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| California                                    |   | 77-0388249                       |
|-----------------------------------------------|--------|----------------------------------|
| (State      or other jurisdiction of          |   | (I.R.S.      Identification No.) |
| Incorporation      or organization)           |   |                             |
|                                          |   |                             |
| 545      12th Street                          |   |                             |
| Paso      Robles, California                  |   | 93446                            |
| (Address      of Principal Executive Offices) |   | (Zip      Code)                  |

| COMMON      STOCK, (no par value) | NASDAQ      Global Market                     |
|-----------------------------------|-----------------------------------------------|
| Title      of each class          | Name      of each exchange on whichregistered |

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| Part      I                                                                                                                          |            |
|--------------------------------------------------------------------------------------------------------------------------------------|-----------------|
|                                                                                                                                 |            |
| Item      1. Business                                                                                                                |        3   |
| Item      1A. Risk Factors                                                                                                           |        18  |
| Item      1B. Unresolved Staff Comments                                                                                              |        29  |
| Item      2. Properties                                                                                                              |        30  |
| Item      3. Legal Proceedings                                                                                                       | 30              |
| Item      4. (Removed and Reserved)                                                                                                  |        30  |
|                                                                                                                                 |            |
| Part      II                                                                                                                         |            |
|                                                                                                                                 |            |
| Item      5. Market for Registrant’s Common Equity, Related Stockholder Matters and      Issuer Purchases of Equity Securities |        31  |
| Item      6. Selected Financial Data                                                                                                 |        35  |
| Item      7. Management’s Discussion and Analysis of Financial Condition and Results      of Operations                        |        36  |
| Item      7A. Quantitative and Qualitative Disclosures about Market    Risk                                                          |        75  |
| Item      8. Financial Statements and Supplementary Data                                                                             |        77  |
| Item      9. Changes in and Disagreements with Accountants on Accounting and      Financial Disclosure                               |        127 |
| Item      9A. Controls and Procedures                                                                                                |        127 |
| Item      9B. Other Information                                                                                                      |        127 |
|                                                                                                                                 |            |
| Part      III                                                                                                                        |            |
|                                                                                                                                 |            |
| Item      10. Directors, Executive Officers and Corporate Governance                                                                 |        128 |
| Item      11. Executive Compensation                                                                                                 |        128 |
| Item      12. Security Ownership of Certain Beneficial Owners and Management and      Related Stockholder Matters                    |        128 |
| Item      13. Certain Relationships and Related Transactions, and Director      Independence                                         |        128 |
| Item      14. Principal Accounting Fees and Services                                                                                 |        128 |
|                                                                                                                                 |            |
| Part      IV                                                                                                                         |            |
|                                                                                                                                 |            |
| Item      15. Exhibits, Financial Statement Schedules                                                                                |        129 |
|                                                                                                                                 |            |
| Signatures                                                                                                                           |        130 |
|                                                                                                                                 |            |
| Exhibit      Index                                                                                                                   |        131 |
|                                                                                                                                 |            |
| Certifications                                                                                                                       |            |

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|                                         |   | For      The Years Ended December 31, |   |
|----------------------------------------------|--------|---------------------------------------|--------|
|                                         |   |                                  |   |   | Percent |   |   |   |   |   | Percent |   |   |   |   |   | Percent |   |
| (dollar      amounts in thousands)           |   | 2009                                  |   |   | Composition |   |   | 2008 |   |   | Composition |   |   | 2007 |   |   | Composition |   |
| Interest      and fees on loans              |   | $                                     | 45,530 |   |   |   | 81.7 | % |   | $ | 47,038 |   |   |   | 83.5 | % |   | $ | 42,425 |   |   |   | 84.0 | % |
| Interest      on investments                 |   |                                  | 4,029  |   |   |   | 7.2 | % |   |   | 3,112 |   |   |   | 5.5 | % |   |   | 2,749 |   |   |   | 5.4 | % |
| Service      charges, other charges and fees |   |                                  | 2,965  |   |   |   | 5.3 | % |   |   | 3,284 |   |   |   | 5.8 | % |   |   | 2,774 |   |   |   | 5.5 | % |
| Mortgage      origination fees               |   |                                  | 1,253  |   |   |   | 2.2 | % |   |   | 568 |   |   |   | 1.0 | % |   |   | 461 |   |   |   | 0.9 | % |
| Miscellaneous      income                    |   |                                  | 1,980  |   |   |   | 3.6 | % |   |   | 2,354 |   |   |   | 4.2 | % |   |   | 2,114 |   |   |   | 4.2 | % |
|                                         |   |                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total      consolidated revenues             |   | $                                     | 55,757 |   |   |   | 100.0 | % |   | $ | 56,356 |   |   |   | 100.0 | % |   | $ | 50,523 |   |   |   | 100.0 | % |

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|   | · | the      imposition of a conservator or receiver or the issuance of a      cease-and-desist order that can be judicially  enforced; |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------|

|   | · | the      termination of insurance of deposits (in the case of a depository      institution); |
|--------|--------|-----------------------------------------------------------------------------------------------|

|   | · | the      imposition of civil moneypenalties; |
|--------|--------|----------------------------------------------|

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|   | · | the      issuance of directives to increasecapital; |
|--------|--------|-----------------------------------------------------|

|   | · | the      issuance of formal and informalagreements; |
|--------|--------|-----------------------------------------------------|

|   | · | the      issuance of removal and prohibition orders against institution-affiliated      parties; and the enforcement of such actions through injunctions or      restraining orders based upon a judicial determination that the agency      would be harmed if such equitable relief was not  granted. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|   | · | initial      notices to customers about their privacy policies, describing the      conditions under which they may disclose non-public information to      nonaffiliated third parties andaffiliates; |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | annual      notices of their privacy policies to current customers;  and |
|--------|--------|--------------------------------------------------------------------------|

|   | · | a      reasonable method for customers to “opt out” of disclosures to      nonaffiliated third parties. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------|

|   | · | making      unaffordable loans based on the assets of the borrower rather than on the      borrower's ability to repay an obligation, or asset-based      lending; |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | inducing      a borrower to refinance a loan repeatedly in order to charge high points      and fees each time the loan is refinanced, or loan flipping;      and |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | engaging      in fraud or deception to conceal the true nature of the loan obligation      from an unsuspecting or unsophisticated  borrower. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | interest      rates for first lien mortgage loans in excess of 8 percentage points above      comparable Treasury securities; |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------|

|   | · | subordinate-lien      loans of 10 percentage points above Treasury securities;    and |
|--------|--------|---------------------------------------------------------------------------------------|

|   | · | fees      such as optional insurance and similar debt protection costs paid in      connection with the credit transaction, when combined with points and fees      if deemed excessive. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|   | · | We      potentially face increased regulation of our industry, compliance with      which may increase our costs and limit our ability to pursue business      opportunities. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | The      process we use to estimate losses inherent in our credit exposure requires      difficult, subjective and complex judgments, including forecasts of      economic conditions and how these economic conditions might impair the      ability of our borrowers to repay their loans. The level of uncertainty      concerning economic conditions may adversely affect the accuracy of our      estimates, which may, in turn, impact the reliability of the      process. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | The      value of the portfolio of investment securities that we hold may be      adversely affected. |
|--------|--------|-------------------------------------------------------------------------------------------------------|

|   | · | We      may be required to pay significantly higher FDIC premiums because market      developments have significantly depleted the insurance fund of the FDIC      and reduced the ratio of reserves to insured  deposits. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Authority      for the FRB to pay interest on depository institution      balances; |
|--------|--------|-------------------------------------------------------------------------------------|

|   | · | Mortgage      loss mitigation and homeownerprotection; |
|--------|--------|--------------------------------------------------------|

|   | · | Temporary      increase in FDIC insurance coverage from $100,000 to $250,000 through      December 31, 2013; and |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------|

|   | · | Authority      to the SEC to suspend mark-to-market accounting requirements for any      issuer or class of category oftransactions. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------|

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|   | · | Inability      to control non-interest expense, including, but not limited to, rising      employee, regulatory compliance, and  healthcare      costs; |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Limitations      imposed on us in the Consent Order and/or Written    Agreement. |
|--------|--------|----------------------------------------------------------------------------------|

|   | · | Inability      to increase non-interest income;and |
|--------|--------|----------------------------------------------------|

|   | · | Continuing      ability to expand, through de novo branching or finding acquisition      targets at valuation levels we findattractive. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------|

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|   | · | Information      Systems |
|--------|--------|--------------------------|

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|   | · | Technological      Advances |
|--------|--------|-----------------------------|

|   | · | Severe      Weather, Natural Disasters, Acts of War or Terrorism and Other External      Events |
|--------|--------|-------------------------------------------------------------------------------------------------|

|   | · | We Depend On Cash Dividends From      Our Subsidiary Bank To Meet Our Cash  Obligations |
|--------|--------|-----------------------------------------------------------------------------------------|

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|   | · | Under      the terms outlined by the U.S. Treasury for participants in the CPP, the      Company issued a warrant to the U.S Treasury to purchase shares of its      common stock.  The issuance of this warrant is dilutive to      current common stockholders in that it reduces earnings per common share.      Additionally, the ownership interest of the existing holders of our common      stock will be diluted to the extent the warrant is exercised. The shares      of common stock underlying the warrant represent approximately 7.9% of the      shares of our common stock outstanding as of December 31, 2009 (including      the shares issuable upon exercise of the warrant in total shares      outstanding). |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Although      the U.S. Treasury has agreed not to vote any of the shares of common stock      it receives upon exercise of the warrant, a transferee of any portion of      the warrant or of any shares of common stock acquired upon exercise of the      warrant is not bound by this restriction and therefore may become a      significant holder of the Company’s common stock and possess significant      voting power. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Although      the preferred equity issued to the U.S. Treasury is non-voting, the terms      of the CPP stipulate that the U.S. Treasury may vote their senior equity      in matters deemed by the U.S. Treasury to have an impact on their      holdings. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | The      Purchase Agreement between the Company and the U.S Treasury provides that      before the earlier of (1) March 20, 2012 and (2) the date on which all of      the shares of the preferred stock have been redeemed by us or transferred      by the U.S. Treasury to third parties, we may not, without consent of the      U.S. Treasury, (a) increase the quarterly cash dividend on our common      stock above $0.08 per share, the amount of the last quarterly cash      dividend per share declared prior to October 14, 2008 or (b) subject to      limited exceptions, redeem, repurchase or otherwise acquire shares of our      common stock or preferred stock other than the preferred stock. In      addition, we are unable to pay any dividends on our common stock unless we      are current in our dividend payments on the preferred stock. These      restrictions, together with the potentially dilutive impact of the warrant      issued to the U.S. Treasury, may have a negative effect on the value of      our common stock. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Although      the Company does not foresee any material changes to the terms associated      with its participation in the CPP, the U.S. Government, as a sovereign      body, may at any time change the terms of our participation in the CPP and      or significantly influence Companypolicy. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|   | · | Actual      or anticipated variations in quarterly results of    operations; |
|--------|--------|------------------------------------------------------------------------------|

|   | · | Recommendations      by securities analysts; |
|--------|--------|----------------------------------------------|

|   | · | Operating      and stock price performance of other companies that investors deem      comparable to our company; |
|--------|--------|-------------------------------------------------------------------------------------------------------------------|

|   | · | News      reports relating to trends, concerns and other issues in the financial      services industry; and |
|--------|--------|--------------------------------------------------------------------------------------------------------------|

|   | · | Perceptions      in the marketplace regarding our company and/or its competitors and the      industry in which we operate. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------|

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|                    |   | Closing      Prices |   |
|-------------------------|--------|---------------------|--------|
| Quarters      Ended     |   | High                |   |   | Low |   |
| December      31, 2009  |   | $                   | 7.35   |   |   | $ | 4.00 |   |
| September      30, 2009 |   |                | 7.35   |   |   |   | 5.70 |   |
| June      30, 2009      |   |                | 6.75   |   |   |   | 4.20 |   |
| March      31, 2009     |   |                | 5.45   |   |   |   | 3.25 |   |
|                    |   |                |   |   |   |   |   |   |
| December      31, 2008  |   | $                   | 8.65   |   |   | $ | 4.88 |   |
| September      30, 2008 |   |                | 9.14   |   |   |   | 6.80 |   |
| June      30, 2008      |   |                | 12.38  |   |   |   | 9.10 |   |
| March      31, 2008     |   |                | 12.70  |   |   |   | 10.89 |   |

----

|                |   | Dividend       |   |   |        |     |   |     |    |
|---------------------|--------|----------------|--------|--------|-------------|----------|--------|----------|---------|
|                |   | Amount         |   |   | Declaration |     | Record |     | Payable |
| Dividend      Type  |   | Per Share |   |   | Date        |     | Date   |     | Date    |
| Stock      dividend |   |           | 5      | %      |        | 04/24/08 |   | 05/02/08 |    | 05/16/08 |
| Cash      dividend  |   | $              | 0.08   |   |        | 01/24/08 |   | 02/01/08 |    | 02/15/08 |

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|                                                             |   | Number of                   |    |   |                        |   |   |                           |   |
|------------------------------------------------------------------|--------|----------------------------------|---------|--------|-----------------------------|--------|--------|--------------------------------|--------|
|                                                             |   | Securities To Be       |    |   | Weighted Average       |   |   | Number of Securities |   |
|                                                             |   | Issued Upon Exercise   |    |   | Exercise Price of |   |   | Remaining Available       |   |
| Plan Category                                               |   | of Outstanding Options |    |   | Outstanding Options    |   |   | For Future Issuance  |   |
| Equity      compensation plans approved by security holders:     |   |                             | 440,738 | (1)    |                        | $      | 9.15   |                           |   |   | 462,584 | (2) |
| Equity      compensation plans not approved by security holders: |   |                             | N/A     |   |                        |   | N/A    |                           |   |   | N/A |   |

