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

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

| MISSISSIPPI                                                   | 64-0636653                           |
|---------------------------------------------------------------|--------------------------------------|
| (State or other jurisdiction of                               | (I.R.S. Employer Identification No.) |
| incorporation or organization)                                |                                 |
|                                                          |                                 |
| 134 West Washington Street,  Kosciusko, Mississippi | 39090                                |
| (Address of principal executive offices)                      | (Zip Code)                           |

| Common Stock, $5 par value | The NASDAQ Stock Market LLC                 |
|----------------------------|---------------------------------------------|
| (Title of each class)      | (Name of each exchange on which registered) |

| Common stock, $5 par value | 9,106,803 Shares                       |
|----------------------------|----------------------------------------|
| Title of Class             | Shares Outstanding at January 31, 2011 |

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|     |                                                                                                               |   | Page   |
|----------|--------------------------------------------------------------------------------------------------------------------|--------|--------|
| PART I   |                                                                                                               |   |   |
|     |                                                                                                               |   |   |
| Item 1   | Business                                                                                                           |   | 3      |
| Item 1A  | Risk Factors                                                                                                       |   | 13     |
| Item 1B  | Unresolved Staff Comments                                                                                          |   | 15     |
| Item 2   | Properties                                                                                                         |   | 15     |
| Item 3   | Legal Proceedings                                                                                                  |   | 15     |
| Item 4   | Reserved                                                                                                           |   |   |
|     |                                                                                                               |   |   |
| PART II  |                                                                                                               |   |   |
|     |                                                                                                               |   |   |
| Item 5   | Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities |   | 16     |
| Item 6   | Selected Financial Data                                                                                            |   | 19     |
| Item 7   | Management’s Discussion and Analysis of Financial Condition and Results of Operations                        |   | 20     |
| Item 7A  | Quantitative and Qualitative Disclosures About Market Risk                                                         |   | 49     |
| Item 8   | Financial Statements and Supplementary Data                                                                        |   | 50     |
| Item 9   | Changes in and Disagreements With Accountants on Accounting and Financial Disclosure                               |   | 107    |
| Item 9A  | Controls and Procedures                                                                                            |   | 107    |
| Item 9B  | Other Information                                                                                                  |   | 107    |
|     |                                                                                                               |   |   |
| PART III |                                                                                                               |   |   |
|     |                                                                                                               |   |   |
| Item 10  | Directors, Executive Officers and Corporate Governance                                                             |   | 108    |
| Item 11  | Executive Compensation                                                                                             |   | 108    |
| Item 12  | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters                     |   | 108    |
| Item 13  | Certain Relationships and Related Transactions and Director Independence                                           |   | 108    |
| Item 14  | Principal Accounting Fees and Services                                                                             |   | 108    |
|     |                                                                                                               |   |   |
| PART IV  |                                                                                                               |   |   |
|     |                                                                                                               |   |   |
| Item 15  | Exhibits                                                                                                           |   | 109    |

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

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

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

|   | · | Return on assets for 2010 was 0.25% while the return on equity was 3.74%. Return on assets for 2009 was (3.63)% while the return on equity was (42.97)%. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Debit card revenues grew by 9.44%, composing 26.96% of deposit revenues |
|--------|--------|-------------------------------------------------------------------------|

|   | · | Mortgage banking revenues decreased by 13.27% in 2010 after increasing by 51.66% in 2009 |
|--------|--------|------------------------------------------------------------------------------------------|

|   | · | Mortgage originations were $80.139 million in 2010 as compared to $97.741 million in 2009 |
|--------|--------|-------------------------------------------------------------------------------------------|

|   | · | Property, casualty, life and health insurance commissions decreased from $3.810 million in 2009 to $3.796 million in 2010 |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------|

|   | · | Loans held for investment increased by 0.17% in 2010 due to the continuing effects of the general economic slowdown |
|--------|--------|---------------------------------------------------------------------------------------------------------------------|

|   | · | Church loan participations of $36.221 million were purchased in 2010 as a means to grow and diversify the loan portfolio |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------|

|   | · | Net charge offs, as a percentage of average loans, were 1.65% for 2010 compared to 4.50% for 2009 |
|--------|--------|---------------------------------------------------------------------------------------------------|

|   | · | Nonaccrual loans as a percentage of loans decreased to 3.11% at the end of 2010 from 4.17% at the end of 2009 |
|--------|--------|---------------------------------------------------------------------------------------------------------------|

|   | · | 90 day past due accruing loans as a percentage of loans decreased to .09% at the end of 2010 from .23% at the end of 2009 |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------|

|   | · | Foreclosed real estate balances were $31.125 million at the end of 2010 as compared to $23.578 million at the end of 2009 |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------|

|   | · | Foreclosed real estate of $15.877 million was sold during 2010 |
|--------|--------|----------------------------------------------------------------|

|   | · | Expenses related to foreclosed properties were $1.373 million in 2010 while losses incurred on foreclosed properties through sales and write-downs were $1.573 million as compared to expenses of $1.505 million and losses of $5.778 million in 2009 |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | As previously disclosed in the Company’s Current Report on Form 8-K filed October 5, 2010, the Company’s bank subsidiary was certified as a Community Development Financial Institution in September 2010, allowing it access to capital under the TARP Community Development Capital Initiative |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | In September 2010 the Company issued preferred stock with a 2% coupon pursuant to the Community Development Capital Initiative and exchanged it with the U.S. Treasury for its 5% coupon preferred stock originally issued in February 2009 pursuant to the TARP Capital Purchase Program |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | The Company remained well capitalized with a total risk-based capital ratio of 11.29% at the end of 2010 as compared to 11.09% at the end of 2009 |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------|

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|   | · | Continue to strengthen credit monitoring systems to provide proactive credit solutions |
|--------|--------|----------------------------------------------------------------------------------------|

|   | · | Continue to work on sales of real estate owned as well as to work with customers to dispose of real estate collateral and manage the level of nonperforming loans downward |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Build the capital strength and funding flexibility of the organization |
|--------|--------|------------------------------------------------------------------------|

|   | · | Continue to build core deposits around strong products like Summit Checking that provide a base upon which a portfolio of financial services can be provided |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Continue to diversify the loan portfolio into consumer and commercial loans that are not real estate dependent |
|--------|--------|----------------------------------------------------------------------------------------------------------------|

|   | · | Continue to increase the volumes and improve the products and services delivered through the insurance agencies and focus on branch referrals to enhance agency business |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Continue to build the retail investment brokerage business |
|--------|--------|------------------------------------------------------------|

|   | · | Use cost-saving initiatives to further reduce and control expenses in current operations |
|--------|--------|------------------------------------------------------------------------------------------|

|   | · | Promote low-cost delivery channels such as debit cards and electronic banking that are convenient to customers |
|--------|--------|----------------------------------------------------------------------------------------------------------------|

|   | · | Continue developing customer-friendly technologies such as deposit image capture for commercial customers, emailing of statements, enhanced internet banking capabilities and mobile banking |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Encourage customer use of more efficient technologies over labor-intensive processes by tying rates and benefits of deposit products to the use of internet and technology-based applications |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Enhance product offerings to and develop relationships with small business customers |
|--------|--------|--------------------------------------------------------------------------------------|

|   | · | Leverage our CDFI status to improve services and products offered to gain penetration in the Company’s target market |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------|

|   | · | Develop niche markets such as church and agricultural lending |
|--------|--------|---------------------------------------------------------------|

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|   | · | Asset-based deposit insurance assessments.  FDIC deposit insurance premium assessments will be based on bank assets rather than domestic deposits. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Deposit insurance limit increase.  The deposit insurance coverage limit has been permanently increased from $100,000 to $250,000. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Extension of Transaction Account Guarantee Program.  Unlimited deposit insurance coverage is extended for noninterest-bearing transaction accounts and certain other accounts for two years.  This applies to all banks; there is no opt-in or opt-out requirement. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Establishment of the Bureau of Consumer Financial Protection (CFPB).  The CFPB will be housed within the Federal Reserve and, in consultation with the Federal banking agencies, will make rules relating to consumer protection.  The CFPB has the authority, should it wish to do so, to rewrite virtually all of the consumer protection regulations governing banks, including those implementing the Truth in Lending Act, the Real Estate Settlement Procedures Act (or RESPA), the Truth in Savings Act, the Electronic Funds Transfer Act, the Equal Credit Opportunity Act, the Home Mortgage Disclosure Act, the S.A.F.E. Mortgage Licensing Act, the Fair Credit Reporting Act (except Sections 615(e) and 628), the Fair Debt Collection Practices Act, and the Gramm-Leach-Bliley Act (sections 502 through 509 relating to privacy), amongothers. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Risk-retention rule.  Banks originating loans for sale on the secondary market or securitization must retain 5 percent of any loan they sell or securitize, except for mortgages that meet low-risk standards to be developed by regulators. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | · | Limitation on federal preemption.  Limitations have been imposed on the ability of national bank regulators to preempt state law.  Formerly, the national bank and federal thrift regulators possessed preemption powers with regard to transactions, operating subsidiaries and attorney general civil enforcement authority.  These preemption requirements have been limited by the Dodd-Frank Act, which will likely impact state banks by affecting activities previously permitted through parity with national banks. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Changes to regulation of bank holding companies.  Under Dodd-Frank, bank holding companies must be well-capitalized and well-managed to engage in interstate transactions.  In the past, only the subsidiary banks were required to meet those standards.  The Federal Reserve Board’s “source of strength doctrine” has now been codified, mandating that bank holding companies such as the Company serve as a source of strength for their subsidiary banks, meaning that the bank holding company must be able to provide financial assistance in the event the subsidiary bank experiences financial distress. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Executive compensation limitations.  The Dodd-Frank Act codified executive compensation limitations similar to those previously imposed on TARP recipients. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| (Dollars in thousands)              |   | 2010    |      |   | 2009     |   |   | 2008   |   |
|-------------------------------------|--------|---------|-----------|--------|----------|--------|--------|--------|--------|
|                                |   | Average |      |   |     |   |   | Yield/ |   |   | Average |   |   |   |   |   | Yield/ |   |   | Average |   |   |   |   |   | Yield/ |   |
|                                |   | Balance |      |   | Interest |   |   | Cost   |   |   | Balance |   |   | Interest |   |   | Cost |   |   | Balance |   |   | Interest |   |   | Cost |   |
| Interest-bearing bank balances      |   | $       | 60,894    |   |     | $      | 143    |   |   |   | 0.23 | % |   | $ | 25,151 |   |   | $ | 42 |   |   |   | 0.17 | % |   | $ | 6,954 |   |   | $ | 133 |   |   |   | 1.91 | % |
| Federal funds sold                  |   |    | 35,642    |   |     |   | 82     |   |   |   | 0.23 |   |   |   | 43,871 |   |   |   | 95 |   |   |   | 0.22 |   |   |   | 9,810 |   |   |   | 182 |   |   |   | 1.86 |   |
| Taxable investments                 |   |    | 236,046   |   |     |   | 7,616  |   |   |   | 3.23 |   |   |   | 234,942 |   |   |   | 9,531 |   |   |   | 4.06 |   |   |   | 176,284 |   |   |   | 9,023 |   |   |   | 5.12 |   |
| Tax-exempt investments              |   |    | 41,347    |   |     |   | 2,470  |   |   |   | 5.97 |   |   |   | 56,021 |   |   |   | 3,357 |   |   |   | 5.99 |   |   |   | 55,990 |   |   |   | 3,451 |   |   |   | 6.16 |   |
| Loans                               |   |    | 1,052,883 |   |     |   | 62,501 |   |   |   | 5.94 |   |   |   | 1,130,428 |   |   |   | 67,290 |   |   |   | 5.95 |   |   |   | 1,206,798 |   |   |   | 81,972 |   |   |   | 6.79 |   |
| Total earning assets                |   |    | 1,426,812 |   |     |   | 72,812 |   |   |   | 5.10 |   |   |   | 1,490,413 |   |   |   | 80,315 |   |   |   | 5.39 |   |   |   | 1,455,836 |   |   |   | 94,761 |   |   |   | 6.51 |   |
| Nonearning assets                   |   |    | 164,130   |   |     |   |   |   |   |   |   |   |   |   | 154,747 |   |   |   |   |   |   |   |   |   |   |   | 165,867 |   |   |   |   |   |   |   |   |   |
| Total average assets                |   | $       | 1,590,942 |   |     |   |   |   |   |   |   |   |   | $ | 1,645,160 |   |   |   |   |   |   |   |   |   |   | $ | 1,621,703 |   |   |   |   |   |   |   |   |   |
|                                |   |    |      |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| NOW & MMDA                      |   |    | 473,010   |   |     |   | 5,062  |   |   |   | 1.07 |   |   |   | 447,909 |   |   |   | 5,839 |   |   |   | 1.30 |   |   |   | 388,588 |   |   |   | 7,336 |   |   |   | 1.89 |   |
| Savings deposits                    |   |    | 114,358   |   |     |   | 1,467  |   |   |   | 1.28 |   |   |   | 113,397 |   |   |   | 1,679 |   |   |   | 1.48 |   |   |   | 115,027 |   |   |   | 2,645 |   |   |   | 2.30 |   |
| Certificates of deposit             |   |    | 544,192   |   |     |   | 12,280 |   |   |   | 2.26 |   |   |   | 569,623 |   |   |   | 16,183 |   |   |   | 2.84 |   |   |   | 587,695 |   |   |   | 22,274 |   |   |   | 3.79 |   |
| Short-term borrowings               |   |    | 19,112    |   |     |   | 66     |   |   |   | 0.35 |   |   |   | 10,448 |   |   |   | 97 |   |   |   | 0.93 |   |   |   | 13,860 |   |   |   | 327 |   |   |   | 2.36 |   |
| Other borrowings                    |   |    | 102,112   |   |     |   | 5,016  |   |   |   | 4.91 |   |   |   | 165,548 |   |   |   | 7,441 |   |   |   | 4.49 |   |   |   | 186,978 |   |   |   | 8,710 |   |   |   | 4.66 |   |
| Total interest-bearing liabilities  |   |    | 1,252,784 |   |     |   | 23,891 |   |   |   | 1.91 |   |   |   | 1,306,925 |   |   |   | 31,239 |   |   |   | 2.39 |   |   |   | 1,292,148 |   |   |   | 41,292 |   |   |   | 3.20 |   |
| Noninterest-bearing deposits        |   |    | 222,083   |   |     |   |   |   |   |   |   |   |   |   | 190,541 |   |   |   |   |   |   |   |   |   |   |   | 179,237 |   |   |   |   |   |   |   |   |   |
| Noninterest-bearing liabilities     |   |    | 8,909     |   |     |   |   |   |   |   |   |   |   |   | 8,538 |   |   |   |   |   |   |   |   |   |   |   | 8,312 |   |   |   |   |   |   |   |   |   |
| Capital                             |   |    | 107,166   |   |     |   |   |   |   |   |   |   |   |   | 139,156 |   |   |   |   |   |   |   |   |   |   |   | 142,006 |   |   |   |   |   |   |   |   |   |
| Total avg. liabilities & equity |   | $       | 1,590,942 |   |     |   |   |   |   |   |   |   |   | $ | 1,645,160 |   |   |   |   |   |   |   |   |   |   | $ | 1,621,703 |   |   |   |   |   |   |   |   |   |
| Net interest margin                 |   |    |      |   |     |   | 48,921 |   |   |   | 3.43 |   |   |   |   |   |   |   | 49,076 |   |   |   | 3.29 |   |   |   |   |   |   |   | 53,469 |   |   |   | 3.67 |   |
| Less tax equivalent adjustment      |   |    |      |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Investments                         |   |    |      |   |     |   | 921    |   |   |   | 0.06 |   |   |   |   |   |   |   | 1,252 |   |   |   | 0.08 |   |   |   |   |   |   |   | 1,287 |   |   |   | 0.09 |   |
| Loans                               |   |    |      |   |     |   | 199    |   |   |   | 0.02 |   |   |   |   |   |   |   | 230 |   |   |   | 0.02 |   |   |   |   |   |   |   | 186 |   |   |   | 0.01 |   |
| Reported book net interest margin   |   |    |      |   |     | $      | 47,801 |   |   |   | 3.35 | % |   |   |   |   |   | $ | 47,594 |   |   |   | 3.19 | % |   |   |   |   |   | $ | 51,996 |   |   |   | 3.57 | % |
|                                |   |    |      |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

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|                                               |   | 2010 Compared To 2009      |   |   | 2009 Compared To 2008      |   |
|---------------------------------------------------------|--------|----------------------------|--------|--------|----------------------------|--------|
| (Dollars in thousands)                                  |   | Increase (Decrease) Due To |   |   | Increase (Decrease) Due To |   |
|                                                    |   |                       |   |   | Yield/                     |   |   |   |   |   |   |   |   | Yield/ |   |   |   |   |
|                                                    |   | Volume                     |   |   | Cost                       |   |   | Net |   |   | Volume |   |   | Cost |   |   | Net |   |
| Interest earned on:                                     |   |                       |   |   |                       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-bearing bank balances                          |   | $                          | 72     |   |                       | $      | 29 |   |   | $ | 101 |   |   | $ | 189 |   |   | $ | (280 | ) |   | $ | (91 | ) |
| Federal funds sold                                      |   |                       | (18    | )      |                       |   | 5 |   |   |   | (13 | ) |   |   | 353 |   |   |   | (440 | ) |   |   | (87 | ) |
| Taxable investments                                     |   |                       | 40     |   |                       |   | (1,955 | ) |   |   | (1,915 | ) |   |   | 2,691 |   |   |   | (2,183 | ) |   |   | 508 |   |
| Tax-exempt investments                                  |   |                       | (878   | )      |                       |   | (9 | ) |   |   | (887 | ) |   |   | 2 |   |   |   | (96 | ) |   |   | (94 | ) |
| Loans                                                   |   |                       | (4,610 | )      |                       |   | (179 | ) |   |   | (4,789 | ) |   |   | (4,867 | ) |   |   | (9,815 | ) |   |   | (14,682 | ) |
|    Total earning assets                  |   |                       | (3,336 | )      |                       |   | (4,167 | ) |   |   | (7,503 | ) |   |   | 2,057 |   |   |   | (16,503 | ) |   |   | (14,446 | ) |
|                                                    |   |                       |   |   |                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest paid on:                                       |   |                       |   |   |                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| NOW & MMDA                                          |   |                       | 298    |   |                       |   | (1,075 | ) |   |   | (777 | ) |   |   | 947 |   |   |   | (2,444 | ) |   |   | (1,497 | ) |
| Savings deposits                                        |   |                       | 13     |   |                       |   | (225 | ) |   |   | (212 | ) |   |   | (31 | ) |   |   | (935 | ) |   |   | (966 | ) |
| Certificates of deposit                                 |   |                       | (648   | )      |                       |   | (3,255 | ) |   |   | (3,903 | ) |   |   | (599 | ) |   |   | (5,492 | ) |   |   | (6,091 | ) |
| Short-term borrowings                                   |   |                       | 55     |   |                       |   | (86 | ) |   |   | (31 | ) |   |   | (56 | ) |   |   | (174 | ) |   |   | (230 | ) |
| Other borrowings                                        |   |                       | (2,984 | )      |                       |   | 559 |   |   |   | (2,425 | ) |   |   | (981 | ) |   |   | (288 | ) |   |   | (1,269 | ) |
| Total interest-bearing liabilities                      |   |                       | (1,163 | )      |                       |   | (6,185 | ) |   |   | (7,348 | ) |   |   | 413 |   |   |   | (10,466 | ) |   |   | (10,053 | ) |
| Change in net interest income on a tax-equivalent basis |   | $                          | (2,173 | )      |                       | $      | 2,018 |   |   | $ | (155 | ) |   | $ | 1,644 |   |   | $ | (6,037 | ) |   | $ | (4,393 | ) |
|                                                    |   |                       |   |   |                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

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|                                             |   | Carrying Value of Securities |    |
|--------------------------------------------------|--------|------------------------------|---------|
|                                             |   | December 31                  |    |
| (Dollars in thousands)                           |   | 2010                         |    |   | 2009 |   |   | 2008 |   |
| Securities Available For Sale                    |   |                         |    |   |   |   |   |   |   |
| U.S. Treasury                                    |   | $                            | -       |   |   | $ | 517 |   |   | $ | 543 |   |
| U.S. Government sponsored entities               |   |                         | 58,611  |   |   |   | 55,161 |   |   |   | 8,397 |   |
| Mortgage-backed securities                       |   |                         | 173,921 |   |   |   | 167,875 |   |   |   | 145,362 |   |
| Obligations of states and political subdivisions |   |                         | 41,828  |   |   |   | 56,586 |   |   |   | 64,829 |   |
| Other securities                                 |   |                         | 2,569   |   |   |   | 4,411 |   |   |   | 8,014 |   |
|                                             |   |                         |    |   |   |   |   |   |   |   |   |   |
| Total securities available for sale              |   | $                            | 276,929 |   |   | $ | 284,550 |   |   | $ | 227,145 |   |

|                                             |   | Amortized Cost of Securities |    |
|--------------------------------------------------|--------|------------------------------|---------|
|                                             |   | December 31                  |    |
|                                             |   | 2010                         |    |   | 2009 |   |   | 2008 |   |
| Securities Available For Sale                    |   |                         |    |   |   |   |   |   |   |
| U.S. Treasury                                    |   | $                            | -       |   |   | $ | 503 |   |   | $ | 509 |   |
| U.S. Government sponsored entities               |   |                         | 58,152  |   |   |   | 54,746 |   |   |   | 8,089 |   |
| Mortgage-backed securities                       |   |                         | 170,039 |   |   |   | 162,647 |   |   |   | 141,688 |   |
| Obligations of states and political subdivisions |   |                         | 40,924  |   |   |   | 55,153 |   |   |   | 64,357 |   |
| Other securities                                 |   |                         | 5,306   |   |   |   | 7,421 |   |   |   | 9,239 |   |
|                                             |   |                         |    |   |   |   |   |   |   |   |   |   |
| Total securities available for sale              |   | $                            | 274,421 |   |   | $ | 280,470 |   |   | $ | 223,882 |   |

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|                                        |   |   |   |   |   |   |   | After One  |   |   |    |   |   |       |   |   |   |   |   |      |   |   |   |   |   |   |   |   |   |   |
|--------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|------------|--------|--------|---------|--------|--------|------------|--------|--------|--------|--------|--------|-----------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
|                                             |   | Within |   |   |   |   |   | But Within |   |   |    |   |   | After Five |   |   |   |   |   |      |   |   |   |   |   |   |   |   |   |   |
| (Dollars in thousands)                           |   | One    |   |   |   |   |   | Five       |   |   |    |   |   | But Within |   |   |   |   |   | Over      |   |   |   |   |   |   |   |   |   |   |
|                                             |   | Year   |   |   | Yield  |   |   | Years      |   |   | Yield   |   |   | Ten Years  |   |   | Yield  |   |   | Ten Years |   |   | Yield  |   |   | Total  |   |   | Yield  |   |
| Securities Available For Sale                    |   |   |   |   |   |   |   |       |   |   |    |   |   |       |   |   |   |   |   |      |   |   |   |   |   |   |   |   |   |   |
| U.S. Government sponsored entities               |   | $      | 25,393 |   |   |   | 1.80   | %          |   | $      | 32,647  |   |   |       | 2.12   | %      |   | $      | 571    |      |   |   | 2.51   | %      |   | $      | -      |   |   |   | - | % |   | $ | 58,611 |   |   |   | 1.99 | % |
| Mortgage-backed securities                       |   |   | 62,589 |   |   |   | 3.76   |       |   |   | 67,925  |   |   |       | 3.86   |   |   |   | 18,915 |      |   |   | 3.07   |   |   |   | 24,492 |   |   |   | 3.63 |   |   |   | 173,921 |   |   |   | 3.71 |   |
| Obligations of states and political subdivisions |   |   | 6,913  |   |   |   | 6.22   |       |   |   | 18,750  |   |   |       | 6.17   |   |   |   | 15,307 |      |   |   | 6.30   |   |   |   | 858    |   |   |   | 9.51 |   |   |   | 41,828 |   |   |   | 6.29 |   |
| Other debt securities                            |   |   | 260    |   |   |   | 5.49   |       |   |   | 1,375   |   |   |       | 5.52   |   |   |   | -      |      |   |   | -      |   |   |   | 934    |   |   |   | 1.44 |   |   |   | 2,569 |   |   |   | 4.04 |   |
| Total debt securities available for sale         |   | $      | 95,155 |   |   |   | 3.42   | %          |   | $      | 120,697 |   |   |       | 3.77   | %      |   | $      | 34,793 |      |   |   | 4.48   | %      |   | $      | 26,284 |   |   |   | 3.74 | % |   | $ | 276,929 |   |   |   | 3.74 | % |
|                                             |   |   |   |   |   |   |   |       |   |   |    |   |   |       |   |   |   |   |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

----

----

|                              |   | 2010   |      |   | 2009   |   |   | 2008   |   |   | 2007      |   |   | 2006   |   |
|----------------------------------------|--------|--------|-----------|--------|--------|--------|--------|--------|--------|--------|-----------|--------|--------|--------|--------|
| (Dollars in                            |   |   |      |   | % Of   |   |   |   |   |   | % Of      |   |   |   |   |   | % Of |   |   |   |   |   | % Of |   |   |   |   |   | % Of |   |
| thousands)                             |   | Amount |      |   | Total  |   |   | Amount |   |   | Total     |   |   | Amount |   |   | Total |   |   | Amount |   |   | Total |   |   | Amount |   |   | Total |   |
| Held For Investment:                   |   |   |      |   |   |   |   |   |   |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commercial, financial and agricultural |   | $      | 133,226   |   |   |   | 12.57  | %      |   | $      | 129,571   |   |   |   | 12.24  | % |   | $ | 136,795 |   |   |   | 11.62 | % |   | $ | 176,747 |   |   |   | 14.50 | % |   | $ | 156,613 |   |   |   | 14.41 | % |
| Non-residential real estate            |   |   | 646,731   |   |   |   | 61.00  |   |   |   | 643,804   |   |   |   | 60.83  |   |   |   | 745,699 |   |   |   | 63.39 |   |   |   | 731,595 |   |   |   | 59.99 |   |   |   | 621,841 |   |   |   | 57.19 |   |
| Residential real estate                |   |   | 235,489   |   |   |   | 22.21  |   |   |   | 239,921   |   |   |   | 22.67  |   |   |   | 255,488 |   |   |   | 21.71 |   |   |   | 269,601 |   |   |   | 22.11 |   |   |   | 262,046 |   |   |   | 24.10 |   |
| Consumer loans                         |   |   | 44,700    |   |   |   | 4.22   |   |   |   | 45,044    |   |   |   | 4.26   |   |   |   | 38,613 |   |   |   | 3.28 |   |   |   | 41,492 |   |   |   | 3.40 |   |   |   | 46,514 |   |   |   | 4.28 |   |
| Lease financing                        |   |   | -         |   |   |   | -      |   |   |   | -         |   |   |   | -      |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 269 |   |   |   | 0.02 |   |
| Total loans                            |   | $      | 1,060,146 |   |   |   | 100.00 | %      |   | $      | 1,058,340 |   |   |   | 100.00 | % |   | $ | 1,176,595 |   |   |   | 100.00 | % |   | $ | 1,219,435 |   |   |   | 100.00 | % |   | $ | 1,087,283 |   |   |   | 100.00 | % |
|                                   |   |   |      |   |   |   |   |   |   |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loans held for sale                    |   | $      | 6,242     |   |   |   |   |   |   | $      | 10,266    |   |   |   |   |   |   | $ | 7,698 |   |   |   |   |   |   | $ | 5,571 |   |   |   |   |   |   | $ | 7,263 |   |   |   |   |   |

----

----

| Maturity distribution of loans at December 31, 2010 |   | Within   |    |   | One to Five |        |    | After Five |       |   |    |   |
|-----------------------------------------------------|--------|----------|---------|--------|-------------|-------------|---------|------------|------------|--------|---------|--------|
| (Dollars in thousands)                              |   | One Year |    |   | Years       |        |    | Years      |       |   | Total   |   |
|                                                |   |     |    |   |        |        |    |       |       |   |    |   |
| Commercial, financial and agricultural              |   | $        | 79,993  |   |        | $           | 49,314  |       |       | $      | 3,919   |   |   | $ | 133,226 |   |
| Non-residential real estate                         |   |     | 150,308 |   |        |        | 425,403 |       |       |   | 71,020  |   |   |   | 646,731 |   |
| Residential real estate                             |   |     | 33,265  |   |        |        | 101,033 |       |       |   | 101,191 |   |   |   | 235,489 |   |
| Consumer loans                                      |   |     | 9,838   |   |        |        | 34,330  |       |       |   | 532     |   |   |   | 44,700 |   |
| Total loans                                         |   | $        | 273,404 |   |        | $           | 610,080 |       |       | $      | 176,662 |   |   | $ | 1,060,146 |   |
|                                                |   |     |    |   |        |        |    |       |       |   |    |   |   |   |   |   |
| Rate sensitivity of loans at December 31, 2010      |   |     |    |   |        | One to Five |    |       | After Five |   |    |   |   |   |
|                                                |   |     |    |   |        | Years       |    |       | Years      |   |    | Total  |   |
|                                                |   |     |    |   |        |        |    |       |       |   |    |   |   |   |   |   |
| Fixed rate loans                                    |   |     |    |   |        | $           | 591,735 |       |       | $      | 146,795 |   |   | $ | 738,530 |   |
| Floating rate loans                                 |   |     |    |   |        |        | 18,345  |       |       |   | 29,867  |   |   |   | 48,212 |   |
| Total                                               |   |     |    |   |        | $           | 610,080 |       |       | $      | 176,662 |   |   | $ | 786,742 |   |

----

----

| (Dollars in thousands)                                                                                  |   | 2010   |   |   | 2009   |   |   | 2008   |   |   | 2007   |   |   | 2006   |   |
|---------------------------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Nonaccrual loans                                                                                        |   | $      | 33,127 |   |   | $      | 44,549 |   |   | $      | 20,564 |   |   | $      | 6,524  |   |   | $ | 3,557 |   |
| Other real estate owned                                                                                 |   |   | 31,125 |   |   |   | 23,578 |   |   |   | 11,061 |   |   |   | 6,232  |   |   |   | 3,135 |   |
| Investment securities                                                                                   |   |   | 698    |   |   |   | 825    |   |   |   | -      |   |   |   | -      |   |   |   | - |   |
| Total nonperforming assets                                                                              |   | $      | 64,950 |   |   | $      | 68,952 |   |   | $      | 31,625 |   |   | $      | 12,756 |   |   | $ | 6,692 |   |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Accruing loans past due 90 days or more                                                                 |   |   | 951    |   |   |   | 2,479  |   |   |   | 5,686  |   |   |   | 1,093  |   |   |   | 376 |   |
| Restructured loans (accruing)                                                                           |   |   | 18,052 |   |   |   | 4,620  |   |   |   | 3,664  |   |   |   | -      |   |   |   | - |   |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest income that would have been recorded on nonaccrual loans if they had been current and accruing |   | $      | 2,128  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest that was recorded in the financial statements for loans that were on nonaccrual status         |   | $      | 250    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

