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

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

|                                                               |
|---------------------------------------------------------------|
|                                                               |  |  |
| MISSISSIPPI                                                   |   | 64-0636653 |
| (State or other jurisdiction ofincorporation or organization) |   | (I.R.S. Employer Identification No.) |
|                                                          |   |   |
| 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 |   | 9,154,936 Shares |
| Title of Class             |   | Shares Outstanding at January 31, 2012 |

----

----

|         |
|---------|
|         |  |  |  |  |
| PART II |   |   | Page |
|    |   |   |   |
| Item 8  |   | Financial Statements and Supplementary Data | 4 |  |
|    |   |   |   |
| PART IV |   |   |   |
|    |   |   |   |
| Item 15 |   | Exhibits, Financial Statement Schedules | 63 |  |

----

|                                      |
|--------------------------------------|
|                                      |  |  |
| /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 |

----

----

|                                                                                                            |
|------------------------------------------------------------------------------------------------------------|
|                                                                                                            |  |  |  |  |  |  |  |
|                                                                                                       | 2011 |   | 2010 |
| Assets                                                                                                     |   |   |   |
| Cash and due from banks                                                                                    | $ | 39,976 |  |   | $ | 45,099 |  |
| Interest-bearing bank balances                                                                             | 39,391 |  |   | 72,103 |  |
| Federal funds sold                                                                                         | 25,000 |  |   | 25,000 |  |
| Securities available for sale, amortized cost of $315,890 and $274,421                                     | 320,774 |  |   | 276,929 |  |
| Loans held for sale                                                                                        | 26,073 |  |   | 6,242 |  |
| Loans, net of unearned income                                                                              | 996,340 |  |   | 1,060,146 |  |
| Allowance for loan losses                                                                                  | (14,953 | ) |   | (16,025 | ) |
| Net loans                                                                                                  | 981,387 |  |   | 1,044,121 |  |
| Bank premises and equipment                                                                                | 37,989 |  |   | 40,696 |  |
| Accrued interest receivable                                                                                | 6,122 |  |   | 6,380 |  |
| Other real estate                                                                                          | 36,952 |  |   | 31,125 |  |
| Other intangible assets                                                                                    | 4,586 |  |   | 5,013 |  |
| Bank owned life insurance                                                                                  | 22,477 |  |   | 21,790 |  |
| Other assets                                                                                               | 27,924 |  |   | 29,466 |  |
|                                                                                                       | $ | 1,568,651 |  |   | $ | 1,603,964 |  |
| Liabilities and Stockholders’ Equity                                                                 |   |  |   |   |  |
| Liabilities:                                                                                               |   |  |   |   |  |
| Noninterest-bearing deposits                                                                               | $ | 231,718 |  |   | $ | 212,199 |  |
| Interest-bearing deposits                                                                                  | 1,139,745 |  |   | 1,163,213 |  |
| Total deposits                                                                                             | 1,371,463 |  |   | 1,375,412 |  |
| Fed funds purchased and repurchase agreements                                                              | 4,398 |  |   | 33,481 |  |
| Other borrowings                                                                                           | 43,001 |  |   | 50,416 |  |
| Junior subordinated debt                                                                                   | 30,928 |  |   | 30,928 |  |
| Accrued interest payable                                                                                   | 1,023 |  |   | 1,470 |  |
| Other liabilities                                                                                          | 8,242 |  |   | 5,192 |  |
| Total liabilities                                                                                          | 1,459,055 |  |   | 1,496,899 |  |
| Commitments and contingencies (Note 12)                                                                    |   |   |   |
| Stockholders’ equity:                                                                                |   |  |   |   |  |
| Preferred stock; 1,000,000 shares authorized; 30,000 shares issued and outstanding                         | 17,564 |  |   | 16,390 |  |
| Common stock of $5.00 par value; 50,000,000 shares authorized: 9,154,936 and 9,106,803 shares  issued | 45,775 |  |   | 45,534 |  |
| Additional paid-in capital                                                                                 | 31,895 |  |   | 31,883 |  |
| Nonvested restricted stock awards                                                                          | 674 |  |   | 784 |  |
| Retained earnings                                                                                          | 14,456 |  |   | 12,225 |  |
| Accumulated other comprehensive income (loss)                                                              | (768 | ) |   | 249 |  |
| Total equity                                                                                               | 109,596 |  |   | 107,065 |  |
|                                                                                                       | $ | 1,568,651 |  |   | $ | 1,603,964 |  |

----

|                                                                                             |
|---------------------------------------------------------------------------------------------|
|                                                                                             |  |  |  |  |  |  |  |  |  |  |  |
|                                                                                        | 2011 |   | 2010 |   | 2009 |
| Interest income:                                                                            |   |   |   |   |   |
| Interest and fees on loans                                                                  | $ | 60,201 |  |   | $ | 62,070 |  |   | $ | 66,782 |  |
| Interest on loans held for sale                                                             | 275 |  |   | 232 |  |   | 278 |  |
| Taxable investments                                                                         | 6,745 |  |   | 7,616 |  |   | 9,531 |  |
| Tax-exempt investments                                                                      | 1,252 |  |   | 1,549 |  |   | 2,105 |  |
| Federal funds sold                                                                          | 63 |  |   | 82 |  |   | 95 |  |
| Interest-bearing bank balances                                                              | 179 |  |   | 143 |  |   | 42 |  |
| Total interest income                                                                       | 68,715 |  |   | 71,692 |  |   | 78,833 |  |
| Interest expense:                                                                           |   |  |   |   |  |   |   |  |
| Deposits                                                                                    | 13,501 |  |   | 18,809 |  |   | 23,701 |  |
| Fed funds purchased and repurchase agreements                                               | 36 |  |   | 66 |  |   | 97 |  |
| Other borrowings                                                                            | 1,979 |  |   | 3,024 |  |   | 5,449 |  |
| Junior subordinated debt                                                                    | 1,335 |  |   | 1,992 |  |   | 1,992 |  |
| Total interest expense                                                                      | 16,851 |  |   | 23,891 |  |   | 31,239 |  |
| Net interest income                                                                         | 51,864 |  |   | 47,801 |  |   | 47,594 |  |
| Provision for loan losses                                                                   | 9,720 |  |   | 9,220 |  |   | 49,601 |  |
| Net interest income (expense) after provision for loan losses                               | 42,144 |  |   | 38,581 |  |   | (2,007 | ) |
| Noninterest income:                                                                         |   |  |   |   |  |   |   |  |
| Deposit account income                                                                      | 10,293 |  |   | 10,221 |  |   | 10,976 |  |
| Mortgage banking income                                                                     | 1,821 |  |   | 1,581 |  |   | 1,823 |  |
| Agency commission income                                                                    | 3,636 |  |   | 3,809 |  |   | 3,881 |  |
| Trust and brokerage income                                                                  | 584 |  |   | 526 |  |   | 489 |  |
| Bank owned life insurance income                                                            | 638 |  |   | 667 |  |   | 762 |  |
| Other income                                                                                | 2,464 |  |   | 1,865 |  |   | 2,412 |  |
| Securities gains, net                                                                       | 2,769 |  |   | 2,255 |  |   | 456 |  |
| Total investment other-than-temporary impairment losses                                     | (368 | ) |   | (435 | ) |   | (3,527 | ) |
| Portion of loss recognized in (reclassified from) other comprehensive income (before taxes) | (263 | ) |   | 32 |  |   | 2,698 |  |
| Net investment impairment losses recognized                                                 | (631 | ) |   | (403 | ) |   | (829 | ) |
| Total noninterest income                                                                    | 21,574 |  |   | 20,521 |  |   | 19,970 |  |
| Noninterest expenses:                                                                       |   |  |   |   |  |   |   |  |
| Salaries and employee benefits                                                              | 28,469 |  |   | 27,303 |  |   | 28,314 |  |
| Net occupancy expenses                                                                      | 3,935 |  |   | 3,937 |  |   | 4,614 |  |
| Equipment expenses                                                                          | 1,871 |  |   | 2,382 |  |   | 2,877 |  |
| Software and processing expenses                                                            | 1,540 |  |   | 1,627 |  |   | 1,898 |  |
| Foreclosed property expenses                                                                | 7,351 |  |   | 2,946 |  |   | 7,283 |  |
| FDIC insurance assessments                                                                  | 2,426 |  |   | 3,261 |  |   | 3,276 |  |
| Goodwill impairment                                                                         | — |  |   | — |  |   | 32,572 |  |
| Intangible asset amortization and impairment                                                | 427 |  |   | 426 |  |   | 1,688 |  |
| Other expenses                                                                              | 12,315 |  |   | 12,608 |  |   | 13,350 |  |
| Total noninterest expenses                                                                  | 58,334 |  |   | 54,490 |  |   | 95,872 |  |
| Income (loss) before income taxes                                                           | 5,384 |  |   | 4,612 |  |   | (77,909 | ) |
| Income tax expense (benefit)                                                                | 1,011 |  |   | 602 |  |   | (18,104 | ) |
| Net income (loss)                                                                           | 4,373 |  |   | 4,010 |  |   | (59,805 | ) |
| Net loss attributable to noncontrolling interests                                           | — |  |   | (1 | ) |   | (6 | ) |
| Net income (loss) attributable to First M&F Corporation                                 | $ | 4,373 |  |   | $ | 4,011 |  |   | $ | (59,799 | ) |
| Dividends and accretion on preferred stock                                                  | 1,774 |  |   | 1,692 |  |   | 1,464 |  |
| Gain on exchange of preferred stock                                                         | — |  |   | 12,867 |  |   | — |  |
| Net income (loss) applicable to common stock                                                | $ | 2,599 |  |   | $ | 15,186 |  |   | $ | (61,263 | ) |
| Net income (loss) allocated to common shareholders                                          | $ | 2,584 |  |   | $ | 15,071 |  |   | $ | (60,655 | ) |
| Earnings (loss) per share:                                                                  |   |  |   |   |  |   |   |  |
| Basic                                                                                       | $ | 0.28 |  |   | $ | 1.66 |  |   | $ | (6.69 | ) |
| Diluted                                                                                     | 0.28 |  |   | 1.66 |  |   | (6.69 | ) |

----

|                                                                                                                                                                                  |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                  |  |  |  |  |  |  |  |  |  |  |  |
|                                                                                                                                                                             | 2011 |   | 2010 |   | 2009 |
| Net income (loss)                                                                                                                                                                | $ | 4,373 |  |   | $ | 4,010 |  |   | $ | (59,805 | ) |
| Other comprehensive income (loss):                                                                                                                                               |   |  |   |   |  |   |   |  |
| Unrealized gains (losses) on securities:                                                                                                                                         |   |  |   |   |  |   |   |  |
| Unrealized gains on securities available for sale arising during the period, net of tax of $1,728, $159, and $1,628                                                              | 2,901 |  |   | 267 |  |   | 2,736 |  |
| Unrealized losses on other-than-temporarily impaired securities available for sale arising during the period, net of tax of $43, $54 and $1,462                                  | (72 | ) |   | (92 | ) |   | (2,458 | ) |
| Reclassification adjustment for gains on securities available for sale included in net income, net of tax of $1,033, $841, and $170                                              | (1,736 | ) |   | (1,414 | ) |   | (286 | ) |
| Reclassification adjustment for credit related other-than-temporary impairment losses on securities available for sale included in net income, net of tax of $235, $150 and $309 | 396 |  |   | 253 |  |   | 520 |  |
| Unrealized gains (losses) net of settlements on cash flow hedge arising during the period,  net of tax of $989 and $305                                                     | (1,662 | ) |   | 512 |  |   | — |  |
| Defined benefit pension plans:                                                                                                                                                   |   |  |   |   |  |   |   |  |
| Net actuarial gains (losses) arising during the period, net of tax of $859, $111 and $32                                                                                         | (1,445 | ) |   | (187 | ) |   | 53 |  |
| Amortization of transition asset, net of tax of $0, $0 and $3                                                                                                                    | — |  |   | — |  |   | (4 | ) |
| Amortization of prior service cost, net of tax of $9, $14 and $14                                                                                                                | (16 | ) |   | (23 | ) |   | (23 | ) |
| Amortization of actuarial loss, net of tax of $367, $330 and $338                                                                                                                | 617 |  |   | 554 |  |   | 568 |  |
| Other comprehensive income (loss)                                                                                                                                                | (1,017 | ) |   | (130 | ) |   | 1,106 |  |
| Total comprehensive income (loss)                                                                                                                                                | 3,356 |  |   | 3,880 |  |   | (58,699 | ) |
| Comprehensive loss attributable to noncontrolling interests                                                                                                                      | — |  |   | (1 | ) |   | (6 | ) |
| Comprehensive income (loss) of First M&F Corp                                                                                                                                | $ | 3,356 |  |   | $ | 3,881 |  |   | $ | (58,693 | ) |

----

|                                                          |
|----------------------------------------------------------|
|                                                          |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|                                                     | PreferredStock |   | CommonStock |   | AdditionalPaid-inCapital |   | NonvestedRestrictedStockAwards |   | RetainedEarnings(Deficit) |   | AccumulatedOtherComprehensiveIncome (Loss) |   | NoncontrollingInterest |   | Total |
| January 1, 2009                                          | $ | — |  |   | $ | 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 |  |
| Net income                                               | — |  |   | — |  |   | — |  |   | — |  |   | 4,373 |  |   | — |  |   | — |  |   | 4,373 |  |
| Cash dividends - common ($.04 per  share)           | — |  |   | — |  |   | — |  |   | — |  |   | (368 | ) |   | — |  |   | — |  |   | (368 | ) |
| 42,133 shares issued to directors                        | — |  |   | 211 |  |   | (68 | ) |   | — |  |   | — |  |   | — |  |   | — |  |   | 143 |  |
| Dividends and accretion on  preferred stock         | 1,174 |  |   | — |  |   | — |  |   | — |  |   | (1,774 | ) |   | — |  |   | — |  |   | (600 | ) |
| 6,000 restricted share awards vested                     | — |  |   | 30 |  |   | 71 |  |   | (101 | ) |   | — |  |   | — |  |   | — |  |   | — |  |
| Share-based compensation expense  recognized        | — |  |   | — |  |   | 7 |  |   | (9 | ) |   | — |  |   | — |  |   | — |  |   | (2 | ) |
| Tax benefits on restricted stock  dividends paid    | — |  |   | — |  |   | 2 |  |   | — |  |   | — |  |   | — |  |   | — |  |   | 2 |  |
| Net change                                               | — |  |   | — |  |   | — |  |   | — |  |   | — |  |   | (1,017 | ) |   | — |  |   | (1,017 | ) |
| December 31, 2011                                        | $ | 17,564 |  |   | $ | 45,775 |  |   | $ | 31,895 |  |   | $ | 674 |  |   | $ | 14,456 |  |   | $ | (768 | ) |   | $ | — |  |   | $ | 109,596 |  |