----

|                                                      |   | For      The Three Months Ended, |      |   |                                        |   |      |   |   |   |      |   |   |   |      |   |   |   |
|-----------------------------------------------------------|--------|----------------------------------|-----------|--------|---------------------------------------------|--------|-----------|--------|--------|--------|-----------|--------|--------|--------|-----------|--------|--------|--------|
|                                                      |   | December      31,                |      |   | At      or For The Years Ended December 31, |   |
| (dollar      amounts in thousands, except per share data) |   | 2009                             |      |   | 2008                                        |   |      | 2009   |   |   | 2008      |   |   | 2007   |      |   | 2006   |   |   | 2005 |   |
| Consolidated      Income Data:                            |   |                             |      |   |                                        |   |      |   |   |   |      |   |   |   |      |   |   |   |   |   |   |
| Interest      income                                      |   | $                                | 13,534    |   |                                        | $      | 12,223    |   |   | $      | 49,559    |   |   | $      | 50,150    |   |   | $      | 45,174 |   |   | $ | 36,372 |   |   | $ | 30,175 |   |
| Interest      expense                                     |   |                             | 2,698     |   |                                        |   | 2,871     |   |   |   | 10,049    |   |   |   | 12,564    |   |   |   | 14,751 |   |   |   | 9,316 |   |   |   | 5,016 |   |
| Net      interest income                                  |   |                             | 10,836    |   |                                        |   | 9,352     |   |   |   | 39,510    |   |   |   | 37,586    |   |   |   | 30,423 |   |   |   | 27,056 |   |   |   | 25,159 |   |
| Provision      for loan losses                            |   |                             | 9,500     |   |                                        |   | 6,000     |   |   |   | 24,066    |   |   |   | 12,215    |   |   |   | 660 |   |   |   | 600 |   |   |   | 710 |   |
| Net      interest income after provision for loan losses  |   |                             | 1,336     |   |                                        |   | 3,352     |   |   |   | 15,444    |   |   |   | 25,371    |   |   |   | 29,763 |   |   |   | 26,456 |   |   |   | 24,449 |   |
| Non      interest income                                  |   |                             | 1,445     |   |                                        |   | 1,498     |   |   |   | 6,198     |   |   |   | 6,206     |   |   |   | 5,349 |   |   |   | 4,952 |   |   |   | 5,009 |   |
| Non      interest expense                                 |   |                             | 8,826     |   |                                        |   | 7,208     |   |   |   | 34,516    |   |   |   | 29,434    |   |   |   | 23,908 |   |   |   | 20,955 |   |   |   | 18,718 |   |
| Income/(loss)      before income taxes                    |   |                             | (6,045    | )      |                                        |   | (2,358    | )      |   |   | (12,874   | )      |   |   | 2,143     |   |   |   | 11,204 |   |   |   | 10,453 |   |   |   | 10,740 |   |
| Provision      for income taxes                           |   |                             | (2,629    | )      |                                        |   | (1,104    | )      |   |   | (5,825    | )      |   |   | 497       |   |   |   | 4,287 |   |   |   | 3,791 |   |   |   | 4,103 |   |
| Net      income/(loss)                                    |   | $                                | (3,416    | )      |                                        | $      | (1,254    | )      |   | $      | (7,049    | )      |   | $      | 1,646     |   |   | $      | 6,917 |   |   | $ | 6,662 |   |   | $ | 6,637 |   |
| Dividends      and accretion on preferred stock           |   |                             | 351       |   |                                        |   | -         |   |   |   | 964       |   |   |   | -         |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Net      (loss) / income available to common shareholders |   | $                                | (3,767    | )      |                                        | $      | (1,254    | )      |   | $      | (8,013    | )      |   | $      | 1,646     |   |   | $      | 6,917 |   |   | $ | 6,662 |   |   | $ | 6,637 |   |
| Share      Data:                                          |   |                             |      |   |                                        |   |      |   |   |   |      |   |   |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (Loss)      / earnings per common share - basic           |   | $                                | (0.25     | )      |                                        | $      | (0.16     | )      |   | $      | (1.04     | )      |   | $      | 0.22      |   |   | $      | 0.99 |   |   | $ | 1.00 |   |   | $ | 1.02 |   |
| (Loss)      / earnings per common share - diluted         |   | $                                | (0.25     | )      |                                        | $      | (0.16     | )      |   | $      | (1.04     | )      |   | $      | 0.21      |   |   | $      | 0.96 |   |   | $ | 0.96 |   |   | $ | 0.96 |   |
| Dividend      payout ratio (1)                            |   |                             | 0.00      | %      |                                        |   | 0.00      | %      |   |   | 0.00      | %      |   |   | 37.68     | %      |   |   | 35.55 | % |   |   | 41.01 | % |   |   | 0.00 | % |
| Book      value per share                                 |   | $                                | 8.07      |   |                                        | $      | 9.03      |   |   | $      | 8.07      |   |   | $      | 9.03      |   |   | $      | 9.04 |   |   | $ | 7.42 |   |   | $ | 6.85 |   |
| Actual      shares outstanding at end of period (2)       |   |                             | 7,771,952 |   |                                        |   | 7,753,078 |   |   |   | 7,771,952 |   |   |   | 7,753,078 |   |   |   | 7,683,829 |   |   |   | 6,662,921 |   |   |   | 6,543,581 |   |
| Weighted      average shares outstanding - basic          |   |                             | 7,704,060 |   |                                        |   | 7,660,342 |   |   |   | 7,697,234 |   |   |   | 7,641,726 |   |   |   | 6,984,174 |   |   |   | 6,650,620 |   |   |   | 6,476,334 |   |
| Weighted      average shares outstanding - diluted        |   |                             | 7,704,060 |   |                                        |   | 7,660,342 |   |   |   | 7,697,234 |   |   |   | 7,753,013 |   |   |   | 7,228,804 |   |   |   | 6,925,582 |   |   |   | 6,878,958 |   |
| Consolidated      Balance Sheet Data:                     |   |                             |      |   |                                        |   |      |   |   |   |      |   |   |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total      cash and cash equivalents                      |   | $                                | 40,738    |   |                                        | $      | 24,571    |   |   | $      | 40,738    |   |   | $      | 24,571    |   |   | $      | 46,419 |   |   | $ | 23,034 |   |   | $ | 44,559 |   |
| Total      investments and other securities               |   | $                                | 121,180   |   |                                        | $      | 50,762    |   |   | $      | 121,180   |   |   | $      | 50,762    |   |   | $      | 47,556 |   |   | $ | 38,445 |   |   | $ | 44,402 |   |
| Total      gross loans                                    |   | $                                | 728,679   |   |                                        | $      | 680,147   |   |   | $      | 728,679   |   |   | $      | 680,147   |   |   | $      | 613,217 |   |   | $ | 444,983 |   |   | $ | 368,133 |   |
| Allowance      for loan losses                            |   | $                                | (14,372   | )      |                                        | $      | (10,412   | )      |   | $      | (14,372   | )      |   | $      | (10,412   | )      |   | $      | (6,143 | ) |   | $ | (4,081 | ) |   | $ | (3,881 | ) |
| Total      assets                                         |   | $                                | 945,177   |   |                                        | $      | 805,588   |   |   | $      | 945,177   |   |   | $      | 805,588   |   |   | $      | 745,554 |   |   | $ | 541,774 |   |   | $ | 488,501 |   |
| Total      deposits                                       |   | $                                | 775,465   |   |                                        | $      | 603,521   |   |   | $      | 775,465   |   |   | $      | 603,521   |   |   | $      | 644,808 |   |   | $ | 420,521 |   |   | $ | 417,797 |   |
| Federal      Home Loan Bank borrowings                    |   | $                                | 65,000    |   |                                        | $      | 109,000   |   |   | $      | 65,000    |   |   | $      | 109,000   |   |   | $      | 8,000 |   |   | $ | 50,000 |   |   | $ | 10,000 |   |
| Junior      subordinated debt                             |   | $                                | 13,403    |   |                                        | $      | 13,403    |   |   | $      | 13,403    |   |   | $      | 13,403    |   |   | $      | 13,403 |   |   | $ | 16,496 |   |   | $ | 8,248 |   |
| Total      stockholders' equity                           |   | $                                | 83,751    |   |                                        | $      | 70,032    |   |   | $      | 83,751    |   |   | $      | 70,032    |   |   | $      | 69,450 |   |   | $ | 49,472 |   |   | $ | 44,845 |   |
| Selected      Other Balance Sheet Data:                   |   |                             |      |   |                                        |   |      |   |   |   |      |   |   |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Average      assets                                       |   | $                                | 949,856   |   |                                        | $      | 794,989   |   |   | $      | 887,628   |   |   | $      | 779,575   |   |   | $      | 605,736 |   |   | $ | 503,877 |   |   | $ | 480,204 |   |
| Average      earning assets                               |   | $                                | 893,787   |   |                                        | $      | 738,651   |   |   | $      | 829,329   |   |   | $      | 722,061   |   |   | $      | 555,871 |   |   | $ | 455,497 |   |   | $ | 435,613 |   |
| Average      stockholders' equity                         |   | $                                | 88,779    |   |                                        | $      | 71,995    |   |   | $      | 86,949    |   |   | $      | 71,748    |   |   | $      | 55,927 |   |   | $ | 47,236 |   |   | $ | 41,340 |   |
| Selected      Financial Ratios :                          |   |                             |      |   |                                        |   |      |   |   |   |      |   |   |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Return      on average assets                             |   |                             | -1.43     | %      |                                        |   | -0.63     | %      |   |   | -0.79     | %      |   |   | 0.21      | %      |   |   | 1.14 | % |   |   | 1.32 | % |   |   | 1.38 | % |
| Return      on average stockholders' equity               |   |                             | -15.27    | %      |                                        |   | -6.93     | %      |   |   | -8.11     | %      |   |   | 2.29      | %      |   |   | 12.37 | % |   |   | 14.10 | % |   |   | 16.06 | % |
| Net      interest margin (3)                              |   |                             | 4.81      | %      |                                        |   | 5.04      | %      |   |   | 4.76      | %      |   |   | 5.21      | %      |   |   | 5.47 | % |   |   | 5.94 | % |   |   | 5.78 | % |
| Efficiency      ratio (4)                                 |   |                             | 70.84     | %      |                                        |   | 66.43     | %      |   |   | 75.34     | %      |   |   | 67.27     | %      |   |   | 66.83 | % |   |   | 65.47 | % |   |   | 62.04 | % |
| Capital      Ratios:                                      |   |                             |      |   |                                        |   |      |   |   |   |      |   |   |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Average      stockholders' equity to average assets       |   |                             | 9.35      | %      |                                        |   | 9.06      | %      |   |   | 9.80      | %      |   |   | 9.20      | %      |   |   | 9.23 | % |   |   | 9.37 | % |   |   | 8.61 | % |
| Leverage      Ratio                                       |   |                             | 8.24      | %      |                                        |   | 8.90      | %      |   |   | 8.24      | %      |   |   | 8.90      | %      |   |   | 9.60 | % |   |   | 11.00 | % |   |   | 9.61 | % |
| Tier      1 Risk-Based Capital ratio                      |   |                             | 9.59      | %      |                                        |   | 9.37      | %      |   |   | 9.59      | %      |   |   | 9.37      | %      |   |   | 10.08 | % |   |   | 11.51 | % |   |   | 10.98 | % |
| Total      Risk-Based Capital ratio                       |   |                             | 10.85     | %      |                                        |   | 10.62     | %      |   |   | 10.85     | %      |   |   | 10.62     | %      |   |   | 11.04 | % |   |   | 12.36 | % |   |   | 11.93 | % |
| Selected      Asset Quality Ratios:                       |   |                             |      |   |                                        |   |      |   |   |   |      |   |   |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Non-performing      loans to total gross loans (5)        |   |                             | 5.26      | %      |                                        |   | 2.75      | %      |   |   | 5.26      | %      |   |   | 2.75      | %      |   |   | 0.06 | % |   |   | 0.01 | % |   |   | 0.01 | % |
| Non-performing      assets to total gross loans           |   |                             | 5.39      | %      |                                        |   | 2.94      | %      |   |   | 5.39      | %      |   |   | 2.94      | %      |   |   | 0.06 | % |   |   | 0.01 | % |   |   | 0.01 | % |
| Non-performing      assets to total assets (6)            |   |                             | 4.15      | %      |                                        |   | 2.48      | %      |   |   | 4.15      | %      |   |   | 2.48      | %      |   |   | 0.05 | % |   |   | 0.01 | % |   |   | 0.01 | % |
| Allowance      for loan losses to total gross loans       |   |                             | 1.97      | %      |                                        |   | 1.53      | %      |   |   | 1.97      | %      |   |   | 1.53      | %      |   |   | 1.00 | % |   |   | 0.92 | % |   |   | 1.05 | % |
| Allowance      for loan losses to non-performing loans    |   |                             | 37.50     | %      |                                        |   | 55.75     | %      |   |   | 37.50     | %      |   |   | 55.75     | %      |   |   | 1817.46 | % |   |   | 7420.00 | % |   |   | 7187.00 | % |
| Net      charge-offs (recoveries) to average loans        |   |                             | 1.52      | %      |                                        |   | 0.88      | %      |   |   | 2.83      | %      |   |   | 1.21      | %      |   |   | 0.00 | % |   |   | 0.10 | % |   |   | 0.02 | % |

----

|   | · | Interest      income for the year ended December 31, 2009 was approximately $49.6      million, which represents a decline of approximately $0.6 million or      1.2%.  Lower earning asset yields during 2009, resulting from      the current interest rate environment, contributed significantly to the      year over year decline.  Additionally, higher balances of      non-performing loans in 2009 resulted in approximately $0.8 million in      interest reversals, contributing further to the year over year decline      within this category. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

|   | · | Interest      expense for the year ended December 31, 2009 was approximately $10.0      million, which represents a decline of approximately $2.5 million or      20.0%.  Lower offering rates in conjunction with the re-pricing      of floating rate deposit balances as well as the pay-down of      brokered deposits during 2009 contributed significantly to the decline in      interest expense.  Additionally, significantly lower Federal      Home Loan Bank borrowing costs resulting in part from pay-downs of      borrowings due to significant core deposit growth, contributed further to      the year over year decline in interest  expense. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | As      a result of the items mentioned above, net interest income for the year      ended December 31, 2009 was approximately $39.5 million.  When      compared to the same period ended a year earlier, this represents an      increase of approximately $1.9 million or 5.1%.  For the year      ended December 31, 2009 the Company’s net interest margin was 4.76%      compared to the 5.21% reported for 2008, representing a decline of 45      basis points. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | For      the year ended December 31, 2009, non-interest income totaled      approximately $6.2 million, substantially unchanged from that reported for      the same period ended a year earlier.  During 2009, the Bank      recognized a number of one-time items in non-interest income, including      the recognition of a one-time charge related to the recognition of other      than temporary impairment (“OTTI”) on several investment securities      totaling approximately $0.4 million.  Offsetting the OTTI      charge, was the recognition of approximately $0.3 million as a net gain on      the sale of investment securities, OREO property and SBA      loans.  Additionally, the absence of approximately $0.3 million      in income related to the Visa, Inc. IPO the Bank recognized in the second      quarter of 2008, contributed to the slight year over year decline within      this category.  Helping to offset declines within this category      was a $0.7 million year over year increase in mortgage origination fee      income.  For a more detailed discussion regarding non-interest      income please see “Non-Interest Income” of Management’s Discussion and      Analysis filed on this Form 10-K. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Non-interest      expenses for the year ended December 31, 2009 were approximately $34.5      million or $5.1 million higher than the $29.4 million reported for the      same period ended a year earlier.  Contributing to the increase      in non-interest expense in 2009 were higher occupancy and equipment costs      associated with a single branch re-location, higher FDIC assessment costs      as previously mentioned, a $1.3 million write-down on a single OREO      property and higher costs incurred related to the management of problem      assets.  For a more detailed discussion regarding non-interest      expense please see “Non-Interest Expense” of Management’s Discussion and      Analysis filed on this Form 10-K. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | The      operating efficiency ratio for the year ended December 31, 2009 was 75.34%      compared to 67.27% for the year ended December 31,      2008.  Excluding the impact of one-time items mentioned above      totaling approximately $3.2 million including: OREO related expenses, OREO      write-downs, and one-time FDIC assessment costs, the efficiency ratio for      the year ended December 31, 2009 would have been  68.37%. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Total      assets at December 31, 2009 were approximately $945.2 million,      approximately $139.6 million or 17.3% higher than that report at December      31, 2008. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Fed      Funds sold and interest bearing due from balances totaled approximately      $21.4 million at December 31, 2009, approximately $14.7 million or 221.7%      higher than that reported at December 31, 2008.  Significant      increases in core deposit balances in 2009 contributed significantly to      higher balances within this category during  2009. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Available      for sale investment securities totaled approximately $121.2 million at      December 31, 2009, approximately $70.4 million or 138.7% higher than that      reported at December 31, 2008.  As mentioned, core deposit      balances increased significantly during 2009 and increases in the      investment portfolio are the result in part of Management’s efforts to      maximize earning asset yields in the absence of significant new loan      originations. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Gross      loans totaled approximately $728.7 million at December 31, 2009,      representing an increase of approximately $48.5 million or 7.1% over that      reported at December 31, 2008.  A significant majority of new      originations in 2009 occurred in the category of commercial real      estate.  For a more detailed discussion regarding the loan      portfolio, please see “Loans” of Management’s Discussion and Analysis      filed on this Form 10-K. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

|   | · | Total      deposits were approximately $775.5 million at December 31, 2009,      approximately $171.9 million or 28.5% higher than that reported at      December 31, 2008.  Strong core deposit growth in 2009 allowed      the Bank to pay down borrowings with the FHLB as well as brokered      deposits.  Exclusive of pay downs in brokered deposits, total      deposits increased approximately $209.3 million or 37.7% during      2009.  For a more detailed discussion regarding deposits, please      see “Deposits and Borrowed Funds” of Management’s Discussion and Analysis      filed on this Form 10-K. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | FHLB      Borrowings totaled approximately $65.0 million at December 31, 2009, down      approximately $44.0 million or 40.4% from that reported at December 31,      2008.  As mentioned, higher core deposit balances in 2009      allowed the Bank to rely less on wholesale funding  sources. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Shareholders’      equity totaled approximately $83.8 million at December 31, 2009,      representing an increase of approximately $13.7 million or 19.6% over that      reported at December 31, 2008.  Under the terms of the U.S.      Treasury’s CPP, the Company issued $21.0 million in preferred equity to      the U.S. Treasury in March of 2009.  The issuance of this equity      is the primary factor behind the year over year variance in shareholders’      equity.  For additional information regarding the Company’s      participation in the CPP and the related issuance of preferred stock,      please see Note 24. Preferred Stock, of the consolidated financial      statements filed on this Form 10-K.  See also “Recent      Developments – Private Placement,”below. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | At      December 31, 2009 non-performing assets totaled approximately $39.3      million, an increase of approximately $19.3 million or 96.2% over that      reported at December 31, 2008.  The ratio of non-performing      assets to total assets was 4.15% at December 31, 2009 compared to the      2.48% reported at December 31,2008. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Non-performing      loans totaled approximately $38.3 million at December 31, 2009, an      increase of approximately $19.6 million or 105.2% over that reported at      December 31, 2008.  Non-performing loans represented 5.26% of      total gross loans as of December 31, 2009 compared to 2.75% reported for      December 31, 2008.  At December 31, 2009 non-performing loans as      a percent of the allowance for loan losses was 266.6% compared to 179.4%      reported at December 31, 2008. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | The      allowance for loan losses was approximately $14.4 million at December 31,      2009, approximately $4.0 million higher than that reported at December 31,      2008.  During 2009, the Bank made approximately $24.1 million in      provisions to the allowance for loan losses and charged-off approximately      $20.2 million in loan balances.  At December 31, 2009 the      allowance as a percentage of total gross loans was 1.97% compared to the      1.53% reported at December 31,2008. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Net      charge-offs for 2009 totaled approximately $20.1 million compared to the      $7.9 million reported for 2008.  Net charge-offs to average      loans was 2.83% for 2009 compared to 1.21% reported for    2008. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Other      real estate owned totaled approximately $0.9 million at December 31, 2009,      down approximately $0.4 million from that reported at December 31,      2008. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

|   | · | In      March 2010 the Company raised approximately $60.0 million in capital      through a private placement of which approximately $4.0 million was placed      in escrow for a second closing, pending regulatory approvals required for      the particular investor making such investment.  The Company      intends to downstream the majority of these funds to the Bank as Tier I      capital, at which time the Bank will be in compliance with the requirement      to increase its Tier I leverage ratio to a level that meets or exceeds      10.0% and its Total Risk-Based capital ratio of  11.5%. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | An      independent study of the management and personnel structure of the Bank      has begun, with results expected early in the second quarter of      2010. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | During      2009 the Bank eliminated from its books all assets or portions of assets      classified as “Loss” and one-half of assets classified as      “Doubtful.” |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | The      Bank is in the process of complying with the August 31, 2010 deadline to      meet the provision to reduce the level of assets classified as      “Substandard” in the ROE to a level not more than the greater of $50.0      million or 50% of Tier I capital and the allowance for loan losses. Upon      the Company’s downstream of a majority of the funds it raised in its March      2010 private placement it will substantially have met this      requirement. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | The      order requires the Bank to increase its allowance for loan losses      (“ALLL”), as of the date of the ROE, by $3.5 million and to review      and revise it ALLL methodology. The Bank subsequently made      provisions of approximately $19.3 million in the third and fourth quarters      of 2009.  Additionally, the Bank is in the process of revising its      policy for determining the adequacy of the allowance for loan      losses. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | The      Bank is currently in the process of developing a written plan to      systematically reduce the amount of loans or other extensions of credit      advanced, directly or indirectly, to or for the benefit of borrowers in      the “Commercial Real Estate” concentration, with emphasis on those      borrowers involved in construction and land  development. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | The      Bank is in the process of developing a written plan to systematically      reduce its level of non-performingassets. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------|

|   | · | The      Bank has revised its written lending and collection policy to provide      effective guidance and control over its lending  function. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | The      Bank has revised its contingency funding plan and is in the process of      revisions to the liquidity and funds management  policy. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | The      Bank has adopted a comprehensive budget for all categories of income and      expense for the calendar year 2010. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------|

|   | · | The      Company is currently in the process of updating its capital      plan. |
|--------|--------|---------------------------------------------------------------------------------|

|   | · | The      Company is in the process of updating its cash flow projections for the      calendar year 2010 with particular emphasis on the uses of cash for debt      service, operational expenses and other  purposes. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