----

----

| (Dollars in thousands)                 |   | 2010   |    |   | 2009   |   |    | 2008   |   |   | 2007   |   |   | 2006   |   |
|----------------------------------------|--------|--------|---------|--------|--------|--------|---------|--------|--------|--------|--------|--------|--------|--------|--------|
|                                   |   |   |    |   |   |   |    |   |   |   |   |   |   |   |   |
| Balance at beginning of year           |   | $      | 24,014  |   |   | $      | 24,918  |   |   | $      | 14,217 |   |   | $      | 14,950 |   |   | $ | 12,449 |   |
| Adjustment for purchase acquisition    |   |   | -       |   |   |   | -       |   |   |   | -      |   |   |   | -      |   |   |   | 2,234 |   |
| Charge offs:                           |   |   |    |   |   |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commercial, financial and agricultural |   |   | (3,617  | )      |   |   | (4,605  | )      |   |   | (993   | )      |   |   | (762   | ) |   |   | (767 | ) |
| Real estate – nonresidential     |   |   | (13,325 | )      |   |   | (42,133 | )      |   |   | (5,235 | )      |   |   | (1,223 | ) |   |   | (282 | ) |
| Real estate – residential        |   |   | (1,854  | )      |   |   | (3,409  | )      |   |   | (1,968 | )      |   |   | (1,581 | ) |   |   | (1,512 | ) |
| Consumer                               |   |   | (859    | )      |   |   | (1,093  | )      |   |   | (1,510 | )      |   |   | (1,178 | ) |   |   | (1,264 | ) |
| Total                                  |   |   | (19,655 | )      |   |   | (51,240 | )      |   |   | (9,706 | )      |   |   | (4,744 | ) |   |   | (3,825 | ) |
| Recoveries:                            |   |   |    |   |   |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commercial, financial and agricultural |   |   | 281     |   |   |   | 169     |   |   |   | 75     |   |   |   | 373    |   |   |   | 256 |   |
| Real estate – nonresidential     |   |   | 1,798   |   |   |   | 174     |   |   |   | 135    |   |   |   | 666    |   |   |   | 228 |   |
| Real estate – residential        |   |   | 121     |   |   |   | 47      |   |   |   | 67     |   |   |   | 25     |   |   |   | 102 |   |
| Consumer                               |   |   | 246     |   |   |   | 345     |   |   |   | 396    |   |   |   | 427    |   |   |   | 474 |   |
| Total                                  |   |   | 2,446   |   |   |   | 735     |   |   |   | 673    |   |   |   | 1,491  |   |   |   | 1,060 |   |
| Net charge-offs                        |   |   | (17,209 | )      |   |   | (50,505 | )      |   |   | (9,033 | )      |   |   | (3,253 | ) |   |   | (2,765 | ) |
| Provision for loan losses              |   |   | 9,220   |   |   |   | 49,601  |   |   |   | 19,734 |   |   |   | 2,520  |   |   |   | 3,032 |   |
| Balance at end of year                 |   | $      | 16,025  |   |   | $      | 24,014  |   |   | $      | 24,918 |   |   | $      | 14,217 |   |   | $ | 14,950 |   |
|                                   |   |   |    |   |   |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net Charge-Offs To Average Loans       |   |   | 1.65    | %      |   |   | 4.50    | %      |   |   | 0.75   | %      |   |   | 0.28   | % |   |   | 0.26 | % |

----

----

|                                   |   | December 31 |   |
|----------------------------------------|--------|-------------|--------|
| (Dollars in thousands)                 |   | 2010        |   |   | 2009 |   |   | 2008 |   |   | 2007 |   |   | 2006 |   |
|                                   |   |        |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commercial, financial and agricultural |   | $           | 4,442  |   |   | $ | 5,893 |   |   | $ | 6,815 |   |   | $ | 6,953 |   |   | $ | 7,540 |   |
| Non-residential real estate            |   |        | 6,705  |   |   |   | 13,375 |   |   |   | 13,129 |   |   |   | 3,094 |   |   |   | 3,095 |   |
| Residential real estate                |   |        | 3,701  |   |   |   | 3,407 |   |   |   | 1,634 |   |   |   | 1,936 |   |   |   | 1,865 |   |
| Consumer loans                         |   |        | 1,177  |   |   |   | 1,339 |   |   |   | 3,340 |   |   |   | 2,234 |   |   |   | 2,450 |   |
| Total loans                            |   | $           | 16,025 |   |   | $ | 24,014 |   |   | $ | 24,918 |   |   | $ | 14,217 |   |   | $ | 14,950 |   |

|                                     |   | December 31 |   |
|------------------------------------------|--------|-------------|--------|
| Allowance As A Percentage Of Loan Type   |   | 2010        |   |   | 2009 |   |   | 2008 |   |   | 2007 |   |   | 2006 |   |
|                                     |   |        |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commercial, financial and agricultural   |   |        | 3.33   | % |   |   | 4.55 | % |   |   | 4.98 | % |   |   | 3.93 | % |   |   | 4.81 | % |
| Non-residential real estate              |   |        | 1.04   |   |   |   | 2.08 |   |   |   | 1.76 |   |   |   | 0.42 |   |   |   | 0.50 |   |
| Residential real estate                  |   |        | 1.57   |   |   |   | 1.42 |   |   |   | 0.64 |   |   |   | 0.72 |   |   |   | 0.71 |   |
| Consumer loans                           |   |        | 2.63   |   |   |   | 2.97 |   |   |   | 8.65 |   |   |   | 5.38 |   |   |   | 5.27 |   |
| Total loans                              |   |        | 1.51   | % |   |   | 2.27 | % |   |   | 2.12 | % |   |   | 1.17 | % |   |   | 1.37 | % |
|                                     |   |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net Charge-Offs As A Percent Of Year End |   | December 31 |   |
| Loans Outstanding, By Type               |   | 2010        |   |   | 2009 |   |   | 2008 |   |   | 2007 |   |   | 2006 |   |
|                                     |   |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commercial, financial and agricultural   |   |        | 2.50   | % |   |   | 3.42 | % |   |   | 0.67 | % |   |   | 0.22 | % |   |   | 0.33 | % |
| Non-residential real estate              |   |        | 1.78   |   |   |   | 6.52 |   |   |   | 0.68 |   |   |   | 0.08 |   |   |   | 0.01 |   |
| Residential real estate                  |   |        | 0.74   |   |   |   | 1.40 |   |   |   | 0.74 |   |   |   | 0.58 |   |   |   | 0.54 |   |
| Consumer loans                           |   |        | 1.37   |   |   |   | 1.66 |   |   |   | 2.89 |   |   |   | 1.81 |   |   |   | 1.70 |   |
| Total loans                              |   |        | 1.62   | % |   |   | 4.77 | % |   |   | 0.77 | % |   |   | 0.27 | % |   |   | 0.25 | % |

----

----

| Three months or less                  |   | $      | 26,354  |   |
|---------------------------------------|--------|--------|---------|--------|
| Over three months through six months  |   |   | 31,634  |   |
| Over six months through twelve months |   |   | 85,805  |   |
| Over one year                         |   |   | 102,641 |   |
|                                  |   |   |    |   |
| Total                                 |   | $      | 246,434 |   |

----

----

----

|                           |   | 2010   |   |   | 2009   |   |   | 2008   |   |
|--------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
|                           |   |   |   |   |   |   |   |   |   |
| Return on average assets       |   |   | 0.25   | %      |   |   | (3.63  | )%     |   |   | 0.03 | % |
| Return on average equity       |   |   | 3.74   |   |   |   | (42.97 | )      |   |   | 0.37 |   |
| Dividend payout ratio          |   |   | 2.41   |   |   |   | -      |   |   |   | 866.67 |   |
| Average equity to assets ratio |   |   | 6.74   |   |   |   | 8.46   |   |   |   | 8.76 |   |

----

----

| (Dollars in thousands)                                 |   |   |   |   |   |   |   |   |   |
|--------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
|                                                   |   | 2010   |   |   | 2009   |   |   | 2008   |   |
| Securities sold under agreements to repurchase         |   |   |   |   |   |   |   |   |   |
|                                                   |   |   |   |   |   |   |   |   |   |
| Outstanding at end of period                           |   | $      | 33,481 |   |   | $      | 8,642  |   |   | $ | 9,728 |   |
| Maximum outstanding at any month-end during the period |   |   | 41,897 |   |   |   | 12,985 |   |   |   | 20,879 |   |
| Average outstanding during the period                  |   |   | 19,112 |   |   |   | 10,331 |   |   |   | 12,876 |   |
| Interest paid                                          |   |   | 66     |   |   |   | 96     |   |   |   | 301 |   |
| Weighted average rate during each period               |   |   | 0.35   | %      |   |   | 0.93   | %      |   |   | 2.34 | % |
|                                                   |   |   |   |   |   |   |   |   |   |   |   |   |
| Federal funds purchased                                |   |   |   |   |   |   |   |   |   |   |   |   |
| Outstanding at end of period                           |   | $      | -      |   |   | $      | -      |   |   | $ | - |   |
| Maximum outstanding at any month-end during the period |   |   | -      |   |   |   | -      |   |   |   | 325 |   |
| Average outstanding during the period                  |   |   | -      |   |   |   | 117    |   |   |   | 984 |   |
| Interest paid                                          |   |   | -      |   |   |   | 1      |   |   |   | 26 |   |
| Weighted average rate during each period               |   |   | -      |   |   |   | 0.80   | %      |   |   | 2.62 | % |

|   | · | The Company owns $31.125 million in foreclosed other real estate properties. The ability of the Company to dispose of other real estate without incurring severe losses depends on the strength of the economy and especially the strength and liquidity of the real estate market. If the economy remains weak, the Company may not be able to sell some properties. A lack of sales of properties may prompt further write-downs in their values as they become stagnant and less marketable. An inability to sell foreclosed properties also impacts liquidity through a lack of positive cash flows. If properties take longer than expected to sell or become difficult to market, expenses related to the maintenance of those properties may continue or possibly increase. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | The credit quality of the loan portfolio depends on a strengthened economy, as the primary source of repayment for many loans is sales revenue. If the economy stagnates, then customers will have to turn to secondary sources of repayment which may be limited. This could lead to additional loan impairments and possible increases in loan charge-offs. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | The Company has a 61% concentration of commercial real estate loans in the loan portfolio. These loans are vulnerable to fluctuations and economic disruptions in the real estate-related sectors of the economy. Also included in the commercial real estate loan portfolio, representing 3.42% of the Company’s loan portfolio, is a group of predominately out-of-market purchased loan participations secured by church properties. The Company is vulnerable to economic or social events that could hurt the cash flows of the underlying church organizations. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Within the commercial loan portfolio the Company has a group of asset-based loans, some of which are outside of the Company’s banking markets, representing 2.65% of the Company’s loan portfolio. These loans are secured primarily by inventory and accounts receivable, are dependent on daily sales and accounts receivable collections, and require significant monitoring by the asset-based lending staff. Deterioration in economic conditions could significantly affect the collateral cash flows and result in impairments on these loans. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | · | Deposits generally reprice faster than loans. If interest rates increase significantly the Company may be vulnerable to interest expenses rising faster than interest revenues. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Another effect of rising interest rates is that fixed income securities will decrease in value. This could limit the Company’s ability to raise cash through investment security sales without incurring losses. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Increased interest rates may also slow down mortgage origination volumes, as mortgages become less affordable, resulting in lower noninterest revenues from mortgage activities. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Unfavorable judgments in ongoing litigation may result in additional expenses. |
|--------|--------|--------------------------------------------------------------------------------|

|   | · | Natural disasters could interrupt the ability of the Company to conduct business and could restrict our customers’ ability to generate cash flows, causing loan losses and losses of revenues. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Unanticipated catastrophic events could result in unusual loss claims that would reduce or eliminate the profit sharing revenues of the insurance agencies. Such claims may also affect the availability of insurance products for certain classes of customers, thereby reducing commission revenues available to the agencies. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Unforeseen new competition from outside the traditional financial services industry could constrain the Company’s ability to price its products profitably. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Investments in the portfolio of the Company’s pension plan may not provide adequate returns to fund plan termination obligations, thus causing higher annual plan expenses and requiring additional contributions by the Company. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | The Company’s stock is listed and traded on the NASDAQ Global Select Market. The Company depends on the liquidity of the NASDAQ Global Select Market to raise equity capital. If the market should fail to operate, the Company may be severely constrained in raising capital. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Due to its net operating losses and concentrations in real estate-related assets, the Company may not be financially attractive to investors.  This could prevent the Company from being able to raise additional capital if needed. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | The Company has analyst coverage, and therefore, downgrades in the Company’s prospects by an analyst may cause the Company’s stock price to fall and prevent the Company from being able to access the markets for additional capital. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | The Company is subject to the regulations of the Securities Exchange Commission (SEC), the Federal Reserve Board, the Federal Deposit Insurance Corporation, the Mississippi Department of Banking and Consumer Finance, and the Mississippi Department of Insurance. New regulations issued by these agencies may adversely affect the Company’s ability to carry on its business activities. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | The Company is subject to Federal and state laws and regulations such as labor, tax and environmental laws and regulations. Changes in these laws and regulations may adversely affect the Company’s operations or result in unanticipated penalties or other costs. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | The Company is subject to the accounting rules and regulations of the SEC and the Financial Accounting Standards Board. The Company may become subject to accounting rules that adversely affect the reported financial position or results of operations of the Company, or that require extraordinary efforts and additional costs to implement. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | · | In 2010 the Company redeemed its $30 million in preferred stock issued under the Capital Purchase Program (CPP) with $30 million in preferred stock issued under the CDCI program. Participation in this program constrains the Company’s ability to raise dividends and repurchase equity securities and also places certain constraints on executive compensation arrangements. The new funding, which carries a 2% dividend rate, takes the place of the CPP funding which provided assurance that the Company can maintain its minimum regulatory capital ratios in the face of possible future loan-related losses. The Company will have to repay these funds by raising capital within the next eight years to keep its dividend costs from increasing to 9% per annum. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | The rules that govern the CDCI include restrictions on certain compensation to executive officers and a number of others in the Company. Among other things, these rules preclude golden parachute payments, include prohibitions on providing tax gross-ups and include bonus claw-back provisions. It is possible that compensation restrictions imposed by the CDCI and the American Reinvestment and Recovery Act of 2009 could impede our ability to attract and retain qualified executive officers. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Our participation in the CDCI limits our annual dividend to no more than $.04 per share as long as the CDCI preferred stock remains outstanding and up until the eighth anniversary date of its issuance. Beginning on the eighth anniversary date and as long as the CDCI preferred stock is outstanding, the Company may not pay a corporate dividend without the consent of the Treasury Department. Our ability to repurchase our common stock is also restricted. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | The Company must be re-certified as a CDFI every three years by the Community Development Financial Institution Fund of the U.S. Treasury Department. In the event that the Company is not re-certified, and continues to be uncertified for 180 days, the dividend rate shall increase to 5%. If the Company continues to be uncertified for an additional 90 days, then the dividend rate shall increase to 9% until the Company becomes certified, at which time the dividend rate shall revert to its original 2% per annum. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | The Company must receive prior approval from the Federal Reserve to pay dividends on its common stock, to pay interest on outstanding trust preferred securities, to pay dividends on the CDCI preferred stock and to incur any additional debt. If the Company does not produce adequate financial performance then it is at risk of losing approval to make one or more of these payments or to obtain new borrowings. The loss of any of these permissions would subject the Company to much regulatory scrutiny and also impede its ability to obtain funding in the capital market. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | The Company has 20 years to generate net taxable earnings sufficient to absorb the $14.700 million in Federal and $19.004 million in Mississippi NOLs. If the Company cannot generate sufficient taxable earnings, then the NOLs will be lost. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | A disruption in the telecommunications network could interrupt the Company’s business for an unforeseeable amount of time in that it depends on these networks, which are outside of its control, to communicate information with its customers. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Hackers and others beyond the Company’s control could disrupt the Company’s information systems. Natural disasters, fires or electrical disasters could disrupt the Company’s information systems for an unforeseen time until its disaster recovery system could be initiated. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | If the Company does not meet certain covenants related to capital ratios and asset quality, then it is considered technically in default unless it receives a waiver from the correspondent bank. If the Company were to technically default under the covenants and not receive the waiver then it would be subject to immediate repayment of the debt, potential regulatory scrutiny, the possible loss of financial reputation and negative financial repercussion arising from its inability to perform up to the level of the covenants. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|     |   | Quarterly Closing Common StockPrice Ranges and Dividends Paid - Common |   |
|----------|--------|------------------------------------------------------------------------|--------|
|     |   | First                                                                  |   |   | Second |   |   | Third |   |   | Fourth |   |
| 2010:    |   |                                                                   |   |   |   |   |   |   |   |   |   |   |
| High     |   | $                                                                      | 3.50   |   |   | $ | 5.90 |   |   | $ | 4.50 |   |   | $ | 4.15 |   |
| Low      |   |                                                                   | 2.16   |   |   |   | 3.00 |   |   |   | 2.95 |   |   |   | 3.42 |   |
| Close    |   |                                                                   | 3.15   |   |   |   | 3.86 |   |   |   | 3.38 |   |   |   | 3.74 |   |
| Dividend |   |                                                                   | .01    |   |   |   | .01 |   |   |   | .01 |   |   |   | .01 | * |
|     |   |                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 2009:    |   |                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| High     |   | $                                                                      | 9.00   |   |   | $ | 7.39 |   |   | $ | 4.70 |   |   | $ | 3.25 |   |
| Low      |   |                                                                   | 4.48   |   |   |   | 4.04 |   |   |   | 2.66 |   |   |   | 1.80 |   |
| Close    |   |                                                                   | 6.12   |   |   |   | 4.07 |   |   |   | 2.75 |   |   |   | 2.21 |   |
| Dividend |   |                                                                   | .13    |   |   |   | .01 |   |   |   | .01 |   |   |   | .01 | * |

|                      |   | Common Stock and Dividend Performance |   |
|---------------------------|--------|---------------------------------------|--------|
|                      |   | 2010                                  |   |   | 2009 |   |   | 2008 |   |   | 2007 |   |   | 2006 |   |
|                      |   |                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Price/earnings ratio      |   |                                  | 2.25   | x |   |   | - |   |   |   | 141.00 | x |   |   | 9.88 | x |   |   | 12.72 | x |
| Price/book value ratio    |   |                                  | 0.38   | x |   |   | 0.26 | x |   |   | 0.56 | x |   |   | 1.02 | x |   |   | 1.38 | x |
| Book value/share          |   | $                                     | 9.98   |   |   | $ | 8.36 |   |   | $ | 15.00 |   |   | $ | 15.45 |   |   | $ | 14.15 |   |
| Dividend payout ratio     |   |                                  | 2.41   | % |   |   | - | % |   |   | 866.67 | % |   |   | 32.50 | % |   |   | 33.77 | % |
| Historical dividend yield |   |                                  | 1.81   | % |   |   | 1.89 | % |   |   | 3.29 | % |   |   | 2.65 | % |   |   | 3.08 | % |

----

|                                                       |   |                       |   | Number of             |   |   |                        |   |   |                           |   |
|------------------------------------------------------------|--------|----------------------------|--------|----------------------------|--------|--------|-----------------------------|--------|--------|--------------------------------|--------|
|                                                       |   |                       |   | Securities to be |   |   |                        |   |   |                           |   |
|                                                       |   |                       |   | Issued Upon           |   |   | Weighted-Average            |   |   |                           |   |
|                                                       |   |                       |   | Exercise of           |   |   | Exercise Price of |   |   |                           |   |
|                                                       |   |                       |   | Outstanding                |   |   | Outstanding                 |   |   | Number of Securities |   |
|                                                       |   |                       |   | Options, Warrants     |   |   | Options, Warrants      |   |   | Remaining Available       |   |
|                                                       |   | Plan Name             |   | and Rights            |   |   | and Rights             |   |   | for Future Issuance  |   |
|                                                       |   |                       |   |                       |   |   |                        |   |   |                           |   |
| Equity compensation plans approved by security holders     |   | 1999 Stock Option Plan     |   |                       | 15,800 |   |                        | $      | 16.11  |                           |   |   | - |   |
|                                                       |   | 2005 Equity Incentive Plan |   |                       | 16,600 |   |                        |   | 12.04  |                           |   |   | 603,634 |   |
|                                                       |   |                       |   |                       |   |   |                        |   |   |                           |   |   |   |   |
| Equity compensation plans not approved by security holders |   | None                       |   |                       | -      |   |                        |   | -      |                           |   |   | - |   |
|                                                       |   |                       |   |                       |   |   |                        |   |   |                           |   |   |   |   |
| Total                                                      |   |                       |   |                       | 32,400 |   |                        | $      | 14.03  |                           |   |   | 603,634 |   |

----

|                      |   |   | 12/05  |   |   |   | 12/06  |   |   |   | 12/07  |   |   |   | 12/08  |   |   |   | 12/09  |   |   |   | 12/10  |   |
|---------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
|                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| First M&F Corporation |   |   | 100.00 |   |   |   | 119.57 |   |   |   | 99.33  |   |   |   | 55.77  |   |   |   | 15.07  |   |   |   | 25.78  |   |
| NASDAQ Composite          |   |   | 100.00 |   |   |   | 111.74 |   |   |   | 124.67 |   |   |   | 73.77  |   |   |   | 107.12 |   |   |   | 125.93 |   |
| NASDAQ Bank               |   |   | 100.00 |   |   |   | 114.45 |   |   |   | 88.71  |   |   |   | 71.34  |   |   |   | 62.32  |   |   |   | 75.34  |   |

----

| (Thousands, except per share data)            |   |   |      |   |   |   |      |   |   |   |      |   |   |   |      |
|-----------------------------------------------|--------|--------|-----------|--------|--------|--------|-----------|--------|--------|--------|-----------|--------|--------|--------|-----------|
|                                          |   | 2010   |      |   | 2009   |   |      | 2008   |   |   | 2007      |   |   | 2006   |      |
|                                          |   |   |      |   |   |   |      |   |   |   |      |   |   |   |      |
| EARNINGS                                      |   |   |      |   |   |   |      |   |   |   |      |   |   |   |      |
|                                          |   |   |      |   |   |   |      |   |   |   |      |   |   |   |      |
| Interest income                               |   | $      | 71,692    |   |   | $      | 78,833    |   |   | $      | 93,288    |   |   | $      | 101,916   |   |   | $ | 91,505 |   |
| Interest expense                              |   |   | 23,891    |   |   |   | 31,239    |   |   |   | 41,292    |   |   |   | 47,876    |   |   |   | 39,156 |   |
| Net interest income                           |   |   | 47,801    |   |   |   | 47,594    |   |   |   | 51,996    |   |   |   | 54,040    |   |   |   | 52,349 |   |
| Provision for loan losses                     |   |   | 9,220     |   |   |   | 49,601    |   |   |   | 19,734    |   |   |   | 2,520     |   |   |   | 3,032 |   |
| Noninterest income                            |   |   | 20,521    |   |   |   | 19,970    |   |   |   | 21,131    |   |   |   | 21,320    |   |   |   | 20,148 |   |
| Noninterest expense                           |   |   | 54,490    |   |   |   | 95,872    |   |   |   | 54,284    |   |   |   | 51,373    |   |   |   | 48,926 |   |
| Income taxes                                  |   |   | 602       |   |   |   | (18,104   | )      |   |   | (1,436    | )      |   |   | 6,976     |   |   |   | 6,598 |   |
| Noncontrolling interests                      |   |   | (1        | )      |   |   | (6        | )      |   |   | 19        |   |   |   | 33        |   |   |   | 16 |   |
| Net income (loss)                             |   | $      | 4,011     |   |   | $      | (59,799   | )      |   | $      | 526       |   |   | $      | 14,458    |   |   | $ | 13,925 |   |
| Net interest income, taxable equivalent       |   | $      | 48,921    |   |   | $      | 49,076    |   |   | $      | 53,469    |   |   | $      | 55,277    |   |   | $ | 53,616 |   |
| Cash dividends paid on common stock           |   | $      | 366       |   |   | $      | 1,466     |   |   | $      | 4,772     |   |   | $      | 4,772     |   |   | $ | 4,751 |   |
| Dividends paid and accrued on preferred stock |   | $      | 1,692     |   |   | $      | 1,464     |   |   | $      | -         |   |   | $      | -         |   |   | $ | - |   |
|                                          |   |   |      |   |   |   |      |   |   |   |      |   |   |   |      |   |   |   |   |   |
| PER COMMON SHARE                              |   |   |      |   |   |   |      |   |   |   |      |   |   |   |      |   |   |   |   |   |
|                                          |   |   |      |   |   |   |      |   |   |   |      |   |   |   |      |   |   |   |   |   |
| Net income (loss) – basic               |   | $      | 1.66      |   |   | $      | (6.69     | )      |   | $      | 0.06      |   |   | $      | 1.58      |   |   | $ | 1.53 |   |
| Cash dividends paid – common            |   |   | .04       |   |   |   | .16       |   |   |   | .52       |   |   |   | .52       |   |   |   | .52 |   |
| Book value – common                     |   |   | 9.96      |   |   |   | 8.36      |   |   |   | 15.00     |   |   |   | 15.45     |   |   |   | 14.15 |   |
| Closing stock price – common            |   |   | 3.74      |   |   |   | 2.21      |   |   |   | 8.46      |   |   |   | 15.80     |   |   |   | 19.59 |   |
|                                          |   |   |      |   |   |   |      |   |   |   |      |   |   |   |      |   |   |   |   |   |
| SELECTED AVERAGE BALANCES                     |   |   |      |   |   |   |      |   |   |   |      |   |   |   |      |   |   |   |   |   |
|                                          |   |   |      |   |   |   |      |   |   |   |      |   |   |   |      |   |   |   |   |   |
| Assets                                        |   | $      | 1,590,942 |   |   | $      | 1,645,160 |   |   | $      | 1,621,703 |   |   | $      | 1,573,630 |   |   | $ | 1,482,013 |   |
| Earning assets, amortized cost                |   |   | 1,426,812 |   |   |   | 1,490,413 |   |   |   | 1,455,836 |   |   |   | 1,407,559 |   |   |   | 1,321,730 |   |
| Loans held for investment                     |   |   | 1,045,467 |   |   |   | 1,122,307 |   |   |   | 1,200,628 |   |   |   | 1,148,275 |   |   |   | 1,056,899 |   |
| Investments, amortized cost                   |   |   | 277,393   |   |   |   | 290,963   |   |   |   | 232,274   |   |   |   | 243,042   |   |   |   | 237,578 |   |
| Total deposits                                |   |   | 1,353,643 |   |   |   | 1,321,470 |   |   |   | 1,270,547 |   |   |   | 1,208,007 |   |   |   | 1,153,381 |   |
| Equity                                        |   |   | 107,166   |   |   |   | 139,156   |   |   |   | 142,006   |   |   |   | 134,083   |   |   |   | 122,288 |   |
|                                          |   |   |      |   |   |   |      |   |   |   |      |   |   |   |      |   |   |   |   |   |
| SELECTED YEAR-END BALANCES                    |   |   |      |   |   |   |      |   |   |   |      |   |   |   |      |   |   |   |   |   |
|                                          |   |   |      |   |   |   |      |   |   |   |      |   |   |   |      |   |   |   |   |   |
| Assets                                        |   | $      | 1,603,964 |   |   | $      | 1,662,968 |   |   | $      | 1,596,865 |   |   | $      | 1,653,751 |   |   | $ | 1,540,275 |   |
| Earning assets, carrying value                |   |   | 1,440,420 |   |   |   | 1,507,966 |   |   |   | 1,427,344 |   |   |   | 1,467,624 |   |   |   | 1,360,064 |   |
| Loans held for investment                     |   |   | 1,060,146 |   |   |   | 1,058,340 |   |   |   | 1,176,595 |   |   |   | 1,219,435 |   |   |   | 1,087,283 |   |
| Investments, carrying value                   |   |   | 276,929   |   |   |   | 284,550   |   |   |   | 227,145   |   |   |   | 237,138   |   |   |   | 261,828 |   |
| Total deposits                                |   |   | 1,375,412 |   |   |   | 1,388,263 |   |   |   | 1,261,387 |   |   |   | 1,262,455 |   |   |   | 1,185,982 |   |
| Equity                                        |   |   | 107,065   |   |   |   | 104,630   |   |   |   | 135,968   |   |   |   | 140,098   |   |   |   | 128,066 |   |
|                                          |   |   |      |   |   |   |      |   |   |   |      |   |   |   |      |   |   |   |   |   |
| SELECTED RATIOS                               |   |   |      |   |   |   |      |   |   |   |      |   |   |   |      |   |   |   |   |   |
|                                          |   |   |      |   |   |   |      |   |   |   |      |   |   |   |      |   |   |   |   |   |
| Return on average assets                      |   |   | 0.25      | %      |   |   | (3.63     | )%     |   |   | 0.03      | %      |   |   | 0.92      | % |   |   | 0.94 | % |
| Return on average equity                      |   |   | 3.74      |   |   |   | (42.97    | )      |   |   | 0.37      |   |   |   | 10.78     |   |   |   | 11.39 |   |
| Average equity to average assets              |   |   | 6.74      |   |   |   | 8.46      |   |   |   | 8.76      |   |   |   | 8.52      |   |   |   | 8.25 |   |
| Dividend payout ratio                         |   |   | 2.41      |   |   |   | -         |   |   |   | 866.67    |   |   |   | 32.50     |   |   |   | 33.77 |   |
| Price to earnings                             |   |   | 2.25      | x      |   |   | -         |   |   |   | 141.00    | x      |   |   | 9.88      | x |   |   | 12.72 | x |
| Price to book                                 |   |   | 0.38      | x      |   |   | 0.26      | x      |   |   | 0.56      | x      |   |   | 1.02      | x |   |   | 1.38 | x |

----

----

|                                               |   | 2010   |   |   | 2009   |   |   | 2008   |   |
|----------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
|                                               |   |   |   |   |   |   |   |   |   |
| Net interest margin                                |   |   | 3.43   | %      |   |   | 3.29   | %      |   |   | 3.67 | % |
| Efficiency ratio                                   |   |   | 78.47  |   |   |   | 89.87  |   |   |   | 72.77 |   |
| Return on assets                                   |   |   | 0.25   |   |   |   | (3.63  | )      |   |   | 0.03 |   |
| Return on equity                                   |   |   | 3.74   |   |   |   | (42.97 | )      |   |   | 0.37 |   |
| Noninterest income to avg. assets                  |   |   | 1.29   |   |   |   | 1.21   |   |   |   | 1.30 |   |
| Noninterest income to revenues (1)                 |   |   | 29.55  |   |   |   | 28.92  |   |   |   | 28.33 |   |
| Noninterest expense to avg. assets                 |   |   | 3.43   |   |   |   | 5.83   |   |   |   | 3.35 |   |
| Salaries and benefits to total noninterest expense |   |   | 50.11  |   |   |   | 29.53  |   |   |   | 53.34 |   |
| Nonaccrual loans to loans                          |   |   | 3.11   |   |   |   | 4.17   |   |   |   | 1.74 |   |
| 90 day past due loans to loans                     |   |   | 0.09   |   |   |   | 0.23   |   |   |   | 0.48 |   |
| Net charge-offs as a percent of average loans      |   |   | 1.65   |   |   |   | 4.50   |   |   |   | 0.75 |   |
|                                               |   |   |   |   |   |   |   |   |   |   |   |   |

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

| (Dollars in thousands)                            |   | 2010   |   |   | 2009   |   |   | 2008   |   |
|---------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
|                                              |   |   |   |   |   |   |   |   |   |
| Mortgage originations                             |   | $      | 80,139 |   |   | $      | 97,741 |   |   | $ | 62,444 |   |
| Treasury and electronic banking services revenues |   |   | 100    |   |   |   | 119    |   |   |   | 189 |   |
| Trust and retail investment revenues              |   |   | 526    |   |   |   | 489    |   |   |   | 585 |   |
| Revenues per FTE employee                         |   |   | 140    |   |   |   | 131    |   |   |   | 134 |   |
| Agency commissions per agency FTE employee (2)    |   |   | 99     |   |   |   | 99     |   |   |   | 103 |   |

----

----

| (Dollars in thousands)              |   | 2010   |   |   | 2009   |   |   | 2008   |   |
|-------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Service charge revenues             |   | $      | 1,282  |   |   | $      | 1,368  |   |   | $ | 1,415 |   |
| Debit/ATM card revenues             |   |   | 2,755  |   |   |   | 2,518  |   |   |   | 2,219 |   |
| Overdraft fee revenues              |   |   | 6,184  |   |   |   | 7,090  |   |   |   | 8,058 |   |
| Service charges on deposit accounts |   | $      | 10,221 |   |   | $      | 10,976 |   |   | $ | 11,692 |   |

----

| (Dollars in thousands)         |   | 2010   |   |   | 2009   |   |   | 2008   |   |
|--------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Agency profit-sharing revenues |   | $      | 234    |   |   | $      | 433    |   |   | $ | 392 |   |
| Loan fees                      |   |   | 387    |   |   |   | 399    |   |   |   | 494 |   |
| Gains on student loan sales    |   |   | 176    |   |   |   | 133    |   |   |   | 218 |   |
| Loss on bankers bank stock     |   |   | -      |   |   |   | (78    | )      |   |   | - |   |
| All other income               |   |   | 1,068  |   |   |   | 1,525  |   |   |   | 1,802 |   |
| Other income                   |   | $      | 1,865  |   |   | $      | 2,412  |   |   | $ | 2,906 |   |

