the federal prohibitions on the payment of interest on demand deposits, thereby permitting depository institutions to pay interest on business transaction and other accounts; and |

|                                |                                                                                                    |
|--------------------------------|----------------------------------------------------------------------------------------------------|
| •     | Increase the authority of the Federal Reserve to examine the Company and its nonbank subsidiaries. |

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Table of Contents

|                                                           |                                            |        |        |           |        |     |        |
|-----------------------------------------------------------|--------------------------------------------|--------|--------|-----------|--------|-----|--------|
|                                                      | Three Months Ended September 30, |
| ($ amounts in thousands)                                  | 2010                                       |   | 2009   |
| Net Income                                                | $                                          | 2,786  |   |      | $      | 834 |   |
| Average Assets                                            | 1,562,276                                  |   |   | 1,550,847 |   |
| Average Shareholders' Equity                              | 159,252                                    |   |   | 149,769   |   |
| Return on Average Assets                                  | 0.71                                       | %      |   | 0.21      | %      |
| Return on Average Shareholders' Equity                    | 6.94                                       | %      |   | 2.21      | %      |
| Return on Average Tangible Common Equity                  | 7.74                                       | %      |   | 2.02      | %      |
| Total Equity to Assets (end of period)                    | 10.37                                      | %      |   | 9.93      | %      |
| Tangible Common Equity to Tangible Assets (end of period) | 8.68                                       | %      |   | 8.15      | %      |

|                                                     |                                                                   |         |        |         |   |         |        |
|-----------------------------------------------------|-------------------------------------------------------------------|---------|--------|---------|---|---------|--------|
|                                                | For the Three Months Ended September 30, |
| (in thousands)                                      | 2010                                                              |    | 2009   |
| Tangible Common Equity:                             |                                                              |    |   |
| Average total shareholders' equity                  | $                                                                 | 159,252 |   |    | $ | 149,769 |   |
| Less:  Average preferred stock                      | (15,741                                                           | )       |   | (15,675 | ) |
| Average goodwill and intangibles                    | (11,711                                                           | )       |   | (12,720 | ) |
| Average tangible common equity                      | $                                                                 | 131,800 |   |    | $ | 121,374 |   |
|                                                |                                                              |    |   |
| Net income available to common shareholders         | $                                                                 | 2,570   |   |    | $ | 618     |   |
|                                                |                                                              |    |   |
| Annualized return on average tangible common equity | 7.74                                                              | %       |   | 2.02    | % |