----

----

|                                               |   | For      The Year Ended, |    |   | For      The Year Ended, |   |   | For      The Year Ended, |   |
|----------------------------------------------------|--------|--------------------------|---------|--------|--------------------------|--------|--------|--------------------------|--------|
|                                               |   | December      31, 2009   |    |   | December      31, 2008   |   |   | December      31, 2007   |   |
|                                               |   |                     |    |   | Yield/                   |   |   | Income/                  |   |   |   |   |   | Yield/ |   |   | Income/ |   |   |   |   |   | Yield/ |   |   | Income/ |   |
| (dollar      amounts in thousands)                 |   | Balance                  |    |   | Rate                     |   |   | Expense                  |   |   | Balance |   |   | Rate |   |   | Expense |   |   | Balance |   |   | Rate |   |   | Expense |   |
| Interest      Earning Assets                       |   |                     |    |   |                     |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Investments      with other banks                  |   | $                        | 119     |   |                     |   | 2.52   | %                        |   | $ | 3 |   |   | $ | 214 |   |   |   | 3.74 | % |   | $ | 8 |   |   | $ | 499 |   |   |   | 1.60 | % |   | $ | 8 |   |
| Interest      bearing due from                     |   |                     | 16,950  |   |                     |   | 0.29   | %                        |   |   | 49 |   |   |   | - |   |   |   | 0.00 | % |   |   | - |   |   |   | - |   |   |   | 0.00 | % |   |   | - |   |
| Federal      funds sold                            |   |                     | 14,555  |   |                     |   | 0.14   | %                        |   |   | 21 |   |   |   | 6,583 |   |   |   | 2.13 | % |   |   | 140 |   |   |   | 15,878 |   |   |   | 4.94 | % |   |   | 785 |   |
| Investment      securities taxable                 |   |                     | 67,197  |   |                     |   | 4.55   | %                        |   |   | 3,060 |   |   |   | 42,080 |   |   |   | 5.28 | % |   |   | 2,223 |   |   |   | 25,585 |   |   |   | 4.87 | % |   |   | 1,246 |   |
| Investment      securities non taxable             |   |                     | 20,589  |   |                     |   | 4.35   | %                        |   |   | 896 |   |   |   | 17,079 |   |   |   | 4.34 | % |   |   | 741 |   |   |   | 16,535 |   |   |   | 4.29 | % |   |   | 710 |   |
| Loans      (1) (2)                                 |   |                     | 709,919 |   |                     |   | 6.41   | %                        |   |   | 45,530 |   |   |   | 656,105 |   |   |   | 7.17 | % |   |   | 47,038 |   |   |   | 497,374 |   |   |   | 8.53 | % |   |   | 42,425 |   |
| Total      interest earning assets                 |   |                     | 829,329 |   |                     |   | 5.98   | %                        |   |   | 49,559 |   |   |   | 722,061 |   |   |   | 6.95 | % |   |   | 50,150 |   |   |   | 555,871 |   |   |   | 8.13 | % |   |   | 45,174 |   |
|                                               |   |                     |    |   |                     |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Allowance      for possible loan losses            |   |                     | (12,342 | )      |                     |   |   |                     |   |   |   |   |   |   | (7,845 | ) |   |   |   |   |   |   |   |   |   |   | (4,784 | ) |   |   |   |   |   |   |   |   |
| Other      assets                                  |   |                     | 70,641  |   |                     |   |   |                     |   |   |   |   |   |   | 65,359 |   |   |   |   |   |   |   |   |   |   |   | 54,649 |   |   |   |   |   |   |   |   |   |
|                                               |   |                     |    |   |                     |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total      assets                                  |   | $                        | 887,628 |   |                     |   |   |                     |   |   |   |   |   | $ | 779,575 |   |   |   |   |   |   |   |   |   |   | $ | 605,736 |   |   |   |   |   |   |   |   |   |
|                                               |   |                     |    |   |                     |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest      Bearing Liabilities                  |   |                     |    |   |                     |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest      bearing demand                       |   | $                        | 66,652  |   |                     |   | 0.82   | %                        |   | $ | 548 |   |   | $ | 74,170 |   |   |   | 0.60 | % |   | $ | 447 |   |   | $ | 57,586 |   |   |   | 0.45 | % |   | $ | 262 |   |
| Savings                                            |   |                     | 24,665  |   |                     |   | 0.24   | %                        |   |   | 60 |   |   |   | 25,678 |   |   |   | 0.81 | % |   |   | 208 |   |   |   | 26,431 |   |   |   | 0.90 | % |   |   | 238 |   |
| Money      market                                  |   |                     | 202,927 |   |                     |   | 1.51   | %                        |   |   | 3,067 |   |   |   | 186,625 |   |   |   | 1.95 | % |   |   | 3,638 |   |   |   | 123,667 |   |   |   | 3.57 | % |   |   | 4,411 |   |
| Time      deposits                                 |   |                     | 191,817 |   |                     |   | 2.42   | %                        |   |   | 4,638 |   |   |   | 142,124 |   |   |   | 3.30 | % |   |   | 4,693 |   |   |   | 142,490 |   |   |   | 4.77 | % |   |   | 6,795 |   |
| Brokered      money market funds                   |   |                     | 19,416  |   |                     |   | 0.72   | %                        |   |   | 140 |   |   |   | 6,590 |   |   |   | 1.24 | % |   |   | 82 |   |   |   | - |   |   |   | 0.00 | % |   |   | - |   |
| Brokered      time deposits                        |   |                     | 28,303  |   |                     |   | 1.52   | %                        |   |   | 431 |   |   |   | 17,372 |   |   |   | 3.66 | % |   |   | 635 |   |   |   | 3,075 |   |   |   | 5.37 | % |   |   | 165 |   |
| Total      interest bearing deposits               |   |                     | 533,780 |   |                     |   | 1.66   | %                        |   |   | 8,884 |   |   |   | 452,559 |   |   |   | 2.14 | % |   |   | 9,703 |   |   |   | 353,249 |   |   |   | 3.36 | % |   |   | 11,871 |   |
| Federal      funds purchased                       |   |                     | 188     |   |                     |   | 1.06   | %                        |   |   | 2 |   |   |   | 3,406 |   |   |   | 2.55 | % |   |   | 87 |   |   |   | 1,138 |   |   |   | 5.54 | % |   |   | 63 |   |
| Securities      sold under agreement to repurchase |   |                     | 650     |   |                     |   | 0.15   | %                        |   |   | 1 |   |   |   | 2,283 |   |   |   | 2.01 | % |   |   | 46 |   |   |   | 1,855 |   |   |   | 5.28 | % |   |   | 98 |   |
| Federal      Home Loan Bank borrowing              |   |                     | 76,953  |   |                     |   | 0.76   | %                        |   |   | 588 |   |   |   | 76,881 |   |   |   | 2.51 | % |   |   | 1,933 |   |   |   | 33,136 |   |   |   | 5.43 | % |   |   | 1,798 |   |
| Federal      reserve bank borrowings               |   |                     | 14      |   |                     |   | 0.49   | %                        |   |   | - |   |   |   | - |   |   |   | 0.00 | % |   |   | - |   |   |   | - |   |   |   | 0.00 | % |   |   | - |   |
| Junior      subordinated debentures                |   |                     | 13,403  |   |                     |   | 4.28   | %                        |   |   | 574 |   |   |   | 13,403 |   |   |   | 5.93 | % |   |   | 795 |   |   |   | 12,234 |   |   |   | 7.53 | % |   |   | 921 |   |
| Total      borrowed funds                          |   |                     | 91,208  |   |                     |   | 1.28   | %                        |   |   | 1,165 |   |   |   | 95,973 |   |   |   | 2.98 | % |   |   | 2,861 |   |   |   | 48,363 |   |   |   | 5.95 | % |   |   | 2,880 |   |
| Total      interest bearing liabilities            |   |                     | 624,988 |   |                     |   | 1.61   | %                        |   |   | 10,049 |   |   |   | 548,532 |   |   |   | 2.29 | % |   |   | 12,564 |   |   |   | 401,612 |   |   |   | 3.67 | % |   |   | 14,751 |   |
| Non      interest bearing demand                   |   |                     | 167,226 |   |                     |   |   |                     |   |   |   |   |   |   | 151,529 |   |   |   |   |   |   |   |   |   |   |   | 141,123 |   |   |   |   |   |   |   |   |   |
| Total      funding                                 |   |                     | 792,214 |   |                     |   | 1.27   | %                        |   |   | 10,049 |   |   |   | 700,061 |   |   |   | 1.79 | % |   |   | 12,564 |   |   |   | 542,735 |   |   |   | 2.72 | % |   |   | 14,751 |   |
| Other      liabilities                             |   |                     | 8,465   |   |                     |   |   |                     |   |   |   |   |   |   | 7,766 |   |   |   |   |   |   |   |   |   |   |   | 7,074 |   |   |   |   |   |   |   |   |   |
| Total      liabilities                             |   |                     | 800,679 |   |                     |   |   |                     |   |   |   |   |   |   | 707,827 |   |   |   |   |   |   |   |   |   |   |   | 549,809 |   |   |   |   |   |   |   |   |   |
|                                               |   |                     |    |   |                     |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Stockholders'      Equity                          |   |                     |    |   |                     |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Preferred      stock                               |   |                     | 15,162  |   |                     |   |   |                     |   |   |   |   |   |   | - |   |   |   |   |   |   |   |   |   |   |   | - |   |   |   |   |   |   |   |   |   |
| Common      stock                                  |   |                     | 48,681  |   |                     |   |   |                     |   |   |   |   |   |   | 46,829 |   |   |   |   |   |   |   |   |   |   |   | 32,909 |   |   |   |   |   |   |   |   |   |
| Additional      paid in capital                    |   |                     | 2,681   |   |                     |   |   |                     |   |   |   |   |   |   | 852 |   |   |   |   |   |   |   |   |   |   |   | 507 |   |   |   |   |   |   |   |   |   |
| Retained      earnings                             |   |                     | 21,933  |   |                     |   |   |                     |   |   |   |   |   |   | 24,435 |   |   |   |   |   |   |   |   |   |   |   | 22,463 |   |   |   |   |   |   |   |   |   |
| Valuation      allowance investments               |   |                     | (1,508  | )      |                     |   |   |                     |   |   |   |   |   |   | (368 | ) |   |   |   |   |   |   |   |   |   |   | 48 |   |   |   |   |   |   |   |   |   |
| Total      stockholders' equity                    |   |                     | 86,949  |   |                     |   |   |                     |   |   |   |   |   |   | 71,748 |   |   |   |   |   |   |   |   |   |   |   | 55,927 |   |   |   |   |   |   |   |   |   |
|                                               |   |                     |    |   |                     |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total      liabilities and stockholders' equity    |   | $                        | 887,628 |   |                     |   |   |                     |   |   |   |   |   | $ | 779,575 |   |   |   |   |   |   |   |   |   |   | $ | 605,736 |   |   |   |   |   |   |   |   |   |
|                                               |   |                     |    |   |                     |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      interest income                           |   |                     |    |   |                     |   |   |                     |   | $ | 39,510 |   |   |   |   |   |   |   |   |   |   | $ | 37,586 |   |   |   |   |   |   |   |   |   |   | $ | 30,423 |   |
| Net      interest margin (3)                       |   |                     |    |   |                     |   | 4.76   | %                        |   |   |   |   |   |   |   |   |   |   | 5.21 | % |   |   |   |   |   |   |   |   |   |   | 5.47 | % |   |   |   |   |

----

----

|                                   |   | Average      Balance     |    |   |     |   |    |              |   |   | Average      Yield       |   |   |   |   |
|----------------------------------------|--------|--------------------------|---------|--------|----------|--------|---------|-------------------|--------|--------|--------------------------|--------|--------|--------|--------|
|                                   |   | For      The Year Ended, |    |   |     |   |    |              |   |   | For      The Year Ended, |   |   |   |   |
|                                   |   | December      31,        |    |   | Variance |   |    | December      31, |   |   |                     |   |
| (dollar      amounts in thousands)     |   | 2009                     |    |   | 2008     |   |    | dollar            |   |   | percentage               |   |   | 2009   |   |   | 2008 |   |   | Variance |   |
| Interest-Earning      Assets           |   |                     |    |   |     |   |    |              |   |   |                     |   |   |   |   |   |   |   |   |   |   |
| Time      deposits with other banks    |   | $                        | 119     |   |     | $      | 214     |              |   | $      | (95                      | )      |   |   | -44.39 | % |   |   | 2.52 | % |   |   | 3.74 | % |   |   | -1.22 | % |
| Interest      bearing due from         |   |                     | 16,950  |   |     |   | -       |              |   |   | 16,950                   |   |   |   | 100.00 | % |   |   | 0.29 | % |   |   | 0.00 | % |   |   | 0.29 | % |
| Federal      funds sold                |   |                     | 14,555  |   |     |   | 6,583   |              |   |   | 7,972                    |   |   |   | 121.10 | % |   |   | 0.14 | % |   |   | 2.13 | % |   |   | -1.99 | % |
| Investment      securities taxable     |   |                     | 67,197  |   |     |   | 42,080  |              |   |   | 25,117                   |   |   |   | 59.69  | % |   |   | 4.55 | % |   |   | 5.28 | % |   |   | -0.73 | % |
| Investment      securities non-taxable |   |                     | 20,589  |   |     |   | 17,079  |              |   |   | 3,510                    |   |   |   | 20.55  | % |   |   | 4.35 | % |   |   | 4.34 | % |   |   | 0.01 | % |
| Loans      (1) (2)                     |   |                     | 709,919 |   |     |   | 656,105 |              |   |   | 53,814                   |   |   |   | 8.20   | % |   |   | 6.41 | % |   |   | 7.17 | % |   |   | -0.76 | % |
|                                   |   |                     |    |   |     |   |    |              |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total      interest earning assets     |   | $                        | 829,329 |   |     | $      | 722,061 |              |   | $      | 107,268                  |   |   |   | 14.86  | % |   |   | 5.98 | % |   |   | 6.95 | % |   |   | -0.97 | % |

| (1) | Non-accruing      loans have been included in loantotals. |
|-----|-----------------------------------------------------------|

| (2) | Loan      fees of $918 and $1,297 have been included in the interest income      computation for the years ended December 31, 2009 and      2008, respectively. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

|                                             |   | Average      Balance     |    |   |     |   |    |              |   |   | Average      Rate        |   |   |   |   |
|--------------------------------------------------|--------|--------------------------|---------|--------|----------|--------|---------|-------------------|--------|--------|--------------------------|--------|--------|--------|--------|
|                                             |   | For      The Year Ended, |    |   |     |   |    |              |   |   | For      The Year Ended, |   |   |   |   |
|                                             |   | December      31,        |    |   | Variance |   |    | December      31, |   |   |                     |   |
| (dollar      amounts in thousands)               |   | 2009                     |    |   | 2008     |   |    | dollar            |   |   | percentage               |   |   | 2009   |   |   | 2008 |   |   | Variance |   |
| Interest      Bearing Liabilities                |   |                     |    |   |     |   |    |              |   |   |                     |   |   |   |   |   |   |   |   |   |   |
| Interest      bearing demand                     |   | $                        | 66,652  |   |     | $      | 74,170  |              |   | $      | (7,518                   | )      |   |   | -10.14 | % |   |   | 0.82 | % |   |   | 0.60 | % |   |   | 0.22 | % |
| Savings                                          |   |                     | 24,665  |   |     |   | 25,678  |              |   |   | (1,013                   | )      |   |   | -3.95  | % |   |   | 0.24 | % |   |   | 0.81 | % |   |   | -0.57 | % |
| Money      market                                |   |                     | 202,927 |   |     |   | 186,625 |              |   |   | 16,302                   |   |   |   | 8.74   | % |   |   | 1.51 | % |   |   | 1.95 | % |   |   | -0.44 | % |
| Time      deposits                               |   |                     | 191,817 |   |     |   | 142,124 |              |   |   | 49,693                   |   |   |   | 34.96  | % |   |   | 2.42 | % |   |   | 3.30 | % |   |   | -0.88 | % |
| Brokered      money market funds                 |   |                     | 19,416  |   |     |   | 6,590   |              |   |   | 12,826                   |   |   |   | 194.63 | % |   |   | 0.72 | % |   |   | 1.24 | % |   |   | -0.52 | % |
| Brokered      time deposits                      |   |                     | 28,303  |   |     |   | 17,372  |              |   |   | 10,931                   |   |   |   | 62.92  | % |   |   | 1.52 | % |   |   | 3.66 | % |   |   | -2.14 | % |
| Federal      funds purchased                     |   |                     | 188     |   |     |   | 3,406   |              |   |   | (3,218                   | )      |   |   | -94.48 | % |   |   | 1.06 | % |   |   | 2.55 | % |   |   | -1.49 | % |
| Securities      sold under repurchase agreements |   |                     | 650     |   |     |   | 2,283   |              |   |   | (1,633                   | )      |   |   | -71.53 | % |   |   | 0.15 | % |   |   | 2.01 | % |   |   | -1.86 | % |
| Federal      Home Loan Bank borrowing            |   |                     | 76,953  |   |     |   | 76,881  |              |   |   | 72                       |   |   |   | 0.09   | % |   |   | 0.76 | % |   |   | 2.51 | % |   |   | -1.75 | % |
| FRB      Discount Window Borrowings              |   |                     | 14      |   |     |   | -       |              |   |   | 14                       |   |   |   | 100.00 | % |   |   | 0.49 | % |   |   | 0.00 | % |   |   | 0.49 | % |
| Junior      subordinated debentures              |   |                     | 13,403  |   |     |   | 13,403  |              |   |   | -                        |   |   |   | 0.00   | % |   |   | 4.28 | % |   |   | 5.93 | % |   |   | -1.65 | % |
|                                             |   |                     |    |   |     |   |    |              |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total      interest bearing liabilities          |   | $                        | 624,988 |   |     | $      | 548,532 |              |   | $      | 76,456                   |   |   |   | 13.94  | % |   |   | 1.61 | % |   |   | 2.29 | % |   |   | -0.68 | % |