----

|                                                                                                           |
|-----------------------------------------------------------------------------------------------------------|
|                                                                                                           |  |  |  |  |  |  |  |  |  |  |  |
|                                                                                                      | 2011 |   | 2010 |   | 2009 |
| Cash flows from operating activities:                                                                     |   |   |   |   |   |
| Net income (loss)                                                                                         | $ | 4,373 |  |   | $ | 4,010 |  |   | $ | (59,805 | ) |
| Adjustments to reconcile net income (loss) to net cash provided by operating   activities: |   |  |   |   |  |   |   |
| Share-based compensation                                                                                  | 141 |  |   | 194 |  |   | 73 |  |
| Amortization of pension costs                                                                             | 676 |  |   | 787 |  |   | 878 |  |
| Depreciation and amortization                                                                             | 2,517 |  |   | 2,736 |  |   | 3,281 |  |
| Goodwill impairment                                                                                       | — |  |   | — |  |   | 32,572 |  |
| Intangible asset impairments                                                                              | — |  |   | — |  |   | 1,248 |  |
| Provision for loan losses                                                                                 | 9,720 |  |   | 9,220 |  |   | 49,601 |  |
| Net investment amortization                                                                               | 2,791 |  |   | 2,090 |  |   | 1,178 |  |
| Net change in unearned fees/deferred costs on loans                                                       | (109 | ) |   | 44 |  |   | (243 | ) |
| Capitalized dividends on FHLB stock                                                                       | (27 | ) |   | (27 | ) |   | (19 | ) |
| Gain on securities available for sale                                                                     | (2,769 | ) |   | (2,255 | ) |   | (456 | ) |
| Impairment loss on securities available for sale                                                          | 631 |  |   | 403 |  |   | 829 |  |
| Gains on loans held for sale                                                                              | (1,377 | ) |   | (1,285 | ) |   | (1,006 | ) |
| Other real estate losses                                                                                  | 5,874 |  |   | 1,574 |  |   | 5,778 |  |
| Other asset sale (gains) losses                                                                           | (317 | ) |   | 225 |  |   | (732 | ) |
| Deferred income taxes                                                                                     | 1,007 |  |   | 735 |  |   | (10,855 | ) |
| Originations of loans held for sale, net of repayments                                                    | (92,009 | ) |   | (83,200 | ) |   | (107,959 | ) |
| Sales proceeds of loans held for sale                                                                     | 73,071 |  |   | 88,277 |  |   | 106,348 |  |
| (Increase) decrease in:                                                                                   |   |   |   |  |   |   |
| Accrued interest receivable                                                                               | 258 |  |   | 1,218 |  |   | 2,234 |  |
| Cash surrender value of bank owned life insurance                                                         | (638 | ) |   | (667 | ) |   | (762 | ) |
| Other assets                                                                                              | (1,683 | ) |   | (1,800 | ) |   | 1,086 |  |
| Increase (decrease) in:                                                                                   |   |  |   |   |  |   |   |
| Accrued interest payable                                                                                  | (447 | ) |   | (1,463 | ) |   | (604 | ) |
| Other liabilities                                                                                         | 799 |  |   | 8,392 |  |   | (4,874 | ) |
| Net cash provided by operating activities                                                                 | 2,482 |  |   | 29,208 |  |   | 17,791 |  |
|                                                                                                      |   |   |   |   |   |
| Cash flows from investing activities:                                                                     |   |  |   |   |  |   |   |  |
| Purchases of securities available for sale                                                                | (220,235 | ) |   | (170,862 | ) |   | (142,697 | ) |
| Sales of securities available for sale                                                                    | 114,435 |  |   | 89,164 |  |   | 17,240 |  |
| Maturities of securities available for sale                                                               | 63,678 |  |   | 87,509 |  |   | 67,318 |  |
| Purchases of loans held for investment                                                                    | (42,118 | ) |   | (44,167 | ) |   | — |  |
| Sales of nonperforming loans                                                                              | — |  |   | 500 |  |   | 6,350 |  |
| Net decrease in other loans held for investment                                                           | 75,124 |  |   | 397 |  |   | 21,506 |  |
| Net (increase) decrease in:                                                                               |   |  |   |   |  |   |   |
| Interest-bearing bank balances                                                                            | 32,712 |  |   | 12,707 |  |   | (78,254 | ) |
| Federal funds sold                                                                                        | — |  |   | 45,000 |  |   | (60,650 | ) |
| Bank premises and equipment                                                                               | 1,119 |  |   | (226 | ) |   | (1,061 | ) |
| Net benefits received (purchases) of bank owned life insurance                                            | (49 | ) |   | (41 | ) |   | 202 |  |
| Proceeds from sales of other real estate and other repossessed assets                                     | 9,729 |  |   | 16,626 |  |   | 23,127 |  |
| Payments for ORE improvements and lienholder payoffs                                                      | (563 | ) |   | (1,276 | ) |   | (599 | ) |
| Net redemptions of FHLB stock                                                                             | — |  |   | — |  |   | 225 |  |
| Net cash provided by (used in) investing activities                                                       | 33,832 |  |   | 35,331 |  |   | (147,293 | ) |
|                                                                                                      |   |   |   |   |   |

----

|                                                                   |
|-------------------------------------------------------------------|
|                                                                   |  |  |  |  |  |  |  |  |  |  |  |
|                                                              | 2011 |   | 2010 |   | 2009 |
| Cash flows from financing activities:                             |   |   |   |   |   |
| Net increase (decrease) in deposits                               | (3,973 | ) |   | (12,880 | ) |   | 126,857 |  |
| Net increase (decrease) in short-term borrowings                  | (29,083 | ) |   | 24,839 |  |   | (1,086 | ) |
| Proceeds from other borrowings                                    | 686 |  |   | 2,872 |  |   | 20,000 |  |
| Repayments of other borrowings                                    | (8,101 | ) |   | (74,966 | ) |   | (49,037 | ) |
| Earnings distributions to noncontrolling interests                | — |  |   | — |  |   | (11 | ) |
| Common dividends paid                                             | (368 | ) |   | (366 | ) |   | (1,466 | ) |
| Preferred dividends paid                                          | (600 | ) |   | (1,385 | ) |   | (1,075 | ) |
| Preferred shares and common stock warrant issued to U.S. Treasury | — |  |   | — |  |   | 30,000 |  |
| Tax benefits related to share-based compensation                  | 2 |  |   | — |  |   | 28 |  |
| Net cash provided by (used in) financing activities               | (41,437 | ) |   | (61,886 | ) |   | 124,210 |  |
| Net increase (decrease) in cash and due from banks                | (5,123 | ) |   | 2,653 |  |   | (5,292 | ) |
| Cash and due from banks at January 1                              | 45,099 |  |   | 42,446 |  |   | 47,738 |  |
| Cash and due from banks at December 31                            | $ | 39,976 |  |   | $ | 45,099 |  |   | $ | 42,446 |  |
|                                                              |   |   |   |   |   |
|                                                              |   |   |   |   |   |
| Supplemental disclosures:                                         |   |  |   |   |  |   |   |  |
| Total interest paid                                               | $ | 17,311 |  |   | $ | 25,373 |  |   | $ | 31,852 |  |
| Total income taxes paid                                           | 3 |  |   | 232 |  |   | 69 |  |
| Income tax refunds received                                       | — |  |   | 8,735 |  |   | 1,249 |  |
|                                                              |   |   |   |   |   |
| Transfers of loans to foreclosed property                         | 20,870 |  |   | 24,192 |  |   | 40,048 |  |
| Transfers of buildings to foreclosed property                     | 139 |  |   | 180 |  |   | — |  |
| Gain on exchange of Class B preferred stock                       | — |  |   | 12,867 |  |   | — |  |
| U.S. Treasury preferred dividend accrued but unpaid               | 75 |  |   | 75 |  |   | 187 |  |
| Accretion on U.S. Treasury preferred stock                        | 1,174 |  |   | 419 |  |   | 201 |  |

----

----

----

----

----

----

----

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

|                                                  |
|--------------------------------------------------|
|                                                  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|                                             |   |   | Fair Value Measurements atDecember 31, 2010, Using |
|                                             | Assets/LiabilitiesMeasured at FairValue |   | QuotedPrices InActiveMarketsForIdenticalAssets |   | SignificantOtherObservableInputs |   | SignificantUnobservableInputs |
| (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 asset                         | 817 |  |   | — |  |   | — |  |   | 817 |  |
| Mortgage derivative assets                       | 246 |  |   | — |  |   | — |  |   | 246 |  |
|                                             | $ | 277,992 |  |   | $ | — |  |   | $ | 275,995 |  |   | $ | 1,997 |  |
|                                             |   |   |   |   |   |   |   |
| Interest rate swap liability                     | $ | — |  |   | $ | — |  |   | $ | — |  |   | $ | — |  |
| Mortgage derivative liabilities                  | 28 |  |   | — |  |   | — |  |   | 28 |  |
|                                             | $ | 28 |  |   | $ | — |  |   | $ | — |  |   | $ | 28 |  |

----

|                                                                                                                                                                                      |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                      |  |  |  |  |  |  |  |  |  |  |  |
|                                                                                                                                                                                 | Year Ended December 31, 2011 |
| (Dollars in thousands)                                                                                                                                                     | CollateralizedDebtObligations |   | MortgageDerivatives |   | InterestRateSwap |
| Beginning Balance                                                                                                                                                                    | $ | 934 |  |   | $ | 218 |  |   | $ | 817 |  |
| Total gains or losses (realized/unrealized):                                                                                                                                         |   |  |   |   |  |   |   |  |
| Other-than-temporary impairment included in earnings                                                                                                                                 | (631 | ) |   | — |  |   | — |  |
| Other-than-temporary impairment transferred from other comprehensive income                                                                                                          | 263 |  |   | — |  |   | — |  |
| Other gains/losses included in other comprehensive income                                                                                                                            | 253 |  |   | — |  |   | (3,171 | ) |
| Net swap settlement recorded                                                                                                                                                         | — |  |   | — |  |   | 520 |  |
| IRLC and FSA issuances                                                                                                                                                               | — |  |   | 398 |  |   | — |  |
| IRLC and FSA expirations and fair value changes included in earnings                                                                                                                 | — |  |   | (398 | ) |   | — |  |
| IRLC transfers into closed loans/FSA transferred on sales                                                                                                                            | — |  |   | (240 | ) |   | — |  |
| Ending Balance                                                                                                                                                                       | $ | 819 |  |   | $ | (22 | ) |   | $ | (1,834 | ) |
|                                                                                                                                                                                 |   |   |   |   |   |
| 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 | $ | (631 | ) |   | $ | — |  |   | $ | (520 | ) |

----

|                                                                                                                                                                                      |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                      |  |  |  |  |  |  |  |  |  |  |  |
|                                                                                                                                                                                 | Year Ended December 31, 2010 |
| (Dollars in thousands)                                                                                                                                                     | CollateralizedDebtObligations |   | MortgageDerivatives |   | InterestRateSwap |
| 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 other comprehensive income                                                                                                               | (32 | ) |   | — |  |   | — |  |
| Other gains/losses included in other comprehensive income                                                                                                                            | 289 |  |   | — |  |   | 817 |  |
| Net swap settlement recorded                                                                                                                                                         | — |  |   | — |  |   | — |  |
| IRLC and FSA issuances                                                                                                                                                               | — |  |   | 702 |  |   | — |  |
| IRLC and FSA expirations and fair value changes included in earnings                                                                                                                 | — |  |   | (188 | ) |   | — |  |
| IRLC transfers into closed loans/FSA transferred on sales                                                                                                                            | — |  |   | (380 | ) |   | — |  |
| 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 | ) |   | $ | — |  |   | $ | — |  |

|                                                                                                                                                                                      |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                      |  |  |  |  |  |  |  |
|                                                                                                                                                                                 | Year Ended December 31, 2009 |
| (Dollars in thousands)                                                                                                                                                     | CollateralizedDebtObligations |   | MortgageDerivatives |
| Beginning Balance                                                                                                                                                                    | $ | — |  |   | $ | — |  |
| Total gains or losses (realized/unrealized):                                                                                                                                         |   |  |   |   |  |
| Other-than-temporary impairment included in earnings                                                                                                                                 | (829 | ) |   | — |  |
| Other-than-temporary impairment included in 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 |
|                             | For theYear-to-DateEnded |   | QuotedPrices inActiveMarkets forIdenticalAssets |   | SignificantOtherObservableInputs |   | SignificantUnobservableInputs |
| (Dollars in thousands) | 12/31/11 (a) |   | (Level 1) |   | (Level 2) |   | (Level 3) |
| Impaired loans                   | $ | 15,533 |  |   | $ | — |  |   | $ | — |  |   | $ | 15,533 |  |
| Loan foreclosures                | 11,304 |  |   | — |  |   | — |  |   | 11,304 |  |
| Other real estate                | 13,788 |  |   | — |  |   | — |  |   | 13,788 |  |

|                                  |
|----------------------------------|
|                                  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|                             |   |   | Fair Value Measurements Using |
|                             | For theYear-to-DateEnded |   | QuotedPrices inActiveMarkets forIdenticalAssets |   | SignificantOtherObservableInputs |   | SignificantUnobservableInputs |
| (Dollars in thousands) | 12/31/10 (a) |   | (Level 1) |   | (Level 2) |   | (Level 3) |
| Impaired loans                   | $ | 27,335 |  |   | $ | — |  |   | $ | — |  |   | $ | 27,335 |  |
| Loan foreclosures                | 5,013 |  |   | — |  |   | — |  |   | 5,013 |  |
| Loans transferred to HFS         | — |  |   | — |  |   | — |  |   | — |  |
| Other real estate                | 12,498 |  |   | — |  |   | — |  |   | 12,498 |  |

|                                  |
|----------------------------------|
|                                  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|                             |   |   | Fair Value Measurements Using |
|                             | For theYear-to-DateEnded |   | QuotedPrices inActiveMarkets forIdenticalAssets |   | SignificantOtherObservableInputs |   | SignificantUnobservableInputs |
| (Dollars in thousands) | 12/31/09 (a) |   | (Level 1) |   | (Level 2) |   | (Level 3) |
| Impaired loans                   | $ | 67,492 |  |   | $ | — |  |   | $ | — |  |   | $ | 67,492 |  |
| Loan foreclosures                | 17,899 |  |   | — |  |   | — |  |   | 17,899 |  |
| Loans transferred to HFS         | — |  |   | — |  |   | — |  |   | — |  |
| Other real estate                | 11,464 |  |   | — |  |   | — |  |   | 11,464 |  |
| Bankers bank stock               | — |  |   | — |  |   | — |  |   | — |  |
| Goodwill                         | — |  |   | — |  |   | — |  |   | — |  |
| Intangible assets                | — |  |   | — |  |   | — |  |   | — |  |

|     |                                                                                                                                                                                                                                                                                                                                                                                                                   |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (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. |