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Table of Contents

|                                                   |                                  |           |                        |        |                   |        |                |         |                        |           |                   |        |           |        |        |      |        |        |        |      |   |
|---------------------------------------------------|----------------------------------|-----------|------------------------|--------|-------------------|--------|----------------|---------|------------------------|-----------|-------------------|--------|-----------|--------|--------|------|--------|--------|--------|------|---|
|                                              | Three Months Ended September 30, |
|                                              | 2010                             |      | 2009                   |
|                                              | AverageBalance                   |      | InterestIncome/Expense |   | AverageRate/Yield |   | AverageBalance |    | InterestIncome/Expense |      | AverageRate/Yield |
| (dollars in thousands)                            |                             |      |                   |   |              |   |           |    |                   |      |              |
| Average earning assets:                           |                             |      |                   |   |              |   |           |    |                   |      |              |
| Loans (tax equivalent) (1)(2)(3)                  | $                                | 960,037   |                   |   | $                 | 13,857 |           |    | 5.73                   | %         |              | $      | 983,999   |   |   | $    | 14,744 |   |   | 5.94 | % |
| Loan pool participations (4)                      | 76,573                           |      |                   | 552    |              |   | 2.86           |    |                   | 89,942    |              |   | 28        |   |   | 0.12 |   |
| Investment securities:                            |                             |      |                   |   |              |   |           |    |                   |      |              |
| Taxable investments                               | 317,466                          |      |                   | 2,445  |              |   | 3.06           |    |                   | 260,273   |              |   | 2,307     |   |   | 3.52 |   |
| Tax exempt investments (2)                        | 108,534                          |      |                   | 1,433  |              |   | 5.24           |    |                   | 118,485   |              |   | 1,565     |   |   | 5.24 |   |
| Total investment securities                       | 426,000                          |      |                   | 3,878  |              |   | 3.61           |    |                   | 378,758   |              |   | 3,872     |   |   | 4.06 |   |
| Federal funds sold and interest-bearing balances  | 8,829                            |      |                   | 2      |              |   | 0.09           |    |                   | 13,127    |              |   | 9         |   |   | 0.27 |   |
| Total earning assets                              | $                                | 1,471,439 |                   |   | $                 | 18,289 |           |    | 4.93                   | %         |              | $      | 1,465,826 |   |   | $    | 18,653 |   |   | 5.05 | % |
|                                              |                             |      |                   |   |              |   |           |    |                   |      |              |
| Cash and due from banks                           | 18,690                           |      |                   |   |              |   |           | 21,645  |                   |      |              |   |      |
| Premises and equipment                            | 27,726                           |      |                   |   |              |   |           | 29,799  |                   |      |              |   |      |
| Allowance for loan losses                         | (17,112                          | )         |                   |   |              |   |           | (15,654 | )                      |      |              |   |      |
| Other assets                                      | 61,533                           |      |                   |   |              |   |           | 49,231  |                   |      |              |   |      |
| Total assets                                      | $                                | 1,562,276 |                   |   |              |   |           |    | $                      | 1,550,847 |              |   |      |   |   |
|                                              |                             |      |                   |   |              |   |           |    |                   |      |              |
| Average interest-bearing liabilities:             |                             |      |                   |   |              |   |           |    |                   |      |              |
| Savings and interest-bearing demand deposits      | $                                | 485,624   |                   |   | $                 | 1,057  |           |    | 0.86                   | %         |              | $      | 461,467   |   |   | $    | 1,127  |   |   | 0.97 | % |
| Certificates of deposit                           | 561,702                          |      |                   | 3,170  |              |   | 2.24           |    |                   | 585,892   |              |   | 4,175     |   |   | 2.83 |   |
| Total deposits                                    | 1,047,326                        |      |                   | 4,227  |              |   | 1.60           |    |                   | 1,047,359 |              |   | 5,302     |   |   | 2.01 |   |
| Federal funds purchased and repurchase agreements | 47,204                           |      |                   | 79     |              |   | 0.66           |    |                   | 42,462    |              |   | 98        |   |   | 0.92 |   |
| Federal Home Loan Bank borrowings                 | 136,135                          |      |                   | 1,170  |              |   | 3.41           |    |                   | 146,418   |              |   | 1,533     |   |   | 4.15 |   |
| Long-term debt and other                          | 16,378                           |      |                   | 167    |              |   | 4.05           |    |                   | 16,510    |              |   | 171       |   |   | 4.11 |   |
| Total borrowed funds                              | 199,717                          |      |                   | 1,416  |              |   | 2.81           |    |                   | 205,390   |              |   | 1,802     |   |   | 3.48 |   |
| Total interest-bearing liabilities                | $                                | 1,247,043 |                   |   | $                 | 5,643  |           |    | 1.80                   | %         |              | $      | 1,252,749 |   |   | $    | 7,104  |   |   | 2.25 | % |
|                                              |                             |      |                   |   |              |   |           |    |                   |      |              |
| Net interest spread(2)                            |                             |      |                   |   | 3.13              | %      |           |    |                   |      |              | 2.80   | %         |
|                                              |                             |      |                   |   |              |   |           |    |                   |      |              |
| Demand deposits                                   | 138,005                          |      |                   |   |              |   |           | 132,262 |                   |      |              |   |      |
| Other liabilities                                 | 17,976                           |      |                   |   |              |   |           | 16,067  |                   |      |              |   |      |
| Shareholders' equity                              | 159,252                          |      |                   |   |              |   |           | 149,769 |                   |      |              |   |      |
| Total liabilities and shareholders' equity        | $                                | 1,562,276 |                   |   |              |   |           |    | $                      | 1,550,847 |              |   |      |   |   |
|                                              |                             |      |                   |   |              |   |           |    |                   |      |              |
| Interest income/earning assets (2)                | $                                | 1,471,439 |                   |   | $                 | 18,289 |           |    | 4.93                   | %         |              | $      | 1,465,826 |   |   | $    | 18,653 |   |   | 5.05 | % |
| Interest expense/earning assets                   | $                                | 1,471,439 |                   |   | $                 | 5,643  |           |    | 1.52                   | %         |              | $      | 1,465,826 |   |   | $    | 7,104  |   |   | 1.92 | % |
| Net interest margin (2)(5)                        |                             |      | $                      | 12,646 |              |   | 3.41           | %       |                   |      |              | $      | 11,549    |   |   | 3.13 | %      |
|                                              |                             |      |                   |   |              |   |           |    |                   |      |              |
| Non-GAAP to GAAP Reconciliation:                  |                             |      |                   |   |              |   |           |    |                   |      |              |
| Tax Equivalent Adjustment:                        |                             |      |                   |   |              |   |           |    |                   |      |              |
| Loans                                             |                             |      | $                      | 80     |              |   |           |    |                   |      | $                 | 75     |      |   |   |
| Securities                                        |                             |      | 487                    |   |              |   |           |    |                   | 547       |              |   |      |
| Total tax equivalent adjustment                   |                             |      | 567                    |   |              |   |           |    |                   | 622       |              |   |      |
| Net Interest Income                               |                             |      | $                      | 12,079 |              |   |           |    |                   |      | $                 | 10,927 |      |   |   |

|        |     |                                                                                                      |
|--------|-----|------------------------------------------------------------------------------------------------------|
|   | (1) | Loan fees included in interest income are not material.                                              |
|   | (2) | Computed on a tax-equivalent basis, assuming a federal income tax rate of 34%.                       |
|   | (3) | Non-accrual loans have been included in average loans, net of unearned discount.                     |
|   | (4) | Includes interest income and discount realized on loan pool participations.                          |
|   | (5) | Net interest margin is tax-equivalent net interest income as a percentage of average earning assets. |