----

----

|                                       |   | For      The Year Ended, |   |   | For      The Year Ended, |   |   | For      The Year Ended, |   |
|--------------------------------------------|--------|--------------------------|--------|--------|--------------------------|--------|--------|--------------------------|--------|
|                                       |   | December      31, 2009   |   |   | December      31, 2008   |   |   | December      31, 2007   |   |
| (dollar      amounts in thousands)         |   | Volume                   |   |   | Rate                     |   |   | Total                    |   |   | Volume |   |   | Rate |   |   | Total |   |   | Volume |   |   | Rate |   |   | Total |   |
| Interest      income:                      |   |                     |   |   |                     |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Investments      with other banks          |   | $                        | (3     | )      |                     | $      | (2     | )                        |   | $ | (5 | ) |   | $ | (7 | ) |   | $ | 7 |   |   | $ | - |   |   | $ | 4 |   |   | $ | (5 | ) |   | $ | (1 | ) |
| Interest      bearing due from             |   |                     | 49     |   |                     |   | -      |                     |   |   | 49 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Federal      funds sold                    |   |                     | 81     |   |                     |   | (200   | )                        |   |   | (119 | ) |   |   | 8,811 |   |   |   | (9,456 | ) |   |   | (645 | ) |   |   | 232 |   |   |   | 14 |   |   |   | 246 |   |
| Investment      securities taxable         |   |                     | 1,178  |   |                     |   | (341   | )                        |   |   | 837 |   |   |   | 881 |   |   |   | 96 |   |   |   | 977 |   |   |   | (86 | ) |   |   | 107 |   |   |   | 21 |   |
| Investment      securities non-taxable (2) |   |                     | 232    |   |                     |   | 3      |                     |   |   | 235 |   |   |   | 36 |   |   |   | 11 |   |   |   | 47 |   |   |   | 14 |   |   |   | (2 | ) |   |   | 12 |   |
| Taxable      equivalent adjustment (2)     |   |                     | (79    | )      |                     |   | (1     | )                        |   |   | (80 | ) |   |   | (12 | ) |   |   | (4 | ) |   |   | (16 | ) |   |   | (5 | ) |   |   | 1 |   |   |   | (4 | ) |
| Loans      (1)                             |   |                     | 3,680  |   |                     |   | (5,188 | )                        |   |   | (1,508 | ) |   |   | 12,099 |   |   |   | (7,486 | ) |   |   | 4,613 |   |   |   | 8,288 |   |   |   | 240 |   |   |   | 8,528 |   |
|                                       |   |                     |   |   |                     |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      increase / (decrease)             |   |                     | 5,138  |   |                     |   | (5,729 | )                        |   |   | (591 | ) |   |   | 21,808 |   |   |   | (16,832 | ) |   |   | 4,976 |   |   |   | 8,447 |   |   |   | 355 |   |   |   | 8,802 |   |
|                                       |   |                     |   |   |                     |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest      expense:                     |   |                     |   |   |                     |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Savings,      NOW, money market            |   |                     | 113    |   |                     |   | (731   | )                        |   |   | (618 | ) |   |   | 1,516 |   |   |   | (2,134 | ) |   |   | (618 | ) |   |   | 249 |   |   |   | 2,165 |   |   |   | 2,414 |   |
| Time      deposits                         |   |                     | 1,392  |   |                     |   | (1,447 | )                        |   |   | (55 | ) |   |   | (17 | ) |   |   | (2,085 | ) |   |   | (2,102 | ) |   |   | 1,666 |   |   |   | 657 |   |   |   | 2,323 |   |
| Brokered      funds                        |   |                     | 445    |   |                     |   | (591   | )                        |   |   | (146 | ) |   |   | 655 |   |   |   | (103 | ) |   |   | 552 |   |   |   | - |   |   |   | 165 |   |   |   | 165 |   |
| Other      borrowings                      |   |                     | (38    | )      |                     |   | (1,352 | )                        |   |   | (1,390 | ) |   |   | 1,490 |   |   |   | (1,407 | ) |   |   | 83 |   |   |   | 390 |   |   |   | 54 |   |   |   | 444 |   |
| Federal      funds purchased               |   |                     | (52    | )      |                     |   | (33    | )                        |   |   | (85 | ) |   |   | 72 |   |   |   | (48 | ) |   |   | 24 |   |   |   | 7 |   |   |   | - |   |   |   | 7 |   |
| Long      term borrowings                  |   |                     | -      |   |                     |   | (221   | )                        |   |   | (221 | ) |   |   | 82 |   |   |   | (208 | ) |   |   | (126 | ) |   |   | 201 |   |   |   | (119 | ) |   |   | 82 |   |
|                                       |   |                     |   |   |                     |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      increase / (decrease)             |   |                     | 1,860  |   |                     |   | (4,375 | )                        |   |   | (2,515 | ) |   |   | 3,798 |   |   |   | (5,985 | ) |   |   | (2,187 | ) |   |   | 2,513 |   |   |   | 2,922 |   |   |   | 5,435 |   |
|                                       |   |                     |   |   |                     |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total      net increase / (decrease)       |   | $                        | 3,278  |   |                     | $      | (1,354 | )                        |   | $ | 1,924 |   |   | $ | 18,010 |   |   | $ | (10,847 | ) |   | $ | 7,163 |   |   | $ | 5,934 |   |   | $ | (2,567 | ) |   | $ | 3,367 |   |

|                                                 |   | For      The Years Ended |   |   | Variances |   |
|------------------------------------------------------|--------|--------------------------|--------|--------|-----------|--------|
|                                                 |   | December      31,        |   |   | 2009      |   |   | 2008 |   |
| (dollar      amounts in thousands)                   |   | 2009                     |   |   | 2008      |   |   | 2007 |   |   | dollar |   |   | percentage |   |   | dollar |   |   | percentage |   |
| Service      charges on deposit accounts             |   | $                        | 2,965  |   |      | $      | 3,284 |   |   | $ | 2,774 |   |   | $ | (319 | ) |   |   | -9.7 | % |   | $ | 510 |   |   |   | 18.4 | % |
| ATM/Debit      Card transaction/interchange fees     |   |                     | 976    |   |      |   | 895 |   |   |   | 771 |   |   |   | 81 |   |   |   | 9.1 | % |   |   | 124 |   |   |   | 16.1 | % |
| Bancard                                              |   |                     | 180    |   |      |   | 231 |   |   |   | 232 |   |   |   | (51 | ) |   |   | -22.1 | % |   |   | (1 | ) |   |   | -0.4 | % |
| Mortgage      origination fees                       |   |                     | 1,253  |   |      |   | 568 |   |   |   | 461 |   |   |   | 685 |   |   |   | 120.6 | % |   |   | 107 |   |   |   | 23.2 | % |
| Earnings      on cash surrender value life insurance |   |                     | 504    |   |      |   | 474 |   |   |   | 433 |   |   |   | 30 |   |   |   | 6.3 | % |   |   | 41 |   |   |   | 9.5 | % |
| Other                                                |   |                     | 426    |   |      |   | 717 |   |   |   | 636 |   |   |   | (291 | ) |   |   | -40.6 | % |   |   | 81 |   |   |   | 12.7 | % |
|                                                 |   |                     |   |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                                                |   | $                        | 6,304  |   |      | $      | 6,169 |   |   | $ | 5,307 |   |   | $ | 135 |   |   |   | 2.2 | % |   | $ | 862 |   |   |   | 16.2 | % |

----

----

|                               |   | For      The Years Ended December 31, |    |   | Variance |   |
|------------------------------------|--------|---------------------------------------|---------|--------|----------|--------|
| (dollar      amounts in thousands) |   | 2009                                  |    |   | 2008     |   |   | 2007 |   |   | 2009 |   |   | 2008 |   |
| Dollar      volume                 |   | $                                     | 158,540 |   |     | $      | 64,199 |   |   | $ | 50,623 |   |   |   | 147.0 | % |   |   | 26.8 | % |
| Number      of loans               |   |                                  | 464     |   |     |   | 179 |   |   |   | 147 |   |   |   | 159.2 | % |   |   | 21.8 | % |

|                                      |   | For      The Years Ended |                          |   | Variances |   |
|-------------------------------------------|--------|--------------------------|-------------------------------|--------|-----------|--------|
|                                      |   | December      31,        |                          |   | 2009      |   |   | 2008 |   |
| (dollar      amounts in thousands)        |   | 2009                     |                          |   | 2008      |   |   | 2007 |   |   | dollar |   |   | percentage |   |   | dollar |   |   | percentage |   |
| Salaries      and employee benefits       |   | $                        | 15,502                        |   |      | $      | 15,561 |   |   | $ | 13,501 |   |   | $ | (59 | ) |   |   | -0.4 | % |   | $ | 2,060 |   |   |   | 15.3 | % |
| Occupancy      and equipment              |   |                     | 4,917                         |   |      |   | 4,542 |   |   |   | 3,381 |   |   |   | 375 |   |   |   | 8.3 | % |   |   | 1,161 |   |   |   | 34.3 | % |
| Promotional                               |   |                     | 644                           |   |      |   | 823 |   |   |   | 718 |   |   |   | (179 | ) |   |   | -21.7 | % |   |   | 105 |   |   |   | 14.6 | % |
| Data      processing                      |   |                     | 2,743                         |   |      |   | 2,704 |   |   |   | 2,267 |   |   |   | 39 |   |   |   | 1.4 | % |   |   | 437 |   |   |   | 19.3 | % |
| Stationery      and supplies              |   |                     | 431                           |   |      |   | 428 |   |   |   | 350 |   |   |   | 3 |   |   |   | 0.7 | % |   |   | 78 |   |   |   | 22.3 | % |
| Regulatory      fees                      |   |                     | 1,984                         |   |      |   | 475 |   |   |   | 146 |   |   |   | 1,509 |   |   |   | 317.7 | % |   |   | 329 |   |   |   | 225.3 | % |
| Audit      and tax costs                  |   |                     | 625                           |   |      |   | 464 |   |   |   | 517 |   |   |   | 161 |   |   |   | 34.7 | % |   |   | (53 | ) |   |   | -10.3 | % |
| Amortization      core deposit intangible |   |                     | 1,049                         |   |      |   | 861 |   |   |   | 393 |   |   |   | 188 |   |   |   | 21.8 | % |   |   | 468 |   |   |   | 119.1 | % |
| Director      fees                        |   |                     | 355                           |   |      |   | 318 |   |   |   | 289 |   |   |   | 37 |   |   |   | 11.6 | % |   |   | 29 |   |   |   | 10.0 | % |
| Communications                            |   |                     | 275                           |   |      |   | 324 |   |   |   | 286 |   |   |   | (49 | ) |   |   | -15.1 | % |   |   | 38 |   |   |   | 13.3 | % |
| Loan      department costs                |   |                     | 2,803                         |   |      |   | 258 |   |   |   | 129 |   |   |   | 2,545 |   |   |   | 986.4 | % |   |   | 129 |   |   |   | 100.0 | % |
| Other                                     |   |                     |     3,188 |   |      |   | 2,676 |   |   |   | 1,931 |   |   |   | 512 |   |   |   | 19.1 | % |   |   | 745 |   |   |   | 38.6 | % |
|                                      |   |                     |                          |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                                     |   | $                        | 34,516                        |   |      | $      | 29,434 |   |   | $ | 23,908 |   |   | $ | 5,082 |   |   |   | 17.3 | % |   | $ | 5,526 |   |   |   | 23.1 | % |

----

----

----

----

----

----

----

----

----

----

|                                        |   | 2009   |    |   | 2008    |   |   | 2007   |   |   | 2006    |   |   | 2005   |   |
|---------------------------------------------|--------|--------|---------|--------|---------|--------|--------|--------|--------|--------|---------|--------|--------|--------|--------|
| (dollar      amounts in thousands)          |   | Amount |    |   | Percent |   |   | Amount |   |   | Percent |   |   | Amount |   |   | Percent |   |   | Amount |   |   | Percent |   |   | Amount |   |   | Percent |   |
| Real      Estate Secured                    |   |   |    |   |    |   |   |   |   |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Multi-family      residential               |   | $      | 20,631  |   |    |   | 2.8    | %      |   | $      | 16,206  |   |   |   | 2.4    | % |   | $ | 12,779 |   |   |   | 2.1 | % |   | $ | 9,563 |   |   |   | 2.1 | % |   | $ | 3,495 |   |   |   | 0.9 | % |
| Residential      1 to 4 family              |   |   | 25,483  |   |    |   | 3.5    | %      |   |   | 23,910  |   |   |   | 3.5    | % |   |   | 24,326 |   |   |   | 4.0 | % |   |   | 5,267 |   |   |   | 1.2 | % |   |   | 4,925 |   |   |   | 1.3 | % |
| Home      equity line of credit             |   |   | 29,780  |   |    |   | 4.1    | %      |   |   | 26,409  |   |   |   | 3.9    | % |   |   | 17,470 |   |   |   | 2.8 | % |   |   | 10,792 |   |   |   | 2.4 | % |   |   | 14,685 |   |   |   | 4.0 | % |
| Commercial                                  |   |   | 337,940 |   |    |   | 46.5   | %      |   |   | 285,631 |   |   |   | 41.8   | % |   |   | 274,266 |   |   |   | 44.7 | % |   |   | 204,470 |   |   |   | 46.0 | % |   |   | 187,231 |   |   |   | 50.9 | % |
| Farmland                                    |   |   | 13,079  |   |    |   | 1.8    | %      |   |   | 10,723  |   |   |   | 1.6    | % |   |   | 11,557 |   |   |   | 1.9 | % |   |   | 18,101 |   |   |   | 4.1 | % |   |   | 14,753 |   |   |   | 4.0 | % |
| Commercial                                  |   |   |    |   |    |   |   |   |   |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commercial      and industrial              |   |   | 157,270 |   |    |   | 21.6   | %      |   |   | 157,674 |   |   |   | 23.1   | % |   |   | 134,178 |   |   |   | 21.8 | % |   |   | 72,550 |   |   |   | 16.3 | % |   |   | 53,301 |   |   |   | 14.6 | % |
| Agriculture                                 |   |   | 17,698  |   |    |   | 2.4    | %      |   |   | 13,744  |   |   |   | 2.0    | % |   |   | 11,367 |   |   |   | 1.9 | % |   |   | 12,117 |   |   |   | 2.7 | % |   |   | 5,939 |   |   |   | 1.6 | % |
| Other                                       |   |   | 238     |   |    |   | 0.0    | %      |   |   | 620     |   |   |   | 0.1    | % |   |   | 535 |   |   |   | 0.1 | % |   |   | 309 |   |   |   | 0.1 | % |   |   | 809 |   |   |   | 0.2 | % |
| Construction                                |   |   |    |   |    |   |   |   |   |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Single      family residential              |   |   | 15,538  |   |    |   | 2.1    | %      |   |   | 11,414  |   |   |   | 1.7    | % |   |   | 10,239 |   |   |   | 1.6 | % |   |   | 7,785 |   |   |   | 1.7 | % |   |   | 6,118 |   |   |   | 1.7 | % |
| Single      family residential - Spec.      |   |   | 3,400   |   |    |   | 0.5    | %      |   |   | 15,395  |   |   |   | 2.3    | % |   |   | 18,718 |   |   |   | 3.1 | % |   |   | 10,805 |   |   |   | 2.4 | % |   |   | 4,337 |   |   |   | 1.3 | % |
| Tract                                       |   |   | 2,215   |   |    |   | 0.3    | %      |   |   | 2,431   |   |   |   | 0.4    | % |   |   | 1,664 |   |   |   | 0.3 | % |   |   | 179 |   |   |   | 0.0 | % |   |   | 150 |   |   |   | 0.0 | % |
| Multi-family                                |   |   | 2,300   |   |    |   | 0.3    | %      |   |   | 5,808   |   |   |   | 0.9    | % |   |   | 9,054 |   |   |   | 1.5 | % |   |   | 5,343 |   |   |   | 1.2 | % |   |   | 4,176 |   |   |   | 1.1 | % |
| Hospitality                                 |   |   | 14,306  |   |    |   | 2.0    | %      |   |   | 18,630  |   |   |   | 2.7    | % |   |   | 16,784 |   |   |   | 2.7 | % |   |   | 4,723 |   |   |   | 1.1 | % |   |   | 1,650 |   |   |   | 0.4 | % |
| Commercial                                  |   |   | 27,128  |   |    |   | 3.7    | %      |   |   | 21,484  |   |   |   | 3.2    | % |   |   | 30,677 |   |   |   | 5.0 | % |   |   | 52,766 |   |   |   | 11.9 | % |   |   | 42,427 |   |   |   | 11.5 | % |
| Land                                        |   |   | 52,793  |   |    |   | 7.2    | %      |   |   | 61,681  |   |   |   | 9.1    | % |   |   | 31,064 |   |   |   | 5.1 | % |   |   | 24,111 |   |   |   | 5.4 | % |   |   | 18,123 |   |   |   | 4.9 | % |
| Installment      loans to individuals       |   |   | 8,327   |   |    |   | 1.1    | %      |   |   | 7,851   |   |   |   | 1.2    | % |   |   | 7,977 |   |   |   | 1.3 | % |   |   | 5,598 |   |   |   | 1.3 | % |   |   | 5,620 |   |   |   | 1.5 | % |
| All      other loans (including overdrafts) |   |   | 553     |   |    |   | 0.1    | %      |   |   | 536     |   |   |   | 0.1    | % |   |   | 562 |   |   |   | 0.1 | % |   |   | 504 |   |   |   | 0.1 | % |   |   | 394 |   |   |   | 0.1 | % |
|                                        |   |   |    |   |    |   |   |   |   |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total      loans, gross                     |   | $      | 728,679 |   |    |   | 100.0  | %      |   | $      | 680,147 |   |   |   | 100.0  | % |   | $ | 613,217 |   |   |   | 100.0 | % |   | $ | 444,983 |   |   |   | 100.0 | % |   | $ | 368,133 |   |   |   | 100.0 | % |
| Deferred      loan fees                     |   |   | 1,825   |   |    |   |   |   |   |   | 1,701   |   |   |   |   |   |   |   | 1,732 |   |   |   |   |   |   |   | 1,625 |   |   |   |   |   |   |   | 1,617 |   |   |   |   |   |
| Reserve      for possible loan losses       |   |   | 14,372  |   |    |   |   |   |   |   | 10,412  |   |   |   |   |   |   |   | 6,143 |   |   |   |   |   |   |   | 4,081 |   |   |   |   |   |   |   | 3,881 |   |   |   |   |   |
|                                        |   |   |    |   |    |   |   |   |   |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total      loans, net                       |   | $      | 712,482 |   |    |   |   |   |   | $      | 668,034 |   |   |   |   |   |   | $ | 605,342 |   |   |   |   |   |   | $ | 439,277 |   |   |   |   |   |   | $ | 362,635 |   |   |   |   |   |
|                                        |   |   |    |   |    |   |   |   |   |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loans      held for sale                    |   | $      | 9,487   |   |    |   |   |   |   | $      | 7,939   |   |   |   |   |   |   | $ | 902 |   |   |   |   |   |   | $ | 1,764 |   |   |   |   |   |   | $ | 3,392 |   |   |   |   |   |