----

| (Dollars in thousands) |   |                                 |   |   | Other-Than-Temporary Impairment          |   |
|----------------------------------|--------|--------------------------------------|--------|--------|-----------------------------------------------|--------|
|                             |   | Other-Than-Temporary Impairment |   |   | Charged To (Reclassified From) |   |
|                             |   | Charged Against Earnings   |   |   | Other Comprehensive Income          |   |
| Name of Issuer         |   | 1st Quarter                     |   |   | 2nd Quarter                              |   |   | 3rd Quarter |   |   | 1st Quarter |   |   | 2nd Quarter |   |   | 3rd Quarter |   |
| Trapeza I 2002-1A                |   | $                                    | 101    |   |                                          | $      | - |   |   | $ | - |   |   | $ | 156 |   |   | $ | - |   |   | $ | - |   |
| Trapeza II 2003-2A               |   |                                 | -      |   |                                          |   | 53 |   |   |   | 8 |   |   |   | - |   |   |   | (14 | ) |   |   | 39 |   |
| Tpref Funding II                 |   |                                 | -      |   |                                          |   | 50 |   |   |   | - |   |   |   | - |   |   |   | (17 | ) |   |   | - |   |
| MM Community Funding IX          |   |                                 | 101    |   |                                          |   | 61 |   |   |   | 29 |   |   |   | (86 | ) |   |   | (36 | ) |   |   | (10 | ) |
| Total                            |   | $                                    | 202    |   |                                          | $      | 164 |   |   | $ | 37 |   |   | $ | 70 |   |   | $ | (67 | ) |   | $ | 29 |   |

| (Dollars in thousands) |   | Other-Than-Temporary Impairment |   |   | Other-Than-Temporary Impairment                      |   |
|----------------------------------|--------|--------------------------------------|--------|--------|-----------------------------------------------------------|--------|
|                             |   | Charged Against Earnings   |   |   | Charged To Other Comprehensive Income |   |
| Name of Issuer         |   | 2nd Quarter                     |   |   | 3rd Quarter                                          |   |   | 4th Quarter |   |   | 2nd Quarter |   |   | 3rd Quarter |   |   | 4th Quarter |   |
| Trapeza I 2002-1A      |   | $                                    | 175    |   |                                                      | $      | - |   |   | $ | - |   |   | $ | 218 |   |   | $ | - |   |   | $ | - |   |
| Trapeza II 2003-2A               |   |                                 | -      |   |                                                      |   | - |   |   |   | 200 |   |   |   | - |   |   |   | - |   |   |   | 769 |   |
| Tpref Funding II                 |   |                                 | -      |   |                                                      |   | - |   |   |   | 113 |   |   |   | - |   |   |   | - |   |   |   | 632 |   |
| Trapeza V 2003-5A                |   |                                 | -      |   |                                                      |   | 167 |   |   |   | - |   |   |   | - |   |   |   | 501 |   |   |   | - |   |
| MM Community Funding IX          |   |                                 | -      |   |                                                      |   | 70 |   |   |   | 104 |   |   |   | - |   |   |   | 489 |   |   |   | 89 |   |
| Total                            |   | $                                    | 175    |   |                                                      | $      | 237 |   |   | $ | 417 |   |   | $ | 218 |   |   | $ | 990 |   |   | $ | 1,490 |   |

----

| As of December 31, 2010 |   |
|---------------------------------------------|--------|
| (Dollars in thousands)            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | Deferrals and |   |   |   |   |
|                                        |   |   |   |   |   |   |   |   |   |   |   |   | Moody’s |   |   | Number of |   |   | Defaults as |   |   |   |   |
|                                        |   |   |   | Book |   |   | Fair |   |   | Unrealized |   |   | Credit |   |   | Banks in |   |   | a Percent |   |   | Excess |   |
| Name of Issuer                    |   | Class |   | Value |   |   | Value |   |   | Loss |   |   | Rating |   |   | Issuance |   |   | of Collateral |   |   | Subordination |   |
| Trapeza I 2002-1A                           |   | C1 |   | $ | 474 |   |   | $ | 112 |   |   | $ | 362 |   |   | C |   |   |   | 25 |   |   |   | 43.09 | % |   |   | 0.00 | % |
| Trapeza II 2003-2A                          |   | C1 |   |   | 989 |   |   |   | 246 |   |   |   | 743 |   |   | Ca |   |   |   | 37 |   |   |   | 37.04 |   |   |   | 0.00 |   |
| Tpref Funding II                            |   | B |   |   | 837 |   |   |   | 235 |   |   |   | 602 |   |   | Caa3 |   |   |   | 34 |   |   |   | 36.21 |   |   |   | 0.00 |   |
| Trapeza V 2003-5A                           |   | C1 |   |   | 833 |   |   |   | 129 |   |   |   | 704 |   |   | Ca |   |   |   | 43 |   |   |   | 29.30 |   |   |   | 0.00 |   |
| MM Community Funding IX                     |   | B1 |   |   | 635 |   |   |   | 212 |   |   |   | 423 |   |   | Caa3 |   |   |   | 33 |   |   |   | 42.95 |   |   |   | 0.00 |   |
|                                        |   |   |   | $ | 3,768 |   |   | $ | 934 |   |   | $ | 2,834 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

| As of December 31, 2009 |   |
|---------------------------------------------|--------|
| (Dollars in thousands)            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | Deferrals and |   |   |   |   |
|                                        |   |   |   |   |   |   |   |   |   |   |   |   | Moody’s |   |   | Number of |   |   | Defaults as |   |   |   |   |
|                                        |   |   |   | Book |   |   | Fair |   |   | Unrealized |   |   | Credit |   |   | Banks in |   |   | a Percent |   |   | Excess |   |
| Name of Issuer                    |   | Class |   | Value |   |   | Value |   |   | Loss |   |   | Rating |   |   | Issuance |   |   | of Collateral |   |   | Subordination |   |
| Trapeza I 2002-1A                           |   | C1 |   | $ | 575 |   |   | $ | 125 |   |   | $ | 450 |   |   | Ca |   |   |   | 25 |   |   |   | 43.09 | % |   |   | 0.00 | % |
| Trapeza II 2003-2A                          |   | C1 |   |   | 1,050 |   |   |   | 281 |   |   |   | 769 |   |   | Ca |   |   |   | 40 |   |   |   | 33.36 |   |   |   | 3.01 |   |
| Tpref Funding II                            |   | B |   |   | 887 |   |   |   | 255 |   |   |   | 632 |   |   | Caa3 |   |   |   | 34 |   |   |   | 26.60 |   |   |   | 0.00 |   |
| Trapeza V 2003-5A                           |   | C1 |   |   | 833 |   |   |   | 170 |   |   |   | 663 |   |   | Ca |   |   |   | 43 |   |   |   | 26.09 |   |   |   | 0.10 |   |
| MM Community Funding IX                     |   | B1 |   |   | 826 |   |   |   | 249 |   |   |   | 577 |   |   | Caa3 |   |   |   | 34 |   |   |   | 38.04 |   |   |   | 0.00 |   |
|                                        |   |   |   | $ | 4,171 |   |   | $ | 1,080 |   |   | $ | 3,091 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

| (Dollars in thousands)                        |   | 2010   |   |   | 2009   |   |   | 2008   |   |
|-----------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Losses (gains) on sales of other real estate  |   | $      | (749   | )      |   | $      | 1,677  |   |   | $ | 258 |   |
| Write-downs of other real estate              |   |   | 2,323  |   |   |   | 4,101  |   |   |   | 1,117 |   |
| Other real estate expenses                    |   |   | 1,686  |   |   |   | 1,543  |   |   |   | 557 |   |
| Rental income on other real estate properties |   |   | (314   | )      |   |   | (38    | )      |   |   | (19 | ) |
| Total foreclosed property expenses            |   | $      | 2,946  |   |   | $      | 7,283  |   |   | $ | 1,913 |   |

----

----

----

|                                                     |   | 2010    |   |
|----------------------------------------------------------|--------|---------|--------|
|                                                     |   | First   |   |   | Second |   |   | Third |   |   | Fourth |   |
| (Dollars in thousands)                         |   | Quarter |   |   | Quarter |   |   | Quarter |   |   | Quarter |   |
|                                                     |   |    |   |   |   |   |   |   |   |   |   |   |
| Interest income                                          |   | $       | 18,012 |   |   | $ | 18,222 |   |   | $ | 17,855 |   |   | $ | 17,603 |   |
| Interest expense                                         |   |    | 6,771  |   |   |   | 6,324 |   |   |   | 5,561 |   |   |   | 5,235 |   |
| Net interest income                                      |   |    | 11,241 |   |   |   | 11,898 |   |   |   | 12,294 |   |   |   | 12,368 |   |
| Provision for loan losses                                |   |    | 2,280  |   |   |   | 2,380 |   |   |   | 2,280 |   |   |   | 2,280 |   |
| Noninterest income                                       |   |    | 5,603  |   |   |   | 5,216 |   |   |   | 4,746 |   |   |   | 4,956 |   |
| Noninterest expense                                      |   |    | 13,409 |   |   |   | 13,342 |   |   |   | 13,111 |   |   |   | 14,628 |   |
| Net income before taxes                                  |   |    | 1,155  |   |   |   | 1,392 |   |   |   | 1,649 |   |   |   | 416 |   |
| Income taxes                                             |   |    | 301    |   |   |   | 120 |   |   |   | 407 |   |   |   | (226 | ) |
| Noncontrolling interest                                  |   |    | 1      |   |   |   | - |   |   |   | (3 | ) |   |   | 1 |   |
| Net income                                               |   | $       | 853    |   |   | $ | 1,272 |   |   | $ | 1,245 |   |   | $ | 641 |   |
| Preferred dividends                                      |   |    | (437   | ) |   |   | (439 | ) |   |   | (441 | ) |   |   | (375 | ) |
| Gain on exchange of preferred stock                      |   |    | -      |   |   |   | - |   |   |   | 12,867 |   |   |   | - |   |
| Net income applicable to common stock                    |   |    | 416    |   |   |   | 833 |   |   |   | 13,671 |   |   |   | 266 |   |
| Loss (earnings) attributable to participating securities |   |    | (3     | ) |   |   | (7 | ) |   |   | (106 | ) |   |   | 1 |   |
| Net income allocated to common shareholders              |   | $       | 413    |   |   | $ | 826 |   |   | $ | 13,565 |   |   | $ | 267 |   |
| Per common share:                                        |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net income - basic                                       |   | $       | .05    |   |   | $ | .09 |   |   | $ | 1.49 |   |   | $ | .03 |   |
| Net income - diluted                                     |   | $       | .05    |   |   | $ | .09 |   |   | $ | 1.49 |   |   | $ | .03 |   |
| Cash dividends                                           |   |    | .01    |   |   |   | .01 |   |   |   | .01 |   |   |   | .01 |   |

|                                                     |   | 2009    |    |
|----------------------------------------------------------|--------|---------|---------|
|                                                     |   | First   |    |   | Second |   |   | Third |   |   | Fourth |   |
| (Dollars in thousands)                         |   | Quarter |    |   | Quarter |   |   | Quarter |   |   | Quarter |   |
|                                                     |   |    |    |   |   |   |   |   |   |   |   |   |
| Interest income                                          |   | $       | 20,261  |   |   | $ | 19,160 |   |   | $ | 19,926 |   |   | $ | 19,486 |   |
| Interest expense                                         |   |    | 8,417   |   |   |   | 7,895 |   |   |   | 7,628 |   |   |   | 7,299 |   |
| Net interest income                                      |   |    | 11,844  |   |   |   | 11,265 |   |   |   | 12,298 |   |   |   | 12,187 |   |
| Provision for loan losses                                |   |    | 19,840  |   |   |   | 9,195 |   |   |   | 4,805 |   |   |   | 15,761 |   |
| Noninterest income                                       |   |    | 5,188   |   |   |   | 4,976 |   |   |   | 5,381 |   |   |   | 4,425 |   |
| Noninterest expense                                      |   |    | 31,041  |   |   |   | 15,815 |   |   |   | 14,140 |   |   |   | 34,876 |   |
| Income taxes                                             |   |    | (6,592  | ) |   |   | (3,660 | ) |   |   | (1,137 | ) |   |   | (6,715 | ) |
| Noncontrolling interest                                  |   |    | (16     | ) |   |   | 2 |   |   |   | 7 |   |   |   | 1 |   |
| Net loss                                                 |   | $       | (27,241 | ) |   | $ | (5,111 | ) |   | $ | (136 | ) |   | $ | (27,311 | ) |
| Preferred dividends                                      |   |    | (154    | ) |   |   | (439 | ) |   |   | (435 | ) |   |   | (436 | ) |
| Net loss applicable to common stock                      |   |    | (27,395 | ) |   |   | (5,550 | ) |   |   | (571 | ) |   |   | (27,747 | ) |
| Loss (earnings) attributable to participating securities |   |    | 306     |   |   |   | 52 |   |   |   | (9 | ) |   |   | 259 |   |
| Net loss allocated to common shareholders                |   | $       | (27,089 | ) |   | $ | (5,498 | ) |   | $ | (580 | ) |   | $ | (27,488 | ) |
| Per common share:                                        |   |    |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net loss - basic                                         |   | $       | (2.99   | ) |   | $ | (.61 | ) |   | $ | (.06 | ) |   | $ | (3.03 | ) |
| Net loss - diluted                                       |   | $       | (2.99   | ) |   | $ | (.61 | ) |   | $ | (.06 | ) |   | $ | (3.03 | ) |
| Cash dividends                                           |   |    | .13     |   |   |   | .01 |   |   |   | .01 |   |   |   | .01 |   |

----

| (Dollars in thousands)                 |   | 2010   |   |   | 2009   |   |     | 2008   |   |
|----------------------------------------|--------|--------|--------|--------|--------|--------|----------|--------|--------|
|                                   |   |   |   |   |   |   |     |   |   |
| Net increase (decrease) in loans       |   | $      | 1,806  |   |   | $      | (118,255 | )      |   | $ | (42,840 | ) |
| Net increase (decrease) in deposits    |   |   | 12,851 |   |   |   | 126,876  |   |   |   | (1,068 | ) |
| Ratio of loan growth to deposit growth |   |   | 14.05  | %      |   |   | -        | %      |   |   | - | % |

| (Dollars in thousands)       |   | December 31, 2010 |      |   | December 31, 2009 |   |      | December 31, 2008 |   |
|----------------------------------------|--------|-----------------------------|-----------|--------|-----------------------------|--------|-----------|-----------------------------|--------|
| Commercial real estate                 |   | $                           | 646,731   |   |                        | $      | 643,804   |                        |   | $ | 745,699 |   |
| Residential real estate                |   |                        | 195,184   |   |                        |   | 195,361   |                        |   |   | 209,697 |   |
| Home equity lines                      |   |                        | 40,305    |   |                        |   | 44,560    |                        |   |   | 45,791 |   |
| Commercial, financial and agricultural |   |                        | 133,226   |   |                        |   | 129,571   |                        |   |   | 136,795 |   |
| Consumer                               |   |                        | 44,700    |   |                        |   | 45,044    |                        |   |   | 38,613 |   |
| Total                                  |   | $                           | 1,060,146 |   |                        | $      | 1,058,340 |                        |   | $ | 1,176,595 |   |
|                                   |   |                        |      |   |                        |   |      |                        |   |   |   |   |
| Mortgages held for sale                |   | $                           | 6,242     |   |                        | $      | 3,118     |                        |   | $ | 3,803 |   |
| Student loans held for sale            |   |                        | -         |   |                        |   | 7,148     |                        |   |   | 3,895 |   |

----

|                             |   | Core Customers      |    |   | Public Funds        |   |   | Total Deposits      |   |
|----------------------------------|--------|--------------------------|---------|--------|--------------------------|--------|--------|--------------------------|--------|
| (Dollars in thousands) |   | Increase (Decrease) |    |   | Increase (Decrease) |   |   | Increase (Decrease) |   |
|                             |   | Amt.                     |    |   | Pct.                     |   |   | Amt.                     |   |   | Pct. |   |   | Amt. |   |   | Pct. |   |
| Noninterest-bearing              |   | $                        | (5,677  | )      |                     |   | (2.68  | )%                       |   | $ | (10,703 | ) |   |   | (63.42 | )% |   | $ | (16,380 | ) |   |   | (7.17 | )% |
| NOW                              |   |                     | 15,130  |   |                     |   | 7.37   |                     |   |   | 39,534 |   |   |   | 37.92 |   |   |   | 54,664 |   |   |   | 17.66 |   |
| MMDA                             |   |                     | 21,864  |   |                     |   | 16.72  |                     |   |   | (16,979 | ) |   |   | (55.14 | ) |   |   | 4,885 |   |   |   | 3.02 |   |
| Savings                          |   |                     | 1,947   |   |                     |   | 1.73   |                     |   |   | 58 |   |   |   | 20.94 |   |   |   | 2,005 |   |   |   | 1.78 |   |
| Customer CDs                     |   |                     | (34,965 | )      |                     |   | (6.77  | )                        |   |   | (18,996 | ) |   |   | (47.40 | ) |   |   | (53,961 | ) |   |   | (9.69 | ) |
| Brokered CDs                     |   |                     | (5,413  | )      |                     |   | (36.55 | )                        |   |   | 1,349 |   |   |   | 31.66 |   |   |   | (4,064 | ) |   |   | (21.31 | ) |
| Total                            |   | $                        | (7,114  | )      |                     |   | (.60   | )%                       |   | $ | (5,737 | ) |   |   | (2.92 | )% |   | $ | (12,851 | ) |   |   | (0.93 | )% |

----

| (Dollars in thousands) |   | December 31, 2010 |      |   | December 31, 2009 |   |      | December 31, 2008 |   |
|----------------------------------|--------|-----------------------------|-----------|--------|-----------------------------|--------|-----------|-----------------------------|--------|
|                             |   |                        |      |   |                        |   |      |                        |   |
| Noninterest-bearing demand       |   | $                           | 212,199   |   |                        | $      | 228,579   |                        |   | $ | 178,689 |   |
| NOW deposits                     |   |                        | 364,209   |   |                        |   | 309,545   |                        |   |   | 217,334 |   |
| Money market deposits            |   |                        | 166,455   |   |                        |   | 161,570   |                        |   |   | 182,364 |   |
| Savings deposits                 |   |                        | 114,769   |   |                        |   | 112,764   |                        |   |   | 114,281 |   |
| Certificates of deposit          |   |                        | 502,772   |   |                        |   | 556,733   |                        |   |   | 549,224 |   |
| Brokered certificates of deposit |   |                        | 15,008    |   |                        |   | 19,072    |                        |   |   | 19,495 |   |
| Total                            |   | $                           | 1,375,412 |   |                        | $      | 1,388,263 |                        |   | $ | 1,261,387 |   |

| (Dollars in thousands) |   | December 31, 2010 |    |   | December 31, 2009 |   |    | December 31, 2008 |   |
|----------------------------------|--------|-----------------------------|---------|--------|-----------------------------|--------|---------|-----------------------------|--------|
|                             |   |                        |    |   |                        |   |    |                        |   |
| Noninterest-bearing demand       |   | $                           | 6,174   |   |                        | $      | 16,877  |                        |   | $ | 6,965 |   |
| NOW deposits                     |   |                        | 143,781 |   |                        |   | 104,247 |                        |   |   | 48,019 |   |
| Money market deposits            |   |                        | 13,814  |   |                        |   | 30,793  |                        |   |   | 23,411 |   |
| Savings deposits                 |   |                        | 335     |   |                        |   | 277     |                        |   |   | 469 |   |
| Certificates of deposit          |   |                        | 21,076  |   |                        |   | 40,072  |                        |   |   | 93,265 |   |
| Brokered certificates of deposit |   |                        | 5,610   |   |                        |   | 4,261   |                        |   |   | 2,465 |   |
| Total                            |   | $                           | 190,790 |   |                        | $      | 196,527 |                        |   | $ | 174,594 |   |

----

----

----

----

| (Dollars in thousands) |   |            |   |   |   |   |
|------------------------|--------|-----------------|--------|--------|--------|--------|
|                   |   | Number of Loans |   |   | Amount |   |
| Balance at 12/31/09    |   |            | 13     |   |   | $      | 19,297 |   |
|                   |   |            |   |   |   |   |   |   |
| Balance at 03/31/10    |   |            | 10     |   |   |   | 14,980 |   |
|                   |   |            |   |   |   |   |   |   |
| Balance at 06/30/10    |   |            | 9      |   |   |   | 13,213 |   |
|                   |   |            |   |   |   |   |   |   |
| Balance at 09/30/10    |   |            | 7      |   |   |   | 8,581 |   |
|                   |   |            |   |   |   |   |   |   |
| Balance at 12/31/10    |   |            | 5      |   |   |   | 6,620 |   |

| (Dollars in thousands) |   |            |   |   |   |   |
|------------------------|--------|-----------------|--------|--------|--------|--------|
|                   |   | Number of Loans |   |   | Amount |   |
| Balance at 12/31/09    |   |            | 6      |   |   | $      | 8,021 |   |
|                   |   |            |   |   |   |   |   |   |
| Balance at 03/31/10    |   |            | 8      |   |   |   | 11,291 |   |
|                   |   |            |   |   |   |   |   |   |
| Balance at 06/30/10    |   |            | 8      |   |   |   | 8,899 |   |
|                   |   |            |   |   |   |   |   |   |
| Balance at 09/30/10    |   |            | 7      |   |   |   | 13,451 |   |
|                   |   |            |   |   |   |   |   |   |
| Balance at 12/31/10    |   |            | 8      |   |   |   | 14,085 |   |

----

|                                                     |   |   | December 31, 2009      |   |   | December 31, 2010  |   |
|----------------------------------------------------------|--------|--------|----------------------------------|--------|--------|------------------------------|--------|
|                                                     |   |   | Thirteen Largest Loans |   |   | Five Largest Loans |   |
| (Dollars in thousands)                         |   |   | Nonaccrual                       |   |   | Impairment                   |   |   | Nonaccrual |   |   | Impairment |   |
| Note                                                     |   |   | Balance                          |   |   | Allowance                    |   |   | Balance |   |   | Allowance |   |
| 1.                                                       |   |   | $                                | 2,600  |   |                         | $      | - |   |   | $ | - |   |   | $ | - |   |
| 2.                                                       |   |   |                             | 1,999  |   |                         |   | - |   |   |   | 1,325 |   |   |   | - |   |
| 3.                                                       |   |   |                             | 1,960  |   |                         |   | - |   |   |   | - |   |   |   | - |   |
| 4.                                                       |   |   |                             | 1,849  |   |                         |   | - |   |   |   | - |   |   |   | - |   |
| 5.                                                       |   |   |                             | 1,770  |   |                         |   | - |   |   |   | - |   |   |   | - |   |
| 6.                                                       |   |   |                             | 1,760  |   |                         |   | - |   |   |   | 1,634 |   |   |   | - |   |
| 7.                                                       |   |   |                             | 1,465  |   |                         |   | - |   |   |   | 1,465 |   |   |   | - |   |
| 8.                                                       |   |   |                             | 1,400  |   |                         |   | - |   |   |   | 1,393 |   |   |   | 125 |   |
| 9.                                                       |   |   |                             | 1,210  |   |                         |   | - |   |   |   | - |   |   |   | - |   |
| 10.                                                      |   |   |                             | 1,036  |   |                         |   | - |   |   |   | - |   |   |   | - |   |
| 11.                                                      |   |   |                             | 845    |   |                         |   | - |   |   |   | - |   |   |   | - |   |
| 12.                                                      |   |   |                             | 803    |   |                         |   | - |   |   |   | 803 |   |   |   | - |   |
| 13.                                                      |   |   |                             | 600    |   |                         |   | - |   |   |   | - |   |   |   | - |   |
| Totals                                                   |   |   | $                                | 19,297 |   |                         | $      | - |   |   | $ | 6,620 |   |   | $ | 125 |   |
|                                                     |   |   |                             |   |   |                         |   |   |   |   |   |   |   |   |   |   |   |
| Total nonaccrual construction and land development loans |   |   | $                                | 25,655 |   |                         | $      | 36 |   |   | $ | 10,060 |   |   | $ | 175 |   |

|                                          |   |   | December 31, 2009 |   |   | December 31, 2010   |   |
|-----------------------------------------------|--------|--------|-----------------------------|--------|--------|-------------------------------|--------|
|                                          |   |   | Six Largest Loans |   |   | Eight Largest Loans |   |
| (Dollars in thousands)              |   |   | Nonaccrual                  |   |   | Impairment                    |   |   | Nonaccrual |   |   | Impairment |   |
| Note                                          |   |   | Balance                     |   |   | Allowance                     |   |   | Balance |   |   | Allowance |   |
| 14.                                           |   |   | $                           | 2,980  |   |                          | $      | - |   |   | $ | - |   |   | $ | - |   |
| 15.                                           |   |   |                        | 2,703  |   |                          |   | - |   |   |   | 2,925 |   |   |   | - |   |
| 16.                                           |   |   |                        | 653    |   |                          |   | - |   |   |   | - |   |   |   | - |   |
| 17.                                           |   |   |                        | 650    |   |                          |   | - |   |   |   | - |   |   |   | - |   |
| 18.                                           |   |   |                        | 519    |   |                          |   | - |   |   |   | - |   |   |   | - |   |
| 19.                                           |   |   |                        | 516    |   |                          |   | - |   |   |   | - |   |   |   | - |   |
| 20.                                           |   |   |                        | -      |   |                          |   | - |   |   |   | 2,469 |   |   |   | - |   |
| 21.                                           |   |   |                        | -      |   |                          |   | - |   |   |   | 2,455 |   |   |   | 300 |   |
| 22.                                           |   |   |                        | -      |   |                          |   | - |   |   |   | 2,093 |   |   |   | - |   |
| 23.                                           |   |   |                        | -      |   |                          |   | - |   |   |   | 1,582 |   |   |   | - |   |
| 24.                                           |   |   |                        | -      |   |                          |   | - |   |   |   | 1,008 |   |   |   | - |   |
| 25.                                           |   |   |                        | -      |   |                          |   | - |   |   |   | 880 |   |   |   | - |   |
| 26.                                           |   |   |                        | -      |   |                          |   | - |   |   |   | 673 |   |   |   | 255 |   |
| Totals                                        |   |   | $                           | 8,021  |   |                          | $      | - |   |   | $ | 14,085 |   |   | $ | 555 |   |
|                                          |   |   |                        |   |   |                          |   |   |   |   |   |   |   |   |   |   |   |
| Total nonaccrual commercial real estate loans |   |   | $                           | 9,789  |   |                          | $      | - |   |   | $ | 16,960 |   |   | $ | 765 |   |

----

|                             |   |                  |   |                    |   | Nonaccrual |   |   | Impairment |   | Information |
|----------------------------------|--------|-----------------------|--------|-------------------------|--------|------------|--------|--------|------------|--------|-------------|
| (Dollars in thousands) |   | Type of          |   | Type of            |   | Balance    |   |   | Allowance  |   | Supporting  |
| Note                             |   | Borrower              |   | Collateral              |   | 12/31/10   |   |   | 12/31/10   |   | Allowance   |
| 1.                               |   | Commercial Developer  |   | Commercial Subdivision  |   | $          | 1,634  |   |       |   | -           |   | Appraisal dated 11/17/08 |
| 2.                               |   | Residential Developer |   | Residential Subdivision |   |       | 1,465  |   |       |   | -           |   | Appraisal dated 11/23/09 |
| 3.                               |   | Commercial Developer  |   | Commercial              |   |       | 1,393  |   |       |   | 125         |   | Appraisal dated 10/03/08 |
| 4.                               |   | Commercial Developer  |   | Commercial Subdivision  |   |       | 1,325  |   |       |   | -           |   | Appraisal dated 09/29/10 |
| 5.                               |   | Residential Developer |   | Residential Subdivision |   |       | 803    |   |       |   | -           |   | Appraisal dated 09/30/09 |
| 6.                               |   | Commercial            |   | Land                    |   |       | 2,925  |   |       |   | -           |   | Appraisal dated 07/07/08 |
| 7.                               |   | Commercial            |   | Office                  |   |       | 2,469  |   |       |   | -           |   | Appraisal dated 02/01/10 |
| 8.                               |   | Commercial            |   | Retailer                |   |       | 2,455  |   |       |   | 300         |   | Appraisal dated 10/05/10 |
| 9.                               |   | Commercial            |   | Office/Warehouse        |   |       | 2,093  |   |       |   | -           |   | Appraisal dated 05/06/09 |
| 10.                              |   | Commercial            |   | Self Storage            |   |       | 1,582  |   |       |   | -           |   | Appraisal dated 12/06/10 |
| 11.                              |   | Commercial            |   | Land                    |   |       | 1,008  |   |       |   | -           |   | Appraisal dated 10/14/10 |
| 12.                              |   | Commercial            |   | Commercial              |   |       | 880    |   |       |   | -           |   | Appraisal dated 07/08/10 |
| 13.                              |   | Commercial            |   | Self Storage            |   |       | 673    |   |       |   | 255         |   | In-house evaluation dated 07/22/09 |

----

|                                |   | December 31, 2009 |   |   | December 31, 2010 |   |
|-------------------------------------|--------|-----------------------------|--------|--------|-----------------------------|--------|
| (Dollars in thousands)    |   | Loan                        |   |   | Impairment                  |   |   | Loan |   |   | Impairment |   |
|                                |   | Balance                     |   |   | Allowance                   |   |   | Balance |   |   | Allowance |   |
| Nonaccrual loans                    |   | $                           | 25,655 |   |                        | $      | 36 |   |   | $ | 10,060 |   |   | $ | 175 |   |
| Accruing loans with an allowance    |   |                        | 16,646 |   |                        |   | 6,028 |   |   |   | 11,327 |   |   |   | 2,696 |   |
| Accruing loans without an allowance |   |                        | 11,758 |   |                        |   | - |   |   |   | 8,111 |   |   |   | - |   |
| Total                               |   | $                           | 54,059 |   |                        | $      | 6,064 |   |   | $ | 29,498 |   |   | $ | 2,871 |   |

|                                |   | December 31, 2009 |   |   | December 31, 2010 |   |
|-------------------------------------|--------|-----------------------------|--------|--------|-----------------------------|--------|
| (Dollars in thousands)    |   | Loan                        |   |   | Impairment                  |   |   | Loan |   |   | Impairment |   |
|                                |   | Balance                     |   |   | Allowance                   |   |   | Balance |   |   | Allowance |   |
| Nonaccrual loans                    |   | $                           | 9,789  |   |                        | $      | - |   |   | $ | 16,960 |   |   | $ | 765 |   |
| Accruing loans with an allowance    |   |                        | 23,073 |   |                        |   | 4,614 |   |   |   | 5,025 |   |   |   | 817 |   |
| Accruing loans without an allowance |   |                        | 26,332 |   |                        |   | - |   |   |   | 36,275 |   |   |   | - |   |
| Total                               |   | $                           | 59,194 |   |                        | $      | 4,614 |   |   | $ | 58,260 |   |   | $ | 1,582 |   |