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|                                                              |                                                                   |        |            |        |        |        |        |        |   |       |        |
|--------------------------------------------------------------|-------------------------------------------------------------------|--------|------------|--------|--------|--------|--------|--------|---|-------|--------|
|                                                         | Three Months Ended September 30,                                  |
|                                                         | 2010 Compared to 2009 Change due to |
|                                                         | Volume                                                            |   | Rate/Yield |   | Net    |
| (in thousands)                                               |                                                              |   |       |   |   |
| Increase (decrease) in interest income:                      |                                                              |   |       |   |   |
| Loans (tax equivalent)                                       | $                                                                 | (354   | )          |   | $      | (533   | )      |   | $ | (887  | )      |
| Loan pool participations                                     | (4                                                                | )      |       | 528    |   |   | 524    |   |
| Investment securities:                                       |                                                              |   |       |   |   |
| Taxable investments                                          | 342                                                               |   |       | (204   | )      |   | 138    |   |
| Tax exempt investments                                       | (131                                                              | )      |       | (1     | )      |   | (132   | )      |
|                                                         |                                                              |   |       |   |   |
| Total investment securities                                  | 211                                                               |   |       | (205   | )      |   | 6      |   |
|                                                         |                                                              |   |       |   |   |
| Federal funds sold and interest-bearing balances             | (2                                                                | )      |       | (5     | )      |   | (7     | )      |
|                                                         |                                                              |   |       |   |   |
| Change in interest income                                    | (149                                                              | )      |       | (215   | )      |   | (364   | )      |
|                                                         |                                                              |   |       |   |   |
| Increase (decrease) in interest expense:                     |                                                              |   |       |   |   |
| Savings and interest-bearing demand deposits                 | 65                                                                |   |       | (135   | )      |   | (70    | )      |
| Certificates of deposit                                      | (166                                                              | )      |       | (839   | )      |   | (1,005 | )      |
|                                                         |                                                              |   |       |   |   |
| Total deposits                                               | (101                                                              | )      |       | (974   | )      |   | (1,075 | )      |
|                                                         |                                                              |   |       |   |   |
| Federal funds purchased and repurchase agreements            | 13                                                                |   |       | (32    | )      |   | (19    | )      |
| Federal Home Loan Bank borrowings                            | (102                                                              | )      |       | (261   | )      |   | (363   | )      |
| Other long-term debt                                         | (1                                                                | )      |       | (3     | )      |   | (4     | )      |
|                                                         |                                                              |   |       |   |   |
| Total Borrowed Funds                                         | (90                                                               | )      |       | (296   | )      |   | (386   | )      |
|                                                         |                                                              |   |       |   |   |
| Change in interest expense                                   | (191                                                              | )      |       | (1,270 | )      |   | (1,461 | )      |
|                                                         |                                                              |   |       |   |   |
| Increase in net interest income                              | $                                                                 | 42     |       |   | $      | 1,055  |   |   | $ | 1,097 |   |
|                                                         |                                                              |   |       |   |   |
| Percentage increase in net interest income over prior period |                                                              |   |       |   | 9.50   | %      |

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Table of Contents

|                                                      |                                  |        |        |              |               |              |                                        |              |      |         |
|------------------------------------------------------|----------------------------------|--------|--------|--------------|---------------|--------------|----------------------------------------|--------------|------|---------|
|                                                 | Three Months Ended September 30, |
|                                                 | 2010                             |   | 2009   |    | % Change |
| (dollars in thousands)                               |                             |   |   |    |          |
| Trust and investment fees                            | $                                | 1,049  |   |         | $             | 1,050        |                                   |    | (0.1 | )%      |
| Service charges and fees on deposit accounts         | 1,118                            |   |   | 1,074        |          |    | 4.1                                    |         |
| Mortgage origination and loan servicing fees         | 958                              |   |   | 613          |          |    | 56.3                                   |         |
| Other service charges, commissions and fees          | 633                              |   |   | 568          |          |    | 11.4                                   |         |
| Bank owned life insurance income                     | 158                              |   |   | 154          |          |    | 2.6                                    |         |
| Impairment losses on investment securities, net      | —                          |   |   | (1,388       | )             |    | NM       |         |
| Gain (loss) on sale of available for sale securities | (158                             | )      |   | 491          |          |    | (132.2                                 | )            |
| Loss on sale of premises and equipment               | (1                               | )      |   | (9           | )             |    | (88.9                                  | )            |
| Total noninterest income                             | $                                | 3,757  |   |         | $             | 2,553        |                                   |    | 47.2 |  % |
|                                                 |                             |   |   |         |          |
| NM - Percentage change not considered meaningful.    |                             |   |   |         |          |

|                                     |                                  |              |              |              |               |              |        |              |      |    |
|-------------------------------------|----------------------------------|--------------|--------------|--------------|---------------|--------------|--------|--------------|------|----|
|                                | Three Months Ended September 30, |
|                                | 2010                             |    | 2009         |    | % Change |
| (dollars in thousands)              |                             |    |         |    |          |
| Salaries and employee benefits      | $                                | 5,838        |         |    | $             | 5,863        |   |    | (0.4 | )% |
| Net occupancy and equipment expense | 1,598                            |         |    | 1,729        |          |    | (7.6   | )            |
| Professional fees                   | 696                              |         |    | 727          |          |    | (4.3   | )            |
| Data processing expense             | 421                              |         |    | 438          |          |    | (3.9   | )            |
| FDIC insurance expense              | 726                              |         |    | 615          |          |    | 18.0   |         |
| Other operating expense             | 1,605                            |         |    | 1,785        |          |    | (10.1  | )            |
| Total noninterest expense           | $                                | 10,884       |         |    | $             | 11,157       |   |    | (2.4 | )% |

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Table of Contents

|                                                           |                                      |              |              |              |        |       |        |
|-----------------------------------------------------------|--------------------------------------|--------------|--------------|--------------|--------|-------|--------|
|                                                 | Nine Months Ended September 30, |
| ($ amounts in thousands)                                  | 2010                                 |    | 2009         |
| Net Income                                                | $                                    | 7,395        |         |    | $      | 2,793 |   |
| Average Assets                                            | 1,550,484                            |         |    | 1,541,141    |   |
| Average Shareholders' Equity                              | 155,739                              |         |    | 145,997      |   |
| Return on Average Assets                                  | 0.64                                 | %            |    | 0.24         | %      |
| Return on Average Shareholders' Equity                    | 6.35                                 | %            |    | 2.56         | %      |
| Return on Average Tangible Common Equity                  | 7.04                                 | %            |    | 2.49         | %      |
| Total Equity to Assets (end of period)                    | 10.37                                | %            |    | 9.93         | %      |
| Tangible Common Equity to Tangible Assets (end of period) | 8.68                                 | %            |    | 8.15         | %      |