----

----

|                                        |   |   |    |   |   |   |    | Variance |   |
|---------------------------------------------|--------|--------|---------|--------|--------|--------|---------|----------|--------|
| (dollar      amounts in thousands)          |   | 2009   |    |   | 2008   |   |    | Dollar   |   |   | Percentage |   |
| Real      Estate Secured                    |   |   |    |   |   |   |    |     |   |   |   |   |
| Multi-family      residential               |   | $      | 20,631  |   |   | $      | 16,206  |     |   | $ | 4,425 |   |   |   | 27.3 | % |
| Residential      1 to 4 family              |   |   | 25,483  |   |   |   | 23,910  |     |   |   | 1,573 |   |   |   | 6.6 | % |
| Home      equity line of credit             |   |   | 29,780  |   |   |   | 26,409  |     |   |   | 3,371 |   |   |   | 12.8 | % |
| Commercial                                  |   |   | 337,940 |   |   |   | 285,631 |     |   |   | 52,309 |   |   |   | 18.3 | % |
| Farmland                                    |   |   | 13,079  |   |   |   | 10,723  |     |   |   | 2,356 |   |   |   | 22.0 | % |
| Commercial                                  |   |   |    |   |   |   |    |     |   |   |   |   |   |   |   |   |
| Commercial      and industrial              |   |   | 157,270 |   |   |   | 157,674 |     |   |   | (404 | ) |   |   | -0.3 | % |
| Agriculture                                 |   |   | 17,698  |   |   |   | 13,744  |     |   |   | 3,954 |   |   |   | 28.8 | % |
| Other                                       |   |   | 238     |   |   |   | 620     |     |   |   | (382 | ) |   |   | -61.6 | % |
| Construction                                |   |   |    |   |   |   |    |     |   |   |   |   |   |   |   |   |
| Single      family residential              |   |   | 15,538  |   |   |   | 11,414  |     |   |   | 4,124 |   |   |   | 36.1 | % |
| Single      family residential - Spec.      |   |   | 3,400   |   |   |   | 15,395  |     |   |   | (11,995 | ) |   |   | -77.9 | % |
| Tract                                       |   |   | 2,215   |   |   |   | 2,431   |     |   |   | (216 | ) |   |   | -8.9 | % |
| Multi-family                                |   |   | 2,300   |   |   |   | 5,808   |     |   |   | (3,508 | ) |   |   | -60.4 | % |
| Hospitality                                 |   |   | 14,306  |   |   |   | 18,630  |     |   |   | (4,324 | ) |   |   | -23.2 | % |
| Commercial                                  |   |   | 27,128  |   |   |   | 21,484  |     |   |   | 5,644 |   |   |   | 26.3 | % |
| Land                                        |   |   | 52,793  |   |   |   | 61,681  |     |   |   | (8,888 | ) |   |   | -14.4 | % |
| Installment      loans to individuals       |   |   | 8,327   |   |   |   | 7,851   |     |   |   | 476 |   |   |   | 6.1 | % |
| All      other loans (including overdrafts) |   |   | 553     |   |   |   | 536     |     |   |   | 17 |   |   |   | 3.2 | % |
|                                        |   |   |    |   |   |   |    |     |   |   |   |   |   |   |   |   |
| Total      loans, gross                     |   | $      | 728,679 |   |   | $      | 680,147 |     |   | $ | 48,532 |   |   |   | 7.1 | % |
|                                        |   |   |    |   |   |   |    |     |   |   |   |   |   |   |   |   |
| Deferred      loan fees                     |   |   | 1,825   |   |   |   | 1,701   |     |   |   | 124 |   |   |   | 7.3 | % |
| Reserve      for possible loan losses       |   |   | 14,372  |   |   |   | 10,412  |     |   |   | 3,960 |   |   |   | 38.0 | % |
|                                        |   |   |    |   |   |   |    |     |   |   |   |   |   |   |   |   |
| Total      loans, net                       |   | $      | 712,482 |   |   | $      | 668,034 |     |   | $ | 44,448 |   |   |   | 6.7 | % |
|                                        |   |   |    |   |   |   |    |     |   |   |   |   |   |   |   |   |
| Loans      held for sale                    |   | $      | 9,487   |   |   | $      | 7,939   |     |   | $ | 1,548 |   |   |   | 19.5 | % |

----

----

|                                   |   | December      31, 2009 |    |   |        |   |   | Percent      of |   |   |        |   |   | Single                 |   |
|----------------------------------------|--------|------------------------|---------|--------|-------------|--------|--------|-----------------|--------|--------|-------------|--------|--------|------------------------|--------|
|                                   |   |                   |    |   | Undisbursed |   |   | Total      Bank |   |   | Percent     |   |   | Bank's      Total Risk |   |   | Number |   |   | Largest |   |
| (dollar      amounts in thousands)     |   | Balance                |    |   | Commitment  |   |   | Exposure        |   |   | Composition |   |   | Based      Capital     |   |   | of      Loans |   |   | Loan |   |
| Real      Estate Secured          |   |                   |    |   |        |   |   |            |   |   |        |   |   |                   |   |   |   |   |   |   |   |
| Retail                                 |   | $                      | 45,885  |   |        | $      | 2,727  |            |   | $      | 48,612      |   |   |                   | 10.7   | % |   |   | 59.7 | % |   |   | 65 |   |   | $ | 5,000 |   |
| Professional                           |   |                   | 81,309  |   |        |   | 76     |            |   |   | 81,385      |   |   |                   | 18.0   | % |   |   | 99.9 | % |   |   | 99 |   |   |   | 10,000 |   |
| Hospitality                            |   |                   | 73,002  |   |        |   | 115    |            |   |   | 73,117      |   |   |                   | 16.1   | % |   |   | 89.8 | % |   |   | 41 |   |   |   | 10,891 |   |
| Multi-family                           |   |                   | 20,631  |   |        |   | -      |            |   |   | 20,631      |   |   |                   | 4.6    | % |   |   | 25.3 | % |   |   | 21 |   |   |   | 4,066 |   |
| Home      equity lines of credit       |   |                   | 29,780  |   |        |   | 19,686 |            |   |   | 49,466      |   |   |                   | 10.9   | % |   |   | 60.7 | % |   |   | 318 |   |   |   | 1,680 |   |
| Residential      1 to 4 family         |   |                   | 25,483  |   |        |   | 437    |            |   |   | 25,920      |   |   |                   | 5.7    | % |   |   | 31.8 | % |   |   | 71 |   |   |   | 3,000 |   |
| Farmland                               |   |                   | 13,079  |   |        |   | 1,959  |            |   |   | 15,038      |   |   |                   | 3.3    | % |   |   | 18.5 | % |   |   | 25 |   |   |   | 2,450 |   |
| Healthcare      / medical              |   |                   | 18,467  |   |        |   | 59     |            |   |   | 18,526      |   |   |                   | 4.1    | % |   |   | 22.7 | % |   |   | 34 |   |   |   | 2,155 |   |
| Restaurants      / food establishments |   |                   | 8,395   |   |        |   | -      |            |   |   | 8,395       |   |   |                   | 1.9    | % |   |   | 10.3 | % |   |   | 14 |   |   |   | 2,541 |   |
| Commercial                             |   |                   | 96,099  |   |        |   | 1,065  |            |   |   | 97,164      |   |   |                   | 21.4   | % |   |   | 119.3 | % |   |   | 122 |   |   |   | 5,000 |   |
| Other                                  |   |                   | 14,783  |   |        |   | -      |            |   |   | 14,783      |   |   |                   | 3.3    | % |   |   | 18.1 | % |   |   | 25 |   |   |   | 2,100 |   |
|                                   |   |                   |    |   |        |   |   |            |   |   |        |   |   |                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total      real-estate secured         |   | $                      | 426,913 |   |        | $      | 26,124 |            |   | $      | 453,037     |   |   |                   | 100.0  | % |   |   | 556.1 | % |   |   | 835 |   |   | $ | 48,883 |   |

----

----

|                                   |   | December      31, 2009 |    |   |        |   |   | Percent      of |   |   |        |   |   | Single                 |   |
|----------------------------------------|--------|------------------------|---------|--------|-------------|--------|--------|-----------------|--------|--------|-------------|--------|--------|------------------------|--------|
|                                   |   |                   |    |   | Undisbursed |   |   | Total      Bank |   |   | Percent     |   |   | Bank's      Total Risk |   |   | Number |   |   | Largest |   |
| (dollar      amounts in thousands)     |   | Balance                |    |   | Commitment  |   |   | Exposure        |   |   | Composition |   |   | Based      Capital     |   |   | of      Loans |   |   | Loan |   |
| Commercial      and Industrial         |   |                   |    |   |        |   |   |            |   |   |        |   |   |                   |   |   |   |   |   |   |   |
| Agriculture                            |   | $                      | 2,937   |   |        | $      | 3,981  |            |   | $      | 6,918       |   |   |                   | 2.9    | % |   |   | 8.5 | % |   |   | 30 |   |   | $ | 2,000 |   |
| Oil      gas and utilities             |   |                   | 1,567   |   |        |   | 1,623  |            |   |   | 3,190       |   |   |                   | 1.4    | % |   |   | 3.9 | % |   |   | 10 |   |   |   | 1,200 |   |
| Construction                           |   |                   | 18,878  |   |        |   | 16,786 |            |   |   | 35,664      |   |   |                   | 15.2   | % |   |   | 43.8 | % |   |   | 169 |   |   |   | 2,750 |   |
| Manufacturing                          |   |                   | 11,019  |   |        |   | 6,957  |            |   |   | 17,976      |   |   |                   | 7.6    | % |   |   | 22.1 | % |   |   | 98 |   |   |   | 1,675 |   |
| Wholesale      and retail              |   |                   | 14,108  |   |        |   | 5,676  |            |   |   | 19,784      |   |   |                   | 8.4    | % |   |   | 24.3 | % |   |   | 120 |   |   |   | 1,250 |   |
| Transportation      and warehousing    |   |                   | 2,350   |   |        |   | 429    |            |   |   | 2,779       |   |   |                   | 1.2    | % |   |   | 3.4 | % |   |   | 31 |   |   |   | 596 |   |
| Media      and information services    |   |                   | 10,728  |   |        |   | 1,801  |            |   |   | 12,529      |   |   |                   | 5.3    | % |   |   | 15.4 | % |   |   | 27 |   |   |   | 8,000 |   |
| Financial      services                |   |                   | 10,953  |   |        |   | 3,117  |            |   |   | 14,070      |   |   |                   | 6.0    | % |   |   | 17.3 | % |   |   | 46 |   |   |   | 5,866 |   |
| Real      estate / rental and leasing  |   |                   | 16,988  |   |        |   | 7,344  |            |   |   | 24,332      |   |   |                   | 10.4   | % |   |   | 29.9 | % |   |   | 86 |   |   |   | 3,500 |   |
| Professional      services             |   |                   | 17,909  |   |        |   | 7,319  |            |   |   | 25,228      |   |   |                   | 10.7   | % |   |   | 31.0 | % |   |   | 145 |   |   |   | 1,994 |   |
| Healthcare      / medical              |   |                   | 18,387  |   |        |   | 19,583 |            |   |   | 37,970      |   |   |                   | 16.2   | % |   |   | 46.6 | % |   |   | 114 |   |   |   | 11,355 |   |
| Restaurants      / food establishments |   |                   | 25,766  |   |        |   | 2,148  |            |   |   | 27,914      |   |   |                   | 11.9   | % |   |   | 34.3 | % |   |   | 117 |   |   |   | 6,000 |   |
| All      other                         |   |                   | 5,680   |   |        |   | 1,005  |            |   |   | 6,685       |   |   |                   | 2.8    | % |   |   | 8.2 | % |   |   | 60 |   |   |   | 2,062 |   |
|                                   |   |                   |    |   |        |   |   |            |   |   |        |   |   |                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commercial      and industrial         |   | $                      | 157,270 |   |        | $      | 77,769 |            |   | $      | 235,039     |   |   |                   | 100.0  | % |   |   | 288.7 | % |   |   | 1,053 |   |   | $ | 48,248 |   |

----

----

|                                   |   | December      31, 2009 |   |   |        |   |   | Percent      of |   |   |        |   |   | Single                 |   |
|----------------------------------------|--------|------------------------|--------|--------|-------------|--------|--------|-----------------|--------|--------|-------------|--------|--------|------------------------|--------|
|                                   |   |                   |   |   | Undisbursed |   |   | Total      Bank |   |   | Percent     |   |   | Bank's      Total Risk |   |   | Number |   |   | Largest |   |
| (dollar      amounts in thousands)     |   | Balance                |   |   | Commitment  |   |   | Exposure        |   |   | Composition |   |   | Based      Capital     |   |   | of      Loans |   |   | Loan |   |
| Construction                           |   |                   |   |   |        |   |   |            |   |   |        |   |   |                   |   |   |   |   |   |   |   |
| Single      family residential         |   | $                      | 15,538 |   |        | $      | 5,583  |            |   | $      | 21,121      |   |   |                   | 25.0   | % |   |   | 25.9 | % |   |   | 26 |   |   | $ | 4,600 |   |
| Single      family residential - Spec. |   |                   | 3,400  |   |        |   | 253    |            |   |   | 3,653       |   |   |                   | 4.3    | % |   |   | 4.5 | % |   |   | 6 |   |   |   | 1,250 |   |
| Tract                                  |   |                   | 2,215  |   |        |   | -      |            |   |   | 2,215       |   |   |                   | 2.6    | % |   |   | 2.7 | % |   |   | 10 |   |   |   | 532 |   |
| Multi-family                           |   |                   | 2,300  |   |        |   | 100    |            |   |   | 2,400       |   |   |                   | 2.8    | % |   |   | 2.9 | % |   |   | 4 |   |   |   | 1,500 |   |
| Commercial                             |   |                   | 27,128 |   |        |   | 13,768 |            |   |   | 40,896      |   |   |                   | 48.3   | % |   |   | 50.2 | % |   |   | 22 |   |   |   | 6,720 |   |
| Hospitality                            |   |                   | 14,306 |   |        |   | -      |            |   |   | 14,306      |   |   |                   | 17.0   | % |   |   | 17.6 | % |   |   | 3 |   |   |   | 7,359 |   |
|                                   |   |                   |   |   |        |   |   |            |   |   |        |   |   |                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total      construction                |   | $                      | 64,887 |   |        | $      | 19,704 |            |   | $      | 84,591      |   |   |                   | 100.0  | % |   |   | 103.8 | % |   |   | 71 |   |   | $ | 21,961 |   |