----

|                                    |   |        |    |   | Past Due           |   |   | Past Due  |   |   |       |   |   |          |   |
|-----------------------------------------|--------|-------------|---------|--------|-------------------------|--------|--------|----------------|--------|--------|------------|--------|--------|---------------|--------|
|                                    |   |        |    |   | 30 – 89 |   |   | 90 Days   |   |   |       |   |   |          |   |
|                                    |   |        |    |   | Days                    |   |   | Or More   |   |   |       |   |   | Year-To-      |   |
| (Dollars in thousands)        |   | Outstanding |    |   | And Still          |   |   | And Still |   |   |       |   |   | Date Net |   |
|                                    |   | Balances    |    |   | Accruing                |   |   | Accruing       |   |   | Nonaccrual |   |   | Charge-Offs   |   |
| Construction and development loans:     |   |        |    |   |                    |   |   |           |   |   |       |   |   |          |   |   |
| 12/31/10                                |   | $           | 85,160  |   |                    | $      | 1,257  |           |   | $      | 274        |   |   | $             | 10,060 |   |   | $ | 4,167 |   |
| 09/30/10                                |   |        | 96,848  |   |                    |   | 979    |           |   |   | 430        |   |   |          | 11,887 |   |   |   | 2,628 |   |
| 06/30/10                                |   |        | 106,015 |   |                    |   | 2,495  |           |   |   | 79         |   |   |          | 17,092 |   |   |   | 2,816 |   |
| 03/31/10                                |   |        | 108,574 |   |                    |   | 2,434  |           |   |   | 352        |   |   |          | 20,363 |   |   |   | 852 |   |
| 12/31/09                                |   |        | 123,254 |   |                    |   | 3,119  |           |   |   | 901        |   |   |          | 25,655 |   |   |   | 38,713 |   |
|                                    |   |        |    |   |                    |   |   |           |   |   |       |   |   |          |   |   |   |   |   |   |
| Loans secured by 1-4 family properties: |   |        |    |   |                    |   |   |           |   |   |       |   |   |          |   |   |   |   |   |   |
| 12/31/10                                |   | $           | 235,489 |   |                    | $      | 3,020  |           |   | $      | 564        |   |   | $             | 3,863  |   |   | $ | 1,733 |   |
| 09/30/10                                |   |        | 236,822 |   |                    |   | 2,422  |           |   |   | 319        |   |   |          | 5,001  |   |   |   | 936 |   |
| 06/30/10                                |   |        | 237,801 |   |                    |   | 2,538  |           |   |   | 123        |   |   |          | 4,106  |   |   |   | 812 |   |
| 03/31/10                                |   |        | 238,904 |   |                    |   | 2,984  |           |   |   | 440        |   |   |          | 4,545  |   |   |   | 288 |   |
| 12/31/09                                |   |        | 239,921 |   |                    |   | 4,512  |           |   |   | 312        |   |   |          | 4,490  |   |   |   | 3,362 |   |
|                                    |   |        |    |   |                    |   |   |           |   |   |       |   |   |          |   |   |   |   |   |   |
| Commercial real estate-secured loans:   |   |        |    |   |                    |   |   |           |   |   |       |   |   |          |   |   |   |   |   |   |
| 12/31/10                                |   | $           | 561,571 |   |                    | $      | 2,091  |           |   | $      | -          |   |   | $             | 16,960 |   |   | $ | 7,360 |   |
| 09/30/10                                |   |        | 529,899 |   |                    |   | 3,824  |           |   |   | 44         |   |   |          | 16,306 |   |   |   | 4,917 |   |
| 06/30/10                                |   |        | 509,556 |   |                    |   | 6,359  |           |   |   | 1,080      |   |   |          | 11,890 |   |   |   | 4,667 |   |
| 03/31/10                                |   |        | 517,450 |   |                    |   | 8,120  |           |   |   | 1,268      |   |   |          | 12,444 |   |   |   | 3,848 |   |
| 12/31/09                                |   |        | 520,550 |   |                    |   | 13,928 |           |   |   | 1,208      |   |   |          | 9,789  |   |   |   | 3,245 |   |

| (Dollars in thousands)                            |   | December 31 |   |   | December 31 |   |   | December 31 |   |
|-------------------------------------------------------------|--------|------------------|--------|--------|------------------|--------|--------|------------------|--------|
|                                                        |   | 2010             |   |   | 2009             |   |   | 2008             |   |
| Nonaccrual loans                                            |   | $                | 33,127 |   |             | $      | 44,549 |             |   | $ | 20,564 |   |
| Other real estate                                           |   |             | 31,125 |   |             |   | 23,578 |             |   |   | 11,061 |   |
| Investment securities                                       |   |             | 698    |   |             |   | 825    |             |   |   | - |   |
|                                                        |   |             |   |   |             |   |   |             |   |   |   |   |
| Total non-performing assets                                 |   | $                | 64,950 |   |             | $      | 68,952 |             |   | $ | 31,625 |   |
|                                                        |   |             |   |   |             |   |   |             |   |   |   |   |
| Past due 90 days or more and still accruing interest        |   | $                | 951    |   |             | $      | 2,479  |             |   | $ | 5,686 |   |
| Restructured loans (accruing)                               |   |             | 18,052 |   |             |   | 4,620  |             |   |   | 3,664 |   |
|                                                        |   |             |   |   |             |   |   |             |   |   |   |   |
| Ratios:                                                     |   |             |   |   |             |   |   |             |   |   |   |   |
| Nonaccrual loans to loans                                   |   |             | 3.11   | %      |             |   | 4.17   | %                |   |   | 1.74 | % |
| Past due 90 day loans to loans                              |   |             | .09    | %      |             |   | .23    | %                |   |   | .48 | % |
| Non-performing credit assets to loans and other real estate |   |             | 5.85   | %      |             |   | 6.24   | %                |   |   | 2.65 | % |
| Non-performing assets to assets                             |   |             | 4.05   | %      |             |   | 4.15   | %                |   |   | 1.98 | % |

----

----

----

----

----

| (Dollars in thousands) |   | Payments Due by Period |   |
|----------------------------------|--------|---------------------------------------|--------|
|                             |   |                                  |   |   | Less |   |   |   |   |   |   |   |   | More |   |
|                             |   |                                  |   |   | Than 1 |   |   | 1 - 3 |   |   | 3 – 5 |   |   | Than 5 |   |
| Contractual Obligations     |   | Total                                 |   |   | Year |   |   | Years |   |   | Years |   |   | Years |   |
|                             |   |                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Long-Term Debt                   |   | $                                     | 50,416 |   |   | $ | 10,707 |   |   | $ | 25,982 |   |   | $ | 4,606 |   |   | $ | 9,121 |   |
| Junior Subordinated Debentures   |   |                                  | 30,928 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 30,928 |   |
| Capital Lease Obligations        |   |                                  | -      |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Operating Leases                 |   |                                  | 2,548  |   |   |   | 637 |   |   |   | 906 |   |   |   | 576 |   |   |   | 429 |   |
| Purchase Obligations             |   |                                  | -      |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Other Long-Term Liabilities      |   |                                  | -      |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
|                             |   |                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                            |   | $                                     | 83,892 |   |   | $ | 11,344 |   |   | $ | 26,888 |   |   | $ | 5,182 |   |   | $ | 40,478 |   |

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

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

| (3)  | Goodwill, intangible assets and related impairment |
|-----------|----------------------------------------------------|

| (4)  | Contingent liabilities |
|-----------|------------------------|

| (5)  | Income taxes |
|-----------|--------------|

----

----

----

| Rate Sensitivity Gap Report  |   |
|---------------------------------------------|--------|
| As of December 31, 2010 |   |
| (Dollars in thousands)            |   | 0-12 months |   |   | 1-5 years |   |   | Over 5 years |   |   | Total |   |
|                                        |   |   |   |   |   |   |   |   |   |   |   |   |
| Short-term funds                            |   | $ | 97,103 |   |   | $ | - |   |   | $ | - |   |   | $ | 97,103 |   |
| Investments                                 |   |   | 83,054 |   |   |   | 135,569 |   |   |   | 58,306 |   |   |   | 276,929 |   |
| Loans                                       |   |   | 496,474 |   |   |   | 505,971 |   |   |   | 63,943 |   |   |   | 1,066,388 |   |
| Total earning assets                        |   |   | 676,631 |   |   |   | 641,540 |   |   |   | 122,249 |   |   |   | 1,440,420 |   |
|                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| NOW, MMDA & savings deposits            |   |   | 343,339 |   |   |   | 40,272 |   |   |   | 261,825 |   |   |   | 645,436 |   |
| Time deposits                               |   |   | 304,444 |   |   |   | 213,332 |   |   |   | - |   |   |   | 517,776 |   |
| Short-term borrowings                       |   |   | 33,481 |   |   |   | - |   |   |   | - |   |   |   | 33,481 |   |
| Other borrowings                            |   |   | 47,829 |   |   |   | 33,515 |   |   |   | - |   |   |   | 81,344 |   |
| Interest rate swap                          |   |   | (30,000 | ) |   |   | - |   |   |   | 30,000 |   |   |   | - |   |
| Total int. bearing liabilities              |   | $ | 699,093 |   |   | $ | 287,119 |   |   | $ | 291,825 |   |   | $ | 1,278,037 |   |
|                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Rate sensitive gap                          |   | $ | (22,462 | ) |   | $ | 354,421 |   |   | $ | (169,576 | ) |   |   |   |   |
|                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cumulative gap                              |   | $ | (22,462 | ) |   | $ | 331,959 |   |   | $ | 162,383 |   |   |   |   |   |
| Cumulative % of assets                      |   |   | (1.40 | )% |   |   | 20.70 | % |   |   | 10.12 | % |   |   |   |   |

----

| /s/ Hugh S. Potts, Jr.               |   | /s/ John G. Copeland            |
|--------------------------------------|--------|---------------------------------|
| Hugh S. Potts, Jr.                   |   | John G. Copeland                |
| Chairman and Chief Executive Officer |   | EVP and Chief Financial Officer |

----

----

|                                                                                                 |   | 2010   |      |   | 2009   |   |
|------------------------------------------------------------------------------------------------------|--------|--------|-----------|--------|--------|--------|
| Assets                                                                                               |   |   |      |   |   |   |
|                                                                                                 |   |   |      |   |   |   |
| Cash and due from banks                                                                              |   | $      | 45,099    |   |   | $      | 42,446 |   |
| Interest-bearing bank balances                                                                       |   |   | 72,103    |   |   |   | 84,810 |   |
| Federal funds sold                                                                                   |   |   | 25,000    |   |   |   | 70,000 |   |
| Securities available for sale, amortized cost of $274,421 and $280,470                               |   |   | 276,929   |   |   |   | 284,550 |   |
| Loans held for sale                                                                                  |   |   | 6,242     |   |   |   | 10,266 |   |
|                                                                                                 |   |   |      |   |   |   |   |   |
| Loans, net of unearned income                                                                        |   |   | 1,060,146 |   |   |   | 1,058,340 |   |
| Allowance for loan losses                                                                            |   |   | (16,025   | )      |   |   | (24,014 | ) |
|                                                                                                 |   |   |      |   |   |   |   |   |
| Net loans                                                                                            |   |   | 1,044,121 |   |   |   | 1,034,326 |   |
|                                                                                                 |   |   |      |   |   |   |   |   |
| Bank premises and equipment                                                                          |   |   | 40,696    |   |   |   | 42,919 |   |
| Accrued interest receivable                                                                          |   |   | 6,380     |   |   |   | 7,598 |   |
| Other real estate                                                                                    |   |   | 31,125    |   |   |   | 23,578 |   |
| Other intangible assets                                                                              |   |   | 5,013     |   |   |   | 5,439 |   |
| Other assets                                                                                         |   |   | 51,256    |   |   |   | 57,036 |   |
|                                                                                                 |   |   |      |   |   |   |   |   |
|                                                                                                 |   | $      | 1,603,964 |   |   | $      | 1,662,968 |   |
| Liabilities and Stockholders’ Equity                                                           |   |   |      |   |   |   |   |   |
|                                                                                                 |   |   |      |   |   |   |   |   |
| Liabilities:                                                                                         |   |   |      |   |   |   |   |   |
| Noninterest-bearing deposits                                                                         |   | $      | 212,199   |   |   | $      | 228,579 |   |
| Interest-bearing deposits                                                                            |   |   | 1,163,213 |   |   |   | 1,159,684 |   |
| Total deposits                                                                                       |   |   | 1,375,412 |   |   |   | 1,388,263 |   |
| Fed funds purchased and repurchase agreements                                                        |   |   | 33,481    |   |   |   | 8,642 |   |
| Other borrowings                                                                                     |   |   | 50,416    |   |   |   | 122,510 |   |
| Junior subordinated debt                                                                             |   |   | 30,928    |   |   |   | 30,928 |   |
| Accrued interest payable                                                                             |   |   | 1,470     |   |   |   | 2,933 |   |
| Other liabilities                                                                                    |   |   | 5,192     |   |   |   | 5,062 |   |
| Total liabilities                                                                                    |   |   | 1,496,899 |   |   |   | 1,558,338 |   |
|                                                                                                 |   |   |      |   |   |   |   |   |
| Stockholders’ equity:                                                                          |   |   |      |   |   |   |   |   |
| Preferred stock:                                                                                     |   |   |      |   |   |   |   |   |
| Class A; 1,000,000 shares authorized                                                                 |   |   | -         |   |   |   | - |   |
| Class B; 1,000,000 shares authorized;                                                                |   |   |      |   |   |   |   |   |
| Series A; 30,000 shares issued                                                                       |   |   | -         |   |   |   | 28,838 |   |
| Series CD; 30,000 shares issued                                                                      |   |   | 16,390    |   |   |   | - |   |
| Common stock of $5.00 par value; 50,000,000 shares authorized: 9,106,803 and 9,069,346 shares issued |   |   | 45,534    |   |   |   | 45,347 |   |
| Additional paid-in capital                                                                           |   |   | 31,883    |   |   |   | 31,926 |   |
| Nonvested restricted stock awards                                                                    |   |   | 784       |   |   |   | 734 |   |
| Retained earnings (deficit)                                                                          |   |   | 12,225    |   |   |   | (2,595 | ) |
| Accumulated other comprehensive income                                                               |   |   | 249       |   |   |   | 379 |   |
| First M&F Corporation equity                                                                     |   |   | 107,065   |   |   |   | 104,629 |   |
| Noncontrolling interest in subsidiaries                                                              |   |   | -         |   |   |   | 1 |   |
| Total equity                                                                                         |   |   | 107,065   |   |   |   | 104,630 |   |
|                                                                                                 |   |   |      |   |   |   |   |   |
|                                                                                                 |   | $      | 1,603,964 |   |   | $      | 1,662,968 |   |

----

|                                                                    |   | 2010   |   |   | 2009   |   |    | 2008   |   |
|-------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|---------|--------|--------|
| Interest income:                                                        |   |   |   |   |   |   |    |   |   |
| Interest and fees on loans                                              |   | $      | 62,070 |   |   | $      | 66,782  |   |   | $ | 81,487 |   |
| Interest on loans held for sale                                         |   |   | 232    |   |   |   | 278     |   |   |   | 299 |   |
| Taxable investments                                                     |   |   | 7,616  |   |   |   | 9,531   |   |   |   | 9,023 |   |
| Tax-exempt investments                                                  |   |   | 1,549  |   |   |   | 2,105   |   |   |   | 2,164 |   |
| Federal funds sold                                                      |   |   | 82     |   |   |   | 95      |   |   |   | 182 |   |
| Interest-bearing bank balances                                          |   |   | 143    |   |   |   | 42      |   |   |   | 133 |   |
| Total interest income                                                   |   |   | 71,692 |   |   |   | 78,833  |   |   |   | 93,288 |   |
|                                                                    |   |   |   |   |   |   |    |   |   |   |   |   |
| Interest expense:                                                       |   |   |   |   |   |   |    |   |   |   |   |   |
| Deposits                                                                |   |   | 18,809 |   |   |   | 23,701  |   |   |   | 32,255 |   |
| Fed funds purchased and repurchase agreements                           |   |   | 66     |   |   |   | 97      |   |   |   | 327 |   |
| Other borrowings                                                        |   |   | 3,024  |   |   |   | 5,449   |   |   |   | 6,717 |   |
| Junior subordinated debt                                                |   |   | 1,992  |   |   |   | 1,992   |   |   |   | 1,993 |   |
| Total interest expense                                                  |   |   | 23,891 |   |   |   | 31,239  |   |   |   | 41,292 |   |
|                                                                    |   |   |   |   |   |   |    |   |   |   |   |   |
| Net interest income                                                     |   |   | 47,801 |   |   |   | 47,594  |   |   |   | 51,996 |   |
| Provision for loan losses                                               |   |   | 9,220  |   |   |   | 49,601  |   |   |   | 19,734 |   |
| Net interest income (expense) after provision for loan losses           |   |   | 38,581 |   |   |   | (2,007  | )      |   |   | 32,262 |   |
|                                                                    |   |   |   |   |   |   |    |   |   |   |   |   |
| Noninterest income:                                                     |   |   |   |   |   |   |    |   |   |   |   |   |
| Deposit account income                                                  |   |   | 10,221 |   |   |   | 10,976  |   |   |   | 11,692 |   |
| Mortgage banking income                                                 |   |   | 1,581  |   |   |   | 1,823   |   |   |   | 1,202 |   |
| Agency commission income                                                |   |   | 3,809  |   |   |   | 3,881   |   |   |   | 4,125 |   |
| Trust and brokerage income                                              |   |   | 526    |   |   |   | 489     |   |   |   | 585 |   |
| Bank owned life insurance income                                        |   |   | 667    |   |   |   | 762     |   |   |   | 615 |   |
| Other income                                                            |   |   | 1,865  |   |   |   | 2,412   |   |   |   | 2,906 |   |
| Securities gains, net                                                   |   |   | 2,255  |   |   |   | 456     |   |   |   | 6 |   |
|                                                                    |   |   |   |   |   |   |    |   |   |   |   |   |
| Total investment other-than-temporary impairment losses                 |   |   | (435   | )      |   |   | (3,527  | )      |   |   | - |   |
| Portion of loss recognized in other comprehensive income (before taxes) |   |   | 32     |   |   |   | 2,698   |   |   |   | - |   |
| Net investment impairment losses recognized                             |   |   | (403   | )      |   |   | (829    | )      |   |   | - |   |
|                                                                    |   |   |   |   |   |   |    |   |   |   |   |   |
| Total noninterest income                                                |   |   | 20,521 |   |   |   | 19,970  |   |   |   | 21,131 |   |
|                                                                    |   |   |   |   |   |   |    |   |   |   |   |   |
| Noninterest expenses:                                                   |   |   |   |   |   |   |    |   |   |   |   |   |
| Salaries and employee benefits                                          |   |   | 27,303 |   |   |   | 28,314  |   |   |   | 28,954 |   |
| Net occupancy expenses                                                  |   |   | 3,937  |   |   |   | 4,614   |   |   |   | 4,210 |   |
| Equipment expenses                                                      |   |   | 2,382  |   |   |   | 2,877   |   |   |   | 3,594 |   |
| Software and processing expenses                                        |   |   | 1,627  |   |   |   | 1,898   |   |   |   | 2,072 |   |
| Telecommunications expenses                                             |   |   | 980    |   |   |   | 1,043   |   |   |   | 1,162 |   |
| Marketing and business development expenses                             |   |   | 1,014  |   |   |   | 1,351   |   |   |   | 1,439 |   |
| Foreclosed property expenses                                            |   |   | 2,946  |   |   |   | 7,283   |   |   |   | 1,913 |   |
| FDIC insurance assessments                                              |   |   | 3,261  |   |   |   | 3,276   |   |   |   | 575 |   |
| Goodwill impairment                                                     |   |   | -      |   |   |   | 32,572  |   |   |   | - |   |
| Intangible asset amortization and impairment                            |   |   | 426    |   |   |   | 1,688   |   |   |   | 485 |   |
| Other expenses                                                          |   |   | 10,614 |   |   |   | 10,956  |   |   |   | 9,880 |   |
| Total noninterest expenses                                              |   |   | 54,490 |   |   |   | 95,872  |   |   |   | 54,284 |   |
|                                                                    |   |   |   |   |   |   |    |   |   |   |   |   |
| Income (loss) before income taxes                                       |   |   | 4,612  |   |   |   | (77,909 | )      |   |   | (891 | ) |
| Income tax expense (benefit)                                            |   |   | 602    |   |   |   | (18,104 | )      |   |   | (1,436 | ) |
| Net income (loss)                                                       |   |   | 4,010  |   |   |   | (59,805 | )      |   |   | 545 |   |
| Net income (loss) attributable to noncontrolling interests              |   |   | (1     | )      |   |   | (6      | )      |   |   | 19 |   |
| Net income (loss) attributable to First M&F Corporation             |   | $      | 4,011  |   |   | $      | (59,799 | )      |   | $ | 526 |   |
| Dividends and accretion on preferred stock                              |   |   | 1,692  |   |   |   | 1,464   |   |   |   | - |   |
| Gain on exchange of preferred stock                                     |   |   | 12,867 |   |   |   | -       |   |   |   | - |   |
| Net income (loss) applicable to common stock                            |   | $      | 15,186 |   |   | $      | (61,263 | )      |   | $ | 526 |   |
|                                                                    |   |   |   |   |   |   |    |   |   |   |   |   |
| Net income (loss) allocated to common shareholders                      |   | $      | 15,071 |   |   | $      | (60,655 | )      |   | $ | 522 |   |
| Earnings (loss) per share:                                              |   |   |   |   |   |   |    |   |   |   |   |   |
| Basic                                                                   |   | $      | 1.66   |   |   | $      | (6.69   | )      |   | $ | 0.06 |   |
| Diluted                                                                 |   |   | 1.66   |   |   |   | (6.69   | )      |   |   | 0.06 |   |

----

|                                                                                                                                                                        |   | 2010   |   |   | 2009   |   |    | 2008   |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|---------|--------|--------|
|                                                                                                                                                                        |   |   |   |   |   |   |    |   |   |
| Net income (loss)                                                                                                                                                           |   | $      | 4,010  |   |   | $      | (59,805 | )      |   | $ | 545 |   |
|                                                                                                                                                                        |   |   |   |   |   |   |    |   |   |   |   |   |
| Other comprehensive income (loss):                                                                                                                                          |   |   |   |   |   |   |    |   |   |   |   |   |
| Unrealized gains (losses) on securities:                                                                                                                                    |   |   |   |   |   |   |    |   |   |   |   |   |
| Unrealized gains on securities available for sale arising during the period, net of tax of $159, $1,628, and $1,009                                                         |   |   | 267    |   |   |   | 2,736   |   |   |   | 1,697 |   |
| Unrealized losses on other-than-temporarily impaired securities available for sale arising during the period, net of tax of $54 and $1,462                                  |   |   | (92    | )      |   |   | (2,458  | )      |   |   | - |   |
| Reclassification adjustment for gains on securities available for sale included in net income, net of tax of $841, $170, and $2                                             |   |   | (1,414 | )      |   |   | (286    | )      |   |   | (4 | ) |
| Reclassification adjustment for credit related other-than- temporary impairment losses on securities available for sale included in net income, net of tax of $150 and $309 |   |   | 253    |   |   |   | 520     |   |   |   | - |   |
| Unrealized gains on cash flow hedge arising during the period, net of tax of $305                                                                                           |   |   | 512    |   |   |   | -       |   |   |   | - |   |
| Defined benefit pension plans:                                                                                                                                              |   |   |   |   |   |   |    |   |   |   |   |   |
| Net actuarial gains (losses) arising during the period, net of tax of $112, $32 and $1,113                                                                                  |   |   | (187   | )      |   |   | 53      |   |   |   | (1,868 | ) |
| Amortization of transition asset, net of tax of $0, $3 and $3                                                                                                               |   |   | -      |   |   |   | (4      | )      |   |   | (6 | ) |
| Amortization of prior service cost, net of tax of $14, $14 and $14                                                                                                          |   |   | (23    | )      |   |   | (23     | )      |   |   | (23 | ) |
| Amortization of actuarial loss, net of tax of $331, $338 and $122                                                                                                           |   |   | 554    |   |   |   | 568     |   |   |   | 204 |   |
| Effects of changing the pension plan measurement date pursuant to change in accounting principle (charged to retained earnings):                                            |   |   |   |   |   |   |    |   |   |   |   |   |
| Amortization of transition asset, net of tax of $1                                                                                                                          |   |   | -      |   |   |   | -       |   |   |   | (1 | ) |
| Amortization of prior service cost, net of tax of $3                                                                                                                        |   |   | -      |   |   |   | -       |   |   |   | (6 | ) |
| Amortization of actuarial loss, net of tax of $30                                                                                                                           |   |   | -      |   |   |   | -       |   |   |   | 51 |   |
|                                                                                                                                                                        |   |   |   |   |   |   |    |   |   |   |   |   |
| Other comprehensive income (loss)                                                                                                                                           |   |   | (130   | )      |   |   | 1,106   |   |   |   | 44 |   |
|                                                                                                                                                                        |   |   |   |   |   |   |    |   |   |   |   |   |
| Total comprehensive income (loss)                                                                                                                                           |   |   | 3,880  |   |   |   | (58,699 | )      |   |   | 589 |   |
| Comprehensive income (loss) attributable to noncontrolling interests                                                                                                        |   |   | (1     | )      |   |   | (6      | )      |   |   | 19 |   |
|                                                                                                                                                                        |   |   |   |   |   |   |    |   |   |   |   |   |
| Comprehensive income (loss) of First M&F Corp                                                                                                                           |   | $      | 3,881  |   |   | $      | (58,693 | )      |   | $ | 570 |   |

----

|                                                                                                   |   |      |    |   |   |   |   |       |   |   | Nonvested  |   |   |      |   |   | Accumulated        |   |    |           |   |   |   |   |
|-------------------------------------------------------------------------------------------------------------|--------|-----------|---------|--------|--------|--------|--------|------------|--------|--------|------------|--------|--------|-----------|--------|--------|--------------------|--------|---------|----------------|--------|--------|--------|--------|
|                                                                                                        |   |      |    |   |   |   |   | Additional |   |   | Restricted |   |   | Retained  |   |   | Other              |   |    |           |   |   |   |   |
|                                                                                                        |   | Preferred |    |   | Common |   |   | Paid-in    |   |   | Stock      |   |   | Earnings  |   |   | Comprehensive      |   |    | Noncontrolling |   |   |   |   |
|                                                                                                        |   | Stock     |    |   | Stock  |   |   | Capital    |   |   | Awards     |   |   | (Deficit) |   |   | Income (Loss) |   |    | Interest       |   |   | Total  |   |
|                                                                                                        |   |      |    |   |   |   |   |       |   |   |       |   |   |      |   |   |               |   |    |           |   |   |   |   |
| January 1, 2008                                                                                             |   | $         | -       |   |   | $      | 45,338 |       |   | $      | 30,475     |   |   | $         | 643    |   |               | $      | 64,395  |           |   | $      | (771   | )      |   | $ | 18 |   |   | $ | 140,098 |   |
| Net income                                                                                                  |   |      | -       |   |   |   | -      |       |   |   | -          |   |   |      | -      |   |               |   | 526     |           |   |   | -      |   |   |   | 19 |   |   |   | 545 |   |
| Cash dividends - common ($.52 per share)                                                                    |   |      | -       |   |   |   | -      |       |   |   | -          |   |   |      | -      |   |               |   | (4,772  | )              |   |   | -      |   |   |   | - |   |   |   | (4,772 | ) |
| 7,500 common shares repurchased                                                                             |   |      | -       |   |   |   | (38    | )          |   |   | (80        | )      |   |      | -      |   |               |   | -       |           |   |   | -      |   |   |   | - |   |   |   | (118 | ) |
| Share-based compensation expense recognized                                                                 |   |      | -       |   |   |   | -      |       |   |   | 9          |   |   |      | 197    |   |               |   | 3       |           |   |   | -      |   |   |   | - |   |   |   | 209 |   |
| 3,266 restricted share awards vested                                                                        |   |      | -       |   |   |   | 17     |       |   |   | 43         |   |   |      | (60    | )      |               |   | -       |           |   |   | -      |   |   |   | - |   |   |   | - |   |
| Net change                                                                                                  |   |      | -       |   |   |   | -      |       |   |   | -          |   |   |      | -      |   |               |   | -       |           |   |   | -      |   |   |   | - |   |   |   | - |   |
| Distributions                                                                                               |   |      | -       |   |   |   | -      |       |   |   | -          |   |   |      | -      |   |               |   | -       |           |   |   | -      |   |   |   | (19 | ) |   |   | (19 | ) |
| Effects of change in accounting principle regarding pension plan measurement date:                          |   |      |    |   |   |   |   |       |   |   |       |   |   |      |   |   |               |   |    |           |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest cost, and expected return on plan assets for October 1- December 31, 2008 net of tax of $15        |   |      | -       |   |   |   | -      |       |   |   | -          |   |   |      | -      |   |               |   | 25      |           |   |   | -      |   |   |   | - |   |   |   | 25 |   |
| Amortization of prior service cost and transition asset for October 1- December 31, 2008, net of tax of $26 |   |      | -       |   |   |   | -      |       |   |   | -          |   |   |      | -      |   |               |   | (44     | )              |   |   | 44     |   |   |   | - |   |   |   | - |   |
|                                                                                                        |   |      |    |   |   |   |   |       |   |   |       |   |   |      |   |   |               |   |    |           |   |   |   |   |   |   |   |   |   |   |   |   |
| December 31, 2008                                                                                           |   | $         | -       |   |   | $      | 45,317 |       |   | $      | 30,447     |   |   | $         | 780    |   |               | $      | 60,133  |           |   | $      | (727   | )      |   | $ | 18 |   |   | $ | 135,968 |   |
|                                                                                                        |   |      |    |   |   |   |   |       |   |   |       |   |   |      |   |   |               |   |    |           |   |   |   |   |   |   |   |   |   |   |   |   |
| Net loss                                                                                                    |   |      | -       |   |   |   | -      |       |   |   | -          |   |   |      | -      |   |               |   | (59,799 | )              |   |   | -      |   |   |   | (6 | ) |   |   | (59,805 | ) |
| Cash dividends - common ($.16 per share)                                                                    |   |      | -       |   |   |   | -      |       |   |   | -          |   |   |      | -      |   |               |   | (1,466  | )              |   |   | -      |   |   |   | - |   |   |   | (1,466 | ) |
| Issuance of 30,000 shares of preferred stock                                                                |   |      | 28,637  |   |   |   | -      |       |   |   | -          |   |   |      | -      |   |               |   | -       |           |   |   | -      |   |   |   | - |   |   |   | 28,637 |   |
| Issuance of stock warrant for 513,113 shares                                                                |   |      | -       |   |   |   | -      |       |   |   | 1,363      |   |   |      | -      |   |               |   | -       |           |   |   | -      |   |   |   | - |   |   |   | 1,363 |   |
| Dividends and accretion on preferred stock                                                                  |   |      | 201     |   |   |   | -      |       |   |   | -          |   |   |      | -      |   |               |   | (1,464  | )              |   |   | -      |   |   |   | - |   |   |   | (1,263 | ) |
| 6,000 restricted share awards vested                                                                        |   |      | -       |   |   |   | 30     |       |   |   | 71         |   |   |      | (101   | )      |               |   | -       |           |   |   | -      |   |   |   | - |   |   |   | - |   |
| Share-based compensation expense recognized                                                                 |   |      | -       |   |   |   | -      |       |   |   | 17         |   |   |      | 55     |   |               |   | 1       |           |   |   | -      |   |   |   | - |   |   |   | 73 |   |
| Tax benefits on restricted stock dividends paid                                                             |   |      | -       |   |   |   | -      |       |   |   | 28         |   |   |      | -      |   |               |   | -       |           |   |   | -      |   |   |   | - |   |   |   | 28 |   |
| Net change                                                                                                  |   |      | -       |   |   |   | -      |       |   |   | -          |   |   |      | -      |   |               |   | -       |           |   |   | 1,106  |   |   |   | - |   |   |   | 1,106 |   |
| Distributions                                                                                               |   |      | -       |   |   |   | -      |       |   |   | -          |   |   |      | -      |   |               |   | -       |           |   |   | -      |   |   |   | (11 | ) |   |   | (11 | ) |
|                                                                                                        |   |      |    |   |   |   |   |       |   |   |       |   |   |      |   |   |               |   |    |           |   |   |   |   |   |   |   |   |   |   |   |   |
| December 31, 2009                                                                                           |   | $         | 28,838  |   |   | $      | 45,347 |       |   | $      | 31,926     |   |   | $         | 734    |   |               | $      | (2,595  | )              |   | $      | 379    |   |   | $ | 1 |   |   | $ | 104,630 |   |
|                                                                                                        |   |      |    |   |   |   |   |       |   |   |       |   |   |      |   |   |               |   |    |           |   |   |   |   |   |   |   |   |   |   |   |   |
| Net income                                                                                                  |   |      | -       |   |   |   | -      |       |   |   | -          |   |   |      | -      |   |               |   | 4,011   |           |   |   | -      |   |   |   | (1 | ) |   |   | 4,010 |   |
| Cash dividends - common ($.04 per share)                                                                    |   |      | -       |   |   |   | -      |       |   |   | -          |   |   |      | -      |   |               |   | (366    | )              |   |   | -      |   |   |   | - |   |   |   | (366 | ) |
| 37,457 shares issued to directors                                                                           |   |      | -       |   |   |   | 187    |       |   |   | (54        | )      |   |      | -      |   |               |   | -       |           |   |   | -      |   |   |   | - |   |   |   | 133 |   |
| Dividends and accretion on preferred stock                                                                  |   |      | 419     |   |   |   | -      |       |   |   | -          |   |   |      | -      |   |               |   | (1,692  | )              |   |   | -      |   |   |   | - |   |   |   | (1,273 | ) |
| Gain on exchange of preferred stock                                                                         |   |      | (12,867 | )      |   |   | -      |       |   |   | -          |   |   |      | -      |   |               |   | 12,867  |           |   |   | -      |   |   |   | - |   |   |   | - |   |
| Share-based compensation expense recognized                                                                 |   |      | -       |   |   |   | -      |       |   |   | 11         |   |   |      | 50     |   |               |   | -       |           |   |   | -      |   |   |   | - |   |   |   | 61 |   |
| Net change                                                                                                  |   |      | -       |   |   |   | -      |       |   |   | -          |   |   |      | -      |   |               |   | -       |           |   |   | (130   | )      |   |   | - |   |   |   | (130 | ) |
|                                                                                                        |   |      |    |   |   |   |   |       |   |   |       |   |   |      |   |   |               |   |    |           |   |   |   |   |   |   |   |   |   |   |   |   |
| December 31, 2010                                                                                           |   | $         | 16,390  |   |   | $      | 45,534 |       |   | $      | 31,883     |   |   | $         | 784    |   |               | $      | 12,225  |           |   | $      | 249    |   |   | $ | - |   |   | $ | 107,065 |   |