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Table of Contents

|                                              |                                                                  |         |        |         |   |         |        |
|----------------------------------------------|------------------------------------------------------------------|---------|--------|---------|---|---------|--------|
|                                         | For the Nine Months Ended September 30, |
| (in thousands)                               | 2010                                                             |    | 2009   |
| Tangible Common Equity:                      |                                                             |    |   |
| Average total shareholders' equity           | $                                                                | 155,739 |   |    | $ | 145,997 |   |
| Less:  Average preferred stock               | (15,724                                                          | )       |   | (13,660 | ) |
| Average goodwill and intangibles             | (11,921                                                          | )       |   | (12,661 | ) |
| Average tangible common equity               | $                                                                | 128,094 |   |    | $ | 119,676 |   |
|                                         |                                                             |    |   |
| Net income available to common shareholders  | $                                                                | 6,745   |   |    | $ | 2,230   |   |
|                                         |                                                             |    |   |
| Return on average tangible common equity (1) | 7.04                                                             | %       |   | 2.49    | % |
| (1)   Annualized                             |                                                             |    |   |

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Table of Contents

|                                                   |                                 |           |                        |        |                   |        |                |         |                        |           |                   |        |           |        |        |      |        |        |        |      |        |
|---------------------------------------------------|---------------------------------|-----------|------------------------|--------|-------------------|--------|----------------|---------|------------------------|-----------|-------------------|--------|-----------|--------|--------|------|--------|--------|--------|------|--------|
|                                              | Nine Months Ended September 30, |
|                                              | 2010                            |      | 2009                   |
|                                              | AverageBalance                  |      | InterestIncome/Expense |   | AverageRate/Yield |   | AverageBalance |    | InterestIncome/Expense |      | AverageRate/Yield |
| (dollars in thousands)                            |                            |      |                   |   |              |   |           |    |                   |      |              |
| Average earning assets:                           |                            |      |                   |   |              |   |           |    |                   |      |              |
| Loans (tax equivalent) (1)(2)(3)                  | $                               | 958,971   |                   |   | $                 | 41,487 |           |    | 5.78                   | %         |              | $      | 999,313   |   |   | $    | 44,633 |   |   | 5.97 | %      |
| Loan pool participations (4)                      | 80,752                          |      |                   | 2,360  |              |   | 3.91           |    |                   | 93,716    |              |   | 1,707     |   |   | 2.44 |   |
| Investment securities:                            |                            |      |                   |   |              |   |           |    |                   |      |              |
| Taxable investments                               | 291,522                         |      |                   | 7,115  |              |   | 3.26           |    |                   | 219,696   |              |   | 6,429     |   |   | 3.91 |   |
| Tax exempt investments (2)                        | 112,991                         |      |                   | 4,450  |              |   | 5.27           |    |                   | 113,865   |              |   | 4,595     |   |   | 5.40 |   |
| Total investment securities                       | 404,513                         |      |                   | 11,565 |              |   | 3.82           |    |                   | 333,561   |              |   | 11,024    |   |   | 4.42 |   |
| Federal funds sold and interest-bearing balances  | 14,477                          |      |                   | 33     |              |   | 0.30           |    |                   | 29,412    |              |   | 48        |   |   | 0.22 |   |
| Total earning assets                              | $                               | 1,458,713 |                   |   | $                 | 55,445 |           |    | 5.08                   | %         |              | $      | 1,456,002 |   |   | $    | 57,412 |   |   | 5.27 | %      |
|                                              |                            |      |                   |   |              |   |           |    |                   |      |              |
| Cash and due from banks                           | 19,243                          |      |                   |   |              |   |           | 23,333  |                   |      |              |   |      |
| Premises and equipment                            | 28,357                          |      |                   |   |              |   |           | 29,641  |                   |      |              |   |      |
| Allowance for loan losses                         | (16,908                         | )         |                   |   |              |   |           | (15,009 | )                      |      |              |   |      |
| Other assets                                      | 61,079                          |      |                   |   |              |   |           | 47,174  |                   |      |              |   |      |
| Total assets                                      | $                               | 1,550,484 |                   |   |              |   |           |    | $                      | 1,541,141 |              |   |      |   |   |
|                                              |                            |      |                   |   |              |   |           |    |                   |      |              |
| Average interest-bearing liabilities:             |                            |      |                   |   |              |   |           |    |                   |      |              |
| Savings and interest-bearing demand deposits      | $                               | 482,448   |                   |   | $                 | 3,339  |           |    | 0.93                   | %         |              | $      | 454,578   |   |   | $    | 3,624  |   |   | 1.07 | %      |
| Certificates of deposit                           | 567,453                         |      |                   | 10,053 |              |   | 2.37           |    |                   | 579,437   |              |   | 13,160    |   |   | 3.04 |   |
| Total deposits                                    | 1,049,901                       |      |                   | 13,392 |              |   | 1.71           |    |                   | 1,034,015 |              |   | 16,784    |   |   | 2.17 |   |
| Federal funds purchased and repurchase agreements | 42,402                          |      |                   | 227    |              |   | 0.72           |    |                   | 46,634    |              |   | 359       |   |   | 1.03 |   |
| Federal Home Loan Bank borrowings                 | 132,553                         |      |                   | 3,560  |              |   | 3.59           |    |                   | 154,047   |              |   | 4,115     |   |   | 3.57 |   |
| Long-term debt and other                          | 16,411                          |      |                   | 491    |              |   | 4.00           |    |                   | 16,549    |              |   | 554       |   |   | 4.48 |   |
| Total borrowed funds                              | 191,366                         |      |                   | 4,278  |              |   | 2.99           |    |                   | 217,230   |              |   | 5,028     |   |   | 3.09 |   |
| Total interest-bearing liabilities                | $                               | 1,241,267 |                   |   | $                 | 17,670 |           |    | 1.90                   | %         |              | $      | 1,251,245 |   |   | $    | 21,812 |   |   | 2.33 | %      |
|                                              |                            |      |                   |   |              |   |           |    |                   |      |              |
| Net interest spread (2)                           |                            |      |                   |   | 3.18              | %      |           |    |                   |      |              | 2.94   | %         |
|                                              |                            |      |                   |   |              |   |           |    |                   |      |              |
| Demand deposits                                   | 137,224                         |      |                   |   |              |   |           | 131,421 |                   |      |              |   |      |
| Other liabilities                                 | 16,254                          |      |                   |   |              |   |           | 12,478  |                   |      |              |   |      |
| Shareholders' equity                              | 155,739                         |      |                   |   |              |   |           | 145,997 |                   |      |              |   |      |
| Total liabilities and shareholders' equity        | $                               | 1,550,484 |                   |   |              |   |           |    | $                      | 1,541,141 |              |   |      |   |   |
|                                              |                            |      |                   |   |              |   |           |    |                   |      |              |
| Interest income/earning assets (2)                | $                               | 1,458,713 |                   |   | $                 | 55,445 |           |    | 5.08                   | %         |              | $      | 1,456,002 |   |   | $    | 57,412 |   |   | 5.27 | %      |
| Interest expense/earning assets                   | $                               | 1,458,713 |                   |   | $                 | 17,670 |           |    | 1.62                   | %         |              | $      | 1,456,002 |   |   | $    | 21,812 |   |   | 2.00 |   |
| Net interest margin (2)(5)                        |                            |      | $                      | 37,775 |              |   | 3.46           | %       |                   |      |              | $      | 35,600    |   |   | 3.27 | %      |
|                                              |                            |      |                   |   |              |   |           |    |                   |      |              |
| Non-GAAP to GAAP Reconciliation:                  |                            |      |                   |   |              |   |           |    |                   |      |              |
| Tax Equivalent Adjustment:                        |                            |      |                   |   |              |   |           |    |                   |      |              |
| Loans                                             |                            |      | $                      | 245    |              |   |           |    |                   |      | $                 | 268    |      |   |   |
| Securities                                        |                            |      | 1,528                  |   |              |   |           |    |                   | 1,607     |              |   |      |
| Total tax equivalent adjustment                   |                            |      | 1,773                  |   |              |   |           |    |                   | 1,875     |              |   |      |
| Net Interest Income                               |                            |      | $                      | 36,002 |              |   |           |    |                   |      | $                 | 33,725 |      |   |   |