----

----

|                                   |   | December      31, 2009 |   |   |        |   |   | Percent      of |   |   |        |   |   | Single                 |   |
|----------------------------------------|--------|------------------------|--------|--------|-------------|--------|--------|-----------------|--------|--------|-------------|--------|--------|------------------------|--------|
|                                   |   |                   |   |   | Undisbursed |   |   | Total      Bank |   |   | Percent     |   |   | Bank's      Total Risk |   |   | Number |   |   | Largest |   |
| (dollar      amounts in thousands)     |   | Balance                |   |   | Commitment  |   |   | Exposure        |   |   | Composition |   |   | Based      Capital     |   |   | of      Loans |   |   | Loan |   |
| Land                                   |   |                   |   |   |        |   |   |            |   |   |        |   |   |                   |   |   |   |   |   |   |   |
| Single      family residential         |   | $                      | 6,227  |   |        | $      | -      |            |   | $      | 6,227       |   |   |                   | 11.6   | % |   |   | 7.6 | % |   |   | 27 |   |   | $ | 1,000 |   |
| Single      family residential - Spec. |   |                   | 1,849  |   |        |   | -      |            |   |   | 1,849       |   |   |                   | 3.4    | % |   |   | 2.3 | % |   |   | 7 |   |   |   | 618 |   |
| Tract                                  |   |                   | 26,755 |   |        |   | -      |            |   |   | 26,755      |   |   |                   | 49.9   | % |   |   | 32.8 | % |   |   | 10 |   |   |   | 10,673 |   |
| Multi-family                           |   |                   | 2,315  |   |        |   | -      |            |   |   | 2,315       |   |   |                   | 4.3    | % |   |   | 2.8 | % |   |   | 3 |   |   |   | 1,003 |   |
| Commercial                             |   |                   | 11,808 |   |        |   | 860    |            |   |   | 12,668      |   |   |                   | 23.6   | % |   |   | 15.6 | % |   |   | 23 |   |   |   | 1,500 |   |
| Hospitality                            |   |                   | 3,839  |   |        |   | -      |            |   |   | 3,839       |   |   |                   | 7.2    | % |   |   | 4.7 | % |   |   | 4 |   |   |   | 2,001 |   |
|                                   |   |                   |   |   |        |   |   |            |   |   |        |   |   |                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total      land                        |   | $                      | 52,793 |   |        | $      | 860    |            |   | $      | 53,653      |   |   |                   | 100.0  | % |   |   | 65.8 | % |   |   | 74 |   |   | $ | 16,795 |   |

----

----

|                                        |   |          |    |   |         |   |    | Due      Over  |   |   | Due      Over |   |   | Due      Over |   |   |          |   |    |   |   |
|---------------------------------------------|--------|---------------|---------|--------|--------------|--------|---------|----------------|--------|--------|---------------|--------|--------|---------------|--------|--------|---------------|--------|---------|--------|--------|
|                                        |   | Due      Less |    |   | Due          |   |    | 12      Months |   |   | 3      Years  |   |   | 5      Years  |   |   |          |   |    |   |   |
|                                        |   | Than      3   |    |   | 3      To 12 |   |    | Through        |   |   | Through       |   |   | Through       |   |   | Due      Over |   |    |   |   |
| (dollar      amounts in thousands)          |   | Months        |    |   | Months       |   |    | 3      Years   |   |   | 5      Years  |   |   | 15      Years |   |   | 15      Years |   |    | Total  |   |
| Real      Estate Secured                    |   |          |    |   |         |   |    |           |   |   |          |   |   |          |   |   |          |   |    |   |   |
| Multi-family      residential               |   | $             | 997     |   |         | $      | 4,016   |           |   | $      | 1,218         |   |   | $             | 4,977  |   |          | $      | 7,112   |   |   | $ | 2,311 |   |   | $ | 20,631 |   |
| Residential      1 to 4 family              |   |          | 9,564   |   |         |   | 3,696   |           |   |   | 4,837         |   |   |          | 2,272  |   |          |   | 3,057   |   |   |   | 2,057 |   |   |   | 25,483 |   |
| Home      equity line of credit             |   |          | 18,542  |   |         |   | -       |           |   |   | -             |   |   |          | -      |   |          |   | 883     |   |   |   | 10,355 |   |   |   | 29,780 |   |
| Commercial                                  |   |          | 45,123  |   |         |   | 23,262  |           |   |   | 54,918        |   |   |          | 27,411 |   |          |   | 184,210 |   |   |   | 3,016 |   |   |   | 337,940 |   |
| Farmland                                    |   |          | 5,177   |   |         |   | 477     |           |   |   | 743           |   |   |          | 1,708  |   |          |   | 4,974   |   |   |   | - |   |   |   | 13,079 |   |
| Commercial                                  |   |          |    |   |         |   |    |           |   |   |          |   |   |          |   |   |          |   |    |   |   |   |   |   |   |   |   |   |
| Commercial      and industrial              |   |          | 58,342  |   |         |   | 34,712  |           |   |   | 24,001        |   |   |          | 23,725 |   |          |   | 16,490  |   |   |   | - |   |   |   | 157,270 |   |
| Agriculture                                 |   |          | 5,683   |   |         |   | 6,961   |           |   |   | 1,121         |   |   |          | 759    |   |          |   | 3,174   |   |   |   | - |   |   |   | 17,698 |   |
| Other                                       |   |          | 8       |   |         |   | 3       |           |   |   | 108           |   |   |          | -      |   |          |   | 119     |   |   |   | - |   |   |   | 238 |   |
| Construction                                |   |          |    |   |         |   |    |           |   |   |          |   |   |          |   |   |          |   |    |   |   |   |   |   |   |   |   |   |
| Single      family residential              |   |          | 7,712   |   |         |   | 5,985   |           |   |   | -             |   |   |          | -      |   |          |   | 1,841   |   |   |   | - |   |   |   | 15,538 |   |
| Single      family residential - Spec.      |   |          | 2,784   |   |         |   | 616     |           |   |   | -             |   |   |          | -      |   |          |   | -       |   |   |   | - |   |   |   | 3,400 |   |
| Tract                                       |   |          | 2,215   |   |         |   | -       |           |   |   | -             |   |   |          | -      |   |          |   | -       |   |   |   | - |   |   |   | 2,215 |   |
| Multi-family                                |   |          | 900     |   |         |   | 1,400   |           |   |   | -             |   |   |          | -      |   |          |   | -       |   |   |   | - |   |   |   | 2,300 |   |
| Hospitality                                 |   |          | -       |   |         |   | 13,126  |           |   |   | -             |   |   |          | -      |   |          |   | 1,180   |   |   |   | - |   |   |   | 14,306 |   |
| Commercial                                  |   |          | 8,874   |   |         |   | 10,109  |           |   |   | 4,825         |   |   |          | -      |   |          |   | 3,320   |   |   |   | - |   |   |   | 27,128 |   |
| Land                                        |   |          | 39,566  |   |         |   | 8,373   |           |   |   | 2,337         |   |   |          | 2,340  |   |          |   | 177     |   |   |   | - |   |   |   | 52,793 |   |
| Installment      loans to individuals       |   |          | 2,548   |   |         |   | 252     |           |   |   | 1,283         |   |   |          | 1,554  |   |          |   | 2,001   |   |   |   | 689 |   |   |   | 8,327 |   |
| All      other loans (including overdrafts) |   |          | 553     |   |         |   | -       |           |   |   | -             |   |   |          | -      |   |          |   | -       |   |   |   | - |   |   |   | 553 |   |
|                                        |   |          |    |   |         |   |    |           |   |   |          |   |   |          |   |   |          |   |    |   |   |   |   |   |   |   |   |   |
| Total      loans, gross                     |   | $             | 208,588 |   |         | $      | 112,988 |           |   | $      | 95,391        |   |   | $             | 64,746 |   |          | $      | 228,538 |   |   | $ | 18,428 |   |   | $ | 728,679 |   |
|                                        |   |          |    |   |         |   |    |           |   |   |          |   |   |          |   |   |          |   |    |   |   |   |   |   |   |   |   |   |
| Variable      rate loans                    |   |          | 101,861 |   |         |   | 18,542  |           |   |   | 45,263        |   |   |          | 13,573 |   |          |   | 1,919   |   |   |   | - |   |   |   | 181,158 |   |
| Fixed      rate loans                       |   |          | 106,727 |   |         |   | 94,446  |           |   |   | 50,128        |   |   |          | 51,173 |   |          |   | 226,619 |   |   |   | 18,428 |   |   |   | 547,521 |   |
|                                        |   |          |    |   |         |   |    |           |   |   |          |   |   |          |   |   |          |   |    |   |   |   |   |   |   |   |   |   |
| Total      loans, gross                     |   | $             | 208,588 |   |         | $      | 112,988 |           |   | $      | 95,391        |   |   | $             | 64,746 |   |          | $      | 228,538 |   |   | $ | 18,428 |   |   | $ | 728,679 |   |

----

----

----

----

----

----

|                                        |   | 2009      |   |   | 2008          |   |   | 2007      |   |   | 2006          |   |   | 2005      |   |
|---------------------------------------------|--------|-----------|--------|--------|---------------|--------|--------|-----------|--------|--------|---------------|--------|--------|-----------|--------|
|                                        |   |      |   |   | Percent       |   |   |      |   |   | Percent       |   |   |      |   |   | Percent |   |   |   |   |   | Percent |   |   |   |   |   | Percent |   |
|                                        |   | Amount    |   |   | of      Total |   |   | Amount    |   |   | of      Total |   |   | Amount    |   |   | of      Total |   |   | Amount |   |   | of      Total |   |   | Amount |   |   | of      Total |   |
| (dollars      amounts in thousands)         |   | Allocated |   |   | Loans         |   |   | Allocated |   |   | Loans         |   |   | Allocated |   |   | Loans |   |   | Allocated |   |   | Loans |   |   | Allocated |   |   | Loans |   |
| Real      Estate Secured                    |   |      |   |   |          |   |   |      |   |   |          |   |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Multi-family      residential               |   | $         | 119    |   |          |   | 2.8    | %         |   | $      | 250           |   |   |      | 2.4    | % |   | $ | 129 |   |   |   | 2.1 | % |   | $ | 86 |   |   |   | 2.1 | % |   | $ | 35 |   |   |   | 0.9 | % |
| Residential      1 to 4 family              |   |      | 264    |   |          |   | 3.5    | %         |   |   | 364           |   |   |      | 3.5    | % |   |   | 246 |   |   |   | 4.0 | % |   |   | 49 |   |   |   | 1.2 | % |   |   | 50 |   |   |   | 1.3 | % |
| Home      equity line of credit             |   |      | 179    |   |          |   | 4.1    | %         |   |   | 406           |   |   |      | 3.9    | % |   |   | 172 |   |   |   | 2.8 | % |   |   | 98 |   |   |   | 2.4 | % |   |   | 155 |   |   |   | 4.0 | % |
| Commercial                                  |   |      | 6,081  |   |          |   | 46.5   | %         |   |   | 4,354         |   |   |      | 41.8   | % |   |   | 2,747 |   |   |   | 44.7 | % |   |   | 1,878 |   |   |   | 46.0 | % |   |   | 1,976 |   |   |   | 50.9 | % |
| Farmland                                    |   |      | 208    |   |          |   | 1.8    | %         |   |   | 167           |   |   |      | 1.6    | % |   |   | 117 |   |   |   | 1.9 | % |   |   | 167 |   |   |   | 4.1 | % |   |   | 155 |   |   |   | 4.0 | % |
| Commercial                                  |   |      |   |   |          |   |   |      |   |   |          |   |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commercial      and industrial              |   |      | 4,635  |   |          |   | 21.6   | %         |   |   | 2,405         |   |   |      | 23.1   | % |   |   | 1,339 |   |   |   | 21.8 | % |   |   | 665 |   |   |   | 16.3 | % |   |   | 567 |   |   |   | 14.6 | % |
| Agriculture                                 |   |      | 178    |   |          |   | 2.4    | %         |   |   | 208           |   |   |      | 2.0    | % |   |   | 117 |   |   |   | 1.9 | % |   |   | 110 |   |   |   | 2.7 | % |   |   | 62 |   |   |   | 1.6 | % |
| Other                                       |   |      | 1      |   |          |   | 0.0    | %         |   |   | 10            |   |   |      | 0.1    | % |   |   | 6 |   |   |   | 0.1 | % |   |   | 4 |   |   |   | 0.1 | % |   |   | 8 |   |   |   | 0.2 | % |
| Construction                                |   |      |   |   |          |   |   |      |   |   |          |   |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Single      family residential              |   |      | 304    |   |          |   | 2.1    | %         |   |   | 177           |   |   |      | 1.7    | % |   |   | 98 |   |   |   | 1.6 | % |   |   | 69 |   |   |   | 1.7 | % |   |   | 66 |   |   |   | 1.7 | % |
| Single      family residential - Spec.      |   |      | 46     |   |          |   | 0.5    | %         |   |   | 239           |   |   |      | 2.3    | % |   |   | 190 |   |   |   | 3.1 | % |   |   | 98 |   |   |   | 2.4 | % |   |   | 50 |   |   |   | 1.3 | % |
| Tract                                       |   |      | 190    |   |          |   | 0.3    | %         |   |   | 42            |   |   |      | 0.4    | % |   |   | 18 |   |   |   | 0.3 | % |   |   | - |   |   |   | 0.0 | % |   |   | - |   |   |   | 0.0 | % |
| Multi-family                                |   |      | 90     |   |          |   | 0.3    | %         |   |   | 94            |   |   |      | 0.9    | % |   |   | 92 |   |   |   | 1.5 | % |   |   | 49 |   |   |   | 1.2 | % |   |   | 43 |   |   |   | 1.1 | % |
| Hospitality                                 |   |      | 107    |   |          |   | 2.0    | %         |   |   | 281           |   |   |      | 2.7    | % |   |   | 166 |   |   |   | 2.7 | % |   |   | 45 |   |   |   | 1.1 | % |   |   | 16 |   |   |   | 0.4 | % |
| Commercial                                  |   |      | 270    |   |          |   | 3.7    | %         |   |   | 333           |   |   |      | 3.2    | % |   |   | 307 |   |   |   | 5.0 | % |   |   | 486 |   |   |   | 11.9 | % |   |   | 446 |   |   |   | 11.5 | % |
| Land                                        |   |      | 1,644  |   |          |   | 7.2    | %         |   |   | 947           |   |   |      | 9.1    | % |   |   | 313 |   |   |   | 5.1 | % |   |   | 220 |   |   |   | 5.4 | % |   |   | 190 |   |   |   | 4.9 | % |
| Installment      loans to individuals       |   |      | 40     |   |          |   | 1.1    | %         |   |   | 125           |   |   |      | 1.2    | % |   |   | 80 |   |   |   | 1.3 | % |   |   | 53 |   |   |   | 1.3 | % |   |   | 58 |   |   |   | 1.5 | % |
| All      other loans (including overdrafts) |   |      | 16     |   |          |   | 0.1    | %         |   |   | 10            |   |   |      | 0.1    | % |   |   | 6 |   |   |   | 0.1 | % |   |   | 4 |   |   |   | 0.1 | % |   |   | 4 |   |   |   | 0.1 | % |
|                                        |   |      |   |   |          |   |   |      |   |   |          |   |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total      allowance for loan losses        |   | $         | 14,372 |   |          |   | 100.0  | %         |   | $      | 10,412        |   |   |      | 100.0  | % |   | $ | 6,143 |   |   |   | 100.0 | % |   | $ | 4,081 |   |   |   | 100.0 | % |   | $ | 3,881 |   |   |   | 100.0 | % |