----

|                                                                                     |   | 2010   |     |   | 2009   |   |     | 2008   |   |
|------------------------------------------------------------------------------------------|--------|--------|----------|--------|--------|--------|----------|--------|--------|
|                                                                                     |   |   |     |   |   |   |     |   |   |
| Cash flows from operating activities:                                                    |   |   |     |   |   |   |     |   |   |
| Net income (loss)                                                                        |   | $      | 4,010    |   |   | $      | (59,805  | )      |   | $ | 545 |   |
| Adjustments to reconcile net income (loss) to net cash provided by operating activities: |   |   |     |   |   |   |     |   |   |   |   |   |
| Share-based compensation                                                                 |   |   | 61       |   |   |   | 73       |   |   |   | 209 |   |
| Director fees issued in stock                                                            |   |   | 133      |   |   |   | -        |   |   |   | - |   |
| Amortization of pension costs                                                            |   |   | 787      |   |   |   | 878      |   |   |   | 121 |   |
| Depreciation and amortization                                                            |   |   | 2,736    |   |   |   | 3,281    |   |   |   | 3,373 |   |
| Goodwill impairment                                                                      |   |   | -        |   |   |   | 32,572   |   |   |   | - |   |
| Intangible asset impairments                                                             |   |   | -        |   |   |   | 1,248    |   |   |   | - |   |
| Provision for loan losses                                                                |   |   | 9,220    |   |   |   | 49,601   |   |   |   | 19,734 |   |
| Net investment amortization (accretion)                                                  |   |   | 2,090    |   |   |   | 1,178    |   |   |   | (122 | ) |
| Net change in unearned fees/deferred costs on loans                                      |   |   | 44       |   |   |   | (243     | )      |   |   | (496 | ) |
| Capitalized dividends on FHLB stock                                                      |   |   | (27      | )      |   |   | (19      | )      |   |   | (237 | ) |
| Net accretion of discount on time deposits                                               |   |   | 29       |   |   |   | 19       |   |   |   | 38 |   |
| Net accretion of discount on debt                                                        |   |   | -        |   |   |   | -        |   |   |   | 5 |   |
| Gain on securities available for sale                                                    |   |   | (2,255   | )      |   |   | (456     | )      |   |   | (6 | ) |
| Impairment loss on securities available for sale                                         |   |   | 403      |   |   |   | 829      |   |   |   | - |   |
| Gains on loans held for sale                                                             |   |   | (1,285   | )      |   |   | (1,006   | )      |   |   | (831 | ) |
| Other real estate losses                                                                 |   |   | 1,574    |   |   |   | 5,778    |   |   |   | 1,375 |   |
| Other asset sale (gains) losses                                                          |   |   | 225      |   |   |   | (732     | )      |   |   | (94 | ) |
| Deferred income taxes                                                                    |   |   | 735      |   |   |   | (10,855  | )      |   |   | (3,670 | ) |
| Originations of loans held for sale, net of repayments                                   |   |   | (83,200  | )      |   |   | (107,959 | )      |   |   | (67,955 | ) |
| Sales proceeds of loans held for sale                                                    |   |   | 88,277   |   |   |   | 106,348  |   |   |   | 66,582 |   |
| (Increase) decrease in:                                                                  |   |   |     |   |   |   |     |   |   |   |   |   |
| Accrued interest receivable                                                              |   |   | 1,218    |   |   |   | 2,234    |   |   |   | 2,602 |   |
| Cash surrender value of bank owned life insurance                                        |   |   | (667     | )      |   |   | (762     | )      |   |   | (615 | ) |
| Other assets                                                                             |   |   | (1,800   | )      |   |   | 1,086    |   |   |   | 1,638 |   |
| Increase (decrease) in:                                                                  |   |   |     |   |   |   |     |   |   |   |   |   |
| Accrued interest payable                                                                 |   |   | (1,463   | )      |   |   | (604     | )      |   |   | (1,614 | ) |
| Other liabilities                                                                        |   |   | 8,363    |   |   |   | (4,893   | )      |   |   | (2,207 | ) |
|                                                                                     |   |   |     |   |   |   |     |   |   |   |   |   |
| Net cash provided by operating activities                                                |   |   | 29,208   |   |   |   | 17,791   |   |   |   | 18,375 |   |
|                                                                                     |   |   |     |   |   |   |     |   |   |   |   |   |
| Cash flows from investing activities:                                                    |   |   |     |   |   |   |     |   |   |   |   |   |
| Purchases of securities available for sale                                               |   |   | (170,862 | )      |   |   | (142,697 | )      |   |   | (89,503 | ) |
| Sales of securities available for sale                                                   |   |   | 89,164   |   |   |   | 17,240   |   |   |   | 6,878 |   |
| Maturities of securities available for sale                                              |   |   | 87,509   |   |   |   | 67,318   |   |   |   | 95,446 |   |
| Purchases of loans held for investment                                                   |   |   | (36,380  | )      |   |   | -        |   |   |   | - |   |
| Sales of nonperforming loans                                                             |   |   | 500      |   |   |   | 6,350    |   |   |   | - |   |
| Net (increase) decrease in other loans held for investment                               |   |   | (7,390   | )      |   |   | 21,506   |   |   |   | 20,986 |   |
| Net (increase) decrease in:                                                              |   |   |     |   |   |   |     |   |   |   |   |   |
| Interest-bearing bank balances                                                           |   |   | 12,707   |   |   |   | (78,254  | )      |   |   | (3,076 | ) |
| Federal funds sold                                                                       |   |   | 45,000   |   |   |   | (60,650  | )      |   |   | (7,350 | ) |
| Bank premises and equipment                                                              |   |   | (226     | )      |   |   | (1,061   | )      |   |   | (1,867 | ) |
| Net benefits received (purchases) of bank owned life insurance                           |   |   | (41      | )      |   |   | 202      |   |   |   | (78 | ) |
| Proceeds from sales of other real estate and other repossessed assets                    |   |   | 16,626   |   |   |   | 23,127   |   |   |   | 7,338 |   |
| Payments for ORE improvements and lienholder payoffs                                     |   |   | (1,276   | )      |   |   | (599     | )      |   |   | (300 | ) |
| Net redemptions of FHLB stock                                                            |   |   | -        |   |   |   | 225      |   |   |   | 2,382 |   |
|                                                                                     |   |   |     |   |   |   |     |   |   |   |   |   |
| Net cash provided by (used in) investing activities                                      |   |   | 35,331   |   |   |   | (147,293 | )      |   |   | 30,856 |   |

----

|                                                              |   | 2010   |    |   | 2009   |   |    | 2008   |   |
|-------------------------------------------------------------------|--------|--------|---------|--------|--------|--------|---------|--------|--------|
|                                                              |   |   |    |   |   |   |    |   |   |
| Cash flows from financing activities:                             |   |   |    |   |   |   |    |   |   |
| Net increase (decrease) in deposits                               |   |   | (12,880 | )      |   |   | 126,857 |   |   |   | (1,106 | ) |
| Net increase (decrease) in short-term borrowings                  |   |   | 24,839  |   |   |   | (1,086  | )      |   |   | 52 |   |
| Proceeds from other borrowings                                    |   |   | 2,872   |   |   |   | 20,000  |   |   |   | 200,500 |   |
| Repayments of other borrowings                                    |   |   | (74,966 | )      |   |   | (49,037 | )      |   |   | (250,270 | ) |
| Earnings distributions to noncontrolling interests                |   |   | -       |   |   |   | (11     | )      |   |   | (19 | ) |
| Common dividends paid                                             |   |   | (366    | )      |   |   | (1,466  | )      |   |   | (4,772 | ) |
| Preferred dividends paid                                          |   |   | (1,385  | )      |   |   | (1,075  | )      |   |   | - |   |
| Preferred shares and common stock warrant issued to U.S. Treasury |   |   | -       |   |   |   | 30,000  |   |   |   | - |   |
| Common shares repurchased                                         |   |   | -       |   |   |   | -       |   |   |   | (118 | ) |
| Tax benefits related to share-based compensation                  |   |   | -       |   |   |   | 28      |   |   |   | - |   |
|                                                              |   |   |    |   |   |   |    |   |   |   |   |   |
| Net cash provided by (used in) financing activities               |   |   | (61,886 | )      |   |   | 124,210 |   |   |   | (55,733 | ) |
|                                                              |   |   |    |   |   |   |    |   |   |   |   |   |
| Net increase (decrease) in cash and due from banks                |   |   | 2,653   |   |   |   | (5,292  | )      |   |   | (6,502 | ) |
|                                                              |   |   |    |   |   |   |    |   |   |   |   |   |
| Cash and due from banks at January 1                              |   |   | 42,446  |   |   |   | 47,738  |   |   |   | 54,240 |   |
|                                                              |   |   |    |   |   |   |    |   |   |   |   |   |
| Cash and due from banks at December 31                            |   | $      | 45,099  |   |   | $      | 42,446  |   |   | $ | 47,738 |   |
|                                                              |   |   |    |   |   |   |    |   |   |   |   |   |
| Supplemental disclosures:                                         |   |   |    |   |   |   |    |   |   |   |   |   |
| Total interest paid                                               |   | $      | 25,373  |   |   | $      | 31,852  |   |   | $ | 42,870 |   |
| Total income taxes paid                                           |   |   | 232     |   |   |   | 69      |   |   |   | 3,435 |   |
| Income tax refunds received                                       |   |   | 8,735   |   |   |   | 1,249   |   |   |   | 23 |   |
|                                                              |   |   |    |   |   |   |    |   |   |   |   |   |
| Transfers of loans to foreclosed property                         |   |   | 24,192  |   |   |   | 40,048  |   |   |   | 13,031 |   |
| Transfers of buildings to foreclosed property                     |   |   | 180     |   |   |   | -       |   |   |   | - |   |
| Gain on exchange of Class B preferred stock                       |   |   | 12,867  |   |   |   | -       |   |   |   | - |   |
| U.S. Treasury preferred dividend accrued but unpaid               |   |   | 75      |   |   |   | 187     |   |   |   | - |   |
| Accretion on U.S. Treasury preferred stock                        |   |   | 419     |   |   |   | 201     |   |   |   | - |   |

----

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----

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

|                                             |   |                        |    |   | Fair Value Measurements at |   |
|--------------------------------------------------|--------|-----------------------------|---------|--------|-------------------------------------------|--------|
|                                             |   |                        |    |   | December 31, 2009, Using   |   |
|                                             |   |                        |    |   | Quoted                                    |   |   |   |   |   |   |   |
|                                             |   |                        |    |   | Prices In                            |   |   |   |   |   |   |   |
|                                             |   |                        |    |   | Active                                    |   |   |   |   |   |   |   |
|                                             |   |                        |    |   | Markets                                   |   |   | Significant |   |   |   |   |
|                                             |   | Assets/Liabilities          |    |   | For                                       |   |   | Other |   |   | Significant |   |
|                                             |   | Measured at Fair  |    |   | Identical                                 |   |   | Observable |   |   | Unobservable |   |
|                                             |   | Value                       |    |   | Assets                                    |   |   | Inputs |   |   | Inputs |   |
| (Dollars in thousands)                 |   | December 31, 2009 |    |   | (Level 1)                            |   |   | (Level 2) |   |   | (Level 3) |   |
|                                             |   |                        |    |   |                                      |   |   |   |   |   |   |   |
| U.S. Treasury securities                         |   | $                           | 517     |   |                                      | $      | - |   |   | $ | 517 |   |   | $ | - |   |
| U.S. Government sponsored entities               |   |                        | 55,161  |   |                                      |   | - |   |   |   | 55,161 |   |   |   | - |   |
| Mortgage-backed investments                      |   |                        | 167,875 |   |                                      |   | - |   |   |   | 167,875 |   |   |   | - |   |
| Obligations of states and political subdivisions |   |                        | 56,586  |   |                                      |   | - |   |   |   | 56,586 |   |   |   | - |   |
| Collateralized debt obligations                  |   |                        | 1,080   |   |                                      |   | - |   |   |   | - |   |   |   | 1,080 |   |
| Other debt securities                            |   |                        | 2,486   |   |                                      |   | - |   |   |   | 2,486 |   |   |   | - |   |
| Equity securities                                |   |                        | 845     |   |                                      |   | 845 |   |   |   | - |   |   |   | - |   |
| Total securities available for sale              |   | $                           | 284,550 |   |                                      | $      | 845 |   |   | $ | 282,625 |   |   | $ | 1,080 |   |
|                                             |   |                        |    |   |                                      |   |   |   |   |   |   |   |   |   |   |   |
| Mortgage derivative assets                       |   |                        | 85      |   |                                      |   | - |   |   |   | - |   |   |   | 85 |   |
|                                             |   |                        |    |   |                                      |   |   |   |   |   |   |   |   |   |   |   |
| Mortgage derivative liabilities                  |   |                        | 1       |   |                                      |   | - |   |   |   | - |   |   |   | 1 |   |

----

----

| (Dollars in thousands)                                                                                                                                                     |   | Year Ended December 31, 2010 |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------|--------|
|                                                                                                                                                                                 |   | Collateralized                                   |   |   |   |   |   | Interest |   |
|                                                                                                                                                                                 |   | Debt                                             |   |   | Mortgage |   |   | Rate |   |
|                                                                                                                                                                                 |   | Obligations                                      |   |   | Derivatives |   |   | Swap |   |
| Beginning Balance                                                                                                                                                                    |   | $                                                | 1,080  |   |   | $ | 84 |   |   | $ | - |   |
| Total gains or losses (realized/unrealized)                                                                                                                                          |   |                                             |   |   |   |   |   |   |   |   |   |   |
| Other-than-temporary impairment included in earnings                                                                                                                                 |   |                                             | (403   | ) |   |   | - |   |   |   | - |   |
| Other-than-temporary impairment (included in) transferred from other comprehensive income                                                                                            |   |                                             | (32    | ) |   |   | - |   |   |   | - |   |
| Other gains/losses included in other comprehensive income                                                                                                                            |   |                                             | 289    |   |   |   | - |   |   |   | 817 |   |
| IRLC and FSA issuances included in earnings                                                                                                                                          |   |                                             | -      |   |   |   | 702 |   |   |   | - |   |
| IRLC and FSA expirations and fair value changes included in earnings                                                                                                                 |   |                                             | -      |   |   |   | (67 | ) |   |   | - |   |
| IRLC transfers into closed loans/FSA sold loans                                                                                                                                      |   |                                             | -      |   |   |   | (501 | ) |   |   | - |   |
| Ending Balance                                                                                                                                                                       |   | $                                                | 934    |   |   | $ | 218 |   |   | $ | 817 |   |
|                                                                                                                                                                                 |   |                                             |   |   |   |   |   |   |   |   |   |   |
| The amount of total gains or losses for the period included in earnings attributable to the change in unrealized gains or losses relating to assets still held at the reporting date |   | $                                                | (403   | ) |   | $ | - |   |   | $ | - |   |

| (Dollars in thousands)                                                                                                                                                     |   | Year Ended December 31, 2009 |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------|--------|
|                                                                                                                                                                                 |   | Collateralized                                   |   |   |   |   |
|                                                                                                                                                                                 |   | Debt                                             |   |   | Mortgage |   |
|                                                                                                                                                                                 |   | Obligations                                      |   |   | Derivatives |   |
| Beginning Balance                                                                                                                                                                    |   | $                                                | -      |   |   | $ | - |   |
| Total gains or losses (realized/unrealized)                                                                                                                                          |   |                                             |   |   |   |   |   |   |
| Other-than-temporary impairment included in earnings                                                                                                                                 |   |                                             | (829   | ) |   |   | - |   |
| Other-than-temporary impairment (included in) transferred from other comprehensive income                                                                                            |   |                                             | (2,698 | ) |   |   | - |   |
| Other gains/losses included in other comprehensive income                                                                                                                            |   |                                             | 641    |   |   |   | - |   |
| Transfers in and/or out of Level 3                                                                                                                                                   |   |                                             | 3,966  |   |   |   | 84 |   |
| Ending Balance                                                                                                                                                                       |   | $                                                | 1,080  |   |   | $ | 84 |   |
|                                                                                                                                                                                 |   |                                             |   |   |   |   |   |   |
| The amount of total gains or losses for the period included in earnings attributable to the change in unrealized gains or losses relating to assets still held at the reporting date |   | $                                                | (829   | ) |   | $ | - |   |

----

|                             |   |              |   |   | Fair Value Measurements Using |   |   |           |   |   |           |   |
|----------------------------------|--------|-------------------|--------|--------|----------------------------------------------|--------|--------|----------------|--------|--------|----------------|--------|
|                             |   |              |   |   | Quoted                                       |   |   |           |   |   |           |   |   |   |   |   |   |   |
|                             |   |              |   |   | Prices in                               |   |   |           |   |   |           |   |   |   |   |   | Fair Value |   |
|                             |   |              |   |   | Active                                       |   |   | Significant    |   |   |           |   |   | Charged to |   |   | Adjustment |   |
|                             |   | For the      |   |   | Markets for                             |   |   | Other          |   |   | Significant    |   |   | Allowance |   |   | Recognized |   |
|                             |   | Year-to-Date      |   |   | Identical                                    |   |   | Observable     |   |   | Unobservable   |   |   | for Loan Losses |   |   | In Earnings |   |
|                             |   | Ended             |   |   | Assets                                       |   |   | Inputs         |   |   | Inputs         |   |   | During |   |   | During |   |
| (Dollars in thousands) |   | 12/31/10 (a) |   |   | (Level 1)                               |   |   | (Level 2) |   |   | (Level 3) |   |   | Current Period |   |   | Current Period |   |
|                             |   |              |   |   |                                         |   |   |           |   |   |           |   |   |   |   |   |   |   |
| Impaired loans                   |   | $                 | 27,335 |   |                                         | $      | -      |           |   | $      | -              |   |   | $ | 27,335 |   |   | $ | - |   |   | $ | (6,550 | ) |
| Loan foreclosures                |   |              | 5,013  |   |                                         |   | -      |           |   |   | -              |   |   |   | 5,013 |   |   |   | 4,080 |   |   |   | - |   |
| Loans transferred to HFS         |   |              | 500    |   |                                         |   | -      |           |   |   | -              |   |   |   | - |   |   |   | 325 |   |   |   | - |   |
| Other real estate                |   |              | 12,498 |   |                                         |   | -      |           |   |   | -              |   |   |   | 12,498 |   |   |   | - |   |   |   | (2,323 | ) |

|                             |   |              |   |   | Fair Value Measurements Using |   |   |           |   |   |           |   |
|----------------------------------|--------|-------------------|--------|--------|----------------------------------------------|--------|--------|----------------|--------|--------|----------------|--------|
|                             |   |              |   |   | Quoted                                       |   |   |           |   |   |           |   |   |   |   |   |   |   |
|                             |   |              |   |   | Prices in                               |   |   |           |   |   |           |   |   |   |   |   | Fair Value |   |
|                             |   |              |   |   | Active                                       |   |   | Significant    |   |   |           |   |   | Charged to |   |   | Adjustment |   |
|                             |   | For the      |   |   | Markets for                             |   |   | Other          |   |   | Significant    |   |   | Allowance |   |   | Recognized |   |
|                             |   | Year-to-Date      |   |   | Identical                                    |   |   | Observable     |   |   | Unobservable   |   |   | for Loan Losses |   |   | In Earnings |   |
|                             |   | Ended             |   |   | Assets                                       |   |   | Inputs         |   |   | Inputs         |   |   | During |   |   | During |   |
| (Dollars in thousands) |   | 12/31/09 (a) |   |   | (Level 1)                               |   |   | (Level 2) |   |   | (Level 3) |   |   | Current Period |   |   | Current Period |   |
|                             |   |              |   |   |                                         |   |   |           |   |   |           |   |   |   |   |   |   |   |
| Impaired loans                   |   | $                 | 67,492 |   |                                         | $      | -      |           |   | $      | -              |   |   | $ | 67,492 |   |   | $ | - |   |   | $ | (26,135 | ) |
| Loan foreclosures                |   |              | 17,899 |   |                                         |   | -      |           |   |   | -              |   |   |   | 17,899 |   |   |   | 12,025 |   |   |   | - |   |
| Loans transferred to HFS         |   |              | -      |   |                                         |   | -      |           |   |   | -              |   |   |   | - |   |   |   | 3,189 |   |   |   | - |   |
| Bankers bank stock               |   |              | -      |   |                                         |   | -      |           |   |   | -              |   |   |   | - |   |   |   | - |   |   |   | (78 | ) |
| Other real estate                |   |              | 11,464 |   |                                         |   | -      |           |   |   | -              |   |   |   | 11,464 |   |   |   | - |   |   |   | (3,509 | ) |
| Goodwill                         |   |              | -      |   |                                         |   | -      |           |   |   | -              |   |   |   | - |   |   |   | - |   |   |   | (32,572 | ) |
| Intangible assets                |   |              | -      |   |                                         |   | -      |           |   |   | -              |   |   |   | - |   |   |   | - |   |   |   | (1,248 | ) |

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

----

----

|                                               |   | December 31, 2010 |      |   | December 31, 2009 |   |
|----------------------------------------------------|--------|-----------------------------|-----------|--------|-----------------------------|--------|
| (Dollars in thousands)                   |   | Carrying                    |      |   | Estimated                   |   |   | Carrying |   |   | Estimated |   |
|                                               |   | Amount                      |      |   | Fair Value             |   |   | Amount |   |   | Fair Value |   |
| Financial assets:                                  |   |                        |      |   |                        |   |   |   |   |   |   |   |
| Cash and short-term investments                    |   | $                           | 142,202   |   |                        | $      | 142,202 |   |   | $ | 197,256 |   |   | $ | 197,256 |   |
| Securities available for sale                      |   |                        | 276,929   |   |                        |   | 276,929 |   |   |   | 284,550 |   |   |   | 284,550 |   |
| Loans held for sale                                |   |                        | 6,242     |   |                        |   | 6,242 |   |   |   | 10,266 |   |   |   | 10,270 |   |
| Loans held for investment                          |   |                        | 1,044,121 |   |                        |   | 965,894 |   |   |   | 1,034,326 |   |   |   | 996,382 |   |
| Agency accounts receivable                         |   |                        | 346       |   |                        |   | 346 |   |   |   | 357 |   |   |   | 357 |   |
| Accrued interest receivable                        |   |                        | 6,380     |   |                        |   | 6,380 |   |   |   | 7,598 |   |   |   | 7,598 |   |
| Nonmarketable equity investments                   |   |                        | 7,353     |   |                        |   | 7,353 |   |   |   | 7,326 |   |   |   | 7,326 |   |
| Investment in unconsolidated VIE                   |   |                        | 3,615     |   |                        |   | 3,615 |   |   |   | 928 |   |   |   | 928 |   |
| Mortgage derivative assets                         |   |                        | 246       |   |                        |   | 246 |   |   |   | 85 |   |   |   | 85 |   |
| Financial liabilities:                             |   |                        |      |   |                        |   |   |   |   |   |   |   |   |   |   |   |
| Noninterest-bearing deposits                       |   |                        | 212,199   |   |                        |   | 212,199 |   |   |   | 228,579 |   |   |   | 228,579 |   |
| NOW, MMDA and savings deposits                     |   |                        | 645,433   |   |                        |   | 645,433 |   |   |   | 583,879 |   |   |   | 583,879 |   |
| Certificates of deposit                            |   |                        | 517,780   |   |                        |   | 527,971 |   |   |   | 575,805 |   |   |   | 580,895 |   |
| Short-term borrowings                              |   |                        | 33,481    |   |                        |   | 33,481 |   |   |   | 8,642 |   |   |   | 8,642 |   |
| Other borrowings                                   |   |                        | 50,416    |   |                        |   | 53,213 |   |   |   | 122,510 |   |   |   | 124,021 |   |
| Junior subordinated debt                           |   |                        | 30,928    |   |                        |   | 25,123 |   |   |   | 30,928 |   |   |   | 15,835 |   |
| Agency accounts payable                            |   |                        | 586       |   |                        |   | 586 |   |   |   | 639 |   |   |   | 639 |   |
| Accrued interest payable                           |   |                        | 1,470     |   |                        |   | 1,470 |   |   |   | 2,933 |   |   |   | 2,933 |   |
| Mortgage derivative liabilities                    |   |                        | 28        |   |                        |   | 28 |   |   |   | 1 |   |   |   | 1 |   |
| Other financial instruments:                       |   |                        |      |   |                        |   |   |   |   |   |   |   |   |   |   |   |
| Commitments to extend credit and letters of credit |   |                        | (15       | )      |                        |   | (306 | ) |   |   | (31 | ) |   |   | (400 | ) |
| Interest rate swap                                 |   |                        | 817       |   |                        |   | 817 |   |   |   | - |   |   |   | - |   |

----

----

----

|                                             |   | Amortized |    |   | Gross Unrealized |   |   | Fair   |   |
|--------------------------------------------------|--------|-----------|---------|--------|-----------------------|--------|--------|--------|--------|
| (Dollars in thousands)                 |   | Cost      |    |   | Gains                 |   |   | Losses |   |   | Value |   |
| December 31, 2010:                               |   |      |    |   |                  |   |   |   |   |   |   |   |
| U.S. Government sponsored entities               |   | $         | 58,152  |   |                  | $      | 650    |   |   | $ | 191 |   |   | $ | 58,611 |   |
| Mortgage-backed investments                      |   |      | 170,039 |   |                  |   | 4,268  |   |   |   | 386 |   |   |   | 173,921 |   |
| Obligations of states and political subdivisions |   |      | 40,924  |   |                  |   | 1,104  |   |   |   | 200 |   |   |   | 41,828 |   |
| Collateralized debt obligations                  |   |      | 3,768   |   |                  |   | -      |   |   |   | 2,834 |   |   |   | 934 |   |
| Other debt securities                            |   |      | 1,538   |   |                  |   | 97     |   |   |   | - |   |   |   | 1,635 |   |
|                                             |   |      |    |   |                  |   |   |   |   |   |   |   |   |   |   |   |
|                                             |   | $         | 274,421 |   |                  | $      | 6,119  |   |   | $ | 3,611 |   |   | $ | 276,929 |   |
|                                             |   |      |    |   |                  |   |   |   |   |   |   |   |   |   |   |   |
| December 31, 2009:                               |   |      |    |   |                  |   |   |   |   |   |   |   |   |   |   |   |
| U.S. Treasury securities                         |   | $         | 503     |   |                  | $      | 14     |   |   | $ | - |   |   | $ | 517 |   |
| U.S. Government sponsored entities               |   |      | 54,746  |   |                  |   | 489    |   |   |   | 74 |   |   |   | 55,161 |   |
| Mortgage-backed investments                      |   |      | 162,647 |   |                  |   | 5,300  |   |   |   | 72 |   |   |   | 167,875 |   |
| Obligations of states and political subdivisions |   |      | 55,153  |   |                  |   | 1,533  |   |   |   | 100 |   |   |   | 56,586 |   |
| Collateralized debt obligations                  |   |      | 4,171   |   |                  |   | -      |   |   |   | 3,091 |   |   |   | 1,080 |   |
| Other debt securities                            |   |      | 2,385   |   |                  |   | 101    |   |   |   | - |   |   |   | 2,486 |   |
| Equity securities                                |   |      | 865     |   |                  |   | 20     |   |   |   | 40 |   |   |   | 845 |   |
|                                             |   |      |    |   |                  |   |   |   |   |   |   |   |   |   |   |   |
|                                             |   | $         | 280,470 |   |                  | $      | 7,457  |   |   | $ | 3,377 |   |   | $ | 284,550 |   |

| (Dollars in thousands)                 |   | Less Than 12 Months |   |   | 12 Months or More |   |   | Total  |   |
|--------------------------------------------------|--------|------------------------------------|--------|--------|----------------------------------|--------|--------|--------|--------|
|                                             |   | Fair                               |   |   | Unrealized                       |   |   | Fair   |   |   | Unrealized |   |   | Fair |   |   | Unrealized |   |
| December 31, 2010:                     |   | Value                              |   |   | Losses                           |   |   | Value  |   |   | Losses |   |   | Value |   |   | Losses |   |
| U.S. Government sponsored entities               |   | $                                  | 10,898 |   |                             | $      | 191    |   |   | $ | - |   |   | $ | - |   |   | $ | 10,898 |   |   | $ | 191 |   |
| Mortgage-backed investments                      |   |                               | 35,821 |   |                             |   | 386    |   |   |   | - |   |   |   | - |   |   |   | 35,821 |   |   |   | 386 |   |
| Obligations of states and political subdivisions |   |                               | 5,898  |   |                             |   | 162    |   |   |   | 317 |   |   |   | 38 |   |   |   | 6,215 |   |   |   | 200 |   |
| Collateralized debt obligations                  |   |                               | -      |   |                             |   | -      |   |   |   | 934 |   |   |   | 2,834 |   |   |   | 934 |   |   |   | 2,834 |   |
|                                             |   |                               |   |   |                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                             |   | $                                  | 52,617 |   |                             | $      | 739    |   |   | $ | 1,251 |   |   | $ | 2,872 |   |   | $ | 53,868 |   |   | $ | 3,611 |   |
|                                             |   |                               |   |   |                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| December 31, 2009:                               |   |                               |   |   |                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| U.S. Government sponsored entities               |   | $                                  | 5,093  |   |                             | $      | 74     |   |   | $ | - |   |   | $ | - |   |   | $ | 5,093 |   |   | $ | 74 |   |
| Mortgage-backed investments                      |   |                               | 4,122  |   |                             |   | 71     |   |   |   | 76 |   |   |   | 1 |   |   |   | 4,198 |   |   |   | 72 |   |
| Obligations of states and political subdivisions |   |                               | 2,423  |   |                             |   | 40     |   |   |   | 3,087 |   |   |   | 60 |   |   |   | 5,510 |   |   |   | 100 |   |
| Collateralized debt obligations                  |   |                               | -      |   |                             |   | -      |   |   |   | 1,080 |   |   |   | 3,091 |   |   |   | 1,080 |   |   |   | 3,091 |   |
| Equity securities                                |   |                               | 350    |   |                             |   | 8      |   |   |   | 84 |   |   |   | 32 |   |   |   | 434 |   |   |   | 40 |   |
|                                             |   |                               |   |   |                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                             |   | $                                  | 11,988 |   |                             | $      | 193    |   |   | $ | 4,327 |   |   | $ | 3,184 |   |   | $ | 16,315 |   |   | $ | 3,377 |   |

----

| (Dollars in thousands)                         |   | Year EndedDecember 31 |   |
|----------------------------------------------------------|--------|---------------------------------|--------|
|                                                     |   | 2010                            |   |   | 2009 |   |
| Beginning balance                                        |   | $                               | 829    |   |   | $ | - |   |
| OTTI credit losses on securities not previously impaired |   |                            | -      |   |   |   | 724 |   |
| OTTI credit losses on previously impaired securities     |   |                            | 403    |   |   |   | 105 |   |
|                                                     |   |                            |   |   |   |   |   |   |
| Ending balance                                           |   | $                               | 1,232  |   |   | $ | 829 |   |

----

|                             |   | Amortized |    |   | Fair   |   |
|----------------------------------|--------|-----------|---------|--------|--------|--------|
| (Dollars in thousands) |   | Cost      |    |   | Value  |   |
|                             |   |      |    |   |   |   |
| One year or less                 |   | $         | 32,447  |   |   | $      | 32,564 |   |
| After one through five years     |   |      | 51,748  |   |   |   | 52,776 |   |
| After five through ten years     |   |      | 15,550  |   |   |   | 15,877 |   |
| After ten years                  |   |      | 4,637   |   |   |   | 1,791 |   |
|                             |   |      | 104,382 |   |   |   | 103,008 |   |
| Mortgage-backed investments      |   |      | 170,039 |   |   |   | 173,921 |   |
|                             |   |      |    |   |   |   |   |   |
|                             |   | $         | 274,421 |   |   | $      | 276,929 |   |

|                                            |   | 2010      |    |   | 2009   |   |
|-------------------------------------------------|--------|-----------|---------|--------|--------|--------|
|                                            |   | Amortized |    |   | Fair   |   |   | Amortized |   |   | Fair |   |
| (Dollars in thousands)                |   | Cost      |    |   | Value  |   |   | Cost |   |   | Value |   |
|                                            |   |      |    |   |   |   |   |   |   |   |   |   |
| Pledged to secure public and tax deposits       |   | $         | 158,839 |   |   | $      | 161,469 |   |   | $ | 212,088 |   |   | $ | 215,830 |   |
| Pledged for Trust account deposits              |   |      | 4,877   |   |   |   | 4,990 |   |   |   | 4,208 |   |   |   | 4,324 |   |
| Pledged for FHLB borrowings                     |   |      | -       |   |   |   | - |   |   |   | 1,094 |   |   |   | 1,141 |   |
| Pledged for non-public repurchase agreements    |   |      | 37,420  |   |   |   | 37,109 |   |   |   | 23,415 |   |   |   | 24,177 |   |
| Pledged for Fed funds purchased lines of credit |   |      | 8,683   |   |   |   | 8,866 |   |   |   | 14,288 |   |   |   | 14,378 |   |
| Pledged for letter of credit obtained           |   |      | 5,691   |   |   |   | 5,717 |   |   |   | 3,701 |   |   |   | 3,744 |   |
| Pledged to an insurance commissioner            |   |      | 546     |   |   |   | 585 |   |   |   | 544 |   |   |   | 591 |   |
|                                            |   |      |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total securities pledged                        |   | $         | 216,056 |   |   | $      | 218,736 |   |   | $ | 259,338 |   |   | $ | 264,185 |   |

| (Dollars in thousands)                                                            |   | 2010   |   |   | 2009   |   |   | 2008   |   |
|---------------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
|                                                                                        |   |   |   |   |   |   |   |   |   |
| Proceeds from sales                                                                         |   | $      | 89,164 |   |   | $      | 17,240 |   |   | $ | 6,878 |   |
|                                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |
| Gross realized gains                                                                        |   |   | 2,346  |   |   |   | 467    |   |   |   | 32 |   |
| Gross realized losses                                                                       |   |   | (91    | )      |   |   | (11    | )      |   |   | (26 | ) |
|                                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |
| Net gains from sales                                                                        |   | $      | 2,255  |   |   | $      | 456    |   |   | $ | 6 |   |
| Gross recognized losses related to the credit component of other-than-temporary impairments |   | $      | 403    |   |   | $      | 829    |   |   | $ | - |   |