|        |     |                                                                                                      |
|--------|-----|------------------------------------------------------------------------------------------------------|
|   | (1) | Loan fees included in interest income are not material.                                              |
|   | (2) | Computed on a tax-equivalent basis, assuming a federal income tax rate of 34%.                       |
|   | (3) | Non-accrual loans have been included in average loans, net of unearned discount.                     |
|   | (4) | Includes interest income and discount realized on loan pool participations.                          |
|   | (5) | Net interest margin is tax-equivalent net interest income as a percentage of average earning assets. |

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Table of Contents

|                                                              |                                                                   |        |            |        |        |        |        |        |   |        |        |
|--------------------------------------------------------------|-------------------------------------------------------------------|--------|------------|--------|--------|--------|--------|--------|---|--------|--------|
|                                                         | Nine Months Ended September 30,                                   |
|                                                         | 2010 Compared to 2009 Change due to |
|                                                         | Volume                                                            |   | Rate/Yield |   | Net    |
| (in thousands)                                               |                                                              |
| Increase (decrease) in interest income:                      |                                                              |   |       |   |   |
| Loans (tax equivalent)                                       | $                                                                 | (1,770 | )          |   | $      | (1,376 | )      |   | $ | (3,146 | )      |
| Loan pool participations                                     | (194                                                              | )      |       | 847    |   |   | 653    |   |
| Investment securities:                                       |                                                              |   |       |   |   |
| Taxable investments                                          | 1,393                                                             |   |       | (707   | )      |   | 686    |   |
| Tax exempt investments                                       | (35                                                               | )      |       | (110   | )      |   | (145   | )      |
|                                                         |                                                              |   |       |   |   |
| Total investment securities                                  | 1,358                                                             |   |       | (817   | )      |   | 541    |   |
|                                                         |                                                              |   |       |   |   |
| Federal funds sold and interest-bearing balances             | (69                                                               | )      |       | 54     |   |   | (15    | )      |
|                                                         |                                                              |   |       |   |   |
| Change in interest income                                    | (675                                                              | )      |       | (1,292 | )      |   | (1,967 | )      |
|                                                         |                                                              |   |       |   |   |
| Increase (decrease) in interest expense:                     |                                                              |   |       |   |   |
| Savings and interest-bearing demand deposits                 | 248                                                               |   |       | (533   | )      |   | (285   | )      |
| Certificates of deposit                                      | (267                                                              | )      |       | (2,840 | )      |   | (3,107 | )      |
|                                                         |                                                              |   |       |   |   |
| Total deposits                                               | (19                                                               | )      |       | (3,373 | )      |   | (3,392 | )      |
|                                                         |                                                              |   |       |   |   |
| Federal funds purchased and repurchase agreements            | (30                                                               | )      |       | (102   | )      |   | (132   | )      |
| Federal Home Loan Bank borrowings                            | (577                                                              | )      |       | 22     |   |   | (555   | )      |
| Other long-term debt                                         | (5                                                                | )      |       | (58    | )      |   | (63    | )      |
|                                                         |                                                              |   |       |   |   |
| Total borrowed funds                                         | (612                                                              | )      |       | (138   | )      |   | (750   | )      |
|                                                         |                                                              |   |       |   |   |
| Change in interest expense                                   | (631                                                              | )      |       | (3,511 | )      |   | (4,142 | )      |
|                                                         |                                                              |   |       |   |   |
| Increase (decrease) in net interest income                   | $                                                                 | (44    | )          |   | $      | 2,219  |   |   | $ | 2,175  |   |
|                                                         |                                                              |   |       |   |   |
| Percentage increase in net interest income over prior period |                                                              |   |       |   | 6.11   | %      |