----

----

|                                                              |   | For      The Years Ended December 31, |    |
|-------------------------------------------------------------------|--------|---------------------------------------|---------|
| (dollars      amounts in thousands)                               |   | 2009                                  |    |   | 2008 |   |   | 2007 |   |   | 2006 |   |   | 2005 |   |
|                                                              |   |                                  |    |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance,      beginning of period                                 |   | $                                     | 10,412  |   |   | $ | 6,143 |   |   | $ | 4,081 |   |   | $ | 3,881 |   |   | $ | 3,247 |   |
| Balance      of Business First National Bank, beginning of period |   |                                  | -       |   |   |   | - |   |   |   | 1,381 |   |   |   | - |   |   |   | - |   |
| Charge-offs:                                                      |   |                                  |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Real      Estate Secured                                          |   |                                  |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Multi-family      residential                                     |   |                                  | -       |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Residential      1 to 4 family                                    |   |                                  | 558     |   |   |   | 555 |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Home      equity line of credit                                   |   |                                  | -       |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Commercial                                                        |   |                                  | 339     |   |   |   | 340 |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Farmland                                                          |   |                                  | -       |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Commercial                                                        |   |                                  |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commercial      and industrial                                    |   |                                  | 5,816   |   |   |   | 3,854 |   |   |   | 233 |   |   |   | 508 |   |   |   | 86 |   |
| Agriculture                                                       |   |                                  | 2,224   |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Other                                                             |   |                                  | -       |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Construction                                                      |   |                                  | 2,218   |   |   |   | 1,837 |   |   |   | 16 |   |   |   | - |   |   |   | - |   |
| Land                                                              |   |                                  | 8,886   |   |   |   | 1,434 |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Installment      loans to individuals                             |   |                                  | 163     |   |   |   | 20 |   |   |   | - |   |   |   | 44 |   |   |   | 12 |   |
| All      other loans                                              |   |                                  | -       |   |   |   | 36 |   |   |   | - |   |   |   | 9 |   |   |   | 2 |   |
|                                                              |   |                                  |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total      charge-offs                                            |   |                                  | 20,204  |   |   |   | 8,076 |   |   |   | 249 |   |   |   | 561 |   |   |   | 100 |   |
| Recoveries:                                                       |   |                                  |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Real      Estate Secured                                          |   |                                  |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Multi-family      residential                                     |   |                                  | -       |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Resiential      1 to 4 family                                     |   |                                  | 21      |   |   |   | 2 |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Home      equity line of credit                                   |   |                                  | -       |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Commercial                                                        |   |                                  | -       |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Farmland                                                          |   |                                  | -       |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Commercial                                                        |   |                                  |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commercial      and industrial                                    |   |                                  | 54      |   |   |   | 107 |   |   |   | 191 |   |   |   | 101 |   |   |   | - |   |
| Agriculture                                                       |   |                                  | 4       |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Other                                                             |   |                                  | -       |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Construction                                                      |   |                                  | 16      |   |   |   | - |   |   |   | 70 |   |   |   | - |   |   |   | - |   |
| Land                                                              |   |                                  | -       |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Installment      loans to individuals                             |   |                                  | 2       |   |   |   | 1 |   |   |   | 3 |   |   |   | 56 |   |   |   | 24 |   |
| All      other loans                                              |   |                                  | 1       |   |   |   | 20 |   |   |   | 6 |   |   |   | 4 |   |   |   | - |   |
|                                                              |   |                                  |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total      recoveries                                             |   |                                  | 98      |   |   |   | 130 |   |   |   | 270 |   |   |   | 161 |   |   |   | 24 |   |
|                                                              |   |                                  |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      charge-offs / (recoveries)                               |   |                                  | 20,106  |   |   |   | 7,946 |   |   |   | (21 | ) |   |   | 400 |   |   |   | 76 |   |
|                                                              |   |                                  |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Additions      to allowance charged to operations                 |   |                                  | 24,066  |   |   |   | 12,215 |   |   |   | 660 |   |   |   | 600 |   |   |   | 710 |   |
|                                                              |   |                                  |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance,      end of period                                       |   | $                                     | 14,372  |   |   | $ | 10,412 |   |   | $ | 6,143 |   |   | $ | 4,081 |   |   | $ | 3,881 |   |
|                                                              |   |                                  |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Gross      loans, end of period                                   |   | $                                     | 728,679 |   |   | $ | 680,147 |   |   | $ | 613,217 |   |   | $ | 444,983 |   |   | $ | 368,133 |   |
|                                                              |   |                                  |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      charge-offs to average loans                             |   |                                  | 2.83    | % |   |   | 1.21 | % |   |   | 0.00 | % |   |   | 0.10 | % |   |   | 0.02 | % |
|                                                              |   |                                  |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Allowance      for loan losses to total gross loans               |   |                                  | 1.97    | % |   |   | 1.53 | % |   |   | 1.00 | % |   |   | 0.92 | % |   |   | 1.05 | % |
|                                                              |   |                                  |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Non-performing      loans to allowance for loan losses            |   |                                  | 241.28  | % |   |   | 179.36 | % |   |   | 5.50 | % |   |   | 1.35 | % |   |   | 1.39 | % |

----

----

----

----

|                                                                  |   | December      31, |   |   | Variance |   |
|-----------------------------------------------------------------------|--------|-------------------|--------|--------|----------|--------|
| (dollar      amounts in thousands)                                    |   | 2009              |   |   | 2008     |   |   | Dollar |   |   | Percent |   |
|                                                                  |   |              |   |   |     |   |   |   |   |   |   |   |
| Loans      delinquent 90 days or more and still accruing              |   | $                 | 151    |   |     | $      | 348 |   |   | $ | (197 | ) |   |   | -56.6 | % |
|                                                                  |   |              |   |   |     |   |   |   |   |   |   |   |   |   |   |   |
| Non      Accruing Loans:                                              |   |              |   |   |     |   |   |   |   |   |   |   |   |   |   |   |
| Commercial      real estate                                           |   | $                 | 11,035 |   |     | $      | 1,961 |   |   | $ | 9,074 |   |   |   | 462.7 | % |
| Residential      1-4 family                                           |   |              | 1,147  |   |     |   | 265 |   |   |   | 882 |   |   |   | 332.8 | % |
| Home      equity lines of credit                                      |   |              | 320    |   |     |   | 320 |   |   |   | - |   |   |   | 0.0 | % |
| Commercial      and industrial                                        |   |              | 8,429  |   |     |   | 7,060 |   |   |   | 1,369 |   |   |   | 19.4 | % |
| Agriculture                                                           |   |              | 3,172  |   |     |   | - |   |   |   | 3,172 |   |   |   | 100.0 | % |
| Construction                                                          |   |              | 3,838  |   |     |   | 5,990 |   |   |   | (2,152 | ) |   |   | -35.9 | % |
| Land                                                                  |   |              | 10,182 |   |     |   | 2,720 |   |   |   | 7,462 |   |   |   | 274.3 | % |
| Other                                                                 |   |              | 47     |   |     |   | 11 |   |   |   | 36 |   |   |   | 327.3 | % |
|                                                                  |   |              |   |   |     |   |   |   |   |   |   |   |   |   |   |   |
| Total      non-accruing loans                                         |   | $                 | 38,170 |   |     | $      | 18,327 |   |   | $ | 19,843 |   |   |   | 108.3 | % |
|                                                                  |   |              |   |   |     |   |   |   |   |   |   |   |   |   |   |   |
| Other      real estate owned                                          |   | $                 | 946    |   |     | $      | 1,337 |   |   | $ | (391 | ) |   |   | -29.2 | % |
|                                                                  |   |              |   |   |     |   |   |   |   |   |   |   |   |   |   |   |
| Total      non-performing assets                                      |   | $                 | 39,267 |   |     | $      | 20,012 |   |   | $ | 19,255 |   |   |   | 96.2 | % |
|                                                                  |   |              |   |   |     |   |   |   |   |   |   |   |   |   |   |   |
| Ratio      of allowance for loan losses to total gross loans          |   |              | 1.97   | %      |     |   | 1.53 | % |   |   |   |   |   |   |   |   |
|                                                                  |   |              |   |   |     |   |   |   |   |   |   |   |   |   |   |   |
| Ratio      of allowance for loan losses to total non-performing loans |   |              | 37.50  | %      |     |   | 55.75 | % |   |   |   |   |   |   |   |   |
|                                                                  |   |              |   |   |     |   |   |   |   |   |   |   |   |   |   |   |
| Ratio      of non-performing loans to total gross loans               |   |              | 5.26   | %      |     |   | 2.75 | % |   |   |   |   |   |   |   |   |
|                                                                  |   |              |   |   |     |   |   |   |   |   |   |   |   |   |   |   |
| Ratio      of non-performing assets to total assets                   |   |              | 4.15   | %      |     |   | 2.48 | % |   |   |   |   |   |   |   |   |

|   | · | Approximately      $1.8 million can be attributed to one loan in which the Bank is currently      working with the borrower to restructure and pay-down with proceeds from      the sale or refinance of other clientassets. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Approximately      $1.5 million can be attributed to one loan in which the Bank is working      with the borrower to bring current.  Recent data suggests that      the borrower’s financial condition is sound.  The borrower is      also working to sell other assets to pay-down the  loan. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Two      loans made to two separate borrowers totaling approximately $1.8 million      in which the Bank has restructured.  A third party has expressed      interest in assuming responsibility for these notes and the Bank      anticipates these notes to pay-down sometime during the first quarter of      2010. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Two      loans totaling approximately $1.7 million made to one borrower are      currently paying as agreed.  Based on the borrower’s recent      performance and financial condition, the Bank currently anticipates these      loans will move back to performing status sometime during the second      quarter of 2010. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

|   | · | The      Bank currently anticipates receiving proceeds from the sale of collateral      securing two loans to one borrower totaling approximately $1.1 million      during the first half of 2010. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | One      loan to one borrower totaling approximately $0.9 million, secured by      commercial property in the Bank’s primary market area.  The Bank      is working with the bankruptcy trustee to liquidate the collateral and      pay-down the loan. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | One      loan to one borrower totaling approximately $0.7 million.  The      borrower is currently paying on the loan and recent financial information      concerning the borrower indicates the borrower currently has the cash flow      to continue to service the loan. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | One      loan in the approximate amount of $0.1 million.  A third party      has expressed interest in assuming responsibility for the      note.  The Bank currently anticipates this note to pay-down      sometime during the first quarter of2010. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | One      loan in the approximate amount of $0.1 million is secured by real estate      in the Bank’s primary market as well as various business      assets.  Recent financial information concerning the client      indicates the borrower currently has the cash flow to continue to service      the loan. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Three      loans to one borrower totaling approximately $0.9 million.  The      underlying collateral represents leased residential real      estate.  The Bank is in the process of taking possession of the      collateral and its rent proceeds to liquidate and pay-down the      loan. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | One      loan in the approximate amount of $0.4 million.  The borrower      has been paying as agreed.  The Bank currently anticipates the      loan to move back to performing status sometime during the second quarter      of 2010. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | One      loan in the approximate amount of $0.2 million.  The Bank is      working with the borrower to restructure the loan and pay-down with      proceeds with from the sale or refinancing of other client      assets. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | One      loan in the approximate amount to $0.5 million contains an SBA      guarantee.  Physical collateral has been repossessed and is      being liquidated. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | One      loan in the approximate amount of $0.4 million is secured by real estate      in the Bank’s primary market area. The Bank is working with the bankruptcy      trustee to liquidate collateral and pay-down the  loan. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | One      loan in the approximate amount of $3.6 million is secured by real estate      in the Bank’s primary market area.  A recent appraisal indicates      its value is sufficient to cover the carrying value of the      loan.  The Bank continues to work towards liquidation of the      collateral. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

|   | · | Three      loans to two borrowers totaling approximately $2.9 million representing      land for residential tract development.  The Bank is currently      working to take possession of and liquidate the  collateral. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Two      loans to one borrower totaling approximately $1.3 million representing      land within the Bank’s primary market area.  The Bank is      currently in negotiation with the borrower to take possession of the      collateral and liquidate it. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | One      loan totaling approximately $1.1 million.  A third party has      expressed interest in assuming responsibility for the loan.  The      Bank currently anticipates the loan to pay-down during the first quarter      of 2010. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | One      loan in the amount of $1.0 million that was written down by approximately      $2.6 million to the current appraised value.  The Bank is      currently in the process of working with the borrower to liquidate the      collateral and receive additionalrecovery. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | One      loan in the amount of $0.9 million that was written down by approximately      $227 thousand to the current appraisedvalue. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------|

|   | · | One      loan to one borrower in the amount of $2.0 million that was written down      by approximately $339 thousand to the current appraised    value. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                   |   | Balance           |   |   | Additions      to |   |   |     |   |   | Transfers      to OREO |   |   | Returns      to |   |   |        |   |    | Balance           |   |
|----------------------------------------|--------|-------------------|--------|--------|-------------------|--------|--------|----------|--------|--------|------------------------|--------|--------|-----------------|--------|--------|-------------|--------|---------|-------------------|--------|
|                                   |   | December      31, |   |   | Non-Accruing      |   |   | Net      |   |   | or      Foreclosed     |   |   | Preforming      |   |   |        |   |    | December      31, |   |
| (dollar      amounts in thousands)     |   | 2008              |   |   | Balances          |   |   | Paydowns |   |   | Collateral             |   |   | Status          |   |   | Charge-offs |   |    | 2009              |   |
| Real      Estate Secured               |   |              |   |   |              |   |   |     |   |   |                   |   |   |            |   |   |        |   |    |              |   |
| Multi-family      residential          |   | $                 | -      |   |              | $      | -      |     |   | $      | -                      |   |   | $               | -      |   |        | $      | -       |              |   | $ | - |   |   | $ | - |   |
| Residential      1 to 4 family         |   |              | 265    |   |              |   | 2,602  |     |   |   | (1,162                 | )      |   |            | -      |   |        |   | -       |              |   |   | (558 | ) |   |   | 1,147 |   |
| Home      equity line of credit        |   |              | 320    |   |              |   | -      |     |   |   | -                      |   |   |            | -      |   |        |   | -       |              |   |   | - |   |   |   | 320 |   |
| Commercial                             |   |              | 1,961  |   |              |   | 10,407 |     |   |   | (523                   | )      |   |            | (35    | )      |        |   | (436    | )                 |   |   | (339 | ) |   |   | 11,035 |   |
| Farmland                               |   |              | -      |   |              |   | -      |     |   |   | -                      |   |   |            | -      |   |        |   | -       |              |   |   | - |   |   |   | - |   |
| Commercial                             |   |              |   |   |              |   |   |     |   |   |                   |   |   |            |   |   |        |   |    |              |   |   |   |   |   |   |   |   |
| Commercial      and industrial         |   |              | 7,060  |   |              |   | 11,336 |     |   |   | (2,395                 | )      |   |            | (1,742 | )      |        |   | (14     | )                 |   |   | (5,816 | ) |   |   | 8,429 |   |
| Agriculture                            |   |              | -      |   |              |   | 5,643  |     |   |   | (247                   | )      |   |            | -      |   |        |   | -       |              |   |   | (2,224 | ) |   |   | 3,172 |   |
| Other                                  |   |              | -      |   |              |   | -      |     |   |   | -                      |   |   |            | -      |   |        |   | -       |              |   |   | - |   |   |   | - |   |
| Construction                           |   |              |   |   |              |   |   |     |   |   |                   |   |   |            |   |   |        |   |    |              |   |   |   |   |   |   |   |   |
| Single      family residential         |   |              | -      |   |              |   | 1,465  |     |   |   | (380                   | )      |   |            | -      |   |        |   | -       |              |   |   | (145 | ) |   |   | 940 |   |
| Single      family residential - Spec. |   |              | 5,990  |   |              |   | 3,557  |     |   |   | -                      |   |   |            | (5,541 | )      |        |   | (1,250  | )                 |   |   | (2,073 | ) |   |   | 683 |   |
| Tract                                  |   |              | -      |   |              |   | 2,215  |     |   |   | -                      |   |   |            | -      |   |        |   | -       |              |   |   | - |   |   |   | 2,215 |   |
| Multi-family                           |   |              | -      |   |              |   | -      |     |   |   | -                      |   |   |            | -      |   |        |   | -       |              |   |   | - |   |   |   | - |   |
| Hospitality                            |   |              | -      |   |              |   | -      |     |   |   | -                      |   |   |            | -      |   |        |   | -       |              |   |   | - |   |   |   | - |   |
| Commercial                             |   |              | -      |   |              |   | -      |     |   |   | -                      |   |   |            | -      |   |        |   | -       |              |   |   | - |   |   |   | - |   |
| Land                                   |   |              | 2,720  |   |              |   | 30,222 |     |   |   | (924                   | )      |   |            | (2,277 | )      |        |   | (10,673 | )                 |   |   | (8,886 | ) |   |   | 10,182 |   |
| Installment      loans to individuals  |   |              | 11     |   |              |   | 292    |     |   |   | (10                    | )      |   |            | (83    | )      |        |   | -       |              |   |   | (163 | ) |   |   | 47 |   |
| All      other loans                   |   |              | -      |   |              |   | -      |     |   |   | -                      |   |   |            | -      |   |        |   | -       |              |   |   | - |   |   |   | - |   |
|                                   |   |              |   |   |              |   |   |     |   |   |                   |   |   |            |   |   |        |   |    |              |   |   |   |   |   |   |   |   |
| Totals                                 |   | $                 | 18,327 |   |              | $      | 67,739 |     |   | $      | (5,641                 | )      |   | $               | (9,678 | )      |        | $      | (12,373 | )                 |   | $ | (20,204 | ) |   | $ | 38,170 |   |

|                                                    |   | Balance           |   |   | Additions      to |   |   | Transfers            |   |   | Transfers      to OREO |   |   | Returns      to |   |   |        |   |   | Balance           |   |
|---------------------------------------------------------|--------|-------------------|--------|--------|-------------------|--------|--------|----------------------|--------|--------|------------------------|--------|--------|-----------------|--------|--------|-------------|--------|--------|-------------------|--------|
|                                                    |   | December      31, |   |   | 90      Day Plus  |   |   | to      Non-Accruing |   |   | or      Foreclosed     |   |   | Preforming      |   |   |        |   |   | December      31, |   |
| (dollar      amounts in thousands)                      |   | 2008              |   |   | Balances          |   |   | Status               |   |   | Collateral             |   |   | Status          |   |   | Charge-offs |   |   | 2009              |   |
| Loans      90 days deliquent or more and still accruing |   | $                 | 348    |   |              | $      | 7,018  |                 |   | $      | (6,379                 | )      |   | $               | -      |   |        | $      | (268   | )                 |   | $ | (568 | ) |   | $ | 151 |   |