----

| (Dollars in thousands)      |   | December 31, 2010 |   |   | December 31, 2009 |   |
|---------------------------------------|--------|-----------------------------|--------|--------|-----------------------------|--------|
|                                  |   | Notional                    |   |   | Positive                    |   |   | Negative |   |   | Notional |   |   | Positive |   |   | Negative |   |
| Instrument                            |   | Amount                      |   |   | Fair Value             |   |   | Fair Value |   |   | Amount |   |   | Fair Value |   |   | Fair Value |   |
| Forward sale contracts                |   | $                           | 7,745  |   |                        | $      | 245 |   |   | $ | - |   |   | $ | 3,895 |   |   | $ | 77 |   |   | $ | - |   |
| Written interest rate options (locks) |   |                        | 4,398  |   |                        |   | 1 |   |   |   | 28 |   |   |   | 7,108 |   |   |   | 8 |   |   |   | 1 |   |

| (Dollars in thousands)       |   | Year Ended December 31 |   |
|----------------------------------------|--------|---------------------------------------|--------|
|                                   |   | 2010                                  |   |   | 2009 |   |
| Forward sale contracts:                |   |                                  |   |   |   |   |
| Recorded in mortgage banking income    |   | $                                     | 168    |   |   | $ | 80 |   |
| Written interest rate options (locks): |   |                                  |   |   |   |   |   |   |
| Recorded in mortgage banking income    |   |                                  | 12     |   |   |   | 17 |   |

| (Dollars in thousands) |   |     |   |   |     |   |   |   |       |   |        |   |       |   |     |
|----------------------------------|--------|----------|--------|--------|----------|--------|--------|--------|------------|--------|-------------|--------|------------|--------|----------|
|                             |   |     |   |   | Positive |   |   |   |       |   |        |   | Fixed      |   | Floating |
|                             |   | Notional |   |   | Fair     |   | Trade  |   | Effective  |   | Termination |   | Rate       |   | Rate     |
| Instrument                       |   | Amount   |   |   | Value    |   | Date   |   | Date       |   | Date        |   | Paid       |   | Received |
| Interest rate swap               |   | $        | 30,000 |   |     | $      | 817    |   | 11/09/2010 |   | 03/15/2011  |   | 03/15/2018 |   |     | 3.795 | % | 3-Month |
|                             |   |     |   |   |     |   |   |   |       |   |        |   |       |   |     |   |   | LIBOR |
|                             |   |     |   |   |     |   |   |   |       |   |        |   |       |   |     |   |   | Plus 1.33% |

----

| (Dollars in thousands)       |   | 2010   |      |   | 2009   |   |
|----------------------------------------|--------|--------|-----------|--------|--------|--------|
| Real estate loans:                     |   |   |      |   |   |   |
| Residential                            |   | $      | 235,489   |   |   | $      | 239,921 |   |
| Multifamily                            |   |   | 45,329    |   |   |   | 41,482 |   |
| Construction and land development      |   |   | 85,160    |   |   |   | 123,254 |   |
| Farmland                               |   |   | 37,061    |   |   |   | 38,508 |   |
| Nonfarm nonresidential real estate     |   |   | 479,181   |   |   |   | 440,560 |   |
| Commercial, financial and agricultural |   |   | 133,226   |   |   |   | 129,571 |   |
| Consumer                               |   |   | 44,700    |   |   |   | 45,044 |   |
|                                   |   |   |      |   |   |   |   |   |
|                                   |   | $      | 1,060,146 |   |   | $      | 1,058,340 |   |

| (Dollars in thousands)           |   | 2010   |   |   | 2009   |   |
|----------------------------------|--------|--------|--------|--------|--------|--------|
|                             |   |   |   |   |   |   |
| Loans outstanding at January 1   |   | $      | 5,018  |   |   | $      | 9,367 |   |
| New loans and advances           |   |   | 592    |   |   |   | 23,235 |   |
| Repayments                       |   |   | (2,402 | )      |   |   | (27,583 | ) |
| Retirements                      |   |   | (2,335 | )      |   |   | (1 | ) |
|                             |   |   |   |   |   |   |   |   |
| Loans outstanding at December 31 |   | $      | 873    |   |   | $      | 5,018 |   |

| (Dollars in thousands)                         |   | 2010   |   |   | 2009   |   |
|----------------------------------------------------------|--------|--------|--------|--------|--------|--------|
|                                                     |   |   |   |   |   |   |
| Nonaccrual loans                                         |   | $      | 33,127 |   |   | $      | 44,549 |   |
| Other real estate owned                                  |   |   | 31,125 |   |   |   | 23,578 |   |
|                                                     |   |   |   |   |   |   |   |   |
| Total nonperforming credit-related assets                |   | $      | 64,252 |   |   | $      | 68,127 |   |
|                                                     |   |   |   |   |   |   |   |   |
| Accruing loans past due 90 days or more                  |   | $      | 951    |   |   | $      | 2,479 |   |
| Loans restructured and in compliance with modified terms |   | $      | 18,052 |   |   | $      | 4,620 |   |

----

| (Dollars in thousands)        |   |          |   |   |          |   |   |         |   |   |   |   |   |    |   |   |       |   |      | Total                   |   |
|-----------------------------------------|--------|---------------|--------|--------|---------------|--------|--------|--------------|--------|--------|--------|--------|--------|---------|--------|--------|------------|--------|-----------|-------------------------|--------|
|                                    |   | 30-59         |   |   | 60-89         |   |   | Greater      |   |   | Total  |   |   |    |   |   | Total      |   |      | Loans > 90 |   |
|                                    |   | Days          |   |   | Days          |   |   | Than         |   |   | Past   |   |   |    |   |   | Loans      |   |      | Days and           |   |
|                                    |   | Past Due |   |   | Past Due |   |   | 90 Days |   |   | Due    |   |   | Current |   |   | Receivable |   |      | Accruing                |   |
| Construction and land development loans |   | $             | 1,295  |   |          | $      | 388    |         |   | $      | 8,265  |   |   | $       | 9,948  |   |       | $      | 75,212    |                    |   | $ | 85,160 |   |   | $ | 274 |   |
| Other commercial real estate loans      |   |          | 997    |   |          |   | 1,453  |         |   |   | 14,557 |   |   |    | 17,007 |   |       |   | 544,564   |                    |   |   | 561,571 |   |   |   | - |   |
| Asset based loans                       |   |          | -      |   |          |   | -      |         |   |   | -      |   |   |    | -      |   |       |   | 28,132    |                    |   |   | 28,132 |   |   |   | - |   |
| Other commercial loans                  |   |          | 873    |   |          |   | 48     |         |   |   | 2,028  |   |   |    | 2,949  |   |       |   | 102,145   |                    |   |   | 105,094 |   |   |   | 99 |   |
| Home equity loans                       |   |          | 453    |   |          |   | -      |         |   |   | 220    |   |   |    | 673    |   |       |   | 39,632    |                    |   |   | 40,305 |   |   |   | - |   |
| Other 1-4 family residential loans      |   |          | 2,396  |   |          |   | 452    |         |   |   | 2,549  |   |   |    | 5,397  |   |       |   | 189,787   |                    |   |   | 195,184 |   |   |   | 564 |   |
| Consumer loans                          |   |          | 315    |   |          |   | 147    |         |   |   | 46     |   |   |    | 508    |   |       |   | 44,192    |                    |   |   | 44,700 |   |   |   | 14 |   |
| Total                                   |   | $             | 6,329  |   |          | $      | 2,488  |         |   | $      | 27,665 |   |   | $       | 36,482 |   |       | $      | 1,023,664 |                    |   | $ | 1,060,146 |   |   | $ | 951 |   |

| (Dollars in thousands)        |   | 2010   |   |
|-----------------------------------------|--------|--------|--------|
| Construction and land development loans |   | $      | 10,060 |   |
| Other commercial real estate loans      |   |   | 16,960 |   |
| Asset based loans                       |   |   | -      |   |
| Other commercial loans                  |   |   | 2,151  |   |
| Home equity loans                       |   |   | 303    |   |
| Other 1-4 family residential loans      |   |   | 3,560  |   |
| Consumer loans                          |   |   | 93     |   |
| Total                                   |   | $      | 33,127 |   |

----

| (Dollars in thousands) |   |         |   |   | Other Commercial |   |    |        |   |   |                  |   |
|----------------------------------|--------|--------------|--------|--------|-----------------------|--------|---------|-------------|--------|--------|-----------------------|--------|
|                             |   | Construction |   |   | Real Estate      |   |    | Asset-Based |   |   | Other Commercial |   |
| 10 and 20                        |   | $            | -      |   |                  | $      | -       |        |   | $      | -                     |   |   | $ | 13,141 |   |
| 30-32                            |   |         | 51,077 |   |                  |   | 472,614 |        |   |   | 19,162                |   |   |   | 79,856 |   |
| 40                               |   |         | 4,111  |   |                  |   | 30,696  |        |   |   | 7,947                 |   |   |   | 3,771 |   |
| 50                               |   |         | 23,045 |   |                  |   | 58,111  |        |   |   | 1,023                 |   |   |   | 7,565 |   |
| 60                               |   |         | 6,927  |   |                  |   | 150     |        |   |   | -                     |   |   |   | 761 |   |
| Total                            |   | $            | 85,160 |   |                  | $      | 561,571 |        |   | $      | 28,132                |   |   | $ | 105,094 |   |

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

----

| (Dollars in thousands)              |   |     |   |   | Unpaid    |   |   |      |   |   | Average                            |   |
|-----------------------------------------------|--------|----------|--------|--------|-----------|--------|--------|-----------|--------|--------|------------------------------------|--------|
|                                          |   | Recorded |   |   | Principal |   |   | Specific  |   |   | Investment                         |   |
|                                          |   | Balance  |   |   | Balance   |   |   | Allowance |   |   | in Impaired Loans * |   |
| Loans without a specific valuation allowance: |   |     |   |   |      |   |   |      |   |   |                               |   |
| Construction and land development loans       |   | $        | 16,598 |   |      | $      | 24,993 |      |   | $      | -                                  |   |   | $ | 16,708 |   |
| Other commercial real estate loans            |   |     | 49,544 |   |      |   | 53,879 |      |   |   | -                                  |   |   |   | 50,421 |   |
| Asset based loans                             |   |     | -      |   |      |   | -      |      |   |   | -                                  |   |   |   | - |   |
| Other commercial loans                        |   |     | 7,028  |   |      |   | 8,049  |      |   |   | -                                  |   |   |   | 7,288 |   |
| Home equity loans                             |   |     | 508    |   |      |   | 508    |      |   |   | -                                  |   |   |   | 513 |   |
| Other 1-4 family residential loans            |   |     | 4,695  |   |      |   | 4,961  |      |   |   | -                                  |   |   |   | 4,721 |   |
| Consumer loans                                |   |     | 474    |   |      |   | 485    |      |   |   | -                                  |   |   |   | 505 |   |
|                                          |   |     |   |   |      |   |   |      |   |   |                               |   |   |   |   |   |
| Loans with a specific valuation allowance:    |   |     |   |   |      |   |   |      |   |   |                               |   |   |   |   |   |
| Construction and land development loans       |   | $        | 12,900 |   |      | $      | 13,921 |      |   | $      | 2,871                              |   |   | $ | 12,936 |   |
| Other commercial real estate loans            |   |     | 8,716  |   |      |   | 8,716  |      |   |   | 1,582                              |   |   |   | 8,940 |   |
| Asset based loans                             |   |     | -      |   |      |   | -      |      |   |   | -                                  |   |   |   | - |   |
| Other commercial loans                        |   |     | 1,268  |   |      |   | 1,419  |      |   |   | 809                                |   |   |   | 1,387 |   |
| Home equity loans                             |   |     | 45     |   |      |   | 45     |      |   |   | 45                                 |   |   |   | 45 |   |
| Other 1-4 family residential loans            |   |     | 2,304  |   |      |   | 2,304  |      |   |   | 765                                |   |   |   | 2,317 |   |
| Consumer loans                                |   |     | 129    |   |      |   | 129    |      |   |   | 60                                 |   |   |   | 138 |   |
|                                          |   |     |   |   |      |   |   |      |   |   |                               |   |   |   |   |   |
| Total:                                        |   |     |   |   |      |   |   |      |   |   |                               |   |   |   |   |   |
| Construction and land development loans       |   | $        | 29,498 |   |      | $      | 38,914 |      |   | $      | 2,871                              |   |   | $ | 29,644 |   |
| Other commercial real estate loans            |   |     | 58,260 |   |      |   | 62,595 |      |   |   | 1,582                              |   |   |   | 59,361 |   |
| Asset based loans                             |   |     | -      |   |      |   | -      |      |   |   | -                                  |   |   |   | - |   |
| Other commercial loans                        |   |     | 8,296  |   |      |   | 9,468  |      |   |   | 809                                |   |   |   | 8,675 |   |
| Home equity loans                             |   |     | 553    |   |      |   | 553    |      |   |   | 45                                 |   |   |   | 558 |   |
| Other 1-4 family residential loans            |   |     | 6,999  |   |      |   | 7,265  |      |   |   | 765                                |   |   |   | 7,038 |   |
| Consumer loans                                |   |     | 603    |   |      |   | 614    |      |   |   | 60                                 |   |   |   | 643 |   |

----

| (Dollars in thousands)                |   |         |   |   |           |   |    |       |   |   |        |   |   |     |    |   |        |   |   |   |   |
|-------------------------------------------------|--------|--------------|--------|--------|----------------|--------|---------|------------|--------|--------|-------------|--------|--------|----------|---------|--------|-------------|--------|--------|--------|--------|
|                                            |   | Construction |   |   | Other CRE |   |    | Commercial |   |   | Residential |   |   | Consumer |    |   | Unallocated |   |   | Total  |   |
| Allowance for loan losses:                      |   |         |   |   |           |   |    |       |   |   |        |   |   |     |    |   |        |   |   |   |   |
| Balance, beginning of year                      |   | $            | 7,416  |   |           | $      | 5,959   |       |   | $      | 5,893       |   |   | $        | 3,407   |   |        | $      | 1,339  |   |   | $ | - |   |   | $ | 24,014 |   |
| Provision charged to expense                    |   |         | 693    |   |           |   | 4,164   |       |   |   | 1,885       |   |   |     | 2,027   |   |        |   | 451    |   |   |   | - |   |   |   | 9,220 |   |
| Losses charged off                              |   |         | (5,471 | )      |           |   | (7,854  | )          |   |   | (3,617      | )      |   |     | (1,854  | )      |        |   | (859   | )      |   |   | - |   |   |   | (19,655 | ) |
| Recoveries                                      |   |         | 1,304  |   |           |   | 494     |       |   |   | 281         |   |   |     | 121     |   |        |   | 246    |   |   |   | - |   |   |   | 2,446 |   |
| Balance, end of year                            |   | $            | 3,942  |   |           | $      | 2,763   |       |   | $      | 4,442       |   |   | $        | 3,701   |   |        | $      | 1,177  |   |   | $ | - |   |   | $ | 16,025 |   |
| Ending balance:                                 |   |         |   |   |           |   |    |       |   |   |        |   |   |     |    |   |        |   |   |   |   |   |   |   |   |   |   |   |
| individually evaluated for impairment           |   | $            | 2,871  |   |           | $      | 1,582   |       |   | $      | 809         |   |   | $        | 810     |   |        | $      | 60     |   |   | $ | - |   |   | $ | 6,132 |   |
| Ending balance:                                 |   |         |   |   |           |   |    |       |   |   |        |   |   |     |    |   |        |   |   |   |   |   |   |   |   |   |   |   |
| collectively evaluated for impairment           |   | $            | 1,071  |   |           | $      | 1,181   |       |   | $      | 3,633       |   |   | $        | 2,891   |   |        | $      | 1,117  |   |   | $ | - |   |   | $ | 9,893 |   |
| Ending balance:                                 |   |         |   |   |           |   |    |       |   |   |        |   |   |     |    |   |        |   |   |   |   |   |   |   |   |   |   |   |
| loans acquired with deteriorated credit quality |   | $            | -      |   |           | $      | -       |       |   | $      | -           |   |   | $        | -       |   |        | $      | -      |   |   | $ | - |   |   | $ | - |   |
|                                            |   |         |   |   |           |   |    |       |   |   |        |   |   |     |    |   |        |   |   |   |   |   |   |   |   |   |   |   |
| Loans:                                          |   |         |   |   |           |   |    |       |   |   |        |   |   |     |    |   |        |   |   |   |   |   |   |   |   |   |   |   |
| Ending balance                                  |   | $            | 85,160 |   |           | $      | 561,571 |       |   | $      | 133,226     |   |   | $        | 235,489 |   |        | $      | 44,700 |   |   | $ | - |   |   | $ | 1,060,146 |   |
| Ending balance:                                 |   |         |   |   |           |   |    |       |   |   |        |   |   |     |    |   |        |   |   |   |   |   |   |   |   |   |   |   |
| individually evaluated for impairment           |   | $            | 29,498 |   |           | $      | 58,260  |       |   | $      | 8,296       |   |   | $        | 7,552   |   |        | $      | 603    |   |   | $ | - |   |   | $ | 104,209 |   |
| Ending balance:                                 |   |         |   |   |           |   |    |       |   |   |        |   |   |     |    |   |        |   |   |   |   |   |   |   |   |   |   |   |
| collectively evaluated for impairment           |   | $            | 55,662 |   |           | $      | 503,311 |       |   | $      | 124,930     |   |   | $        | 227,937 |   |        | $      | 44,097 |   |   | $ | - |   |   | $ | 955,937 |   |
| Ending balance:                                 |   |         |   |   |           |   |    |       |   |   |        |   |   |     |    |   |        |   |   |   |   |   |   |   |   |   |   |   |
| loans acquired with deteriorated credit quality |   | $            | -      |   |           | $      | -       |       |   | $      | -           |   |   | $        | -       |   |        | $      | -      |   |   | $ | - |   |   | $ | - |   |

----

| (Dollars in thousands)          |   | 2010   |    |   | 2009   |   |
|-------------------------------------------|--------|--------|---------|--------|--------|--------|
|                                      |   |   |    |   |   |   |
| Restructured loans with an allowance      |   | $      | 5,610   |   |   | $      | 3,783 |   |
| Other impaired loans with an allowance    |   |   | 19,752  |   |   |   | 40,897 |   |
| Restructured loans without an allowance   |   |   | 12,500  |   |   |   | 837 |   |
| Other impaired loans without an allowance |   |   | 66,347  |   |   |   | 94,710 |   |
|                                      |   |   |    |   |   |   |   |   |
| Total impaired loans                      |   | $      | 104,209 |   |   | $      | 140,227 |   |
|                                      |   |   |    |   |   |   |   |   |
| Allowance for restructured loans          |   | $      | 1,297   |   |   | $      | 1,974 |   |
| Allowance for other impaired loans        |   | $      | 4,835   |   |   | $      | 11,419 |   |

| (Dollars in thousands)             |   | 2010   |    |   | 2009   |   |    | 2008   |   |
|----------------------------------------------|--------|--------|---------|--------|--------|--------|---------|--------|--------|
|                                         |   |   |    |   |   |   |    |   |   |
| Average balance of impaired loans            |   | $      | 126,102 |   |   | $      | 148,762 |   |   | $ | 91,337 |   |
| Interest income recognized on impaired loans |   |   | 5,667   |   |   |   | 6,285   |   |   |   | 4,941 |   |

| (Dollars in thousands)                                                    |   | 2010   |    |   | 2009   |   |    | 2008   |   |
|-------------------------------------------------------------------------------------|--------|--------|---------|--------|--------|--------|---------|--------|--------|
|                                                                                |   |   |    |   |   |   |    |   |   |
| Balance at January 1                                                                |   | $      | 24,014  |   |   | $      | 24,918  |   |   | $ | 14,217 |   |
|                                                                                |   |   |    |   |   |   |    |   |   |   |   |   |
| Loans charged off                                                                   |   |   | (19,330 | )      |   |   | (48,051 | )      |   |   | (9,706 | ) |
| Charge offs resulting from write-downs of loans transferred to held for sale status |   |   | (325    | )      |   |   | (3,189  | )      |   |   | - |   |
| Recoveries                                                                          |   |   | 2,446   |   |   |   | 735     |   |   |   | 673 |   |
| Net charge-offs                                                                     |   |   | (17,209 | )      |   |   | (50,505 | )      |   |   | (9,033 | ) |
|                                                                                |   |   |    |   |   |   |    |   |   |   |   |   |
| Provision for loan losses                                                           |   |   | 9,220   |   |   |   | 49,601  |   |   |   | 19,734 |   |
|                                                                                |   |   |    |   |   |   |    |   |   |   |   |   |
| Balance at December 31                                                              |   | $      | 16,025  |   |   | $      | 24,014  |   |   | $ | 24,918 |   |

----

| (Dollars in thousands)               |   | 2010   |   |   | 2009   |   |
|------------------------------------------------|--------|--------|--------|--------|--------|--------|
|                                           |   |   |   |   |   |   |
| Land                                           |   | $      | 14,178 |   |   | $      | 14,278 |   |
| Buildings                                      |   |   | 36,292 |   |   |   | 37,304 |   |
| Furniture, fixtures and equipment              |   |   | 19,890 |   |   |   | 20,804 |   |
| Leasehold improvements                         |   |   | 890    |   |   |   | 890 |   |
| Construction in progress                       |   |   | 428    |   |   |   | 380 |   |
|                                           |   |   | 71,678 |   |   |   | 73,656 |   |
| Less accumulated depreciation and amortization |   |   | 30,982 |   |   |   | 30,737 |   |
|                                           |   |   |   |   |   |   |   |   |
|                                           |   | $      | 40,696 |   |   | $      | 42,919 |   |

| (Dollars in thousands) |   | 2010   |   |   | 2009   |   |   | 2008   |   |
|-----------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
|                        |   |   |   |   |   |   |   |   |   |
| Buildings and office space  |   | $      | 581    |   |   | $      | 844    |   |   | $ | 815 |   |
| Computer equipment          |   |   | 284    |   |   |   | 399    |   |   |   | 713 |   |
| Other equipment and autos   |   |   | 184    |   |   |   | 276    |   |   |   | 317 |   |
|                        |   |   | 1,049  |   |   |   | 1,519  |   |   |   | 1,845 |   |
| Rental income               |   |   | (42    | )      |   |   | (47    | )      |   |   | (56 | ) |
|                        |   |   |   |   |   |   |   |   |   |   |   |   |
| Net rent expense            |   | $      | 1,007  |   |   | $      | 1,472  |   |   | $ | 1,789 |   |

| (Dollars in thousands)  |   |   |   |
|------------------------------|--------|--------|--------|
| 2011                         |   | $      | 635    |   |
| 2012                         |   |   | 533    |   |
| 2013                         |   |   | 373    |   |
| 2014                         |   |   | 288    |   |
| 2015                         |   |   | 287    |   |
| After 2015                   |   |   | 429    |   |
|                         |   |   |   |   |
| Total minimum lease payments |   | $      | 2,545  |   |

----

|                             |   |     |    |   |     |   |   | Customer |   |   |       |   |   |    |   |
|----------------------------------|--------|----------|---------|--------|----------|--------|--------|----------|--------|--------|------------|--------|--------|---------|--------|
|                             |   |     |    |   | Core     |   |   | Renewal  |   |   | Noncompete |   |   | Banking |   |
| (Dollars in thousands) |   | Goodwill |    |   | Deposits |   |   | Lists    |   |   | Agreements |   |   | Charter |   |
|                             |   |     |    |   |     |   |   |     |   |   |       |   |   |    |   |
| Balance at January 1, 2009       |   | $        | 32,572  |   |     | $      | 5,865  |     |   | $      | 198        |   |   | $       | 39     |   |   | $ | 1,025 |   |
| Amortization expense             |   |     | -       |   |     |   | (426   | )        |   |   | (7         | )      |   |    | (7     | ) |   |   | - |   |
| Impairment charge                |   |     | (32,572 | )      |     |   | -      |     |   |   | (191       | )      |   |    | (32    | ) |   |   | (1,025 | ) |
|                             |   |     |    |   |     |   |   |     |   |   |       |   |   |    |   |   |   |   |   |   |
| Balance at December 31, 2009     |   | $        | -       |   |     | $      | 5,439  |     |   | $      | -          |   |   | $       | -      |   |   | $ | - |   |
|                             |   |     |    |   |     |   |   |     |   |   |       |   |   |    |   |   |   |   |   |   |
| Amortization expense             |   |     | -       |   |     |   | (426   | )        |   |   | -          |   |   |    | -      |   |   |   | - |   |
|                             |   |     |    |   |     |   |   |     |   |   |       |   |   |    |   |   |   |   |   |   |
| Balance at December 31, 2010     |   | $        | -       |   |     | $      | 5,013  |     |   | $      | -          |   |   | $       | -      |   |   | $ | - |   |
|                             |   |     |    |   |     |   |   |     |   |   |       |   |   |    |   |   |   |   |   |   |
| Estimated amortization expense   |   |     |    |   |     |   |   |     |   |   |       |   |   |    |   |   |   |   |   |   |
| 2011                             |   |     |    |   |     | $      | 426    |     |   |   |       |   |   |    |   |   |   |   |   |   |
| 2012                             |   |     |    |   |     |   | 426    |     |   |   |       |   |   |    |   |   |   |   |   |   |
| 2013                             |   |     |    |   |     |   | 426    |     |   |   |       |   |   |    |   |   |   |   |   |   |
| 2014                             |   |     |    |   |     |   | 426    |     |   |   |       |   |   |    |   |   |   |   |   |   |
| 2015                             |   |     |    |   |     |   | 426    |     |   |   |       |   |   |    |   |   |   |   |   |   |

|                             |   | Gross    |   |   |         |   |   | Net      |   |
|----------------------------------|--------|----------|--------|--------|--------------|--------|--------|----------|--------|
|                             |   | Carrying |   |   | Accumulated  |   |   | Carrying |   |
| (Dollars in thousands) |   | Amount   |   |   | Amortization |   |   | Amount   |   |
|                             |   |     |   |   |         |   |   |     |   |
| December 31, 2010:               |   |     |   |   |         |   |   |     |   |
|                             |   |     |   |   |         |   |   |     |   |
| Customer renewal lists           |   | $        | -      |   |         | $      | -      |     |   | $ | - |   |
| Noncompete agreements            |   |     | -      |   |         |   | -      |     |   |   | - |   |
| Core deposits                    |   |     | 7,060  |   |         |   | 2,047  |     |   |   | 5,013 |   |
|                             |   |     |   |   |         |   |   |     |   |   |   |   |
|                             |   | $        | 7,060  |   |         | $      | 2,047  |     |   | $ | 5,013 |   |
|                             |   |     |   |   |         |   |   |     |   |   |   |   |
| December 31, 2009:               |   |     |   |   |         |   |   |     |   |   |   |   |
|                             |   |     |   |   |         |   |   |     |   |   |   |   |
| Customer renewal lists           |   | $        | 513    |   |         | $      | 513    |     |   | $ | - |   |
| Noncompete agreements            |   |     | 413    |   |         |   | 413    |     |   |   | - |   |
| Core deposits                    |   |     | 7,060  |   |         |   | 1,621  |     |   |   | 5,439 |   |
|                             |   |     |   |   |         |   |   |     |   |   |   |   |
|                             |   | $        | 7,986  |   |         | $      | 2,547  |     |   | $ | 5,439 |   |

----

| (Dollars in thousands)                     |   | 2010   |   |   | 2009   |   |
|------------------------------------------------------|--------|--------|--------|--------|--------|--------|
|                                                 |   |   |   |   |   |   |
| Cash surrender value of bank-owned life insurance    |   | $      | 21,790 |   |   | $      | 21,082 |   |
| Federal Home Loan Bank stock                         |   |   | 7,353  |   |   |   | 7,326 |   |
| Income taxes receivable                              |   |   | 129    |   |   |   | 8,498 |   |
| Deferred income tax                                  |   |   | 14,563 |   |   |   | 15,219 |   |
| Investment in First M&F Statutory Trust I        |   |   | 928    |   |   |   | 928 |   |
| Investment in low income housing tax credit entities |   |   | 2,687  |   |   |   | - |   |
| Other                                                |   |   | 3,806  |   |   |   | 3,983 |   |
|                                                 |   |   |   |   |   |   |   |   |
|                                                 |   | $      | 51,256 |   |   | $      | 57,036 |   |

| (Dollars in thousands)                          |   | 2010   |      |   | 2009   |   |
|-----------------------------------------------------------|--------|--------|-----------|--------|--------|--------|
|                                                      |   |   |      |   |   |   |
| Noninterest-bearing                                       |   | $      | 212,199   |   |   | $      | 228,579 |   |
|                                                      |   |   |      |   |   |   |   |   |
| Interest-bearing:                                         |   |   |      |   |   |   |   |   |
| NOW and money market deposits                             |   |   | 530,664   |   |   |   | 471,115 |   |
| Savings deposits                                          |   |   | 114,769   |   |   |   | 112,764 |   |
| Core certificates of deposit of $100 thousand or more     |   |   | 234,500   |   |   |   | 266,131 |   |
| Other core certificates of deposit                        |   |   | 268,272   |   |   |   | 290,602 |   |
| Brokered certificates of deposit of $100 thousand or more |   |   | 11,934    |   |   |   | 11,788 |   |
| Other brokered certificates of deposit                    |   |   | 3,074     |   |   |   | 7,284 |   |
| Total interest-bearing                                    |   |   | 1,163,213 |   |   |   | 1,159,684 |   |
|                                                      |   |   |      |   |   |   |   |   |
| Total deposits                                            |   | $      | 1,375,412 |   |   | $      | 1,388,263 |   |

| (Dollars in thousands) |   |   |    |
|-----------------------------|--------|--------|---------|
| 2011                        |   | $      | 304,418 |   |
| 2012                        |   |   | 125,471 |   |
| 2013                        |   |   | 34,615  |   |
| 2014                        |   |   | 9,384   |   |
| 2015                        |   |   | 43,888  |   |
| After 2015                  |   |   | 4       |   |
|                        |   |   |    |   |
|                        |   | $      | 517,780 |   |