----

|                          |
|--------------------------|
|                          |  |  |  |  |  |  |  |  |  |  |  |
| (Dollars in thousands)   | 2011 |   | 2010 |   | 2009 |
| Impaired loans           | $ | 8,303 |  |   | $ | 6,550 |  |   | $ | 26,135 |  |
| Loan foreclosures        | 4,892 |  |   | 4,080 |  |   | 12,025 |  |
| Loans transferred to HFS | — |  |   | 325 |  |   | 3,189 |  |
| Other real estate        | 5,093 |  |   | 2,323 |  |   | 4,101 |  |
| Bankers bank stock       | — |  |   | — |  |   | 78 |  |
| Goodwill                 | — |  |   | — |  |   | 32,572 |  |
| Intangible assets        | — |  |   | — |  |   | 1,248 |  |

----

|                                                    |
|----------------------------------------------------|
|                                                    |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|                                               | December 31, 2011 |   | December 31, 2010 |
| (Dollars in thousands)                   | Carrying Amount |   | Estimated Fair Value |   | Carrying Amount |   | Estimated Fair Value |
| Financial assets:                                  |   |   |   |   |   |   |   |
| Cash and short-term investments                    | $ | 104,367 |  |   | $ | 104,367 |  |   | $ | 142,202 |  |   | $ | 142,202 |  |
| Securities available for sale                      | 320,774 |  |   | 320,774 |  |   | 276,929 |  |   | 276,929 |  |
| Loans held for sale                                | 26,073 |  |   | 27,053 |  |   | 6,242 |  |   | 6,242 |  |
| Loans held for investment                          | 981,387 |  |   | 921,351 |  |   | 1,044,121 |  |   | 965,894 |  |
| Agency accounts receivable                         | 217 |  |   | 217 |  |   | 346 |  |   | 346 |  |
| Accrued interest receivable                        | 6,122 |  |   | 6,122 |  |   | 6,380 |  |   | 6,380 |  |
| Nonmarketable equity investments                   | 7,380 |  |   | 7,380 |  |   | 7,353 |  |   | 7,353 |  |
| Investment in unconsolidated VIE                   | 3,425 |  |   | 3,425 |  |   | 3,615 |  |   | 3,615 |  |
| Mortgage derivative assets                         | 269 |  |   | 269 |  |   | 246 |  |   | 246 |  |
| Financial liabilities:                             |   |  |   |   |  |   |   |  |   |   |  |
| Noninterest-bearing deposits                       | 231,718 |  |   | 231,718 |  |   | 212,199 |  |   | 212,199 |  |
| NOW, MMDA and savings deposits                     | 707,798 |  |   | 707,798 |  |   | 645,433 |  |   | 645,433 |  |
| Certificates of deposit                            | 431,947 |  |   | 439,518 |  |   | 517,780 |  |   | 527,971 |  |
| Short-term borrowings                              | 4,398 |  |   | 4,398 |  |   | 33,481 |  |   | 33,481 |  |
| Other borrowings                                   | 43,001 |  |   | 45,193 |  |   | 50,416 |  |   | 53,213 |  |
| Junior subordinated debt                           | 30,928 |  |   | 25,204 |  |   | 30,928 |  |   | 25,123 |  |
| Agency accounts payable                            | 641 |  |   | 641 |  |   | 586 |  |   | 586 |  |
| Accrued interest payable                           | 1,023 |  |   | 1,023 |  |   | 1,470 |  |   | 1,470 |  |
| Mortgage derivative liabilities                    | 291 |  |   | 291 |  |   | 28 |  |   | 28 |  |
| Other financial instruments:                       |   |  |   |   |  |   |   |  |   |   |  |
| Commitments to extend credit and letters of credit | (4 | ) |   | (320 | ) |   | (15 | ) |   | (306 | ) |
|    Interest rate swap               | (1,834 | ) |   | (1,834 | ) |   | 817 |  |   | 817 |  |

----

----

|                                                  |
|--------------------------------------------------|
|                                                  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|                                             | Amortized Cost |   | Gross Unrealized |   | Fair Value |
| (Dollars in thousands)                 |   | Gains |   | Losses |   |
| December 31, 2011:                               |   |   |   |   |   |   |   |
| U.S. Government sponsored entities               | $ | 58,714 |  |   | $ | 174 |  |   | $ | 96 |  |   | $ | 58,792 |  |
| Mortgage-backed investments                      | 198,832 |  |   | 5,016 |  |   | 162 |  |   | 203,686 |  |
| Obligations of states and political subdivisions | 51,763 |  |   | 2,459 |  |   | 80 |  |   | 54,142 |  |
| Collateralized debt obligations                  | 3,137 |  |   | — |  |   | 2,318 |  |   | 819 |  |
| Other debt securities                            | 3,444 |  |   | 25 |  |   | 134 |  |   | 3,335 |  |
|                                             | $ | 315,890 |  |   | $ | 7,674 |  |   | $ | 2,790 |  |   | $ | 320,774 |  |
|                                             |   |   |   |   |   |   |   |
| December 31, 2010:                               |   |  |   |   |  |   |   |  |   |   |  |
| U.S. Government sponsored entities               | $ | 58,152 |  |   | $ | 650 |  |   | $ | 191 |  |   | $ | 58,611 |  |
| Mortgage-backed investments                      | 170,039 |  |   | 4,268 |  |   | 386 |  |   | 173,921 |  |
| Obligations of states and political subdivisions | 40,924 |  |   | 1,104 |  |   | 200 |  |   | 41,828 |  |
| Collateralized debt obligations                  | 3,768 |  |   | — |  |   | 2,834 |  |   | 934 |  |
| Other debt securities                            | 1,538 |  |   | 97 |  |   | — |  |   | 1,635 |  |
|                                             | $ | 274,421 |  |   | $ | 6,119 |  |   | $ | 3,611 |  |   | $ | 276,929 |  |

----

|                                                  |
|--------------------------------------------------|
|                                                  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| (Dollars in thousands)                 | Less Than 12 Months |   | 12 Months or More |   | Total |
| December 31, 2011:                     | FairValue |   | Unrealized Losses |   | FairValue |   | Unrealized Losses |   | FairValue |   | Unrealized Losses |
| U.S. Government sponsored entities               | $ | 23,734 |  |   | $ | 96 |  |   | $ | — |  |   | $ | — |  |   | $ | 23,734 |  |   | $ | 96 |  |
| Mortgage-backed investments                      | 32,280 |  |   | 162 |  |   | — |  |   | — |  |   | 32,280 |  |   | 162 |  |
| Obligations of states and political subdivisions | 7,613 |  |   | 80 |  |   | — |  |   | — |  |   | 7,613 |  |   | 80 |  |
| Collateralized debt obligations                  | — |  |   | — |  |   | 819 |  |   | 2,318 |  |   | 819 |  |   | 2,318 |  |
| Other debt securities                            | 2,317 |  |   | 134 |  |   | — |  |   | — |  |   | 2,317 |  |   | 134 |  |
|                                             | $ | 65,944 |  |   | $ | 472 |  |   | $ | 819 |  |   | $ | 2,318 |  |   | $ | 66,763 |  |   | $ | 2,790 |  |
| December 31, 2010:                     |   |  |   |   |  |   |   |  |   |   |  |   |   |  |   |   |  |
| U.S. Government sponsored entities               | $ | 10,898 |  |   | $ | 191 |  |   | $ | — |  |   | $ | — |  |   | $ | 10,898 |  |   | $ | 191 |  |
| Mortgage-backed investments                      | 35,821 |  |   | 386 |  |   | — |  |   | — |  |   | 35,821 |  |   | 386 |  |
| Obligations of states and political subdivisions | 5,898 |  |   | 162 |  |   | 317 |  |   | 38 |  |   | 6,215 |  |   | 200 |  |
| Collateralized debt obligations                  | — |  |   | — |  |   | 934 |  |   | 2,834 |  |   | 934 |  |   | 2,834 |  |
|                                             | $ | 52,617 |  |   | $ | 739 |  |   | $ | 1,251 |  |   | $ | 2,872 |  |   | $ | 53,868 |  |   | $ | 3,611 |  |

----

|                                                          |
|----------------------------------------------------------|
|                                                          |  |  |  |  |  |  |  |  |  |  |  |
|                                                     | Year EndedDecember 31 |
| (Dollars in thousands)                         | 2011 |   | 2010 |   | 2009 |
| Beginning balance                                        | $ | 1,232 |  |   | $ | 829 |  |   | $ | — |  |
| OTTI credit losses on securities not previously impaired | — |  |   | — |  |   | 724 |  |
| OTTI credit losses on previously impaired securities     | 631 |  |   | 403 |  |   | 105 |  |
| Ending balance                                           | $ | 1,863 |  |   | $ | 1,232 |  |   | $ | 829 |  |

|                                  |
|----------------------------------|
|                                  |  |  |  |  |  |  |  |
| (Dollars in thousands) | AmortizedCost |   | FairValue |
| One year or less                 | $ | 27,286 |  |   | $ | 27,281 |  |
| After one through five years     | 59,747 |  |   | 60,971 |  |
| After five through ten years     | 24,929 |  |   | 26,010 |  |
| After ten years                  | 5,096 |  |   | 2,826 |  |
|                             | 117,058 |  |   | 117,088 |  |
| Mortgage-backed investments      | 198,832 |  |   | 203,686 |  |
|                             |   |   |   |
|                             | $ | 315,890 |  |   | $ | 320,774 |  |

----

|                                                 |
|-------------------------------------------------|
|                                                 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|                                            | 2011 |   | 2010 |
|                                            | Amortized |   | Fair |   | Amortized |   | Fair |
| (Dollars in thousands)                | Cost |   | Value |   | Cost |   | Value |
| Pledged to secure public and tax deposits       | $ | 184,739 |  |   | $ | 188,445 |  |   | $ | 158,839 |  |   | $ | 161,469 |  |
| Pledged for Trust account deposits              | 3,902 |  |   | 4,084 |  |   | 4,877 |  |   | 4,990 |  |
| Pledged for non-public repurchase agreements    | 8,049 |  |   | 8,458 |  |   | 37,420 |  |   | 37,109 |  |
| Pledged for Fed funds purchased lines of credit | 1,008 |  |   | 1,006 |  |   | 8,683 |  |   | 8,866 |  |
| Pledged for interest rate swap                  | 1,500 |  |   | 1,505 |  |   | — |  |   | — |  |
| Pledged for letter of credit obtained           | 7,837 |  |   | 7,924 |  |   | 5,691 |  |   | 5,717 |  |
| Pledged to an insurance commissioner            | 548 |  |   | 566 |  |   | 546 |  |   | 585 |  |
| Total securities pledged                        | $ | 207,583 |  |   | $ | 211,988 |  |   | $ | 216,056 |  |   | $ | 218,736 |  |

|                                                                                             |
|---------------------------------------------------------------------------------------------|
|                                                                                             |  |  |  |  |  |  |  |  |  |  |  |
| (Dollars in thousands)                                                            | 2011 |   | 2010 |   | 2009 |
| Proceeds from sales                                                                         | $ | 114,435 |  |   | $ | 89,164 |  |   | $ | 17,240 |  |
|                                                                                        |   |   |   |   |   |
| Gross realized gains                                                                        | 2,838 |  |   | 2,346 |  |   | 467 |  |
| Gross realized losses                                                                       | (69 | ) |   | (91 | ) |   | (11 | ) |
| Net gains from sales                                                                        | $ | 2,769 |  |   | $ | 2,255 |  |   | $ | 456 |  |
| Gross recognized losses related to the credit component of other-than-temporary impairments | $ | 631 |  |   | $ | 403 |  |   | $ | 829 |  |

|                                         |
|-----------------------------------------|
|                                         |  |  |  |  |  |  |  |  |
| (Dollars in thousands)        |   | December 31, 2011 |   | December 31, 2010 |
| Construction and land development loans |   | $ | 69,325 |  |   | $ | 89,093 |  |
| Other commercial real estate loans      |   | 505,180 |  |   | 557,638 |  |
| Asset-based loans                       |   | 37,540 |  |   | 28,132 |  |
| Other commercial loans                  |   | 117,790 |  |   | 105,094 |  |
| Home equity loans                       |   | 37,024 |  |   | 40,305 |  |
| Other 1-4 family residential loans      |   | 186,815 |  |   | 195,184 |  |
| Consumer loans                          |   | 42,666 |  |   | 44,700 |  |
| Total loans                             |   | $ | 996,340 |  |   | $ | 1,060,146 |  |

----

|                                  |
|----------------------------------|
|                                  |  |  |  |  |  |  |  |
| (Dollars in thousands)           | 2011 |   | 2010 |
| Loans outstanding at January 1   | $ | 4,485 |  |   | $ | 5,018 |  |
| New loans and advances           | 13,341 |  |   | 13,182 |  |
| Repayments                       | (15,879 | ) |   | (11,380 | ) |
| Retirements                      | (156 | ) |   | (2,335 | ) |
| Loans outstanding at December 31 | $ | 1,791 |  |   | $ | 4,485 |  |