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|                                                   |                                 |        |        |              |               |              |                                        |              |      |         |
|---------------------------------------------------|---------------------------------|--------|--------|--------------|---------------|--------------|----------------------------------------|--------------|------|---------|
|                                              | Nine Months Ended September 30, |
|                                              | 2010                            |   | 2009   |    | % Change |
| (dollars in thousands)                            |                            |   |   |    |          |
| Trust and investment fees                         | $                               | 3,497  |   |         | $             | 3,121        |                                   |    | 12.0 |  % |
| Service charges and fees on deposit accounts      | 3,016                           |   |   | 2,975        |          |    | 1.4                                    |         |
| Mortgage origination and loan servicing fees      | 1,983                           |   |   | 2,244        |          |    | (11.6                                  | )            |
| Other service charges, commissions and fees       | 1,793                           |   |   | 1,603        |          |    | 11.9                                   |         |
| Bank owned life insurance income                  | 472                             |   |   | 576          |          |    | (18.1                                  | )            |
| Impairment losses on investment securities, net   | (189                            | )      |   | (2,002       | )             |    | (90.6                                  | )            |
| Gain on sale of available for sale securities     | 312                             |   |   | 491          |          |    | (36.5                                  | )            |
| Loss on sale of premises and equipment            | (282                            | )      |   | (3           | )             |    | NM       |         |
| Total noninterest income                          | $                               | 10,602 |   |         | $             | 9,005        |                                   |    | 17.7 |  % |
|                                              |                            |   |   |         |          |
| NM - Percentage change not considered meaningful. |                            |   |   |         |          |

|                                     |                                 |              |              |              |               |              |        |              |      |    |
|-------------------------------------|---------------------------------|--------------|--------------|--------------|---------------|--------------|--------|--------------|------|----|
|                                | Nine Months Ended September 30, |
|                                | 2010                            |    | 2009         |    | % Change |
| (dollars in thousands)              |                            |    |         |    |          |
| Salaries and employee benefits      | $                               | 17,319       |         |    | $             | 17,463       |   |    | (0.8 | )% |
| Net occupancy and equipment expense | 5,004                           |         |    | 5,083        |          |    | (1.6   | )            |
| Professional fees                   | 2,104                           |         |    | 2,651        |          |    | (20.6  | )            |
| Data processing expense             | 1,292                           |         |    | 1,445        |          |    | (10.6  | )            |
| FDIC insurance expense              | 2,123                           |         |    | 2,568        |          |    | (17.3  | )            |
| Other operating expense             | 4,752                           |         |    | 5,195        |          |    | (8.5   | )            |
| Total noninterest expense           | $                               | 32,594       |         |    | $             | 34,405       |   |    | (5.3 | )% |

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|                                                 |                    |              |                        |              |         |              |                      |        |              |        |              |       |   |
|-------------------------------------------------|--------------------|--------------|------------------------|--------------|---------|--------------|----------------------|--------|--------------|--------|--------------|-------|---|
|                                            | September 30, 2010 |         | December 31, 2009 |
|                                            | Balance            |    | % of Total   |         | Balance |    | % of Total |
| (dollars in thousands)                          |               |    |                   |         |    |    |                 |
| Agricultural                                    | $                  | 90,028       |                   |    | 9.4     | %            |                 | $      | 92,727       |   |    | 9.6   | % |
| Commercial and financial                        | 201,738            |         |              | 21.1         |    |         | 203,539              |   |    | 21.0   |         |
| Real estate:                                    |               |    |                   |         |    |    |                 |
| Construction, one- to four- family residential  | 20,637             |         |              | 2.2          |    |         | 20,785               |   |    | 2.1    |         |
| Construction, land development and commercial   | 52,202             |         |              | 5.4          |    |         | 58,652               |   |    | 6.1    |         |
| Mortgage, farmland                              | 85,203             |         |              | 8.9          |    |         | 88,747               |   |    | 9.2    |         |
| Mortgage, one- to four- family first liens      | 158,779            |         |              | 16.6         |    |         | 161,065              |   |    | 16.7   |         |
| Mortgage, one- to four- family junior liens     | 71,352             |         |              | 7.5          |    |         | 73,665               |   |    | 7.6    |         |
| Mortgage, multifamily                           | 32,478             |         |              | 3.4          |    |         | 32,455               |   |    | 3.3    |         |
| Mortgage, commercial                            | 205,849            |         |              | 21.5         |    |         | 196,025              |   |    | 20.3   |         |
| Loans to individuals                            | 22,962             |         |              | 2.4          |    |         | 23,262               |   |    | 2.4    |         |
| Obligations of state and political subdivisions | 15,096             |         |              | 1.6          |    |         | 16,076               |   |    | 1.7    |         |
| Total loans                                     | $                  | 956,324      |                   |    | 100.0   | %            |                 | $      | 966,998      |   |    | 100.0 | % |