----

| (Dollars in thousands)               |   |                     |   |   | Weighted          |   |
|------------------------------------------------|--------|--------------------------|--------|--------|-------------------|--------|
|                                           |   | Balance Outstanding |   |   | Average Rate |   |
|                                           |   | Maximum                  |   |   | Average           |   |   | At |   |   | During |   |   | At |   |
|                                           |   | Month End           |   |   | Daily             |   |   | Year End |   |   | Year |   |   | Year End |   |
| 2010:                                          |   |                     |   |   |              |   |   |   |   |   |   |   |   |   |   |
| Federal funds purchased                        |   | $                        | -      |   |              | $      | - |   |   | $ | - |   |   |   | - | % |   |   | - | % |
| Securities sold under agreements to repurchase |   |                     | 41,897 |   |              |   | 19,112 |   |   |   | 33,481 |   |   |   | 0.35 | % |   |   | 0.17 | % |
|                                           |   |                     |   |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                           |   | $                        | 41,897 |   |              | $      | 19,112 |   |   | $ | 33,481 |   |   |   |   |   |   |   |   |   |
|                                           |   |                     |   |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 2009:                                          |   |                     |   |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Federal funds purchased                        |   | $                        | -      |   |              | $      | 117 |   |   | $ | - |   |   |   | 0.80 | % |   |   | - | % |
| Securities sold under agreements to repurchase |   |                     | 12,985 |   |              |   | 10,331 |   |   |   | 8,642 |   |   |   | 0.93 | % |   |   | 0.61 | % |
|                                           |   |                     |   |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                           |   | $                        | 12,985 |   |              | $      | 10,448 |   |   | $ | 8,642 |   |   |   |   |   |   |   |   |   |
|                                           |   |                     |   |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 2008:                                          |   |                     |   |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Federal funds purchased                        |   | $                        | 325    |   |              | $      | 984 |   |   | $ | - |   |   |   | 2.62 | % |   |   | - | % |
| Securities sold under agreements to repurchase |   |                     | 20,879 |   |              |   | 12,876 |   |   |   | 9,728 |   |   |   | 2.34 | % |   |   | 1.76 | % |
|                                           |   |                     |   |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                           |   | $                        | 21,204 |   |              | $      | 13,860 |   |   | $ | 9,728 |   |   |   |   |   |   |   |   |   |

| (Dollars in thousands)                                                                                                                                                                                         |   | 2010   |   |   | 2009   |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|
|                                                                                                                                                                                                                     |   |   |   |   |   |   |
| Company’s line of credit in the amount of $5,000,000, maturing in February 2011; secured by approximately 29% of the Bank’s common stock; interest payable quarterly at the prime rate with a floor of 3.50% |   | $      | 3,417  |   |   | $      | 1,916 |   |
|                                                                                                                                                                                                                     |   |   |   |   |   |   |   |   |
| Bank’s advances from Federal Home Loan Banks                                                                                                                                                                       |   |   | 46,999 |   |   |   | 120,594 |   |
|                                                                                                                                                                                                                     |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                                                     |   | $      | 50,416 |   |   | $      | 122,510 |   |
|                                                                                                                                                                                                                     |   |   |   |   |   |   |   |   |
| Company’s junior subordinated debentures, interest payable quarterly at 6.44% through March 2011, and payable quarterly at 90-day LIBOR plus 1.33% through March 2036; redeemable at par after March 2011          |   | $      | 30,928 |   |   | $      | 30,928 |   |

----

| (Dollars in thousands)                               |   | 2010   |       |   | 2009   |   |
|----------------------------------------------------------------|--------|--------|------------|--------|--------|--------|
|                                                           |   |   |       |   |   |   |
| Single payment advances maturing within 12 months of year end: |   |   |       |   |   |   |
| Balance                                                        |   | $      | 686        |   |   | $      | 67,500 |   |
| Range of rates                                                 |   |   | 0.16       | %      |   |   | 2.72%-6.50 | % |
|                                                           |   |   |       |   |   |   |   |   |
| Single payment advances maturing after 12 months of year end:  |   |   |       |   |   |   |   |   |
| Balance                                                        |   | $      | -          |   |   | $      | - |   |
| Range of rates                                                 |   |   | -          |   |   |   | - |   |
| Range of maturities                                            |   |   | -          |   |   |   | - |   |
|                                                           |   |   |       |   |   |   |   |   |
| Amortizing advances:                                           |   |   |       |   |   |   |   |   |
| Balance                                                        |   | $      | 46,313     |   |   | $      | 53,094 |   |
| Monthly payment amount                                         |   |   | 550        |   |   |   | 565 |   |
| Range of rates                                                 |   |   | 3.17%-7.83 | %      |   |   | 3.17%-8.48 | % |
| Range of maturities                                            |   |   | 2011-2020  |   |   |   | 2010-2020 |   |

| (Dollars in thousands) |   |   |   |
|----------------------------------|--------|--------|--------|
| 2011                             |   | $      | 7,290  |   |
| 2012                             |   |   | 6,494  |   |
| 2013                             |   |   | 19,488 |   |
| 2014                             |   |   | 2,260  |   |
| 2015                             |   |   | 2,346  |   |
| After 2015                       |   |   | 9,121  |   |
|                             |   |   |   |   |
|                             |   | $      | 46,999 |   |

----

| (Dollars in thousands) |   | 2010   |    |   | 2009   |   |
|----------------------------------|--------|--------|---------|--------|--------|--------|
|                             |   |   |    |   |   |   |
| Commitments to extend credit     |   | $      | 122,448 |   |   | $      | 145,335 |   |
| Standby letters of credit        |   |   | 6,169   |   |   |   | 3,336 |   |

----

| (Dollars in thousands)                                                          |   | Gross  |   |   | Tax    |   |   | Net    |   |
|--------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
|                                                                                 |   |   |   |   |   |   |   |   |   |
| December 31, 2010:                                                                   |   |   |   |   |   |   |   |   |   |
| Net unrealized gain on securities available for sale                                 |   | $      | 5,342  |   |   | $      | 1,993  |   |   | $ | 3,349 |   |
| Net unrealized loss on other-than-temporarily impaired securities available for sale |   |   | (2,834 | )      |   |   | (1,057 | )      |   |   | (1,777 | ) |
| Net unamortized pension costs                                                        |   |   | (2,927 | )      |   |   | (1,092 | )      |   |   | (1,835 | ) |
| Net unrealized gain on cash flow hedge                                               |   |   | 817    |   |   |   | 305    |   |   |   | 512 |   |
|                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                 |   | $      | 398    |   |   | $      | 149    |   |   | $ | 249 |   |
|                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |
| December 31, 2009:                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net unrealized gain on securities available for sale                                 |   | $      | 7,171  |   |   | $      | 2,675  |   |   | $ | 4,496 |   |
| Net unrealized loss on other-than-temporarily impaired securities available for sale |   |   | (3,091 | )      |   |   | (1,153 | )      |   |   | (1,938 | ) |
| Net unamortized pension costs                                                        |   |   | (3,476 | )      |   |   | (1,297 | )      |   |   | (2,179 | ) |
|                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                 |   | $      | 604    |   |   | $      | 225    |   |   | $ | 379 |   |
|                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |
| December 31, 2008:                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net unrealized gain on securities available for sale                                 |   | $      | 3,263  |   |   | $      | 1,217  |   |   | $ | 2,046 |   |
| Net unamortized pension costs                                                        |   |   | (4,423 | )      |   |   | (1,650 | )      |   |   | (2,773 | ) |
|                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                 |   | $      | (1,160 | )      |   | $      | (433   | )      |   | $ | (727 | ) |

----

----

| (Dollars in thousands, except share data) |   | 2010   |   |   | 2009   |   |   | 2008   |   |
|--------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
|                                                               |   |   |   |   |   |   |   |   |   |
| Stock option expense recognized, gross                             |   | $      | 11     |   |   | $      | 17     |   |   | $ | 19 |   |
| Adjustment for actual vs expected forfeitures                      |   |   | -      |   |   |   | -      |   |   |   | (10 | ) |
| Stock option expense recognized, net                               |   |   | 11     |   |   |   | 17     |   |   |   | 9 |   |
|                                                               |   |   |   |   |   |   |   |   |   |   |   |   |
| Restricted stock award expenses recognized, gross                  |   |   | 170    |   |   |   | 256    |   |   |   | 321 |   |
| Adjustment for actual vs expected forfeitures                      |   |   | (120   | )      |   |   | (200   | )      |   |   | (121 | ) |
| Restricted stock award expenses recognized, net                    |   |   | 50     |   |   |   | 56     |   |   |   | 200 |   |
|                                                               |   |   |   |   |   |   |   |   |   |   |   |   |
| Total stock-based compensation                                     |   |   | 61     |   |   |   | 73     |   |   |   | 209 |   |
| Income tax benefits                                                |   |   | (23    | )      |   |   | (27    | )      |   |   | (78 | ) |
|                                                               |   |   |   |   |   |   |   |   |   |   |   |   |
| Net stock-based compensation recognized                            |   | $      | 38     |   |   | $      | 46     |   |   | $ | 131 |   |

----

|                |   | 2005 Plan |    |   | 1999 Plan        |   |
|--------------------------|--------|----------------|---------|--------|-----------------------|--------|
|                     |   |           |    |   | Restricted Stock |   |   | Stock Options |   |   | Stock Options |   |
|                     |   |           |    |   |                  |   |   | Weighted |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                     |   |           |    |   |                  |   |   | Average |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                     |   | Shares         |    |   |                  |   |   | Grant |   |   |   |   |   | Weighted |   |   |   |   |   | Weighted |   |
|                     |   | Available      |    |   | Number                |   |   | Date |   |   | Number |   |   | Average |   |   | Number |   |   | Average |   |
|                     |   | for            |    |   | of                    |   |   | Fair |   |   | of |   |   | Exercise |   |   | of |   |   | Exercise |   |
|                     |   | Grant          |    |   | Shares                |   |   | Value |   |   | Shares |   |   | Price |   |   | Shares |   |   | Price |   |
| Balance, January 1, 2008 |   |           | 563,984 |   |                  |   | 123,516 |   |   | $ | 16.888 |   |   |   | 5,000 |   |   | $ | 19.033 |   |   |   | 119,900 |   |   | $ | 15.995 |   |
| Awards Granted           |   |           | (7,000  | )      |                  |   | - |   |   |   | - |   |   |   | 7,000 |   |   |   | 13.840 |   |   |   | - |   |   |   | - |   |
| Vested                   |   |           | -       |   |                  |   | (3,266 | ) |   |   | 18.230 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Forfeitures              |   |           | 14,000  |   |                  |   | (14,000 | ) |   |   | 17.075 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| December 31, 2008        |   |           | 570,984 |   |                  |   | 106,250 |   |   |   | 16.823 |   |   |   | 12,000 |   |   |   | 16.004 |   |   |   | 119,900 |   |   |   | 15.995 |   |
| Awards Granted           |   |           | (4,000  | )      |                  |   | - |   |   |   | - |   |   |   | 4,000 |   |   |   | 5.140 |   |   |   | - |   |   |   | - |   |
| Vested                   |   |           | -       |   |                  |   | (6,000 | ) |   |   | 16.855 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Forfeitures              |   |           | 23,250  |   |                  |   | (23,250 | ) |   |   | 16.754 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Expired                  |   |           | -       |   |                  |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (98,300 | ) |   |   | 16.195 |   |
| December 31, 2009        |   |           | 590,234 |   |                  |   | 77,000 |   |   |   | 16.841 |   |   |   | 16,000 |   |   |   | 13.288 |   |   |   | 21,600 |   |   |   | 15.087 |   |
| Awards Granted           |   |           | (2,000  | )      |                  |   | - |   |   |   | - |   |   |   | 2,000 |   |   |   | 4.890 |   |   |   | - |   |   |   | - |   |
| Vested                   |   |           | -       |   |                  |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Forfeitures              |   |           | 15,400  |   |                  |   | (14,000 | ) |   |   | 16.278 |   |   |   | (1,400 | ) |   |   | 16.051 |   |   |   | (200 | ) |   |   | 17.000 |   |
| Expired                  |   |           | -       |   |                  |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (5,600 | ) |   |   | 12.127 |   |
| December, 31, 2010       |   |           | 603,634 |   |                  |   | 63,000 |   |   | $ | 16.966 |   |   |   | 16,600 |   |   | $ | 12.043 |   |   |   | 15,800 |   |   | $ | 16.112 |   |

|             |                         |   |        |   |   | Weighted    |   |   | Weighted    |   |   |        |   |   | Weighted    |   |
|------------------|------------------------------|--------|-------------|--------|--------|-------------|--------|--------|-------------|--------|--------|-------------|--------|--------|-------------|--------|
|             |                         |   |        |   |   | Average     |   |   | Average     |   |   |        |   |   | Average     |   |
|             |                         |   |        |   |   | Remaining   |   |   | Exercise    |   |   |        |   |   | Exercise    |   |
|             |                         |   |        |   |   | Contractual |   |   | Price-      |   |   |        |   |   | Price-      |   |
| Exercise         |                         |   | Options     |   |   | Life        |   |   | Options     |   |   | Options     |   |   | Options     |   |
| Price Range |                         |   | Outstanding |   |   | (Years)     |   |   | Outstanding |   |   | Exercisable |   |   | Exercisable |   |
| $                |  4.89 - 5.14  |   |        |   | 6,000  |        |   |   | 8.67        |   |   | $           | 5.06   |   |        |   | 800 |   |   | $ | 5.14 |   |
|             | 12.63 - 13.84           |   |        |   | 11,200 |        |   |   | 4.57        |   |   |        | 13.30  |   |        |   | 7,600 |   |   |   | 13.04 |   |
|             | 17.00 - 19.06           |   |        |   | 15,200 |        |   |   | 3.97        |   |   |        | 18.01  |   |        |   | 14,200 |   |   |   | 17.94 |   |
|             |                         |   |        |   |   |        |   |   |        |   |   |        |   |   |        |   |   |   |   |   |   |   |
|             |                         |   |        |   | 32,400 |        |   |   | 5.05        |   |   | $           | 14.03  |   |        |   | 22,600 |   |   | $ | 15.84 |   |

----

| (Dollars in thousands)             |   | 2010   |   |   | 2009   |   |   | 2008   |   |
|-----------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
|                                    |   |   |   |   |   |   |   |   |   |
| Postage and shipping                    |   | $      | 875    |   |   | $      | 926    |   |   | $ | 931 |   |
| Stationery and supplies                 |   |   | 696    |   |   |   | 814    |   |   |   | 868 |   |
| Accounting, legal and professional fees |   |   | 2,324  |   |   |   | 2,160  |   |   |   | 1,704 |   |
| Insurance expense                       |   |   | 836    |   |   |   | 782    |   |   |   | 802 |   |
| Other                                   |   |   | 5,883  |   |   |   | 6,274  |   |   |   | 5,575 |   |
|                                    |   |   |   |   |   |   |   |   |   |   |   |   |
|                                    |   | $      | 10,614 |   |   | $      | 10,956 |   |   | $ | 9,880 |   |

----

| (Dollars in thousands)                       |   | Federal |    |   | State  |   |   | Total  |   |
|--------------------------------------------------------|--------|---------|---------|--------|--------|--------|--------|--------|--------|
| 2010:                                                  |   |    |    |   |   |   |   |   |   |
| Current                                                |   | $       | 4       |   |   | $      | (137   | )      |   | $ | (133 | ) |
| Deferred                                               |   |    | 417     |   |   |   | 318    |   |   |   | 735 |   |
| Total                                                  |   | $       | 421     |   |   | $      | 181    |   |   | $ | 602 |   |
|                                                   |   |    |    |   |   |   |   |   |   |   |   |   |
| 2009:                                                  |   |    |    |   |   |   |   |   |   |   |   |   |
| Current                                                |   | $       | (6,221  | )      |   | $      | (1,028 | )      |   | $ | (7,249 | ) |
| Deferred                                               |   |    | (9,341  | )      |   |   | (1,514 | )      |   |   | (10,855 | ) |
| Total                                                  |   | $       | (15,562 | )      |   | $      | (2,542 | )      |   | $ | (18,104 | ) |
|                                                   |   |    |    |   |   |   |   |   |   |   |   |   |
| 2008:                                                  |   |    |    |   |   |   |   |   |   |   |   |   |
| Current                                                |   | $       | 2,225   |   |   | $      | 253    |   |   | $ | 2,478 |   |
| Current benefits from net operating loss carryforwards |   |    | (244    | )      |   |   | -      |   |   |   | (244 | ) |
| Deferred                                               |   |    | (3,178  | )      |   |   | (492   | )      |   |   | (3,670 | ) |
| Total                                                  |   | $       | (1,197  | )      |   | $      | (239   | )      |   | $ | (1,436 | ) |

| (Dollars in thousands)                                         |   | 2010   |   |   | 2009   |   |    | 2008   |   |
|--------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|---------|--------|--------|
|                                                                     |   |   |   |   |   |   |    |   |   |
| Amount computed using the Federal statutory rates on income before taxes |   | $      | 1,568  |   |   | $      | (26,489 | )      |   | $ | (303 | ) |
| Increase (decrease) resulting from:                                      |   |   |   |   |   |   |    |   |   |   |   |   |
| Tax exempt income, net of disallowed interest deduction                  |   |   | (594   | )      |   |   | (770    | )      |   |   | (739 | ) |
| State income tax expense (benefit), net of Federal effect                |   |   | 207    |   |   |   | (1,677  | )      |   |   | (157 | ) |
| Life insurance income                                                    |   |   | (227   | )      |   |   | (259    | )      |   |   | (209 | ) |
| Goodwill impairment expense                                              |   |   | -      |   |   |   | 11,074  |   |   |   | - |   |
| Low income housing tax credits                                           |   |   | (330   | )      |   |   | -       |   |   |   | - |   |
| Other, net                                                               |   |   | (22    | )      |   |   | 17      |   |   |   | (28 | ) |
|                                                                     |   |   |   |   |   |   |    |   |   |   |   |   |
|                                                                     |   | $      | 602    |   |   | $      | (18,104 | )      |   | $ | (1,436 | ) |

----

| (Dollars in thousands)                    |   | 2010   |   |   | 2009   |   |
|-----------------------------------------------------|--------|--------|--------|--------|--------|--------|
|                                                |   |   |   |   |   |   |
| Allowance for loan losses                           |   | $      | 5,977  |   |   | $      | 8,957 |   |
| Loan fees                                           |   |   | 420    |   |   |   | 404 |   |
| Purchase accounting adjustments                     |   |   | 200    |   |   |   | 293 |   |
| Nonperforming assets                                |   |   | 3,334  |   |   |   | 3,260 |   |
| Accrued expenses                                    |   |   | 71     |   |   |   | 236 |   |
| Share-based compensation                            |   |   | 319    |   |   |   | 299 |   |
| Employee benefit plans                              |   |   | 173    |   |   |   | 150 |   |
| Net pension liability and unamortized pension costs |   |   | 202    |   |   |   | 197 |   |
| Net operating loss carry forward                    |   |   | 7,685  |   |   |   | 6,304 |   |
| Tax credit carry forward                            |   |   | 687    |   |   |   | 208 |   |
| Other                                               |   |   | 1,310  |   |   |   | 1,298 |   |
| Total deferred tax assets                           |   |   | 20,378 |   |   |   | 21,606 |   |
|                                                |   |   |   |   |   |   |   |   |
| Fixed assets and depreciation                       |   |   | (2,244 | )      |   |   | (2,419 | ) |
| Federal Home Loan Bank stock dividends              |   |   | (468   | )      |   |   | (458 | ) |
| Intangible assets                                   |   |   | (1,427 | )      |   |   | (1,557 | ) |
| Prepaid expenses                                    |   |   | (398   | )      |   |   | (393 | ) |
| Unrealized gain on securities available for sale    |   |   | (936   | )      |   |   | (1,522 | ) |
| Unrealized gain on cash flow hedge                  |   |   | (305   | )      |   |   | - |   |
| Other                                               |   |   | (37    | )      |   |   | (38 | ) |
| Total deferred tax liabilities                      |   |   | (5,815 | )      |   |   | (6,387 | ) |
|                                                |   |   |   |   |   |   |   |   |
|                                                |   | $      | 14,563 |   |   | $      | 15,219 |   |

| (Dollars in thousands) |   |   |   |   |          |   |   | Remaining |   |   |       |   |   |      |   |   |       |    |   | Total   |       |
|----------------------------------|--------|--------|--------|--------|---------------|--------|--------|-----------|--------|--------|------------|--------|--------|-----------|--------|--------|------------|---------|--------|---------|------------|
|                             |   |   |   |   |          |   |   | Carry     |   |   |       |   |   |      |   |   |       |    |   | Carried |       |
|                             |   |   |   |   | Carried       |   |   | Forward   |   |   |       |   |   |      |   |   |       |    |   | Forward |       |
|                             |   |   |   |   | Back          |   |   | For       |   |   |       |   |   | Estimated |   |   |       |    |   | For     |       |
|                             |   | 2009   |   |   | to Prior |   |   | Future    |   |   | Expiration |   |   | 2010      |   |   | Expiration |    |   | Future  |       |
|                             |   | NOL    |   |   | Years         |   |   | Years     |   |   | Dates      |   |   | NOL       |   |   | Dates      |    |   | Years   |       |
| Federal net operating loss       |   | $      | 38,353 |   |          | $      | 23,653 |      |   | $      | 14,700     |   |   | 2029      |   |   | $          | 3,300   |   |    | 2030       |   |   | $ | 18,000 |   |
| Mississippi net operating loss   |   |   | 34,371 |   |          |   | 15,367 |      |   |   | 19,004     |   |   | 2029      |   |   |       | 3,996   |   |    | 2030       |   |   |   | 23,000 |   |
| Alabama net operating loss       |   |   | 3,206  |   |          |   | 708    |      |   |   | 2,498      |   |   | 2029      |   |   |       | 502     |   |    | 2030       |   |   |   | 3,000 |   |
| Tennessee net operating loss     |   |   | 1,627  |   |          |   | -      |      |   |   | 1,627      |   |   | 2029      |   |   |       | 373     |   |    | 2030       |   |   |   | 2,000 |   |
| Florida net operating loss       |   |   | 654    |   |          |   | -      |      |   |   | 654        |   |   | 2029      |   |   |       | 146     |   |    | 2030       |   |   |   | 800 |   |
|                             |   |   |   |   |          |   |   |      |   |   |       |   |   |      |   |   |       |    |   |    |       |   |   |   |   |   |   |   |
|                             |   |   |   |   |          |   |   |      |   |   |       |   |   |      |   |   |       | Tax     |   |    |       |   |   |   |   |   |   |
|                             |   |   |   |   |          |   |   |      |   |   |       |   |   |      |   |   |       | Credit  |   |    | Expiration |   |   |   |   |   |
|                             |   |   |   |   |          |   |   |      |   |   |       |   |   |      |   |   |       | Amounts |   |    | Dates      |   |   |   |   |   |
| Federal tax credits from 2009    |   |   |   |   |          |   |   |      |   |   |       |   |   |      |   |   |       | $       | 207    |    |       | 2029 |   |   |   |   |   |
| Federal tax credits from 2010    |   |   |   |   |          |   |   |      |   |   |       |   |   |      |   |   |       |    | 480    |    |       | 2030 |   |   |   |   |   |

----

| (Dollars in thousands)                  |   | 2010   |   |   | 2009   |   |
|---------------------------------------------------|--------|--------|--------|--------|--------|--------|
|                                              |   |   |   |   |   |   |
| Change in benefit obligation:                     |   |   |   |   |   |   |
| Projected benefit obligation at beginning of year |   | $      | 8,643  |   |   | $      | 8,032 |   |
| Interest cost                                     |   |   | 468    |   |   |   | 486 |   |
| Actuarial loss                                    |   |   | 614    |   |   |   | 604 |   |
| Benefit payments                                  |   |   | (543   | )      |   |   | (479 | ) |
| Projected benefit obligation at end of year       |   |   | 9,182  |   |   |   | 8,643 |   |
|                                              |   |   |   |   |   |   |   |   |
| Change in plan assets:                            |   |   |   |   |   |   |   |   |
| Fair value of plan assets at beginning of year    |   |   | 8,115  |   |   |   | 7,231 |   |
| Actual return on plan assets                      |   |   | 874    |   |   |   | 1,175 |   |
| Employer contributions                            |   |   | 224    |   |   |   | 204 |   |
| Benefit payments                                  |   |   | (543   | )      |   |   | (479 | ) |
| Expenses                                          |   |   | (30    | )      |   |   | (16 | ) |
| Fair value of plan assets at end of year          |   |   | 8,640  |   |   |   | 8,115 |   |
|                                              |   |   |   |   |   |   |   |   |
| Funded status at measurement date                 |   | $      | (542   | )      |   | $      | (528 | ) |

| (Dollars in thousands)                            |   | 2010   |   |   | 2009   |   |
|-------------------------------------------------------------|--------|--------|--------|--------|--------|--------|
|                                                        |   |   |   |   |   |   |
| Net pension asset                                           |   | $      | -      |   |   | $      | - |   |
|                                                        |   |   |   |   |   |   |   |   |
| Net pension liability                                       |   | $      | (542   | )      |   | $      | (528 | ) |
|                                                        |   |   |   |   |   |   |   |   |
| Accumulated other comprehensive income, before income taxes |   | $      | 2,927  |   |   | $      | 3,476 |   |

----

| (Dollars in thousands) |   | 2010   |   |   | 2009   |   |
|----------------------------------|--------|--------|--------|--------|--------|--------|
|                             |   |   |   |   |   |   |
| Projected benefit obligation     |   | $      | 9,182  |   |   | $      | 8,643 |   |
| Accumulated benefit obligation   |   |   | 9,182  |   |   |   | 8,643 |   |
| Fair value of plan assets        |   |   | 8,640  |   |   |   | 8,115 |   |

| (Dollars in thousands)       |   | 2010   |   |   | 2009   |   |
|----------------------------------------|--------|--------|--------|--------|--------|--------|
|                                   |   |   |   |   |   |   |
| Unamortized prior service credit       |   | $      | (25    | )      |   | $      | (62 | ) |
| Unamortized actuarial loss             |   |   | 2,952  |   |   |   | 3,538 |   |
| Accumulated other comprehensive income |   | $      | 2,927  |   |   | $      | 3,476 |   |

| (Dollars in thousands)                                                               |   | 2010   |   |   | 2009   |   |   | 2008   |   |
|------------------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Net Periodic Benefit Cost:                                                                     |   |   |   |   |   |   |   |   |   |
|                                                                                           |   |   |   |   |   |   |   |   |   |
| Interest cost                                                                                  |   | $      | 468    |   |   | $      | 486    |   |   | $ | 460 |   |
| Expected return on plan assets                                                                 |   |   | (529   | )      |   |   | (470   | )      |   |   | (619 | ) |
| Amortization of transition asset                                                               |   |   | -      |   |   |   | (7     | )      |   |   | (9 | ) |
| Amortization of prior service credit                                                           |   |   | (37    | )      |   |   | (37    | )      |   |   | (37 | ) |
| Recognized actuarial loss                                                                      |   |   | 885    |   |   |   | 906    |   |   |   | 326 |   |
|                                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |
| Net periodic benefit cost                                                                      |   | $      | 787    |   |   | $      | 878    |   |   | $ | 121 |   |
|                                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |
| Other Changes in Plan Assets and Benefit Obligations Recognized in Other Comprehensive Income: |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |
| Net (gain) loss                                                                                |   | $      | 299    |   |   | $      | (85    | )      |   | $ | 2,981 |   |
| Amortization of actuarial net loss                                                             |   |   | (885   | )      |   |   | (906   | )      |   |   | (326 | ) |
| Amortization of transition asset                                                               |   |   | -      |   |   |   | 7      |   |   |   | 9 |   |
| Amortization of prior service credit                                                           |   |   | 37     |   |   |   | 37     |   |   |   | 37 |   |
| Measurement date transition adjustment                                                         |   |   | -      |   |   |   | -      |   |   |   | (70 | ) |
| Total recognized in other comprehensive income                                                 |   | $      | (549   | )      |   | $      | (947   | )      |   | $ | 2,631 |   |
| Total recognized in net periodic benefit cost and other comprehensive income                   |   | $      | 238    |   |   | $      | (69    | )      |   | $ | 2,752 |   |
|                                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |
| Measurement Date Transition Amounts Recognized in Retained Earnings:                           |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest cost                                                                                  |   |   |   |   |   |   |   |   |   | $ | 115 |   |
| Expected return on plan assets                                                                 |   |   |   |   |   |   |   |   |   |   | (155 | ) |
| Amortization of transition asset                                                               |   |   |   |   |   |   |   |   |   |   | (2 | ) |
| Amortization of prior service credit                                                           |   |   |   |   |   |   |   |   |   |   | (9 | ) |
| Recognized actuarial loss                                                                      |   |   |   |   |   |   |   |   |   |   | 81 |   |
|                                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |
| Net measurement transition retained earnings adjustment                                        |   |   |   |   |   |   |   |   |   | $ | 30 |   |

----

| (Dollars in thousands)                 |   | 2010   |   |   | 2009   |   |   | 2008   |   |
|--------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
|                                             |   |   |   |   |   |   |   |   |   |
| Net pension cost                                 |   | $      | 787    |   |   | $      | 878    |   |   | $ | 121 |   |
| Payments for expenses made on behalf of the plan |   |   | 43     |   |   |   | 39     |   |   |   | 33 |   |
| Payments to PBGC for premiums                    |   |   | 16     |   |   |   | 15     |   |   |   | 9 |   |
|                                             |   |   |   |   |   |   |   |   |   |   |   |   |
|                                             |   | $      | 846    |   |   | $      | 932    |   |   | $ | 163 |   |

|                                                                      |   | 2010   |   |   | 2009   |   |   | 2008   |   |
|---------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
|                                                                      |   |   |   |   |   |   |   |   |   |
| Discount rate for determining current year’s costs                  |   |   | 5.60   | %      |   |   | 6.25   | %      |   |   | 5.75 | % |
| Discount rate for determining year end benefit obligation                 |   |   | 5.05   | %      |   |   | 5.60   | %      |   |   | 6.25 | % |
| Expected return on plan assets for determining current year’s costs |   |   | 6.75   | %      |   |   | 6.75   | %      |   |   | 6.75 | % |
| Rate of compensation increase (plan is frozen)                            |   |   | -      | %      |   |   | -      | %      |   |   | - | % |

|                           |   | 2010   |   |   | 2009   |   |
|--------------------------------|--------|--------|--------|--------|--------|--------|
|                           |   |   |   |   |   |   |
| Interest-bearing bank balances |   |   | 5      | %      |   |   | 17 | % |
| Debt securities                |   |   | 32     | %      |   |   | 23 | % |
| Equity securities              |   |   | 63     | %      |   |   | 60 | % |
|                           |   |   |   |   |   |   |   |   |
|                           |   |   | 100    | %      |   |   | 100 | % |

----

|                                    |   |                        |   |   |                                      |   |
|-----------------------------------------|--------|-----------------------------|--------|--------|-------------------------------------------|--------|
|                                    |   |                        |   |   | Fair Value Measurements at |   |
|                                    |   |                        |   |   | December 31, 2010, Using   |   |
|                                    |   |                        |   |   | Quoted                                    |   |   |   |   |   |   |   |
|                                    |   |                        |   |   | Prices In                            |   |   |   |   |   |   |   |
|                                    |   |                        |   |   | Active                                    |   |   |   |   |   |   |   |
|                                    |   |                        |   |   | Markets                                   |   |   | Significant |   |   |   |   |
|                                    |   | Assets/Liabilities          |   |   | For                                       |   |   | Other |   |   | Significant |   |
|                                    |   | Measured at Fair  |   |   | Identical                                 |   |   | Observable |   |   | Unobservable |   |
|                                    |   | Value                       |   |   | Assets                                    |   |   | Inputs |   |   | Inputs |   |
| (Dollars in thousands)        |   | December 31, 2010 |   |   | (Level 1)                            |   |   | (Level 2) |   |   | (Level 3) |   |
|                                    |   |                        |   |   |                                      |   |   |   |   |   |   |   |
| Cash and cash equivalents               |   | $                           | 398    |   |                                      | $      | 398 |   |   | $ | - |   |   | $ | - |   |
| Equity securities – domestic:     |   |                        |   |   |                                      |   |   |   |   |   |   |   |   |   |   |   |
| Industrials                             |   |                        | 550    |   |                                      |   | 550 |   |   |   | - |   |   |   | - |   |
| Telecommunication                       |   |                        | 176    |   |                                      |   | 176 |   |   |   | - |   |   |   | - |   |
| Energy and Utilities                    |   |                        | 731    |   |                                      |   | 731 |   |   |   | - |   |   |   | - |   |
| Information technology                  |   |                        | 679    |   |                                      |   | 679 |   |   |   | - |   |   |   | - |   |
| Consumer                                |   |                        | 833    |   |                                      |   | 833 |   |   |   | - |   |   |   | - |   |
| Health care                             |   |                        | 423    |   |                                      |   | 423 |   |   |   | - |   |   |   | - |   |
| Financials                              |   |                        | 957    |   |                                      |   | 957 |   |   |   | - |   |   |   | - |   |
| Other                                   |   |                        | 343    |   |                                      |   | 343 |   |   |   | - |   |   |   | - |   |
| Equity securities – international |   |                        | 581    |   |                                      |   | 581 |   |   |   | - |   |   |   | - |   |
| Mutual funds(bond funds)                |   |                        | 212    |   |                                      |   | 212 |   |   |   | - |   |   |   | - |   |
| Government debt securities              |   |                        | 1,056  |   |                                      |   | - |   |   |   | 1,056 |   |   |   | - |   |
| Corporate debt securities               |   |                        | 1,701  |   |                                      |   | - |   |   |   | 1,701 |   |   |   | - |   |
|                                    |   |                        |   |   |                                      |   |   |   |   |   |   |   |   |   |   |   |
| Total assets                            |   | $                           | 8,640  |   |                                      | $      | 5,883 |   |   | $ | 2,757 |   |   | $ | - |   |