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

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

----

|                                                          |
|----------------------------------------------------------|
|                                                          |  |  |  |  |  |  |  |  |
| (Dollars in thousands)                         |   | December 31, 2011 |   | December 31, 2010 |
| Construction and land development loans                  |   | $ | 4,398 |  |   | $ | 13,993 |  |
| Other commercial real estate loans                       |   | 9,937 |  |   | 13,027 |  |
| Asset based loans                                        |   | — |  |   | — |  |
| Other commercial loans                                   |   | 913 |  |   | 2,151 |  |
| Home equity loans                                        |   | 474 |  |   | 303 |  |
| Other 1-4 family residential loans                       |   | 1,422 |  |   | 3,560 |  |
| Consumer loans                                           |   | 33 |  |   | 93 |  |
| Total nonaccrual loans                                   |   | $ | 17,177 |  |   | $ | 33,127 |  |
| Other real estate owned                                  |   | 36,952 |  |   | 31,125 |  |
| Total nonperforming credit-related assets                |   | $ | 54,129 |  |   | $ | 64,252 |  |
|                                                     |   |   |   |   |
| Accruing loans past due 90 days or more                  |   | $ | 602 |  |   | $ | 951 |  |
| Loans restructured and in compliance with modified terms |   | $ | 19,662 |  |   | $ | 18,052 |  |

----

----

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

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

----

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

|                                  |
|----------------------------------|
|                                  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| (Dollars in thousands) | Home Equity |   | Other 1-4 Family |   | Consumer |   | Total |
| 10 and 20                        | $ | — |  |   | $ | 170 |  |   | $ | 14,516 |  |   | $ | 27,827 |  |
| 30-32                            | 39,478 |  |   | 179,501 |  |   | 29,288 |  |   | 870,976 |  |
| 40                               | 274 |  |   | 8,514 |  |   | 292 |  |   | 55,605 |  |
| 50                               | 508 |  |   | 6,810 |  |   | 600 |  |   | 97,662 |  |
| 60                               | 45 |  |   | 189 |  |   | 4 |  |   | 8,076 |  |
| Total                            | $ | 40,305 |  |   | $ | 195,184 |  |   | $ | 44,700 |  |   | $ | 1,060,146 |  |

----

|                                               |
|-----------------------------------------------|
|                                               |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| (Dollars in thousands)              | Recorded Balance |   | Unpaid Principal Balance |   | Specific Allowance |   | Average Investment in ImpairedLoans |   | Interest IncomeRecognized |
| Loans without a specific valuation allowance: |   |   |   |   |   |   |   |   |   |
| Construction and land development loans       | $ | 9,539 |  |   | $ | 13,915 |  |   | $ | — |  |   | $ | 10,665 |  |   | $ | 419 |  |
| Other commercial real estate loans            | 33,048 |  |   | 36,117 |  |   | — |  |   | 33,597 |  |   | 1,361 |  |
| Asset based loans                             | — |  |   | — |  |   | — |  |   | — |  |   | — |  |
| Other commercial loans                        | 433 |  |   | 460 |  |   | — |  |   | 1,920 |  |   | 83 |  |
| Home equity loans                             | 159 |  |   | 159 |  |   | — |  |   | 291 |  |   | 4 |  |
| Other 1-4 family residential loans            | 4,466 |  |   | 4,732 |  |   | — |  |   | 4,476 |  |   | 229 |  |
| Consumer loans                                | 128 |  |   | 154 |  |   | — |  |   | 147 |  |   | 14 |  |
| Loans with a specific valuation allowance:    |   |  |   |   |  |   |   |  |   |   |  |   |   |  |
| Construction and land development loans       | $ | 8,620 |  |   | $ | 11,294 |  |   | $ | 1,750 |  |   | $ | 10,991 |  |   | $ | 356 |  |
| Other commercial real estate loans            | 7,722 |  |   | 8,471 |  |   | 894 |  |   | 10,005 |  |   | 314 |  |
| Asset based loans                             | — |  |   | — |  |   | — |  |   | — |  |   | — |  |
| Other commercial loans                        | 1,111 |  |   | 1,111 |  |   | 485 |  |   | 2,099 |  |   | 91 |  |
| Home equity loans                             | 456 |  |   | 456 |  |   | 166 |  |   | 457 |  |   | 7 |  |
| Other 1-4 family residential loans            | 1,843 |  |   | 1,843 |  |   | 397 |  |   | 1,848 |  |   | 93 |  |
| Consumer loans                                | 37 |  |   | 37 |  |   | 37 |  |   | 50 |  |   | 3 |  |
| Total:                                        |   |  |   |   |  |   |   |  |   |   |  |   |   |  |
| Construction and land development loans       | $ | 18,159 |  |   | $ | 25,209 |  |   | $ | 1,750 |  |   | $ | 21,656 |  |   | $ | 775 |  |
| Other commercial real estate loans            | 40,770 |  |   | 44,588 |  |   | 894 |  |   | 43,602 |  |   | 1,675 |  |
| Asset based loans                             | — |  |   | — |  |   | — |  |   | — |  |   | — |  |
| Other commercial loans                        | 1,544 |  |   | 1,571 |  |   | 485 |  |   | 4,019 |  |   | 174 |  |
| Home equity loans                             | 615 |  |   | 615 |  |   | 166 |  |   | 748 |  |   | 11 |  |
| Other 1-4 family residential loans            | 6,309 |  |   | 6,575 |  |   | 397 |  |   | 6,324 |  |   | 322 |  |
| Consumer loans                                | 165 |  |   | 191 |  |   | 37 |  |   | 197 |  |   | 17 |  |

----

|                                               |
|-----------------------------------------------|
|                                               |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| (Dollars in thousands)              | Recorded Balance |   | Unpaid Principal Balance |   | Specific Allowance |   | Average Investment in ImpairedLoans * |
| Loans without a specific valuation allowance: |   |   |   |   |   |   |   |
| Construction and land development loans       | $ | 20,531 |  |   | $ | 29,004 |  |   | $ | — |  |   | $ | 20,641 |  |
| Other commercial real estate loans            | 45,611 |  |   | 49,868 |  |   | — |  |   | 46,488 |  |
| 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       | $ | 33,431 |  |   | $ | 42,925 |  |   | $ | 2,871 |  |   | $ | 33,577 |  |
| Other commercial real estate loans            | 54,327 |  |   | 58,584 |  |   | 1,582 |  |   | 55,428 |  |
| 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                      | $ | 3,942 |  |   | $ | 2,763 |  |   | $ | 4,442 |  |   | $ | 3,701 |  |   | $ | 1,177 |  |   | $ | — |  |   | $ | 16,025 |  |
| Provision charged to expense                    | 2,159 |  |   | 5,308 |  |   | 971 |  |   | 904 |  |   | 378 |  |   | — |  |   | 9,720 |  |
| Losses charged off                              | (2,935 | ) |   | (4,446 | ) |   | (2,534 | ) |   | (2,142 | ) |   | (952 | ) |   | — |  |   | (13,009 | ) |
| Recoveries                                      | 965 |  |   | 448 |  |   | 468 |  |   | 144 |  |   | 192 |  |   | — |  |   | 2,217 |  |
| Balance, end of year                            | $ | 4,131 |  |   | $ | 4,073 |  |   | $ | 3,347 |  |   | $ | 2,607 |  |   | $ | 795 |  |   | $ | — |  |   | $ | 14,953 |  |
| Ending balance:                                 |   |  |   |   |  |   |   |  |   |   |  |   |   |  |   |   |  |   |   |  |
| individually evaluated for impairment           | $ | 1,750 |  |   | $ | 894 |  |   | $ | 485 |  |   | $ | 563 |  |   | $ | 37 |  |   | $ | — |  |   | $ | 3,729 |  |
| Ending balance:                                 |   |  |   |   |  |   |   |  |   |   |  |   |   |  |   |   |  |   |   |  |
| collectively evaluated for impairment           | $ | 2,381 |  |   | $ | 3,179 |  |   | $ | 2,862 |  |   | $ | 2,044 |  |   | $ | 758 |  |   | $ | — |  |   | $ | 11,224 |  |
| Ending balance:                                 |   |  |   |   |  |   |   |  |   |   |  |   |   |  |   |   |  |   |   |  |
| loans acquired with deteriorated credit quality | $ | — |  |   | $ | — |  |   | $ | — |  |   | $ | — |  |   | $ | — |  |   | $ | — |  |   | $ | — |  |
| Loans:                                          |   |  |   |   |  |   |   |  |   |   |  |   |   |  |   |   |  |   |   |  |
| Ending balance                                  | $ | 69,325 |  |   | $ | 505,180 |  |   | $ | 155,330 |  |   | $ | 223,839 |  |   | $ | 42,666 |  |   | $ | — |  |   | $ | 996,340 |  |
| Ending balance:                                 |   |  |   |   |  |   |   |  |   |   |  |   |   |  |   |   |  |   |   |  |
| individually evaluated for impairment           | $ | 18,159 |  |   | $ | 40,770 |  |   | $ | 1,544 |  |   | $ | 6,924 |  |   | $ | 165 |  |   | $ | — |  |   | $ | 67,562 |  |
| Ending balance:                                 |   |  |   |   |  |   |   |  |   |   |  |   |   |  |   |   |  |   |   |  |
| collectively evaluated for impairment           | $ | 51,166 |  |   | $ | 464,410 |  |   | $ | 153,786 |  |   | $ | 216,915 |  |   | $ | 42,501 |  |   | $ | — |  |   | $ | 928,778 |  |
| Ending balance:                                 |   |  |   |   |  |   |   |  |   |   |  |   |   |  |   |   |  |   |   |  |
| loans acquired with deteriorated credit quality | $ | — |  |   | $ | — |  |   | $ | — |  |   | $ | — |  |   | $ | — |  |   | $ | — |  |   | $ | — |  |

|                                                 |
|-------------------------------------------------|
|                                                 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| (Dollars in thousands)                | Construction |   | Other CRE |   | Commercial |   | Residential |   | Consumer |   | Unallocated |   | Total |
| Allowance for loan losses:                      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance, beginning of 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                                  | $ | 89,093 |  |   | $ | 557,638 |  |   | $ | 133,226 |  |   | $ | 235,489 |  |   | $ | 44,700 |  |   | $ | — |  |   | $ | 1,060,146 |  |
| Ending balance:                                 |   |  |   |   |  |   |   |  |   |   |  |   |   |  |   |   |  |   |   |  |
| individually evaluated for impairment           | $ | 33,431 |  |   | $ | 54,327 |  |   | $ | 8,296 |  |   | $ | 7,552 |  |   | $ | 603 |  |   | $ | — |  |   | $ | 104,209 |  |
| Ending balance:                                 |   |  |   |   |  |   |   |  |   |   |  |   |   |  |   |   |  |   |   |  |
| collectively evaluated for impairment           | $ | 55,662 |  |   | $ | 503,311 |  |   | $ | 124,930 |  |   | $ | 227,937 |  |   | $ | 44,097 |  |   | $ | — |  |   | $ | 955,937 |  |
| Ending balance:                                 |   |  |   |   |  |   |   |  |   |   |  |   |   |  |   |   |  |   |   |  |
| loans acquired with deteriorated credit quality | $ | — |  |   | $ | — |  |   | $ | — |  |   | $ | — |  |   | $ | — |  |   | $ | — |  |   | $ | — |  |

----

|                                                                                     |
|-------------------------------------------------------------------------------------|
|                                                                                     |  |  |  |  |  |  |  |  |  |  |  |
| (Dollars in thousands)                                                    | 2011 |   | 2010 |   | 2009 |
| Balance at January 1                                                                | $ | 16,025 |  |   | $ | 24,014 |  |   | $ | 24,918 |  |
| Loans charged off                                                                   | (13,009 | ) |   | (19,330 | ) |   | (48,051 | ) |
| Charge offs resulting from write-downs of loans transferred to held for sale status | — |  |   | (325 | ) |   | (3,189 | ) |
| Recoveries                                                                          | 2,217 |  |   | 2,446 |  |   | 735 |  |
| Net charge-offs                                                                     | (10,792 | ) |   | (17,209 | ) |   | (50,505 | ) |
| Provision for loan losses                                                           | 9,720 |  |   | 9,220 |  |   | 49,601 |  |
| Balance at December 31                                                              | $ | 14,953 |  |   | $ | 16,025 |  |   | $ | 24,014 |  |

|                                          |
|------------------------------------------|
|                                          |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|                                     |   | December 31, 2011 |   | December 31, 2010 |
| (Dollars in thousands)         |   | Recorded Balance |   | Allowance |   | Recorded Balance |   | Allowance |
| Restructured loans with an allowance:    |   |   |   |   |   |   |   |   |
| Construction and land development loans  |   | $ | 136 |  |   | $ | 61 |  |   | $ | 2,135 |  |   | $ | 450 |  |
| Other commercial real estate loans       |   | 4,018 |  |   | 320 |  |   | 2,086 |  |   | 160 |  |
| Other commercial loans                   |   | 387 |  |   | 117 |  |   | 210 |  |   | 175 |  |
| Other 1-4 family residential loans       |   | 199 |  |   | 76 |  |   | 1,179 |  |   | 512 |  |
| Restructured loans without an allowance: |   |   |  |   |   |  |   |   |  |   |   |  |
| Construction and land development loans  |   | 2,725 |  |   | — |  |   | — |  |   | — |  |
| Other commercial real estate loans       |   | 17,002 |  |   | — |  |   | 12,333 |  |   | — |  |
| Other commercial loans                   |   | 119 |  |   | — |  |   | — |  |   | — |  |
| Other 1-4 family residential loans       |   | 1,194 |  |   | — |  |   | 167 |  |   | — |  |
| Total restructured loans                 |   | $ | 25,780 |  |   | $ | 574 |  |   | $ | 18,110 |  |   | $ | 1,297 |  |