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|                             |                     |              |                         |              |                             |              |        |              |   |        |        |
|-----------------------------|---------------------|--------------|-------------------------|--------------|-----------------------------|--------------|--------|--------------|---|--------|--------|
|                        | GrossCarryingAmount |    | AccumulatedAmortization |    | UnamortizedIntangibleAssets |
| (in thousands)              |                |    |                    |    |                        |
| September 30, 2010          |                |    |                    |    |                        |
| Other intangible assets:    |                |    |                    |    |                        |
| Insurance agency intangible | $                   | 1,320        |                    |    | $                           | 381          |   |    | $ | 939    |   |
| Core deposit premium        | 5,433               |         |               | 2,266        |                        |    | 3,167  |         |
| Trade name intangible       | 7,040               |         |               | —      |                        |    | 7,040  |         |
| Customer list intangible    | 330                 |         |               | 70           |                        |    | 260    |         |
|                        |                |         |                    |         |                        |
| Total                       | $                   | 14,123       |                    |    | $                           | 2,717        |   |    | $ | 11,406 |   |

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|                                                             |                       |           |                           |         |        |           |        |
|-------------------------------------------------------------|-----------------------|-----------|---------------------------|---------|--------|-----------|--------|
|                                                        | At September 30, |      | At December 31, |
| (in thousands)                                              | 2010                  |      | 2009                      |
|                                                        |                  |      |                      |
| Tangible Common Equity:                                     |                  |      |                      |
| Total shareholders' equity                                  | $                     | 161,116   |                      |    | $      | 152,208   |   |
| Less: Preferred stock                                       | (15,749               | )         |                      | (15,699 | )      |
| Goodwill and intangibles                                    | (11,506               | )         |                      | (12,272 | )      |
|                                                        |                  |      |                      |
| Tangible common equity                                      | $                     | 133,861   |                      |    | $      | 124,237   |   |
|                                                        |                  |      |                      |
| Tangible Assets:                                            |                  |      |                      |
| Total assets                                                | $                     | 1,553,528 |                      |    | $      | 1,534,783 |   |
| Less: Goodwill and intangibles                              | (11,506               | )         |                      | (12,272 | )      |
|                                                        |                  |      |                      |
| Tangible assets                                             | $                     | 1,542,022 |                      |    | $      | 1,522,511 |   |
|                                                        |                  |      |                      |
| Tangible common equity to tangible assets                   | 8.68                  | %         |                      | 8.16    | %      |
|                                                        |                  |      |                      |
|                                                        |                  |      |                      |
|                                                        | At September 30, |      | At December 31, |
| (in thousands)                                              | 2010                  |      | 2009                      |
|                                                        |                  |      |                      |
| Tier 1 capital                                              |                  |      |                      |
| Total shareholders' equity                                  | $                     | 161,116   |                      |    | $      | 152,208   |   |
| Plus: Long term debt (qualifying restricted core capital)   | 15,464                |      |                      | 15,464  |   |
|                                                        |                  |      |                      |
| Less: Net unrealized gains on securities available for sale | (4,742                | )         |                      | (1,505  | )      |
| Disallowed goodwill and intangibles                         | (11,141               | )         |                      | (12,286 | )      |
|                                                        |                  |      |                      |
| Tier 1 capital                                              | $                     | 160,697   |                      |    | $      | 153,881   |   |
|                                                        |                  |      |                      |
| Risk-weighted assets                                        | $                     | 1,199,746 |                      |    | $      | 1,215,240 |   |
|                                                        |                  |      |                      |
| Tier 1 capital to risk-weighted assets                      | 13.39                 | %         |                      | 12.66   | %      |