----

|                                    |   |                        |   |   |                                      |   |
|-----------------------------------------|--------|-----------------------------|--------|--------|-------------------------------------------|--------|
|                                    |   |                        |   |   | Fair Value Measurements at |   |
|                                    |   |                        |   |   | December 31, 2009, Using   |   |
|                                    |   |                        |   |   | Quoted                                    |   |   |   |   |   |   |   |
|                                    |   |                        |   |   | Prices In                            |   |   |   |   |   |   |   |
|                                    |   |                        |   |   | Active                                    |   |   |   |   |   |   |   |
|                                    |   |                        |   |   | Markets                                   |   |   | Significant |   |   |   |   |
|                                    |   | Assets/Liabilities          |   |   | For                                       |   |   | Other |   |   | Significant |   |
|                                    |   | Measured at Fair  |   |   | Identical                                 |   |   | Observable |   |   | Unobservable |   |
|                                    |   | Value                       |   |   | Assets                                    |   |   | Inputs |   |   | Inputs |   |
| (Dollars in thousands)        |   | December 31, 2009 |   |   | (Level 1)                            |   |   | (Level 2) |   |   | (Level 3) |   |
|                                    |   |                        |   |   |                                      |   |   |   |   |   |   |   |
| Cash and cash equivalents               |   | $                           | 1,368  |   |                                      | $      | 1,368 |   |   | $ | - |   |   | $ | - |   |
| Equity securities – domestic:     |   |                        |   |   |                                      |   |   |   |   |   |   |   |   |   |   |   |
| Industrials                             |   |                        | 535    |   |                                      |   | 535 |   |   |   | - |   |   |   | - |   |
| Telecommunication                       |   |                        | 61     |   |                                      |   | 61 |   |   |   | - |   |   |   | - |   |
| Energy and Utilities                    |   |                        | 505    |   |                                      |   | 505 |   |   |   | - |   |   |   | - |   |
| Information technology                  |   |                        | 778    |   |                                      |   | 778 |   |   |   | - |   |   |   | - |   |
| Consumer                                |   |                        | 665    |   |                                      |   | 665 |   |   |   | - |   |   |   | - |   |
| Health care                             |   |                        | 341    |   |                                      |   | 341 |   |   |   | - |   |   |   | - |   |
| Financials                              |   |                        | 276    |   |                                      |   | 276 |   |   |   | - |   |   |   | - |   |
| Other                                   |   |                        | 337    |   |                                      |   | 337 |   |   |   | - |   |   |   | - |   |
| Equity securities – international |   |                        | 1,145  |   |                                      |   | 1,145 |   |   |   | - |   |   |   | - |   |
| Mutual funds(bond funds)                |   |                        | 260    |   |                                      |   | 260 |   |   |   | - |   |   |   | - |   |
| Government debt securities              |   |                        | 1,081  |   |                                      |   | - |   |   |   | 1,081 |   |   |   | - |   |
| Corporate debt securities               |   |                        | 571    |   |                                      |   | - |   |   |   | 571 |   |   |   | - |   |
| Mortgage-backed securities              |   |                        | 192    |   |                                      |   | - |   |   |   | 192 |   |   |   | - |   |
|                                    |   |                        |   |   |                                      |   |   |   |   |   |   |   |   |   |   |   |
| Total assets                            |   | $                           | 8,115  |   |                                      | $      | 6,271 |   |   | $ | 1,844 |   |   | $ | - |   |

----

|         |   | Minimum |   |   | Maximum |   |   | Preferred |   |
|--------------|--------|---------|--------|--------|---------|--------|--------|-----------|--------|
|         |   |    |   |   |    |   |   |      |   |
| Equities     |   |    | 50     | %      |    |   | 70     | %         |   |   | 60 | % |
| Fixed-income |   |    | 30     | %      |    |   | 40     | %         |   |   | 35 | % |
| Cash         |   |    | 2      | %      |    |   | 8      | %         |   |   | 5 | % |

| (Dollars in thousands) |   |                   |   |
|----------------------------------|--------|------------------------|--------|
| Year                             |   | Expected payments |   |
|                             |   |                   |   |
| 2011                             |   | $                      | 606    |   |
| 2012                             |   |                   | 606    |   |
| 2013                             |   |                   | 634    |   |
| 2014                             |   |                   | 679    |   |
| 2015                             |   |                   | 671    |   |
| 2016 – 2020                |   |                   | 3,336  |   |

----

| (Dollars in thousands, except per share data)                                                                      |   | 2010   |      |   | 2009   |   |      | 2008   |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|-----------|--------|--------|--------|-----------|--------|--------|
|                                                                                                                                             |   |   |      |   |   |   |      |   |   |
| Net income (loss)                                                                                                                                |   | $      | 4,011     |   |   | $      | (59,799   | )      |   | $ | 526 |   |
| Less: Preferred dividends                                                                                                                        |   |   | 1,692     |   |   |   | 1,464     |   |   |   | - |   |
| Add: Gain on exchange of preferred stock                                                                                                         |   |   | 12,867    |   |   |   | -         |   |   |   | - |   |
| Net income (loss) attributable to common stock                                                                                                   |   | $      | 15,186    |   |   | $      | (61,263   | )      |   | $ | 526 |   |
|                                                                                                                                             |   |   |      |   |   |   |      |   |   |   |   |   |
| Net income (loss) allocated to common stockholders:                                                                                              |   |   |      |   |   |   |      |   |   |   |   |   |
| Distributed                                                                                                                                      |   |   | 363       |   |   |   | 1,451     |   |   |   | 4,712 |   |
| Undistributed                                                                                                                                    |   |   | 14,708    |   |   |   | (62,106   | )      |   |   | (4,190 | ) |
|                                                                                                                                             |   | $      | 15,071    |   |   | $      | (60,655   | )      |   | $ | 522 |   |
|                                                                                                                                             |   |   |      |   |   |   |      |   |   |   |   |   |
| Weighted-average basic common and participating shares outstanding                                                                               |   |   | 9,150,980 |   |   |   | 9,157,752 |   |   |   | 9,179,118 |   |
| Less: weighted average participating restricted shares outstanding                                                                               |   |   | 69,293    |   |   |   | 90,872    |   |   |   | 117,388 |   |
| Weighted-average basic shares outstanding                                                                                                        |   |   | 9,081,687 |   |   |   | 9,066,880 |   |   |   | 9,061,730 |   |
|                                                                                                                                             |   |   |      |   |   |   |      |   |   |   |   |   |
| Basic net income (loss) per share                                                                                                                |   | $      | 1.66      |   |   | $      | (6.69     | )      |   | $ | 0.06 |   |
|                                                                                                                                             |   |   |      |   |   |   |      |   |   |   |   |   |
| Weighted-average basic common and participating shares outstanding                                                                               |   |   | 9,150,980 |   |   |   | 9,157,752 |   |   |   | 9,179,118 |   |
| Add: share-based options and stock warrant                                                                                                       |   |   | -         |   |   |   | -         |   |   |   | 654 |   |
|                                                                                                                                             |   |   | 9,150,980 |   |   |   | 9,157,752 |   |   |   | 9,179,772 |   |
| Less: weighted average participating restricted shares outstanding                                                                               |   |   | 69,293    |   |   |   | 90,872    |   |   |   | 117,388 |   |
| Weighted-average dilutive shares outstanding                                                                                                     |   |   | 9,081,687 |   |   |   | 9,066,880 |   |   |   | 9,062,384 |   |
|                                                                                                                                             |   |   |      |   |   |   |      |   |   |   |   |   |
| Dilutive net income (loss) per share                                                                                                             |   | $      | 1.66      |   |   | $      | (6.69     | )      |   | $ | 0.06 |   |
|                                                                                                                                             |   |   |      |   |   |   |      |   |   |   |   |   |
| Weighted-average shares of potentially dilutive instruments that are not included in the dilutive share calculation due to anti-dilutive effect: |   |   |      |   |   |   |      |   |   |   |   |   |
| Compensation plan-related stock options                                                                                                          |   |   | 38,942    |   |   |   | 62,184    |   |   |   | 128,186 |   |
| Common stock warrant                                                                                                                             |   |   | 513,113   |   |   |   | 432,983   |   |   |   | - |   |

----

| (Dollars in thousands)          |   | Actual |    |   | Minimum Capital |   |   | Well Capitalized |   |
|-------------------------------------------|--------|--------|---------|--------|----------------------|--------|--------|-----------------------|--------|
|                                      |   | Amount |    |   | Ratio                |   |   | Amount                |   |   | Ratio |   |   | Amount |   |   | Ratio |   |
|                                      |   |   |    |   |                 |   |   |                  |   |   |   |   |   |   |   |   |   |   |
| December 31, 2010:                        |   |   |    |   |                 |   |   |                  |   |   |   |   |   |   |   |   |   |   |
| Total capital (to risk weighted assets):  |   |   |    |   |                 |   |   |                  |   |   |   |   |   |   |   |   |   |   |
| Company                                   |   | $      | 135,291 |   |                 |   | 11.3   | %                     |   | $ | 95,790 |   |   |   | 8.0 | % |   | $ | - |   |   |   | - |   |
| Bank                                      |   |   | 134,020 |   |                 |   | 11.2   | %                     |   |   | 95,568 |   |   |   | 8.0 | % |   |   | 119,460 |   |   |   | 10.0 | % |
|                                      |   |   |    |   |                 |   |   |                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Tier I capital (to risk weighted assets): |   |   |    |   |                 |   |   |                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Company                                   |   |   | 120,310 |   |                 |   | 10.1   | %                     |   |   | 47,895 |   |   |   | 4.0 | % |   |   | - |   |   |   | - |   |
| Bank                                      |   |   | 119,074 |   |                 |   | 10.0   | %                     |   |   | 47,784 |   |   |   | 4.0 | % |   |   | 71,676 |   |   |   | 6.0 | % |
|                                      |   |   |    |   |                 |   |   |                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Tier I capital (to average assets):       |   |   |    |   |                 |   |   |                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Company                                   |   |   | 120,310 |   |                 |   | 7.7    | %                     |   |   | 62,211 |   |   |   | 4.0 | % |   |   | - |   |   |   | - |   |
| Bank                                      |   |   | 119,074 |   |                 |   | 7.7    | %                     |   |   | 62,155 |   |   |   | 4.0 | % |   |   | 77,693 |   |   |   | 5.0 | % |
|                                      |   |   |    |   |                 |   |   |                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| December 31, 2009:                        |   |   |    |   |                 |   |   |                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total capital (to risk weighted assets):  |   |   |    |   |                 |   |   |                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Company                                   |   | $      | 133,574 |   |                 |   | 11.1   | %                     |   | $ | 96,374 |   |   |   | 8.0 | % |   | $ | - |   |   |   | - |   |
| Bank                                      |   |   | 130,960 |   |                 |   | 10.9   | %                     |   |   | 96,293 |   |   |   | 8.0 | % |   |   | 120,366 |   |   |   | 10.0 | % |
|                                      |   |   |    |   |                 |   |   |                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Tier I capital (to risk weighted assets): |   |   |    |   |                 |   |   |                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Company                                   |   |   | 118,405 |   |                 |   | 9.8    | %                     |   |   | 48,187 |   |   |   | 4.0 | % |   |   | - |   |   |   | - |   |
| Bank                                      |   |   | 115,803 |   |                 |   | 9.6    | %                     |   |   | 48,147 |   |   |   | 4.0 | % |   |   | 72,220 |   |   |   | 6.0 | % |
|                                      |   |   |    |   |                 |   |   |                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Tier I capital (to average assets):       |   |   |    |   |                 |   |   |                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Company                                   |   |   | 118,405 |   |                 |   | 7.1    | %                     |   |   | 66,346 |   |   |   | 4.0 | % |   |   | - |   |   |   | - |   |
| Bank                                      |   |   | 115,803 |   |                 |   | 7.0    | %                     |   |   | 66,339 |   |   |   | 4.0 | % |   |   | 82,924 |   |   |   | 5.0 | % |

----

----

| (Dollars in thousands)           |   |   |    |   |   |   |
|--------------------------------------------|--------|--------|---------|--------|--------|--------|
|                                       |   | 2010   |    |   | 2009   |   |
|                                       |   |   |    |   |   |   |
| Assets                                     |   |   |    |   |   |   |
|                                       |   |   |    |   |   |   |
| Cash                                       |   | $      | 4,401   |   |   | $      | 4,735 |   |
| Investment in banking subsidiary           |   |   | 133,947 |   |   |   | 131,179 |   |
| Investment in statutory trust              |   |   | 928     |   |   |   | 928 |   |
| Other assets                               |   |   | 2,250   |   |   |   | 912 |   |
|                                       |   |   |    |   |   |   |   |   |
|                                       |   | $      | 141,526 |   |   | $      | 137,754 |   |
| Liabilities and Stockholders’ Equity |   |   |    |   |   |   |   |   |
|                                       |   |   |    |   |   |   |   |   |
| Note payable                               |   | $      | 3,416   |   |   | $      | 1,916 |   |
| Junior subordinated debt                   |   |   | 30,928  |   |   |   | 30,928 |   |
| Other liabilities                          |   |   | 117     |   |   |   | 281 |   |
| Stockholders’ equity                 |   |   | 107,065 |   |   |   | 104,629 |   |
|                                       |   |   |    |   |   |   |   |   |
|                                       |   | $      | 141,526 |   |   | $      | 137,754 |   |

| (Dollars in thousands)                              |   | 2010   |   |   | 2009   |   |    | 2008   |   |
|---------------------------------------------------------------|--------|--------|--------|--------|--------|--------|---------|--------|--------|
| Income:                                                       |   |   |   |   |   |   |    |   |   |
| Dividends received from banking subsidiary                    |   | $      | 2,200  |   |   | $      | 3,800   |   |   | $ | 4,500 |   |
| Dividends received from statutory trust                       |   |   | 60     |   |   |   | 60      |   |   |   | 60 |   |
| Equity in undistributed earnings (loss) of banking subsidiary |   |   | 3,215  |   |   |   | (59,869 | )      |   |   | (2,578 | ) |
| Other income                                                  |   |   | 10     |   |   |   | 24      |   |   |   | 2 |   |
| Total income (loss)                                           |   |   | 5,485  |   |   |   | (55,985 | )      |   |   | 1,984 |   |
|                                                          |   |   |   |   |   |   |    |   |   |   |   |   |
| Expenses:                                                     |   |   |   |   |   |   |    |   |   |   |   |   |
| Interest on other borrowings                                  |   |   | 84     |   |   |   | 64      |   |   |   | 99 |   |
| Interest on junior subordinated debentures                    |   |   | 1,992  |   |   |   | 1,992   |   |   |   | 1,993 |   |
| Goodwill impairment                                           |   |   | -      |   |   |   | 2,310   |   |   |   | - |   |
| Other expenses                                                |   |   | 224    |   |   |   | 291     |   |   |   | 194 |   |
| Total expenses                                                |   |   | 2,300  |   |   |   | 4,657   |   |   |   | 2,286 |   |
|                                                          |   |   |   |   |   |   |    |   |   |   |   |   |
| Income (loss) before income taxes                             |   |   | 3,185  |   |   |   | (60,642 | )      |   |   | (302 | ) |
|                                                          |   |   |   |   |   |   |    |   |   |   |   |   |
| Income tax benefit                                            |   |   | 826    |   |   |   | 843     |   |   |   | 828 |   |
|                                                          |   |   |   |   |   |   |    |   |   |   |   |   |
| Net income (loss)                                             |   | $      | 4,011  |   |   | $      | (59,799 | )      |   | $ | 526 |   |

----

| (Dollars in thousands)                                                  |   | 2010   |   |   | 2009   |   |    | 2008   |   |
|-----------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|---------|--------|--------|
| Cash flows from operating activities:                                             |   |   |   |   |   |   |    |   |   |
| Net income (loss)                                                                 |   | $      | 4,011  |   |   | $      | (59,799 | )      |   | $ | 526 |   |
| Adjustments to reconcile net income to net cash provided by operating activities: |   |   |   |   |   |   |    |   |   |   |   |   |
| Equity in undistributed (earnings) loss of banking subsidiary                     |   |   | (3,215 | )      |   |   | 59,869  |   |   |   | 2,578 |   |
| Goodwill impairment                                                               |   |   | -      |   |   |   | 2,310   |   |   |   | - |   |
| Other, net                                                                        |   |   | (879   | )      |   |   | (45     | )      |   |   | 1,390 |   |
| Net cash provided by (used in) operating activities                               |   |   | (83    | )      |   |   | 2,335   |   |   |   | 4,494 |   |
|                                                                              |   |   |   |   |   |   |    |   |   |   |   |   |
| Cash flows from investing activities:                                             |   |   |   |   |   |   |    |   |   |   |   |   |
| Additional investment in Bank                                                     |   |   | -      |   |   |   | (25,000 | )      |   |   | - |   |
| Net cash used in investing activities                                             |   |   | -      |   |   |   | (25,000 | )      |   |   | - |   |
|                                                                              |   |   |   |   |   |   |    |   |   |   |   |   |
| Cash flows from financing activities:                                             |   |   |   |   |   |   |    |   |   |   |   |   |
| Increase (decrease) in note payable                                               |   |   | 1,500  |   |   |   | (500    | )      |   |   | 500 |   |
| Cash dividends                                                                    |   |   | (1,751 | )      |   |   | (2,541  | )      |   |   | (4,772 | ) |
| Common shares repurchased                                                         |   |   | -      |   |   |   | -       |   |   |   | (118 | ) |
| Preferred stock issued                                                            |   |   | -      |   |   |   | 30,000  |   |   |   | - |   |
| Tax benefits on share-based transactions                                          |   |   | -      |   |   |   | 28      |   |   |   | - |   |
| Net cash provided by (used in) financing activities                               |   |   | (251   | )      |   |   | 26,987  |   |   |   | (4,390 | ) |
|                                                                              |   |   |   |   |   |   |    |   |   |   |   |   |
| Net increase (decrease) in cash                                                   |   |   | (334   | )      |   |   | 4,322   |   |   |   | 104 |   |
|                                                                              |   |   |   |   |   |   |    |   |   |   |   |   |
| Cash at January 1                                                                 |   |   | 4,735  |   |   |   | 413     |   |   |   | 309 |   |
|                                                                              |   |   |   |   |   |   |    |   |   |   |   |   |
| Cash at December 31                                                               |   | $      | 4,401  |   |   | $      | 4,735   |   |   | $ | 413 |   |

----

----

----

| (a) |         | Management’s Annual Report on Internal Control Over Financial Reporting                              |
|-----|--------------|------------------------------------------------------------------------------------------------------------|
| (b) |         | Report of Independent Registered Public Accounting Firm                                                    |
| (c) |         | Consolidated Statements of Condition – December 31, 2010 and 2009                                    |
| (d) |         | Consolidated Statements of Operations – Years Ended December 31, 2010, 2009 and 2008                 |
| (e) |         | Consolidated Statements of Comprehensive Income – Years Ended December 31, 2010, 2009 and 2008       |
| (f) |         | Consolidated Statements of Stockholders’ Equity – Years Ended December 31, 2010, 2009 and 2008 |
| (g) |         | Consolidated Statements of Cash Flows – Years Ended December 31, 2010, 2009 and 2008                 |
| (h) |    | Notes to Consolidated Financial Statements                                                                 |

| 3.1                                                                                                            |         | Articles of Incorporation of the Registrant. Incorporated herein by reference to (1) Exhibit 3 to the Company’s Form S-1 (File No. 33-08751) September 15, 1986, incorporated herein by reference, and (2) Exhibit 3.1 to the Registrant’s Current Report on Form 8-K, filed on March 5, 2009. |
|----------------------------------------------------------------------------------------------------------------|--------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                           |         |                                                                                                                                                                                                                                                                                                       |
| 3.2                                                                                                            |         | Articles of Amendment of the Registrant. Incorporated herein by reference to Exhibit 3.2 to the Registrant’s Current Report on Form 8-K, filed on March 5, 2009.                                                                                                                                     |
|                                                                                                           |         |                                                                                                                                                                                                                                                                                                       |
| 3.3                                                                                                            |         | By-laws of the Registrant, as amended. Filed as Exhibit 3-b to the Company's Form S-1 (File No. 33-08751) September 15, 1986, incorporated herein by reference.                                                                                                                                            |
|                                                                                                           |         |                                                                                                                                                                                                                                                                                                       |
| 3.4                                                                                                            |         | Articles of Amendment of the Registrant.  Incorporated herein by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K, filed on October 5, 2010.                                                                                                                        |
|                                                                                                           |         |                                                                                                                                                                                                                                                                                                       |
| 3.5                                                                                                            |         | Amended and Restated Bylaws of the Registrant.                                                                                                                                                                                                                                                             |
|                                                                                                           |         |                                                                                                                                                                                                                                                                                                       |
| 4.1                                                                                                            |         | Warrant to Purchase up to 513,113 Shares of Common Stock of the Registrant. Incorporated herein by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K, filed on March 5, 2009.                                                                                                  |
|                                                                                                           |         |                                                                                                                                                                                                                                                                                                       |
| 10.1                                                                                                           |         | First M&F Corporation 2005 Equity Incentive Plan. Filed as Appendix A to the Company’s Proxy Statement, March 15, 2005, incorporated herein by reference.                                                                                                                                        |
|                                                                                                           |         |                                                                                                                                                                                                                                                                                                       |
| 10.2                                                                                                           |         | Merchants and Farmers Bank Profit and Savings Plan, as amended. Filed as Exhibit 10(B) to the Company’s Form 10-Q on August 9, 2005, incorporated herein by reference.                                                                                                                               |
|                                                                                                           |         |                                                                                                                                                                                                                                                                                                       |
| 10.3                                                                                                           |         | Letter Agreement, including as Exhibit A thereto, Securities Purchase Agreement. Incorporated herein by reference to Exhibit A to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, filed on March 5, 2009.                                                                               |
|                                                                                                           |         |                                                                                                                                                                                                                                                                                                       |
| 10.4                                                                                                           |         | Form of Preferred Stock Certificate. Incorporated herein by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K, filed on March 5, 2009.                                                                                                                                        |
|                                                                                                           |         |                                                                                                                                                                                                                                                                                                       |
| 10.5                                                                                                           |         | Side Letter Agreement. Incorporated herein by reference to Exhibit 10.3 to the Registrant’s Current Report on Form 8-K, filed on March 5, 2009.                                                                                                                                                      |
|                                                                                                           |         |                                                                                                                                                                                                                                                                                                       |
| 10.6                                                                                                           |         | CDCI Letter Agreement dated September 29, 2010.  Incorporated herein by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, filed on October 5, 2010.                                                                                                                |
|                                                                                                           |         |                                                                                                                                                                                                                                                                                                       |
| 11                                                                                                             |         | Computation of Earnings per Share. Filed herewith as Note 19 to the consolidated financial statements.                                                                                                                                                                                                     |
|                                                                                                           |         |                                                                                                                                                                                                                                                                                                       |
| 21                                                                                                             |         | Subsidiaries of the Registrant                                                                                                                                                                                                                                                                             |
|                                                                                                           |         |                                                                                                                                                                                                                                                                                                       |
| 23                                                                                                             |         | Consent of Independent Registered Public Accounting Firm                                                                                                                                                                                                                                                   |
|                                                                                                           |         |                                                                                                                                                                                                                                                                                                       |
| The following Rule 13a-14(a)/15d-14(a) Certifications are included as exhibits to this report:                 |
|                                                                                                           |         |                                                                                                                                                                                                                                                                                                       |
| 31.1                                                                                                           |         | Rule 13a-14(a) Certification of Hugh S. Potts, Jr., Chief Executive Officer                                                                                                                                                                                                                                |
|                                                                                                           |         |                                                                                                                                                                                                                                                                                                       |
| 31.2                                                                                                           |         | Rule 13a-14(a) Certification of John G. Copeland, Chief Financial Officer                                                                                                                                                                                                                                  |
|                                                                                                           |         |                                                                                                                                                                                                                                                                                                       |
| The following Section 1350 Certifications are included as exhibits to this report:                             |
|                                                                                                           |         |                                                                                                                                                                                                                                                                                                       |
| 32.1                                                                                                           |         | Section 1350 Certification of Hugh S. Potts, Jr., Chief Executive Officer                                                                                                                                                                                                                                  |
|                                                                                                           |         |                                                                                                                                                                                                                                                                                                       |
| 32.2                                                                                                           |         | Section 1350 Certification of John G. Copeland, Chief Financial Officer                                                                                                                                                                                                                                    |
|                                                                                                      |         |                                                                                                                                                                                                                                                                                                       |
| The following Emergency Economic Stability Act of 2008 Certifications are included as exhibits to this report: |
|                                                                                                           |         |                                                                                                                                                                                                                                                                                                       |
| 99.1                                                                                                           |         | Certification pursuant to the Emergency Economic Stability Act of 2008 of Hugh S. Potts, Jr., Chief Executive Officer                                                                                                                                                                                      |
|                                                                                                           |         |                                                                                                                                                                                                                                                                                                       |
| 99.2                                                                                                           |    | Certification pursuant to the Emergency Economic Stability Act of 2008 of John G. Copeland, Chief Financial Officer                                                                                                                                                                                        |

----

|                    |                      |   |
|-------------------------|---------------------------|--------|
| BY:                     | /s/ Hugh S. Potts, Jr.    |   |
|                    | Hugh S. Potts, Jr.        |   |
|                    | Chairman of the Board and |   |
|                    | Chief Executive Officer   |   |
|                    |                      |   |
| DATE:    | March 15, 2011            |   |

|                            | /s/ Hugh S. Potts, Jr.           |
|---------------------------------|----------------------------------|
| DATE:  March 15, 2011 | Hugh S. Potts, Jr., Director     |
|                            | Chairman of the Board            |
|                            | Chief Executive Officer          |
|                            | (principal executive officer)    |
|                            |                             |
|                            | /s/ Hollis C. Cheek              |
| DATE:  March 15, 2011 | Hollis C. Cheek, Director        |
|                            |                             |
|                            | /s/ Jon A. Crocker               |
| DATE:  March 15, 2011 | Jon A. Crocker, Director         |
|                            |                             |
|                            | /s/ J. Marlin Ivey               |
| DATE:  March 15, 2011 | J. Marlin Ivey, Director         |
|                            |                             |
|                            | /s/ Jeffrey B. Lacey             |
| DATE:  March 15, 2011 | Jeffrey B. Lacey, Director       |
|                            | President &                  |
|                            | Chief Banking Officer            |
|                            |                             |
|                            | /s/ John Clark Love, III         |
| DATE:  March 15, 2011 | John Clark Love, III, Director   |
|                            |                             |
|                            | /s/ Susan P. McCaffery           |
| DATE:  March 15, 2011 | Susan P. McCaffery, Director     |
|                            |                             |
|                            | /s/ Michael L. Nelson            |
| DATE:  March 15, 2011 | Michael L. Nelson, Director      |
|                            |                             |
|                            | /s/ Otho E. Pettit, Jr.          |
| DATE:  March 15, 2011 | Otho E. Pettit, Jr., Director    |
|                            |                             |
|                            | /s/ Samuel B. Potts              |
| DATE:  March 15, 2011 | Samuel B. Potts, Director        |
|                            | Vice President                   |
|                            |                             |
|                            | /s/ Charles W. Ritter, Jr.       |
| DATE:  March 15, 2011 | Charles W. Ritter, Jr., Director |
|                            |                             |
|                            | /s/ L. F. Sams, Jr.              |
| DATE:  March 15, 2011 | L. F. Sams, Jr., Director        |

----

|                            | /s/ Larry Terrell                 |
|---------------------------------|-----------------------------------|
| DATE:  March 15, 2011 | Larry Terrell, Director           |
|                            |                              |
|                            | /s/ James I. Tims                 |
| DATE:  March 15, 2011 | James I. Tims, Director           |
|                            |                              |
|                            | /s/ Scott M. Wiggers              |
| DATE:  March 15, 2011 | Scott M. Wiggers, Director        |
|                            |                              |
|                            |                              |
|                            | /s/ John G. Copeland              |
| DATE:  March 15, 2011 | John G. Copeland                  |
|                            | EVP & Chief Financial Officer |
|                            | (principal financial officer)     |
|                            |                              |
|                            | /s/ Robert C. Thompson, III       |
| DATE:  March 15, 2011 | Robert C. Thompson, III           |
|                            | VP – Accounting Policy      |
|                            | (principal accounting officer)    |

----

| 3.1    |         | Articles of Incorporation of the Registrant.  Incorporated herein by reference to (1) Exhibit 3 to the Company's Form S-1 (File No. 33-08751) September 15, 1986, incorporated herein by reference, and (2) Exhibit 3.1 to the Registrant’s Current Report on Form 8-K, filed on March 5, 2009. |
|--------|--------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |         |                                                                                                                                                                                                                                                                                                            |
| 3.2    |         | Articles of Amendment of the Registrant. Incorporated herein by reference to Exhibit 3.2 to the Registrant’s Current Report on Form 8-K, filed on March 5, 2009.                                                                                                                                          |
|   |         |                                                                                                                                                                                                                                                                                                            |
| 3.3    |         | By-laws of the Registrant, as amended. Filed as Exhibit 3-b to the Company’s Form S-1 (File No. 33-08751) September 15, 1986, incorporated herein by reference.                                                                                                                                           |
|   |         |                                                                                                                                                                                                                                                                                                            |
| 3.4    |         | Articles of Amendment of the Registrant.  Incorporated herein by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K, filed on October 5, 2010.                                                                                                                             |
|   |         |                                                                                                                                                                                                                                                                                                            |
| 3.5    |         | Amended and Restated Bylaws of the Registrant.                                                                                                                                                                                                                                                                  |
|   |         |                                                                                                                                                                                                                                                                                                            |
| 4.1    |         | Warrant to Purchase up to 513,113 Shares of Common Stock of the Registrant. Incorporated herein by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K, filed on March 5, 2009.                                                                                                       |
|   |         |                                                                                                                                                                                                                                                                                                            |
| 10.1   |         | First M&F Corporation 2005 Equity Incentive Plan. Filed as Appendix A to the Company’s Proxy Statement, March 15, 2005, incorporated herein by reference.                                                                                                                                             |
|   |         |                                                                                                                                                                                                                                                                                                            |
| 10.2   |         | Merchants and Farmers Bank Profit and Savings Plan, as amended. Filed as Exhibit 10(B) to the Company’s Form 10-Q on August 9, 2005, incorporated herein by reference.                                                                                                                                    |
|   |         |                                                                                                                                                                                                                                                                                                            |
| 10.3   |         | Letter Agreement, including as Exhibit A thereto, Securities Purchase Agreement. Incorporated herein by reference to Exhibit A to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, filed on March 5, 2009.                                                                                    |
|   |         |                                                                                                                                                                                                                                                                                                            |
| 10.4   |         | Form of Preferred Stock Certificate.  Incorporated herein by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K, filed on March 5, 2009.                                                                                                                                  |
|   |         |                                                                                                                                                                                                                                                                                                            |
| 10.5   |         | Side Letter Agreement.  Incorporated herein by reference to Exhibit 10.3 to the Registrant’s Current Report on Form 8-K, filed on March 5, 2009.                                                                                                                                                |
|   |         |                                                                                                                                                                                                                                                                                                            |
| 10.6   |         | CDCI Letter Agreement dated September 29, 2010.  Incorporated herein by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, filed on October 5, 2010.                                                                                                                     |
|   |         |                                                                                                                                                                                                                                                                                                            |
| 11     |         | Computation of Earnings per Share – Filed herewith as Note 19 to the consolidated financial statements.                                                                                                                                                                                                   |
|   |         |                                                                                                                                                                                                                                                                                                            |
| 21     |         | Subsidiaries of the Registrant.                                                                                                                                                                                                                                                                                 |
|   |         |                                                                                                                                                                                                                                                                                                            |
| 23     |         | Consent of Independent Registered Public Accounting Firm.                                                                                                                                                                                                                                                       |
|   |         |                                                                                                                                                                                                                                                                                                            |
| 31.1   |         | Rule 13a-14(a) Certification of Hugh S. Potts, Jr., Chief Executive Officer.                                                                                                                                                                                                                                    |
|   |         |                                                                                                                                                                                                                                                                                                            |
| 31.2   |         | Rule 13a-14(a) Certification of John G. Copeland, Chief Financial Officer.                                                                                                                                                                                                                                      |
|   |         |                                                                                                                                                                                                                                                                                                            |
| 32.1   |         | Section 1350 Certification of Hugh S. Potts, Jr., Chief Executive Officer.                                                                                                                                                                                                                                      |
|   |         |                                                                                                                                                                                                                                                                                                            |
| 32.2   |         | Section 1350 Certification of John G. Copeland, Chief Financial Officer.                                                                                                                                                                                                                                        |
|   |         |                                                                                                                                                                                                                                                                                                            |
| 99.1   |         | Certification pursuant to the Emergency Economic Stability Act of 2008 of Hugh S. Potts, Jr., Chief Executive Officer                                                                                                                                                                                           |
|   |         |                                                                                                                                                                                                                                                                                                            |
| 99.2   |    | Certification pursuant to the Emergency Economic Stability Act of 2008 of John G. Copeland, Chief Financial Officer                                                                                                                                                                                             |

----