----

|                                         |
|-----------------------------------------|
|                                         |  |  |  |  |  |  |  |  |  |  |  |
| (Dollars in thousands)        |   | Number of Loans Modified |   |  Pre Modification Balance |   | Post Modification Balance |
| Interest Rate Modifications:            |   |   |   |   |   |   |
| Construction and land development loans |   | 3 |  |   | $ | 1,125 |  |   | $ | 1,125 |  |
| Other commercial real estate loans      |   | 3 |  |   | 674 |  |   | 672 |  |
| Other commercial loans                  |   | 1 |  |   | 10 |  |   | 10 |  |
| Other 1-4 family residential loans      |   | 3 |  |   | 157 |  |   | 157 |  |
| Total rate modifications                |   | 10 |  |   | $ | 1,966 |  |   | $ | 1,964 |  |
|                                    |   |   |   |   |   |   |
| Term Extensions and Renewals:           |   |   |   |   |   |   |
| Construction and land development loans |   | 6 |  |   | $ | 3,685 |  |   | $ | 3,483 |  |
| Other commercial real estate loans      |   | 7 |  |   | 9,694 |  |   | 9,663 |  |
| Other commercial loans                  |   | 1 |  |   | 1,797 |  |   | 1,747 |  |
| Other 1-4 family residential loans      |   | 3 |  |   | 537 |  |   | 536 |  |
| Total extensions and renewals           |   | 17 |  |   | $ | 15,713 |  |   | $ | 15,429 |  |
| Total loans restructured                |   | 27 |  |   | $ | 17,679 |  |   | $ | 17,393 |  |

|                                         |
|-----------------------------------------|
|                                         |  |  |  |  |  |  |  |
| (Dollars in thousands)        |   | Number of Loans |   | Amortized Cost |
| Construction and land development loans |   | 2 |  |   | $ | 1,951 |  |
| Other commercial real estate loans      |   | 5 |  |   | 6,655 |  |
| Other 1-4 family residential loans      |   | 4 |  |   | 306 |  |
| Total subsequent defaults               |   | 11 |  |   | $ | 8,912 |  |

|                                                |
|------------------------------------------------|
|                                                |  |  |  |  |  |  |  |
| (Dollars in thousands)               | 2011 |   | 2010 |
| Land                                           | $ | 12,365 |  |   | $ | 14,178 |  |
| Buildings                                      | 36,293 |  |   | 36,292 |  |
| Furniture, fixtures and equipment              | 19,901 |  |   | 19,890 |  |
| Leasehold improvements                         | 842 |  |   | 890 |  |
| Construction in progress                       | 131 |  |   | 428 |  |
|                                           | 69,532 |  |   | 71,678 |  |
| Less accumulated depreciation and amortization | 31,543 |  |   | 30,982 |  |
|                                           | $ | 37,989 |  |   | $ | 40,696 |  |

----

|                                  |
|----------------------------------|
|                                  |  |  |  |  |  |  |  |  |  |  |  |
| (Dollars in thousands) | 2011 |   | 2010 |   | 2009 |
| Buildings and office space       | $ | 665 |  |   | $ | 581 |  |   | $ | 844 |  |
| Computer equipment               | 13 |  |   | 284 |  |   | 399 |  |
| Other equipment and autos        | 163 |  |   | 184 |  |   | 276 |  |
|                             | 841 |  |   | 1,049 |  |   | 1,519 |  |
| Rental income                    | (41 | ) |   | (42 | ) |   | (47 | ) |
| Net rent expense                 | $ | 800 |  |   | $ | 1,007 |  |   | $ | 1,472 |  |

|                                  |
|----------------------------------|
|                                  |  |  |  |
| (Dollars in thousands) |   |
| 2012                             | $ | 573 |  |
| 2013                             | 384 |  |
| 2014                             | 300 |  |
| 2015                             | 271 |  |
| 2016                             | 233 |  |
| After 2016                       | 201 |  |
| Total minimum lease payments     | $ | 1,962 |  |

----

|                                  |
|----------------------------------|
|                                  |  |  |  |  |  |  |  |  |
|                             |   | Core Deposit Intangible |
|                             |   | December 31 |
| (Dollars in thousands) |   | 2011 |   | 2010 |
| Beginning Balance                |   | $ | 5,013 |  |   | $ | 5,439 |  |
| Amortization expense             |   | (427 | ) |   | (426 | ) |
| Ending Balance                   |   | $ | 4,586 |  |   | $ | 5,013 |  |
| Estimated amortization expense   |   |   |  |   |   |  |
| 2012                             |   | $ | 427 |  |   |   |  |
| 2013                             |   | 427 |  |   |   |  |
| 2014                             |   | 427 |  |   |   |  |
| 2015                             |   | 427 |  |   |   |  |
| 2016                             |   | 427 |  |   |   |  |

|                                  |
|----------------------------------|
|                                  |  |  |  |  |  |  |  |  |
|                             |   | Core Deposit Intangible |
|                             |   | December 31 |
| (Dollars in thousands) |   | 2011 |   | 2010 |
| Gross carrying amount            |   | $ | 7,060 |  |   | $ | 7,060 |  |
| Accumulated amortization         |   | (2,474 | ) |   | (2,047 | ) |
| Net carrying amount              |   | $ | 4,586 |  |   | $ | 5,013 |  |

|                                                      |
|------------------------------------------------------|
|                                                      |  |  |  |  |  |  |  |
| (Dollars in thousands)                     | 2011 |   | 2010 |
| Federal Home Loan Bank stock                         | $ | 7,380 |  |   | $ | 7,353 |  |
| Income taxes receivable                              | 175 |  |   | 129 |  |
| Deferred income tax                                  | 14,115 |  |   | 14,563 |  |
| Investment in First M&F Statutory Trust I        | 928 |  |   | 928 |  |
| Investment in low income housing tax credit entities | 2,497 |  |   | 2,687 |  |
| Other                                                | 2,829 |  |   | 3,806 |  |
|                                                 | $ | 27,924 |  |   | $ | 29,466 |  |

----

|                                                           |
|-----------------------------------------------------------|
|                                                           |  |  |  |  |  |  |  |
| (Dollars in thousands)                          | 2011 |   | 2010 |
| Noninterest-bearing                                       | $ | 231,718 |  |   | $ | 212,199 |  |
| Interest-bearing:                                         |   |  |   |   |  |
| NOW and money market deposits                             | 588,105 |  |   | 530,664 |  |
| Savings deposits                                          | 119,693 |  |   | 114,769 |  |
| Core certificates of deposit of $100 thousand or more     | 187,513 |  |   | 234,500 |  |
| Other core certificates of deposit                        | 227,867 |  |   | 268,272 |  |
| Brokered certificates of deposit of $100 thousand or more | 13,028 |  |   | 11,934 |  |
| Other brokered certificates of deposit                    | 3,539 |  |   | 3,074 |  |
| Total interest-bearing                                    | 1,139,745 |  |   | 1,163,213 |  |
| Total deposits                                            | $ | 1,371,463 |  |   | $ | 1,375,412 |  |

|                                  |
|----------------------------------|
|                                  |  |  |  |
| (Dollars in thousands) |   |
| 2012                             | $ | 250,353 |  |
| 2013                             | 93,564 |  |
| 2014                             | 41,629 |  |
| 2015                             | 44,254 |  |
| 2016                             | 2,147 |  |
| After 2016                       | — |  |
|                             | $ | 431,947 |  |

----

|                                                |
|------------------------------------------------|
|                                                |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|                                           | Balance Outstanding |   | WeightedAverage Rate |
| (Dollars in thousands)               | Maximum Month End |   | Average Daily |   | At Year End |   | During Year |   | At Year End |
| 2011:                                          |   |   |   |   |   |   |   |   |   |
| Federal funds purchased                        | $ | — |  |   | $ | — |  |   | $ | — |  |   | — | % |   | — | % |
| Securities sold under agreements to repurchase | 27,082 |  |   | 10,855 |  |   | 4,398 |  |   | 0.33 | % |   | 0.70 | % |
|                                           | $ | 27,082 |  |   | $ | 10,855 |  |   | $ | 4,398 |  |   |   |  |   |   |  |
| 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 |  |   |   |  |   |   |  |

|                                                                                                                                                                                                                             |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                             |  |  |  |  |  |  |  |  |
| (Dollars in thousands)                                                                                                                                                                                            |   | 2011 |   | 2010 |
| Company’s line of credit in the amount of $5,000,000, maturing in March 2012; secured by approximately  51% of the Bank’s common stock; interest payable quarterly at the prime rate with a floor of 3.50% |   | $ | 3,292 |  |   | $ | 3,417 |  |
|                                                                                                                                                                                                                        |   |   |   |   |
| Bank’s advances from Federal Home Loan Banks                                                                                                                                                                          |   | 39,709 |  |   | 46,999 |  |
|                                                                                                                                                                                                                        |   | $ | 43,001 |  |   | $ | 50,416 |  |
|                                                                                                                                                                                                                        |   |   |   |   |
| Company’s junior subordinated debentures, interest payable quarterly at 90-day LIBOR plus 1.33%  through March 2036; currently redeemable                                                                        |   | $ | 30,928 |  |   | $ | 30,928 |  |

----

|                                                                |
|----------------------------------------------------------------|
|                                                                |  |  |  |  |  |  |  |
| (Dollars in thousands)                               | 2011 |   | 2010 |
| Single payment advances maturing within 12 months of year end: |   |   |   |
| Balance                                                        | $ | — |  |   | $ | 686 |  |
| Range of rates                                                 | — | % |   | 0.16 | % |
| Single payment advances maturing after 12 months of year end:  |   |  |   |   |  |
| Balance                                                        | $ | — |  |   | $ | — |  |
| Range of rates                                                 | — |  |   | — |  |
| Range of maturities                                            | — |  |   | — |  |
| Amortizing advances:                                           |   |  |   |   |  |
| Balance                                                        | $ | 39,709 |  |   | $ | 46,313 |  |
| Monthly payment amount                                         | 541 |  |   | 550 |  |
| Range of rates                                                 | 3.17%-7.83% |  |   | 3.17%-7.83% |  |
| Range of maturities                                            | 2012-2020 |  |   | 2011-2020 |  |

|                                  |
|----------------------------------|
|                                  |  |  |  |
| (Dollars in thousands) |   |
| 2012                             | $ | 6,494 |  |
| 2013                             | 19,488 |  |
| 2014                             | 2,260 |  |
| 2015                             | 2,346 |  |
| 2016                             | 8,339 |  |
| After 2016                       | 782 |  |
|                             | $ | 39,709 |  |

----

|                                  |
|----------------------------------|
|                                  |  |  |  |  |  |  |  |
| (Dollars in thousands) | 2011 |   | 2010 |
| Commitments to extend credit     | $ | 126,455 |  |   | $ | 122,448 |  |
| Standby letters of credit        | 1,580 |  |   | 6,169 |  |

----

|                                                                                      |
|--------------------------------------------------------------------------------------|
|                                                                                      |  |  |  |  |  |  |  |  |  |  |  |
| (Dollars in thousands)                                                     | Gross |   | Tax |   | Net |
| December 31, 2011:                                                                   |   |   |   |   |   |
| Net unrealized gain on securities available for sale                                 | $ | 7,202 |  |   | $ | 2,688 |  |   | $ | 4,514 |  |
| Net unrealized loss on other-than-temporarily impaired securities available for sale | (2,318 | ) |   | (865 | ) |   | (1,453 | ) |
| Net unamortized pension costs                                                        | (4,272 | ) |   | (1,593 | ) |   | (2,679 | ) |
| Net unrealized loss on cash flow hedge                                               | (1,834 | ) |   | (684 | ) |   | (1,150 | ) |
|                                                                                 | $ | (1,222 | ) |   | $ | (454 | ) |   | $ | (768 | ) |
| 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 |  |

----

|                        |
|------------------------|
|                        |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|                   |   |   |   | Shares at |   | Shares at |   | Carrying Value |
| (Dollars in thousands) |   | December 31, 2011 |   | December 31, 2010 |   | December 31, 2011 |   | December 31, 2010 |
|                   |   | Rate |   | Authorized |   | Outstanding |   | Authorized |   | Outstanding |   |   |
| Class A                |   | — |  |   | 1,000,000 |  |   | — |  |   | 1,000,000 |  |   | — |  |   | $ | — |  |   | $ | — |  |
| Class B:               |   |   |  |   | 1,000,000 |  |   |   |  |   | 1,000,000 |  |   |   |  |   |   |  |   |   |  |
| Series A               |   | 5 | % |   |   |  |   | — |  |   |   |  |   | — |  |   | — |  |   | — |  |
| Series CD              |   | 2 | % |   |   |  |   | 30,000 |  |   |   |  |   | 30,000 |  |   | 17,564 |  |   | 16,390 |  |
|                   |   |   |  |   |   |  |   |   |  |   |   |  |   |   |  |   | $ | 17,564 |  |   | $ | 16,390 |  |

----

|                                                                    |
|--------------------------------------------------------------------|
|                                                                    |  |  |  |  |  |  |  |  |  |  |  |
| (Dollars in thousands, except share data) | 2011 |   | 2010 |   | 2009 |
| Stock option expense recognized, gross                             | $ | 7 |  |   | $ | 11 |  |   | $ | 17 |  |
| Adjustment for actual vs expected forfeitures                      | — |  |   | — |  |   | — |  |
| Stock option expense recognized, net                               | 7 |  |   | 11 |  |   | 17 |  |
| Restricted stock award expenses recognized, gross                  | 136 |  |   | 170 |  |   | 256 |  |
| Adjustment for actual vs expected forfeitures                      | (145 | ) |   | (120 | ) |   | (200 | ) |
| Restricted stock award expenses recognized, net                    | (9 | ) |   | 50 |  |   | 56 |  |
| Total stock-based compensation                                     | (2 | ) |   | 61 |  |   | 73 |  |
| Income tax benefits                                                | 1 |  |   | (23 | ) |   | (27 | ) |
| Net stock-based compensation recognized                            | $ | (1 | ) |   | $ | 38 |  |   | $ | 46 |  |

----

|                          |
|--------------------------|
|                          |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|                | 2005 Plan |   | 1999 Plan |
|                     |   |   | Restricted Stock |   | Stock Options |   | Stock Options |
|                     | SharesAvailableforGrant |   | NumberofShares |   | WeightedAverageGrantDateFairValue |   | NumberofShares |   | WeightedAverageExercisePrice |   | NumberofShares |   | WeightedAverageExercisePrice |
| Balance, January 1, 2009 | 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 |  |   | 16.995 |  |   | 16,600 |  |   | 12.043 |  |   | 15,800 |  |   | 16.018 |  |
| Awards Granted           | (3,000 | ) |   | — |  |   | — |  |   | 3,000 |  |   | 4.120 |  |   | — |  |   | — |  |
| Vested                   | — |  |   | (6,000 | ) |   | 16.855 |  |   | — |  |   | — |  |   | — |  |   | — |  |
| Forfeitures              | 12,800 |  |   | (11,000 | ) |   | 16.915 |  |   | (1,800 | ) |   | 13.840 |  |   | — |  |   | — |  |
| Expired                  | — |  |   | — |  |   | — |  |   | — |  |   | — |  |   | — |  |   | — |  |
| December 31, 2011        | 613,434 |  |   | 46,000 |  |   | $ | 17.032 |  |   | 17,800 |  |   | $ | 10.526 |  |   | 15,800 |  |   | $ | 16.018 |  |

|                           |
|---------------------------|
|                           |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Exercise Price Range |   | Options Outstanding |   | WeightedAverageRemainingContractualLife(Years) |   | WeightedAverageExercisePrice-OptionsOutstanding |   | Options Exercisable |   | WeightedAverageExercisePrice-OptionsExercisable |
|   $4.12 - 5.14  |   | 9,000 |  |   | 8.22 |  |   | $ | 4.74 |  |   | 2,000 |  |   | $ | 5.09 |  |
| 12.63 - 13.84        |   | 9,400 |  |   | 3.03 |  |   | 13.19 |  |   | 8,200 |  |   | 13.10 |  |
| 17.00 - 19.06        |   | 15,200 |  |   | 2.97 |  |   | 18.01 |  |   | 15,000 |  |   | 18.00 |  |
|                      |   | 33,600 |  |   | 4.40 |  |   | $ | 13.11 |  |   | 25,200 |  |   | $ | 15.38 |  |