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|                                                                                               |         |              |                                                  |              |                                                       |              |        |        |              |              |              |        |                 |         |                 |                                   |              |                                   |        |  |
|-----------------------------------------------------------------------------------------------|---------|--------------|--------------------------------------------------|--------------|-------------------------------------------------------|--------------|--------|--------|--------------|--------------|--------------|--------|-----------------|---------|-----------------|-----------------------------------|--------------|-----------------------------------|--------|--|
|                                                                                          | Actual  |         | Minimum Requiredfor CapitalAdequacyPurposes |         | Minimum Requiredto be Well Capitalized |
|                                                                                          | Amount  |    | Ratio                                            |         | Amount                                                |    | Ratio  |   | Amount       |    | Ratio        |
| (dollars in thousands)                                                                        |    |    |                                             |         |                                                  |    |   |   |         |    |         |
| September 30, 2010:                                                                           |    |    |                                             |         |                                                  |    |   |   |         |    |         |
| Total risk-based capital to risk-weighted assets:                                             |    |    |                                             |         |                                                  |    |   |   |         |    |         |
| Consolidated                                                                                  | $       | 175,799      |                                             |    | 14.65                                                 | %            |   | $      | 95,980       |         |    | 8.00   | %               |    | N/A   |                              |    | N/A      |   |
| MidWestOne Bank                                                                               | 151,531 |         |                                        | 12.83        | %                                                     |         | 94,499 |   |    | 8.00         | %            |   | $               | 118,124 |            |                         | 10.00        | %                                 |
| Tier 1 capital to risk-weighted assets:                                                       |    |    |                                             |         |                                                  |    |   |   |         |    |         |
| Consolidated                                                                                  | 160,697 |         |                                        | 13.39        | %                                                     |         | 47,990 |   |    | 4.00         | %            |   | N/A   |    |       | N/A      |         |
| MidWestOne Bank                                                                               | 136,740 |         |                                        | 11.58        | %                                                     |         | 47,249 |   |    | 4.00         | %            |   | 70,874          |    |       | 6.00                              | %            |
| Tier 1 capital to average assets:                                                             |    |    |                                             |         |                                                  |    |   |   |         |    |         |
| Consolidated                                                                                  | 160,697 |         |                                        | 10.52        | %                                                     |         | 61,085 |   |    | 4.00         | %            |   | N/A   |    |       | N/A      |         |
| MidWestOne Bank                                                                               | 136,740 |         |                                        | 8.85         | %                                                     |         | 61,774 |   |    | 4.00         | %            |   | 77,217          |    |       | 5.00                              | %            |
|                                                                                          |    |         |                                             |         |                                                  |         |   |   |         |         |         |
| December 31, 2009:                                                                       |    |    |                                             |         |                                                  |    |   |   |         |    |         |
| Total risk-based capital to risk-weighted assets:                                             |    |    |                                             |         |                                                  |    |   |   |         |    |         |
| Consolidated                                                                                  | $       | 169,149      |                                             |    | 13.92                                                 | %            |   | $      | 97,219       |         |    | 8.00   | %               |    | N/A   |                              |    | N/A      |   |
| MidWestOne Bank                                                                               | 156,413 |         |                                        | 12.94        | %                                                     |         | 96,727 |   |    | 8.00         | %            |   | $               | 120,909 |            |                         | 10.00        | %                                 |
| Tier 1 capital to risk-weighted assets:                                                       |    |    |                                             |         |                                                  |    |   |   |         |    |         |
| Consolidated                                                                                  | 153,881 |         |                                        | 12.66        | %                                                     |         | 48,610 |   |    | 4.00         | %            |   | N/A   |    |       | N/A      |         |
| MidWestOne Bank                                                                               | 141,287 |         |                                        | 11.69        | %                                                     |         | 48,363 |   |    | 4.00         | %            |   | 72,545          |    |       | 6.00                              | %            |
| Tier 1 capital to average assets:                                                             |    |    |                                             |         |                                                  |    |   |   |         |    |         |
| Consolidated                                                                                  | 153,881 |         |                                        | 10.01        | %                                                     |         | 61,505 |   |    | 4.00         | %            |   | N/A   |    |       | N/A      |         |
| MidWestOne Bank                                                                               | 141,287 |         |                                        | 9.23         | %                                                     |         | 61,215 |   |    | 4.00         | %            |   | 76,518          |    |       | 5.00                              | %            |
|                                                                                          |    |         |                                             |         |                                                  |         |   |   |         |         |         |
| N/A - Minimum to be considered well capitalized is not applicable to the consolidated entity. |    |         |

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|        |                         |                           |        |        |        |        |        |        |        |        |        |    |        |   |        |   |        |
|--------|-------------------------|---------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|----|--------|---|--------|---|--------|
|   |                    | Immediate Change in Rates |   |
|   |                    | -200                      |   | -100   |   | +100   |   | +200   |   |
|   | (dollars in thousands)  |                      |   |   |   |   |   |   |   |
|   | September 30, 2010 |                      |   |   |   |   |   |   |   |
|   | Dollar change           | $                         | 1,640  |   |   | $      | 817    |   |   | $      | (1,178 | )  |   | $ | (1,331 | ) |   |
|   | Percent change          | 3.4                       | %      |   | 1.7    | %      |   | (2.4   | )%     |   | (2.8   | )% |   |
|   |                    |                      |   |   |   |   |   |   |   |
|   | December 31, 2009  |                      |   |   |   |   |   |   |   |
|   | Dollar change           | $                         | 885    |   |   | $      | 1,373  |   |   | $      | (1,995 | )  |   | $ | (3,310 | ) |   |
|   | Percent change          | 1.8                       | %      |   | 2.8    | %      |   | (4.1   | )%     |   | (6.8   | )% |   |

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|               |              |              |                                                                                                                                                                  |                               |                |
|---------------|--------------|--------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------------------------|----------------|
| ExhibitNumber |    | Description  |                                                                                                                                                        | Incorporated by Reference to: |
|          |         |         |
| 31.1          |         |    | Certification of Chief Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a)                                                                 |                     | Filed herewith |
|          |         |         |
| 31.2          |         |    | Certification of Chief Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a)                                                                 |                     | Filed herewith |
|          |         |         |
| 32.1          |         |    | Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |                     | Filed herewith |
|          |         |         |
| 32.2          |         |    | Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |                     | Filed herewith |

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|        |                       |        |                                            |        |                                                      |        |        |
|--------|-----------------------|--------|--------------------------------------------|--------|------------------------------------------------------|--------|--------|
|   |                  |   | MIDWESTONE FINANCIAL GROUP, INC. |   |                                                 |
|   |                  |   |                                       |   |                                                 |   |
| Dated: | November 3, 2010 |   | By:                                        |   | /s/ CHARLES N. FUNK                             |   |   |
|   |                  |   |                                       |   | Charles N. Funk                                      |   |   |
|   |                  |   |                                       |   | President and Chief Executive Officer                |   |
|   |                  |   |                                       |   |                                                 |   |
|   |                  |   | By:                                        |   | /s/ GARY J. ORTALE                              |   |   |
|   |                  |   |                                       |   | Gary J. Ortale                                       |   |   |
|   |                  |   |                                       |   | Executive Vice President and Chief Financial Officer |   |