----

|                                             |
|---------------------------------------------|
|                                             |  |  |  |  |  |  |  |  |  |  |  |
| (Dollars in thousands)            | 2011 |   | 2010 |   | 2009 |
| Telecommunications expenses                 | $ | 909 |  |   | $ | 980 |  |   | $ | 1,043 |  |
| Postage and shipping                        | 896 |  |   | 875 |  |   | 926 |  |
| Stationery and supplies                     | 775 |  |   | 696 |  |   | 814 |  |
| Marketing and business development expenses | 1,139 |  |   | 1,014 |  |   | 1,351 |  |
| Accounting, legal and professional fees     | 2,053 |  |   | 2,324 |  |   | 2,160 |  |
| Insurance expense                           | 911 |  |   | 836 |  |   | 782 |  |
| Other                                       | 5,632 |  |   | 5,883 |  |   | 6,274 |  |
|                                        | $ | 12,315 |  |   | $ | 12,608 |  |   | $ | 13,350 |  |

|                                  |
|----------------------------------|
|                                  |  |  |  |  |  |  |  |  |  |  |  |
| (Dollars in thousands) | Federal |   | State |   | Total |
| 2011:                            |   |   |   |   |   |
| Current                          | $ | 4 |  |   | $ | — |  |   | $ | 4 |  |
| Deferred                         | 864 |  |   | 143 |  |   | 1,007 |  |
| Total                            | $ | 868 |  |   | $ | 143 |  |   | $ | 1,011 |  |
| 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 | ) |

----

|                                                                          |
|--------------------------------------------------------------------------|
|                                                                          |  |  |  |  |  |  |  |  |  |  |  |
| (Dollars in thousands)                                         | 2011 |   | 2010 |   | 2009 |
| Amount computed using the Federal statutory rates on income before taxes | $ | 1,831 |  |   | $ | 1,568 |  |   | $ | (26,489 | ) |
| Increase (decrease) resulting from:                                      |   |   |   |  |   |   |  |
| Tax exempt income, net of disallowed interest deduction                  | (488 | ) |   | (594 | ) |   | (770 | ) |
| State income tax expense (benefit), net of Federal effect                | 95 |  |   | 207 |  |   | (1,677 | ) |
| Life insurance income                                                    | (217 | ) |   | (227 | ) |   | (259 | ) |
| Goodwill impairment expense                                              | — |  |   | — |  |   | 11,074 |  |
| Low income housing tax credits                                           | (248 | ) |   | (330 | ) |   | — |  |
| Other, net                                                               | 38 |  |   | (22 | ) |   | 17 |  |
|                                                                     | $ | 1,011 |  |   | $ | 602 |  |   | $ | (18,104 | ) |

|                                                     |
|-----------------------------------------------------|
|                                                     |  |  |  |  |  |  |  |
| (Dollars in thousands)                    | 2011 |   | 2010 |
| Allowance for loan losses                           | $ | 5,566 |  |   | $ | 5,977 |  |
| Loan fees                                           | 518 |  |   | 406 |  |
| Purchase accounting adjustments                     | 187 |  |   | 238 |  |
| Nonperforming assets                                | 4,432 |  |   | 3,131 |  |
| Accrued expenses                                    | 148 |  |   | 71 |  |
| Share-based compensation                            | 277 |  |   | 324 |  |
| Employee benefit plans                              | 185 |  |   | 173 |  |
| Net pension liability and unamortized pension costs | 956 |  |   | 202 |  |
| Unrealized loss on cash flow hedge                  | 684 |  |   | — |  |
| Net operating loss carry forward                    | 5,606 |  |   | 7,989 |  |
| Tax credit carry forward                            | 982 |  |   | 507 |  |
| Other                                               | 52 |  |   | 568 |  |
| Total deferred tax assets                           | 19,593 |  |   | 19,586 |  |
| Fixed assets and depreciation                       | (1,460 | ) |   | (1,448 | ) |
| Federal Home Loan Bank stock dividends              | (478 | ) |   | (468 | ) |
| Intangible assets                                   | (1,290 | ) |   | (1,438 | ) |
| Prepaid expenses                                    | (393 | ) |   | (401 | ) |
| Unrealized gain on securities available for sale    | (1,823 | ) |   | (936 | ) |
| Unrealized gain on cash flow hedge                  | — |  |   | (305 | ) |
| Other                                               | (34 | ) |   | (27 | ) |
| Total deferred tax liabilities                      | (5,478 | ) |   | (5,023 | ) |
|                                                | $ | 14,115 |  |   | $ | 14,563 |  |

----

|                                  |
|----------------------------------|
|                                  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| (Dollars in thousands) | 2009  NOL |   | Carried Back to Prior Years |   | 2010 NOL (Earnings) |   | Estimated 2011 NOL (Earnings) |   | TotalCarried Forward For Future Years |   | Expiring in 2029 |   | Expiring in 2030 |   | Expiring in 2031 |
| Federal net operating loss       | $ | 38,353 |  |   | $ | (23,653 | ) |   | $ | 4,321 |  |   | $ | (6,000 | ) |   | $ | 13,021 |  |   | $ | 8,700 |  |   | $ | 4,321 |  |   | $ | — |  |
| Mississippi net operating loss   | 34,371 |  |   | (15,366 | ) |   | 4,707 |  |   | (5,500 | ) |   | 18,212 |  |   | 13,505 |  |   | 4,707 |  |   | — |  |
| Alabama net operating loss       | 3,206 |  |   | (708 | ) |   | (477 | ) |   | (170 | ) |   | 1,851 |  |   | 1,851 |  |   | — |  |   | — |  |
| Tennessee net operating loss     | 1,790 |  |   | — |  |   | 86 |  |   | (50 | ) |   | 1,826 |  |   | 1,740 |  |   | 86 |  |   | — |  |
| Florida net operating loss       | 654 |  |   | — |  |   | 20 |  |   | 25 |  |   | 699 |  |   | 654 |  |   | 20 |  |   | 25 |  |
|                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                             |   |   |   |   |   |   |   |   | Tax Credit Amounts |   | Expiration Dates |   |   |   |   |
| Federal tax credits from 2009    |   |   |   |   |   |   |   |   | $ | 208 |  |   | 2029 |   |   |   |   |
| Federal tax credits from 2010    |   |   |   |   |   |   |   |   | 299 |  |   | 2030 |   |   |   |   |
| Federal tax credits from 2011    |   |   |   |   |   |   |   |   | 475 |  |   | 2031 |   |   |   |   |

----

|                                                   |
|---------------------------------------------------|
|                                                   |  |  |  |  |  |  |  |
| (Dollars in thousands)                  | 2011 |   | 2010 |
| Change in benefit obligation:                     |   |   |   |
| Projected benefit obligation at beginning of year | $ | 9,182 |  |   | $ | 8,643 |  |
| Interest cost                                     | 448 |  |   | 468 |  |
| Actuarial loss                                    | 1,478 |  |   | 614 |  |
| Benefit payments                                  | (563 | ) |   | (543 | ) |
| Projected benefit obligation at end of year       | 10,545 |  |   | 9,182 |  |
| Change in plan assets:                            |   |  |   |   |  |
| Fair value of plan assets at beginning of year    | 8,640 |  |   | 8,115 |  |
| Actual return on plan assets                      | (235 | ) |   | 874 |  |
| Employer contributions                            | 168 |  |   | 224 |  |
| Benefit payments                                  | (563 | ) |   | (543 | ) |
| Expenses                                          | (29 | ) |   | (30 | ) |
| Fair value of plan assets at end of year          | 7,981 |  |   | 8,640 |  |
| Funded status at measurement date                 | $ | (2,564 | ) |   | $ | (542 | ) |

|                                                             |
|-------------------------------------------------------------|
|                                                             |  |  |  |  |  |  |  |
| (Dollars in thousands)                            | 2011 |   | 2010 |
| Net pension asset                                           | $ | — |  |   | $ | — |  |
|                                                        |   |   |   |
| Net pension liability                                       | $ | (2,564 | ) |   | $ | (542 | ) |
|                                                        |   |   |   |
| Accumulated other comprehensive income, before income taxes | $ | 4,272 |  |   | $ | 2,927 |  |

|                                  |
|----------------------------------|
|                                  |  |  |  |  |  |  |  |
| (Dollars in thousands) | 2011 |   | 2010 |
| Projected benefit obligation     | $ | 10,545 |  |   | $ | 9,182 |  |
| Accumulated benefit obligation   | 10,545 |  |   | 9,182 |  |
| Fair value of plan assets        | 7,981 |  |   | 8,640 |  |

|                                        |
|----------------------------------------|
|                                        |  |  |  |  |  |  |  |
| (Dollars in thousands)       | 2011 |   | 2010 |
| Unamortized prior service credit       | $ | — |  |   | $ | (25 | ) |
| Unamortized actuarial loss             | 4,272 |  |   | 2,952 |  |
| Accumulated other comprehensive income | $ | 4,272 |  |   | $ | 2,927 |  |

----

|                                                                                                      |
|------------------------------------------------------------------------------------------------------|
|                                                                                                      |  |  |  |  |  |  |  |  |  |  |  |
| (Dollars in thousands)                                                                     | 2011 |   | 2010 |   | 2009 |
| Net Periodic Benefit Cost:                                                                           |   |   |   |   |   |
| Interest cost                                                                                        | $ | 448 |  |   | $ | 468 |  |   | $ | 486 |  |
| Expected return on plan assets                                                                       | (563 | ) |   | (529 | ) |   | (470 | ) |
| Amortization of transition asset                                                                     | — |  |   | — |  |   | (7 | ) |
| Amortization of prior service credit                                                                 | (25 | ) |   | (37 | ) |   | (37 | ) |
| Recognized actuarial loss                                                                            | 984 |  |   | 885 |  |   | 906 |  |
| Net periodic benefit cost                                                                            | $ | 844 |  |   | $ | 787 |  |   | $ | 878 |  |
| Other Changes in Plan Assets and Benefit Obligations Recognized in Other  Comprehensive Income: |   |  |   |   |  |   |   |  |
| Net (gain) loss                                                                                      | $ | 2,304 |  |   | $ | 299 |  |   | $ | (85 | ) |
| Amortization of actuarial net loss                                                                   | (984 | ) |   | (885 | ) |   | (906 | ) |
| Amortization of transition asset                                                                     | — |  |   | — |  |   | 7 |  |
| Amortization of prior service credit                                                                 | 25 |  |   | 37 |  |   | 37 |  |
| Total recognized in other comprehensive income                                                       | $ | 1,345 |  |   | $ | (549 | ) |   | $ | (947 | ) |
| Total recognized in net periodic benefit cost and other comprehensive income                         | $ | 2,189 |  |   | $ | 238 |  |   | $ | (69 | ) |

|                                                  |
|--------------------------------------------------|
|                                                  |  |  |  |  |  |  |  |  |  |  |  |
| (Dollars in thousands)                 | 2011 |   | 2010 |   | 2009 |
| Net pension cost                                 | $ | 844 |  |   | $ | 787 |  |   | $ | 878 |  |
| Payments for expenses made on behalf of the plan | 32 |  |   | 43 |  |   | 39 |  |
| Payments to PBGC for premiums                    | 11 |  |   | 16 |  |   | 15 |  |
|                                             | $ | 887 |  |   | $ | 846 |  |   | $ | 932 |  |

|                                                                           |
|---------------------------------------------------------------------------|
|                                                                           |  |  |  |  |  |  |  |  |
|                                                                      | 2011 |   | 2010 |   | 2009 |
| Discount rate for determining current year’s costs                  | 5.05 | % |   | 5.60 | % |   | 6.25 | % |
| Discount rate for determining year end benefit obligation                 | 4.00 | % |   | 5.05 | % |   | 5.60 | % |
| Expected return on plan assets for determining current year’s costs | 6.75 | % |   | 6.75 | % |   | 6.75 | % |
| Rate of compensation increase (plan is frozen)                            | — | % |   | — | % |   | — | % |

----

|                                |
|--------------------------------|
|                                |  |  |  |  |  |
|                           | 2011 |   | 2010 |
| Interest-bearing bank balances | 7 | % |   | 5 | % |
| Debt securities                | 26 | % |   | 32 | % |
| Equity securities              | 67 | % |   | 63 | % |
|                           | 100 | % |   | 100 | % |

|                                           |
|-------------------------------------------|
|                                           |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|                                      |   |   | Fair Value Measurements atDecember 31, 2011, Using |
|                                      | Assets/LiabilitiesMeasured at FairValue |   | QuotedPrices InActiveMarketsForIdenticalAssets |   | SignificantOtherObservableInputs |   | SignificantUnobservableInputs |
| (Dollars in thousands)          | December 31, 2011 |   | (Level 1) |   | (Level 2) |   | (Level 3) |
| Cash and cash equivalents                 | $ | 548 |  |   | $ | 548 |  |   | $ | — |  |   | $ | — |  |
| Equity securities – domestic        | 3,965 |  |   | 3,965 |  |   | — |  |   | — |  |
| Equity securities – international   | 1,142 |  |   | 1,142 |  |   | — |  |   | — |  |
| Mutual funds (bond funds)                 | 214 |  |   | 214 |  |   | — |  |   | — |  |
| Government debt securities                | 239 |  |   | — |  |   | 239 |  |   | — |  |
| Corporate debt securities - domestic      | 1,528 |  |   | — |  |   | 1,528 |  |   | — |  |
| Corporate debt securities - international | 345 |  |   | — |  |   | 345 |  |   | — |  |
| Total assets                              | $ | 7,981 |  |   | $ | 5,869 |  |   | $ | 2,112 |  |   | $ | — |  |

----

|                                           |
|-------------------------------------------|
|                                           |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|                                      |   |   | Fair Value Measurements atDecember 31, 2010, Using |
|                                      | Assets/LiabilitiesMeasured at FairValue |   | QuotedPrices InActiveMarketsForIdenticalAssets |   | SignificantOtherObservableInputs |   | SignificantUnobservableInputs |
| (Dollars in thousands)          | December 31, 2010 |   | (Level 1) |   | (Level 2) |   | (Level 3) |
| Cash and cash equivalents                 | $ | 398 |  |   | $ | 398 |  |   | $ | — |  |   | $ | — |  |
| Equity securities – domestic        | 4,692 |  |   | 4,692 |  |   | — |  |   | — |  |
| Equity securities – international   | 581 |  |   | 581 |  |   | — |  |   | — |  |
| Mutual funds (bond funds)                 | 212 |  |   | 212 |  |   | — |  |   | — |  |
| Government debt securities                | 1,056 |  |   | — |  |   | 1,056 |  |   | — |  |
| Corporate debt securities - domestic      | 1,389 |  |   | — |  |   | 1,389 |  |   | — |  |
| Corporate debt securities - international | 312 |  |   | — |  |   | 312 |  |   | — |  |
| Total assets                              | $ | 8,640 |  |   | $ | 5,883 |  |   | $ | 2,757 |  |   | $ | — |  |

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

----

|                                  |
|----------------------------------|
|                                  |  |  |  |
| (Dollars in thousands) |   |
| Year                             | Expected payments |
|                             |   |
| 2012                             | $ | 622 |  |
| 2013                             | 651 |  |
| 2014                             | 688 |  |
| 2015                             | 680 |  |
| 2016                             | 682 |  |
| 2017 – 2021                | 3,370 |  |

----

|                                                                                                                                                       |
|-------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                       |  |  |  |  |  |  |  |  |  |  |  |
| (Dollars in thousands, except per share data)                                                                           | 2011 |   | 2010 |   | 2009 |
| Net income (loss)                                                                                                                                     | $ | 4,373 |  |   | $ | 4,011 |  |   | $ | (59,799 | ) |
| Less: Preferred dividends                                                                                                                             | 1,774 |  |   | 1,692 |  |   | 1,464 |  |
| Add: Gain on exchange of preferred stock                                                                                                              | — |  |   | 12,867 |  |   | — |  |
| Net income (loss) attributable to common stock                                                                                                        | $ | 2,599 |  |   | $ | 15,186 |  |   | $ | (61,263 | ) |
| Net income (loss) allocated to common stockholders:                                                                                                   |   |  |   |   |  |   |   |  |
| Distributed                                                                                                                                           | 366 |  |   | 363 |  |   | 1,451 |  |
| Undistributed                                                                                                                                         | 2,218 |  |   | 14,708 |  |   | (62,106 | ) |
|                                                                                                                                                  | $ | 2,584 |  |   | $ | 15,071 |  |   | $ | (60,655 | ) |
| Weighted-average basic common and participating shares outstanding                                                                                    | 9,180,997 |  |   | 9,150,980 |  |   | 9,157,752 |  |
| Less: weighted average participating restricted shares outstanding                                                                                    | 54,392 |  |   | 69,293 |  |   | 90,872 |  |
| Weighted-average basic shares outstanding                                                                                                             | 9,126,605 |  |   | 9,081,687 |  |   | 9,066,880 |  |
| Basic net income (loss) per share                                                                                                                     | $ | 0.28 |  |   | $ | 1.66 |  |   | $ | (6.69 | ) |
| Weighted-average basic common and participating shares outstanding                                                                                    | 9,180,997 |  |   | 9,150,980 |  |   | 9,157,752 |  |
| Add: share-based options and stock warrant                                                                                                            | — |  |   | — |  |   | — |  |
|                                                                                                                                                  | 9,180,997 |  |   | 9,150,980 |  |   | 9,157,752 |  |
| Less: weighted average participating restricted shares outstanding                                                                                    | 54,392 |  |   | 69,293 |  |   | 90,872 |  |
| Weighted-average dilutive shares outstanding                                                                                                          | 9,126,605 |  |   | 9,081,687 |  |   | 9,066,880 |  |
| Dilutive net income (loss) per share                                                                                                                  | $ | 0.28 |  |   | $ | 1.66 |  |   | $ | (6.69 | ) |
| 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                                                                                                               | 33,117 |  |   | 38,942 |  |   | 62,184 |  |
| Common stock warrant                                                                                                                                  | 513,113 |  |   | 513,113 |  |   | 432,983 |  |

----

|                                           |
|-------------------------------------------|
|                                           |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|                                      | Actual |   | Minimum Capital |   | Well Capitalized |
| (Dollars in thousands)          | Amount |   | Ratio |   | Amount |   | Ratio |   | Amount |   | Ratio |
| December 31, 2011:                        |   |   |   |   |   |   |   |   |   |   |   |
| Total capital (to risk weighted assets):  |   |   |   |   |   |   |   |   |   |   |   |
| Company                                   | $ | 141,434 |  |   | 12.09 | % |   | $ | 93,564 |  |   | 8.00 | % |   | $ | — |  |   | — | % |
| Bank                                      | 141,088 |  |   | 12.08 | % |   | 93,410 |  |   | 8.00 | % |   | 116,762 |  |   | 10.00 | % |
| Tier I capital (to risk weighted assets): |   |  |   |   |  |   |   |  |   |   |  |   |   |  |   |   |  |
| Company                                   | 126,810 |  |   | 10.84 | % |   | 46,782 |  |   | 4.00 | % |   | — |  |   | — | % |
| Bank                                      | 126,488 |  |   | 10.83 | % |   | 46,705 |  |   | 4.00 | % |   | 70,057 |  |   | 6.00 | % |
| Tier I capital (to average assets):       |   |  |   |   |  |   |   |  |   |   |  |   |   |  |   |   |  |
| Company                                   | 126,810 |  |   | 8.17 | % |   | 62,072 |  |   | 4.00 | % |   | — |  |   | — | % |
| Bank                                      | 126,488 |  |   | 8.17 | % |   | 61,933 |  |   | 4.00 | % |   | 77,416 |  |   | 5.00 | % |
| December 31, 2010:                        |   |  |   |   |  |   |   |  |   |   |  |   |   |  |   |   |  |
| Total capital (to risk weighted assets):  |   |  |   |   |  |   |   |  |   |   |  |   |   |  |   |   |  |
| Company                                   | $ | 135,291 |  |   | 11.30 | % |   | $ | 95,790 |  |   | 8.00 | % |   | $ | — |  |   | — | % |
| Bank                                      | 134,020 |  |   | 11.22 | % |   | 95,568 |  |   | 8.00 | % |   | 119,460 |  |   | 10.00 | % |
| Tier I capital (to risk weighted assets): |   |  |   |   |  |   |   |  |   |   |  |   |   |  |   |   |  |
| Company                                   | 120,310 |  |   | 10.05 | % |   | 47,895 |  |   | 4.00 | % |   | — |  |   | — | % |
| Bank                                      | 119,074 |  |   | 9.97 | % |   | 47,784 |  |   | 4.00 | % |   | 71,676 |  |   | 6.00 | % |
| Tier I capital (to average assets):       |   |  |   |   |  |   |   |  |   |   |  |   |   |  |   |   |  |
| Company                                   | 120,310 |  |   | 7.74 | % |   | 62,211 |  |   | 4.00 | % |   | — |  |   | — | % |
| Bank                                      | 119,074 |  |   | 7.66 | % |   | 62,155 |  |   | 4.00 | % |   | 77,693 |  |   | 5.00 | % |

----

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

|                                                                 |
|-----------------------------------------------------------------|
|                                                                 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|                                                            |   | As of December 31, 2010 |
|                                                            |   | Asset Derivatives |   | Liability Derivatives |
| (Dollars in thousands)                                          |   | Balance Sheet Classification |   | Notional Amount |   | Fair Value |   | Balance Sheet Classification |   | Notional Amount |   | Fair Value |
| Derivatives designated in cash flow hedging relationships: |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest rate swap                                              |   | Other assets |   | $ | 30,000 |  |   | $ | 817 |  |   | Other liabilities |   | $ | — |  |   | $ | — |  |
| Derivatives not designated as hedging instruments:         |   |   |   |   |  |   |   |  |   |   |   |   |  |   |   |  |
| Forward sale agreements                                         |   | Other assets |   | 7,745 |  |   | 245 |  |   | Other liabilities |   | — |  |   | — |  |
| Written interest rate options (locks)                           |   | Other assets |   | 3,234 |  |   | 1 |  |   | Other liabilities |   | 1,164 |  |   | 28 |  |
| Total derivatives                                               |   |   |   | $ | 40,979 |  |   | $ | 1,063 |  |   |   |   | $ | 1,164 |  |   | $ | 28 |  |

----

|                                                    |
|----------------------------------------------------|
|                                                    |  |  |  |  |  |  |  |  |  |  |
|                                          |   | Year Ended December 31, 2011 |
| (Dollars in thousands)                   |   | Amount of pre-tax gain (loss) recognized in OCI (Effective Portion) |   | Classification of gain (loss) reclassified from AOCI into earnings (Effective Portion) |   | Amount of pre-tax gain (loss) reclassified from AOCI into earnings (Effective Portion) |
| Derivatives in cash flow hedging relationships:    |   |   |   |   |   |   |
| Interest rate swap                                 |   | $ | (3,171 | ) |   | Interest on junior subordinated debt |   | $ | (520 | ) |
|                                               |   | Classification of gain (loss) recognized in earnings |   | Amount of pre-tax gain (loss) recognized in earnings |
| Derivatives not designated as hedging instruments: |   |   |  |   |   |   |   |  |
| Forward sale agreements                            |   | Mortgage banking income |   | $ | 188 |  |
| Written interest rate options (locks)              |   | Mortgage banking income |   | (188 | ) |
| Total                                              |   |   |  |   |   |   | $ | — |  |

|                                                    |
|----------------------------------------------------|
|                                                    |  |  |  |  |  |  |  |  |  |  |
|                                               |   | Year Ended December 31, 2010 |
| (Dollars in thousands)                   |   | Amount of pre-tax gain (loss) recognized in OCI (Effective Portion) |   | Classification of gain (loss) reclassified from AOCI into earnings (Effective Portion) |   | Amount of pre-tax gain (loss) reclassified from AOCI into earnings (Effective Portion) |
| Derivatives in cash flow hedging relationships:    |   |   |   |   |   |   |
| Interest rate swap                                 |   | $ | 817 |  |   | Interest on junior subordinated debt |   | $ | — |  |
|                                               |   | Classification of gain (loss) recognized in earnings |   | Amount of pre-tax gain (loss) recognized in earnings |
| Derivatives not designated as hedging instruments: |   |   |  |   |   |   |   |  |
| Forward sale agreements                            |   | Mortgage banking income |   | $ | 502 |  |
| Written interest rate options (locks)              |   | Mortgage banking income |   | 12 |  |
| Total                                              |   |   |  |   |   |   | $ | 514 |  |

|                                                    |
|----------------------------------------------------|
|                                                    |  |  |  |  |  |  |  |  |  |  |
|                                          |   | Year Ended December 31, 2009 |
| (Dollars in thousands)                   |   | Amount of pre-tax gain (loss) recognized in OCI (Effective Portion) |   | Classification of gain (loss) reclassified from AOCI into earnings (Effective Portion) |   | Amount of pre-tax gain (loss) reclassified from AOCI into earnings (Effective Portion) |
| Derivatives in cash flow hedging relationships:    |   |   |   |   |   |   |
| Interest rate swap                                 |   | $ | — |  |   | Interest on junior subordinated debt |   | $ | — |  |
|                                               |   | Classification of gain (loss) recognized in earnings |   | Amount of pre-tax gain (loss) recognized in earnings |
| Derivatives not designated as hedging instruments: |   |   |  |   |   |   |   |  |
| Forward sale agreements                            |   | Mortgage banking income |   | $ | (62 | ) |
| Written interest rate options (locks)              |   | Mortgage banking income |   | 128 |  |
| Total                                              |   |   |  |   |   |   | $ | 66 |  |

----

|                                            |
|--------------------------------------------|
|                                            |  |  |  |  |  |  |  |
| (Dollars in thousands)           | 2011 |   | 2010 |
| Assets                                     |   |   |   |
|                                       |   |   |   |
| Cash                                       | $ | 976 |  |   | $ | 2,901 |  |
| Restricted interest bearing balances       | 1,861 |  |   | 1,500 |  |
| Securities available for sale              | 1,505 |  |   | — |  |
| Investment in banking subsidiary           | 137,470 |  |   | 133,947 |  |
| Investment in statutory trust              | 928 |  |   | 928 |  |
| Other assets                               | 3,035 |  |   | 2,250 |  |
|                                       | $ | 145,775 |  |   | $ | 141,526 |  |
| Liabilities and Stockholders’ Equity |   |  |   |   |  |
|                                       |   |   |   |
| Note payable                               | $ | 3,292 |  |   | $ | 3,416 |  |
| Junior subordinated debt                   | 30,928 |  |   | 30,928 |  |
| Other liabilities                          | 1,959 |  |   | 117 |  |
| Stockholders’ equity                 | 109,596 |  |   | 107,065 |  |
|                                       | $ | 145,775 |  |   | $ | 141,526 |  |

|                                                               |
|---------------------------------------------------------------|
|                                                               |  |  |  |  |  |  |  |  |  |  |  |
| (Dollars in thousands)                              | 2011 |   | 2010 |   | 2009 |
| Income:                                                       |   |   |   |   |   |
| Dividends received from banking subsidiary                    | $ | 2,650 |  |   | $ | 2,200 |  |   | $ | 3,800 |  |
| Dividends received from statutory trust                       | 27 |  |   | 60 |  |   | 60 |  |
| Equity in undistributed earnings (loss) of banking subsidiary | 2,738 |  |   | 3,215 |  |   | (59,869 | ) |
| Interest on investment securities                             | 45 |  |   | — |  |   | — |  |
| Other income                                                  | 5 |  |   | 10 |  |   | 24 |  |
| Total income (loss)                                           | 5,465 |  |   | 5,485 |  |   | (55,985 | ) |
| Expenses:                                                     |   |  |   |   |  |   |   |  |
| Interest on other borrowings                                  | 146 |  |   | 84 |  |   | 64 |  |
| Interest on junior subordinated debentures                    | 1,335 |  |   | 1,992 |  |   | 1,992 |  |
| Goodwill impairment                                           | — |  |   | — |  |   | 2,310 |  |
| Other expenses                                                | 206 |  |   | 224 |  |   | 291 |  |
| Total expenses                                                | 1,687 |  |   | 2,300 |  |   | 4,657 |  |
| Income (loss) before income taxes                             | 3,778 |  |   | 3,185 |  |   | (60,642 | ) |
| Income tax benefit                                            | 595 |  |   | 826 |  |   | 843 |  |
| Net income (loss)                                             | $ | 4,373 |  |   | $ | 4,011 |  |   | $ | (59,799 | ) |

----

|                                                                                   |
|-----------------------------------------------------------------------------------|
|                                                                                   |  |  |  |  |  |  |  |  |  |  |  |
| (Dollars in thousands)                                                  | 2011 |   | 2010 |   | 2009 |
| Cash flows from operating activities:                                             |   |   |   |   |   |
| Net income (loss)                                                                 | $ | 4,373 |  |   | $ | 4,011 |  |   | $ | (59,799 | ) |
| Adjustments to reconcile net income to net cash provided by operating activities: |   |  |   |   |  |   |   |  |
| Equity in undistributed (earnings) loss of banking subsidiary                     | (2,738 | ) |   | (3,215 | ) |   | 59,869 |  |
| Goodwill impairment                                                               | — |  |   | — |  |   | 2,310 |  |
| Other, net                                                                        | (608 | ) |   | (879 | ) |   | (45 | ) |
| Net cash provided by (used in) operating activities                               | 1,027 |  |   | (83 | ) |   | 2,335 |  |
| Cash flows from investing activities:                                             |   |  |   |   |  |   |   |  |
| Purchases of securities available for sale                                        | (1,500 | ) |   | — |  |   | — |  |
| Additional investment in Bank                                                     | — |  |   | — |  |   | (25,000 | ) |
| Net cash used in investing activities                                             | (1,500 | ) |   | — |  |   | (25,000 | ) |
| Cash flows from financing activities:                                             |   |  |   |   |  |   |   |  |
| Increase (decrease) in note payable                                               | (125 | ) |   | 1,500 |  |   | (500 | ) |
| Cash dividends                                                                    | (968 | ) |   | (1,751 | ) |   | (2,541 | ) |
| Preferred stock issued                                                            | — |  |   | — |  |   | 30,000 |  |
| Tax benefits on share-based transactions                                          | 2 |  |   | — |  |   | 28 |  |
| Net cash provided by (used in) financing activities                               | (1,091 | ) |   | (251 | ) |   | 26,987 |  |
| Net increase (decrease) in cash                                                   | (1,564 | ) |   | (334 | ) |   | 4,322 |  |
| Cash at January 1                                                                 | 4,401 |  |   | 4,735 |  |   | 413 |  |
| Cash at December 31                                                               | $ | 2,837 |  |   | $ | 4,401 |  |   | $ | 4,735 |  |

----

|     |                                                                               |
|-----|-------------------------------------------------------------------------------|
| (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, 2011 and 2010 |

|     |                                                                                            |
|-----|--------------------------------------------------------------------------------------------|
| (d) | Consolidated Statements of Operations – Years Ended December 31, 2011, 2010 and 2009 |

|     |                                                                                                      |
|-----|------------------------------------------------------------------------------------------------------|
| (e) | Consolidated Statements of Comprehensive Income – Years Ended December 31, 2011, 2010 and 2009 |

|     |                                                                                                            |
|-----|------------------------------------------------------------------------------------------------------------|
| (f) | Consolidated Statements of Stockholders’ Equity – Years Ended December 31, 2011, 2010 and 2009 |

|     |                                                                                            |
|-----|--------------------------------------------------------------------------------------------|
| (g) | Consolidated Statements of Cash Flows – Years Ended December 31, 2011, 2010 and 2009 |

|     |                                            |
|-----|--------------------------------------------|
| (h) | Notes to Consolidated Financial Statements |

|             |
|-------------|
|             |  |  |
| 3.1         |   | Articles of Incorporation of the Registrant. Incorporated herein by reference to Exhibit 3 to the Company’s Form S-1 (File No. 33-08751) September 15, 1986, incorporated herein by reference. |
|        |   |   |
| 3.2         |   | Amended and Restated Articles of Incorporation of the Registrant. Incorporated herein by reference to Exhibit 3.2 of the Company's Form 10-K for December 31, 2011, filed on March 14, 2012. |
|        |   |   |
| 3.3         |   | By-laws of the Registrant, as amended. Filed as Exhibit 3-b to the Company's Form S-1 (File No. 33-08751) September 15, 1986, incorporated herein by reference. |
|        |   |   |
| 3.4         |   | Amended and Restated Bylaws of the Registrant. Incorporated herein by reference to Exhibit 3.4 of the Company's Form 10-K for December 31, 2011, filed on March 14, 2012. |
|        |   |   |
| 4.1         |   | Warrant to Purchase up to 513,113 Shares of Common Stock of the Registrant. Incorporated herein by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K, filed on March 5, 2009. |
|        |   |   |
| 10.1        |   | First M&F Corporation 2005 Equity Incentive Plan. Filed as Appendix A to the Company’s Proxy Statement, March 15, 2005, incorporated herein by reference. |
|        |   |   |
| 10.2        |   | Merchants and Farmers Bank Profit and Savings Plan, as amended. Filed as Exhibit 10(B) to the Company’s Form 10-Q on August 9, 2005, incorporated herein by reference. |
|        |   |   |
| 10.3        |   | Letter Agreement, including as Exhibit A thereto, Securities Purchase Agreement. Incorporated herein by reference to Exhibit A to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, filed on March 5, 2009. |
|        |   |   |
| 10.4        |   | Form of Preferred Stock Certificate. Incorporated herein by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K, filed on March 5, 2009. |
|        |   |   |
| 10.5        |   | Side Letter Agreement. Incorporated herein by reference to Exhibit 10.3 to the Registrant’s Current Report on Form 8-K, filed on March 5, 2009. |
|        |   |   |
| 10.6        |   | CDCI Letter Agreement dated September 29, 2010.  Incorporated herein by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, filed on October 5, 2010. |
|        |   |   |
| 10.7        |   | Form of Change in Control Agreement between the Company and John G. Copeland, effective May 3, 2004. Incorporated by reference to Exhibit 10.7 of the Company's Form 10-K for December 31, 2011, filed on March 14, 2012. |
|        |   |   |
| 11          |   | Computation of Earnings per Share. Incorporated by reference  to Exhibit 11 of the Company's Form 10-K for December 31, 2011, filed on March 14, 2012. |
|        |   |   |
| 21          |   | Subsidiaries of the Registrant. Incorporated by reference to Exhibit 21 of the Company's Form 10-K for December 31, 2011, filed on March 14, 2012. |
|        |   |   |
| 23          |   | Consent of Independent Registered Public Accounting Firm. Incorporated by reference to Exhibit 23 of the Company's Form 10-K for December 31, 2011, filed on March 14, 2012. |
|        |   |   |
| 31.1 - 31.2 |   | Rule 13a-14(a) Certification of Hugh S. Potts, Jr., Chief Executive Officer and Rule 13a-14(a) Certification of John G. Copeland, Chief Financial Officer. Incorporated by reference to Exhibit 31 of the Company's Form 10-K for December 31, 2011, filed on March 14, 2012. |
|        |   |   |
| 31.3        |   | Rule 13a-14(a) Certification of Hugh S. Potts, Jr., Chief Executive Officer. |
|        |   |   |
| 31.4        |   | Rule 13a-14(a) Certification of John G. Copeland, Chief Financial Officer. |
|        |   |   |
| 32.1 - 32.2 |   | Section 1350 Certification of Hugh S. Potts, Jr., Chief Executive Officer and Section 1350 Certification of John G. Copeland, Chief Financial Officer. Incorporated by reference to Exhibit 32 of the Company's Form 10-K for December 31, 2011, filed on March 14, 2012. |
|        |   |   |
| 32.3        |   | Section 1350 Certification of Hugh S. Potts, Jr., Chief Executive Officer. |
|        |   |   |
| 32.4        |   | Section 1350 Certification of John G. Copeland, Chief Financial Officer. |
|        |   |   |
| 99          |   | Certification pursuant to the Emergency Economic Stability Act of 2008 of Hugh S. Potts, Jr., Chief Executive Officer and Certification pursuant to the Emergency Stability Act of 2008 of John G. Copeland, Chief Financial Officer. Incorporated by reference to Exhibit 99 of the Company's Form 10-K for December 31, 2011, filed on March 14, 2012. |
|        |   |   |
| 101         |   | Interactive Data File (XBRL). Incorporated by reference to Exhibits 101 of the Company's Form 10-K for December 31, 2011, filed on March 14, 2012. |

----

|                         |
|-------------------------|
|                         |  |  |
| BY:                     | /s/ John G. Copeland |   |
|                    | John G. Copeland |   |
|                    | EVP and Chief Financial Officer |   |
|                    |   |   |
| DATE:    | September 28, 2012 |   |

----

|             |
|-------------|
|             |  |  |
| 3.1         |   | Articles of Incorporation of the Registrant. Incorporated herein by reference to Exhibit 3 to the Company’s Form S-1 (File No. 33-08751) September 15, 1986, incorporated herein by reference. |
|        |   |   |
| 3.2         |   | Amended and Restated Articles of Incorporation of the Registrant. Incorporated herein by reference to Exhibit 3.2 of the Company's Form 10-K for December 31, 2011, filed on March 14, 2012. |
|        |   |   |
| 3.3         |   | By-laws of the Registrant, as amended. Filed as Exhibit 3-b to the Company's Form S-1 (File No. 33-08751) September 15, 1986, incorporated herein by reference. |
|        |   |   |
| 3.4         |   | Amended and Restated Bylaws of the Registrant. Incorporated herein by reference to Exhibit 3.4 of the Company's Form 10-K for December 31, 2011, filed on March 14, 2012. |
|        |   |   |
| 4.1         |   | Warrant to Purchase up to 513,113 Shares of Common Stock of the Registrant. Incorporated herein by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K, filed on March 5, 2009. |
|        |   |   |
| 10.1        |   | First M&F Corporation 2005 Equity Incentive Plan. Filed as Appendix A to the Company’s Proxy Statement, March 15, 2005, incorporated herein by reference. |
|        |   |   |
| 10.2        |   | Merchants and Farmers Bank Profit and Savings Plan, as amended. Filed as Exhibit 10(B) to the Company’s Form 10-Q on August 9, 2005, incorporated herein by reference. |
|        |   |   |
| 10.3        |   | Letter Agreement, including as Exhibit A thereto, Securities Purchase Agreement. Incorporated herein by reference to Exhibit A to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, filed on March 5, 2009. |
|        |   |   |
| 10.4        |   | Form of Preferred Stock Certificate. Incorporated herein by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K, filed on March 5, 2009. |
|        |   |   |
| 10.5        |   | Side Letter Agreement. Incorporated herein by reference to Exhibit 10.3 to the Registrant’s Current Report on Form 8-K, filed on March 5, 2009. |
|        |   |   |
| 10.6        |   | CDCI Letter Agreement dated September 29, 2010.  Incorporated herein by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, filed on October 5, 2010. |
|        |   |   |
| 10.7        |   | Form of Change in Control Agreement between the Company and John G. Copeland, effective May 3, 2004. Incorporated by reference to Exhibit 10.7 of the Company's Form 10-K for December 31, 2011, filed on March 14, 2012. |
|        |   |   |
| 11          |   | Computation of Earnings per Share. Incorporated by reference  to Exhibit 11 of the Company's Form 10-K for December 31, 2011, filed on March 14, 2012. |
|        |   |   |
| 21          |   | Subsidiaries of the Registrant. Incorporated by reference to Exhibit 21 of the Company's Form 10-K for December 31, 2011, filed on March 14, 2012. |
|        |   |   |
| 23          |   | Consent of Independent Registered Public Accounting Firm. Incorporated by reference to Exhibit 23 of the Company's Form 10-K for December 31, 2011, filed on March 14, 2012. |
|        |   |   |
| 31.1 - 31.2 |   | Rule 13a-14(a) Certification of Hugh S. Potts, Jr., Chief Executive Officer and Rule 13a-14(a) Certification of John G. Copeland, Chief Financial Officer. Incorporated by reference to Exhibit 31 of the Company's Form 10-K for December 31, 2011, filed on March 14, 2012. |
|        |   |   |
| 31.3        |   | Rule 13a-14(a) Certification of Hugh S. Potts, Jr., Chief Executive Officer. |
|        |   |   |
| 31.4        |   | Rule 13a-14(a) Certification of John G. Copeland, Chief Financial Officer. |
|        |   |   |
| 32.1 - 32.2 |   | Section 1350 Certification of Hugh S. Potts, Jr., Chief Executive Officer and Section 1350 Certification of John G. Copeland, Chief Financial Officer. Incorporated by reference to Exhibit 32 of the Company's Form 10-K for December 31, 2011, filed on March 14, 2012. |
|        |   |   |
| 32.3        |   | Section 1350 Certification of Hugh S. Potts, Jr., Chief Executive Officer. |
|        |   |   |
| 32.4        |   | Section 1350 Certification of John G. Copeland, Chief Financial Officer. |
|        |   |   |
| 99          |   | Certification pursuant to the Emergency Economic Stability Act of 2008 of Hugh S. Potts, Jr., Chief Executive Officer and Certification pursuant to the Emergency Stability Act of 2008 of John G. Copeland, Chief Financial Officer. Incorporated by reference to Exhibit 99 of the Company's Form 10-K for December 31, 2011, filed on March 14, 2012. |
|        |   |   |
| 101         |   | Interactive Data File (XBRL). Incorporated by reference to Exhibits 101 of the Company's Form 10-K for December 31, 2011, filed on March 14, 2012. |
|        |   |   |
|        |   |   |