----

----

|                                        |   | Non-Performing |   |   | YTD      Charge-offs |   |
|---------------------------------------------|--------|----------------|--------|--------|----------------------|--------|
|                                        |   |           |   |   |                 |   |   | Percent      of |   |   |   |   |   |   |   |   |   |   |
|                                        |   |           |   |   | Percent              |   |   | Outstanding |   |   | Percent      of |   |   |   |   |   | Percent |   |
| (dollar      amounts in thousands)          |   | Balance        |   |   | of      Total        |   |   | Loans |   |   | Allowance |   |   | Balance |   |   | of      Total |   |
| Real      Estate Secured                    |   |           |   |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Multi-family      residential               |   | $              | -      |   |                 |   | 0 | % |   |   | 0.0 | % |   |   | 0.0 | % |   | $ | - |   |   |   | 0.0 | % |
| Residential      1 to 4 family              |   |           | 1,147  |   |                 |   | 3.0 | % |   |   | 4.5 | % |   |   | 8.0 | % |   |   | 558 |   |   |   | 2.8 | % |
| Home      equity line of credit             |   |           | 320    |   |                 |   | 0.8 | % |   |   | 1.1 | % |   |   | 2.2 | % |   |   | - |   |   |   | 0.0 | % |
| Commercial                                  |   |           | 11,035 |   |                 |   | 28.7 | % |   |   | 3.3 | % |   |   | 76.8 | % |   |   | 339 |   |   |   | 1.7 | % |
| Farmland                                    |   |           | -      |   |                 |   | 0.0 | % |   |   | 0.0 | % |   |   | 0.0 | % |   |   | - |   |   |   | 0.0 | % |
| Commercial                                  |   |           |   |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commercial      and industrial              |   |           | 8,580  |   |                 |   | 22.4 | % |   |   | 5.5 | % |   |   | 59.7 | % |   |   | 5,816 |   |   |   | 28.8 | % |
| Agriculture                                 |   |           | 3,172  |   |                 |   | 8.3 | % |   |   | 17.9 | % |   |   | 22.1 | % |   |   | 2,224 |   |   |   | 11.0 | % |
| Other                                       |   |           | -      |   |                 |   | 0.0 | % |   |   | 0.0 | % |   |   | 0.0 | % |   |   | - |   |   |   | 0.0 | % |
| Construction                                |   |           |   |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Single      family residential              |   |           | 940    |   |                 |   | 2.5 | % |   |   | 6.0 | % |   |   | 6.5 | % |   |   | 145 |   |   |   | 0.7 | % |
| Single      family residential - Spec.      |   |           | 683    |   |                 |   | 1.8 | % |   |   | 20.1 | % |   |   | 4.8 | % |   |   | 2,073 |   |   |   | 10.3 | % |
| Tract                                       |   |           | 2,215  |   |                 |   | 5.8 | % |   |   | 100.0 | % |   |   | 15.4 | % |   |   | - |   |   |   | 0.0 | % |
| Multi-family                                |   |           | -      |   |                 |   | 0.0 | % |   |   | 0.0 | % |   |   | 0.0 | % |   |   | - |   |   |   | 0.0 | % |
| Hospitality                                 |   |           | -      |   |                 |   | 0.0 | % |   |   | 0.0 | % |   |   | 0.0 | % |   |   | - |   |   |   | 0.0 | % |
| Commercial                                  |   |           | -      |   |                 |   | 0.0 | % |   |   | 0.0 | % |   |   | 0.0 | % |   |   | - |   |   |   | 0.0 | % |
| Land                                        |   |           | 10,182 |   |                 |   | 26.6 | % |   |   | 19.3 | % |   |   | 70.8 | % |   |   | 8,886 |   |   |   | 44.0 | % |
| Installment      loans to individuals       |   |           | 47     |   |                 |   | 0.1 | % |   |   | 0.6 | % |   |   | 0.3 | % |   |   | 163 |   |   |   | 0.8 | % |
| All      other loans (including overdrafts) |   |           | -      |   |                 |   | 0.0 | % |   |   | 0.0 | % |   |   | 0.0 | % |   |   | - |   |   |   | 0.0 | % |
|                                        |   |           |   |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Totals                                      |   | $              | 38,321 |   |                 |   | 100.0 | % |   |   | 5.3 | % |   |   | 266.6 | % |   | $ | 20,204 |   |   |   | 100.0 | % |

|                        |   | For      the years ended |   |
|-----------------------------|--------|--------------------------|--------|
|                        |   | December      31,        |   |
| (dollars      in thousands) |   | 2009                     |   |   | 2008 |   |
| Beginning      balance      |   | $                        | 1,337  |   |   | $ | - |   |
| Additions                   |   |                     | 9,595  |   |   |   | 1,337 |   |
| Dispositions                |   |                     | (8,521 | ) |   |   | - |   |
| Write-downs                 |   |                     | (1,465 | ) |   |   | - |   |
|                        |   |                     |   |   |   |   |   |   |
| Ending      balance         |   | $                        | 946    |   |   | $ | 1,337 |   |

----

----

|                                            |   | 2009   |    |   | 2008    |   |   | 2007   |   |
|-------------------------------------------------|--------|--------|---------|--------|---------|--------|--------|--------|--------|
| (dollar      amounts in thousands)              |   | Amount |    |   | Percent |   |   | Amount |   |   | Percent |   |   | Amount |   |   | Percent |   |
| Federal      Home Loan Bank stock               |   | $      | 5,828   |   |    |   | 3.9    | %      |   | $ | 5,123 |   |   |   | 8.2 | % |   | $ | 3,045 |   |   |   | 4.1 | % |
| Securities      available for sale              |   |   | 121,180 |   |    |   | 81.6   | %      |   |   | 50,762 |   |   |   | 81.0 | % |   |   | 47,556 |   |   |   | 64.2 | % |
| Interest      bearing due from                  |   |   | 17,046  |   |    |   | 11.5   | %      |   |   | - |   |   |   | 0.0 | % |   |   | - |   |   |   | 0.0 | % |
| Federal      funds sold                         |   |   | 4,350   |   |    |   | 2.9    | %      |   |   | 6,650 |   |   |   | 10.6 | % |   |   | 23,165 |   |   |   | 31.3 | % |
| Interest      bearing deposits with other banks |   |   | 119     |   |    |   | 0.1    | %      |   |   | 119 |   |   |   | 0.2 | % |   |   | 330 |   |   |   | 0.4 | % |
|                                            |   |   |    |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total      other earning assets                 |   | $      | 148,523 |   |    |   | 100.0  | %      |   | $ | 62,654 |   |   |   | 100.0 | % |   | $ | 74,096 |   |   |   | 100.0 | % |

----

----

----

----

|                                                          |   |      |    |   | Gross      |   |   | Gross      |   |   |            |   |
|---------------------------------------------------------------|--------|-----------|---------|--------|------------|--------|--------|------------|--------|--------|-----------------|--------|
| (dollar      amounts in thousands)                            |   | Amortized |    |   | Unrealized |   |   | Unrealized |   |   |            |   |
| As      of December 31, 2009                                  |   | Cost      |    |   | Gains      |   |   | Losses     |   |   | Fair      Value |   |
| Obligations      of U.S. government agencies and corporations |   | $         | 108     |   |       | $      | -      |       |   | $      | (4              | )      |   | $ | 104 |   |
| Mortgage      backed securities                               |   |      |    |   |       |   |   |       |   |   |            |   |   |   |   |   |
| Agency                                                        |   |      | 78,203  |   |       |   | 619    |       |   |   | (872            | )      |   |   | 77,950 |   |
| Non-agency                                                    |   |      | 21,935  |   |       |   | 1,184  |       |   |   | (2,966          | )      |   |   | 20,153 |   |
| Obligations      of state and political subdivisions          |   |      | 22,653  |   |       |   | 421    |       |   |   | (210            | )      |   |   | 22,864 |   |
| Other      securities                                         |   |      | 109     |   |       |   | -      |       |   |   | -               |   |   |   | 109 |   |
|                                                          |   |      |    |   |       |   |   |       |   |   |            |   |   |   |   |   |
| Total                                                         |   | $         | 123,008 |   |       | $      | 2,224  |       |   | $      | (4,052          | )      |   | $ | 121,180 |   |
|                                                          |   |      |    |   |       |   |   |       |   |   |            |   |   |   |   |   |
| December      31, 2008                                        |   |      |    |   |       |   |   |       |   |   |            |   |   |   |   |   |
| Obligations      of U.S. government agencies and corporations |   | $         | 149     |   |       | $      | -      |       |   | $      | (1              | )      |   | $ | 148 |   |
| Mortgage      backed securities                               |   |      | -       |   |       |   | -      |       |   |   | -               |   |   |   | - |   |
| Agency                                                        |   |      | 16,454  |   |       |   | 166    |       |   |   | (51             | )      |   |   | 16,569 |   |
| Non-agency                                                    |   |      | 18,885  |   |       |   | -      |       |   |   | (2,051          | )      |   |   | 16,834 |   |
| Obligations      of state and political subdivisions          |   |      | 17,020  |   |       |   | 373    |       |   |   | (291            | )      |   |   | 17,102 |   |
| Other      securities                                         |   |      | 109     |   |       |   | -      |       |   |   | -               |   |   |   | 109 |   |
|                                                          |   |      |    |   |       |   |   |       |   |   |            |   |   |   |   |   |
| Total                                                         |   | $         | 52,617  |   |       | $      | 539    |       |   | $      | (2,394          | )      |   | $ | 50,762 |   |

|                                        |   |      |    |   |            |   |    | Weighted |   |
|---------------------------------------------|--------|-----------|---------|--------|-----------------|--------|---------|----------|--------|
|                                        |   | Amortized |    |   |            |   |    | Average  |   |
| (dollar      amounts in thousands)          |   | Cost      |    |   | Fair      Value |   |    | Yield    |   |
| Due      in one year or less                |   | $         | 2,727   |   |            | $      | 2,752   |     |   |   | 4.14 | % |
| Due      after one year through five years  |   |      | 81,236  |   |            |   | 80,376  |     |   |   | 4.63 | % |
| Due      after five years through ten years |   |      | 16,911  |   |            |   | 17,020  |     |   |   | 4.55 | % |
| Due      after ten years                    |   |      | 22,134  |   |            |   | 21,032  |     |   |   | 4.97 | % |
|                                        |   |      |    |   |            |   |    |     |   |   |   |   |
| Total                                       |   | $         | 123,008 |   |            | $      | 121,180 |     |   |   | 4.67 | % |

----

----

|                               |   | 2009    |    |   | 2008           |   |   | Variance |   |   | 2007           |   |
|------------------------------------|--------|---------|---------|--------|----------------|--------|--------|----------|--------|--------|----------------|--------|
|                               |   |    |    |   | Average        |   |   |     |   |   | Average        |   |   |   |   |   |   |   |   |   |   |   | Average |   |
| (dollar      amounts in thousands) |   | Balance |    |   | Rate      Paid |   |   | Balance  |   |   | Rate      Paid |   |   | Dollar |   |   | Percent |   |   | Balance |   |   | Rate      Paid |   |
| Non      interest bearing demand   |   | $       | 174,635 |   |           |   | 0.00   | %        |   | $      | 147,044        |   |   |   | 0.00 | % |   | $ | 27,591 |   |   |   | 18.76 | % |   | $ | 153,684 |   |   |   | 0.00 | % |
| Interest      bearing demand       |   |    | 77,765  |   |           |   | 0.82   | %        |   |   | 72,952         |   |   |   | 0.60 | % |   |   | 4,813 |   |   |   | 6.60 | % |   |   | 69,558 |   |   |   | 0.45 | % |
| Savings                            |   |    | 27,166  |   |           |   | 0.24   | %        |   |   | 21,835         |   |   |   | 0.81 | % |   |   | 5,331 |   |   |   | 24.41 | % |   |   | 41,599 |   |   |   | 0.90 | % |
| Money      market                  |   |    | 259,671 |   |           |   | 1.51   | %        |   |   | 173,199        |   |   |   | 1.95 | % |   |   | 86,472 |   |   |   | 49.93 | % |   |   | 206,754 |   |   |   | 3.57 | % |
| Time      deposits                 |   |    | 224,998 |   |           |   | 2.42   | %        |   |   | 139,872        |   |   |   | 3.30 | % |   |   | 85,126 |   |   |   | 60.86 | % |   |   | 160,692 |   |   |   | 4.77 | % |
|                               |   |    |    |   |           |   |   |     |   |   |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total      retail deposits         |   |    | 764,235 |   |           |   | 1.27   | %        |   |   | 554,902        |   |   |   | 1.55 | % |   |   | 209,333 |   |   |   | 37.72 | % |   |   | 632,287 |   |   |   | 2.38 | % |
|                               |   |    |    |   |           |   |   |     |   |   |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Brokered      time deposits        |   |    | 10,230  |   |           |   | 1.52   | %        |   |   | 20,117         |   |   |   | 3.66 | % |   |   | (9,887 | ) |   |   | -49.15 | % |   |   | 12,521 |   |   |   | 5.37 | % |
| Brokered      money market funds   |   |    | 1,000   |   |           |   | 0.72   | %        |   |   | 28,502         |   |   |   | 1.24 | % |   |   | (27,502 | ) |   |   | -96.49 | % |   |   | - |   |   |   | 0.00 | % |
|                               |   |    |    |   |           |   |   |     |   |   |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total      brokered deposits       |   |    | 11,230  |   |           |   | 1.20   | %        |   |   | 48,619         |   |   |   | 2.99 | % |   |   | (37,389 | ) |   |   | -76.90 | % |   |   | 12,521 |   |   |   | 5.37 | % |
|                               |   |    |    |   |           |   |   |     |   |   |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total      deposits                |   | $       | 775,465 |   |           |   | 1.27   | %        |   | $      | 603,521        |   |   |   | 1.61 | % |   | $ | 171,944 |   |   |   | 28.49 | % |   | $ | 644,808 |   |   |   | 2.40 | % |

| (dollar      amounts in thousands) |   | 2009   |    |   | 2008   |   |
|------------------------------------|--------|--------|---------|--------|--------|--------|
|                               |   |   |    |   |   |   |
| Less      than 3 months            |   | $      | 28,748  |   |   | $      | 31,876 |   |
| 3      to 12 months                |   |   | 66,676  |   |   |   | 29,917 |   |
| Over      1 year                   |   |   | 21,996  |   |   |   | 13,318 |   |
|                               |   |   |    |   |   |   |   |   |
| Total                              |   | $      | 117,420 |   |   | $      | 75,111 |   |

----

----

|                               |   |              |   |   | Percent      of |   |   |              |   |   | Percent      of |   |   |     |   |
|------------------------------------|--------|-------------------|--------|--------|-----------------|--------|--------|-------------------|--------|--------|-----------------|--------|--------|----------|--------|
|                               |   | December      31, |   |   | Total           |   |   | December      31, |   |   | Total           |   |   | Dollar   |   |
| (dollar      amounts in thousands) |   | 2009              |   |   | Deposits        |   |   | 2008              |   |   | Deposits        |   |   | Variance |   |
| Non      interest bearing demand   |   | $                 | 17,975 |   |            |   | 2.3    | %                 |   | $      | 11,193          |   |   |     | 1.9    | % |   | $ | 6,782 |   |
| Interest      bearing demand       |   |              | 2,578  |   |            |   | 0.3    | %                 |   |   | 21,695          |   |   |     | 3.6    | % |   |   | (19,117 | ) |
| Savings      deposits              |   |              | -      |   |            |   | 0.0    | %                 |   |   | 196             |   |   |     | 0.0    | % |   |   | (196 | ) |
| Money      market deposits         |   |              | 11,113 |   |            |   | 1.4    | %                 |   |   | 28,482          |   |   |     | 4.7    | % |   |   | (17,369 | ) |
|                               |   |              |   |   |            |   |   |              |   |   |            |   |   |     |   |   |   |   |   |   |
| Total      volatile deposits       |   | $                 | 31,666 |   |            |   | 4.0    | %                 |   | $      | 61,566          |   |   |     | 10.2   | % |   | $ | (29,900 | ) |

----

----

----

----

|                                                  |   | Regulatory      Standard |   |   | December      31, 2009 |   |   | December      31, 2008 |   |
|-------------------------------------------------------|--------|--------------------------|--------|--------|------------------------|--------|--------|------------------------|--------|
|                                                  |   | Adequately               |   |   | Well                   |   |   | Heritage      Oaks     |   |   | Heritage      Oaks |   |
| Ratio                                                 |   | Capitalized              |   |   | Capitalized            |   |   | Bancorp                |   |   | Bank |   |   | Bancorp |   |   | Bank |   |
| Leverage      ratio                                   |   |                     | 4.00   | %      |                   |   | 5.00   | %                      |   |   | 8.24 | % |   |   | 7.74 | % |   |   | 8.90 | % |   |   | 8.66 | % |
| Tier      I capital to risk weighted assets           |   |                     | 4.00   | %      |                   |   | 6.00   | %                      |   |   | 9.59 | % |   |   | 8.97 | % |   |   | 9.37 | % |   |   | 9.10 | % |
| Total      risk based capital to risk weighted assets |   |                     | 8.00   | %      |                   |   | 10.00  | %                      |   |   | 10.85 | % |   |   | 10.23 | % |   |   | 10.62 | % |   |   | 10.36 | % |

----

----

|   | · | Investment      Securities |
|--------|--------|----------------------------|

|   | · | Loans      and Interest on Loans |
|--------|--------|----------------------------------|

|   | · | Other      Real Estate Owned |
|--------|--------|------------------------------|

|   | · | Loans      Held for Sale |
|--------|--------|--------------------------|

|   | · | Allowance      for Loan Losses |
|--------|--------|--------------------------------|

|   | · | Appraisals      for Collateral Dependent Loans |
|--------|--------|------------------------------------------------|

|   | · | Goodwill      and Other Intangible Assets |
|--------|--------|-------------------------------------------|

|   | · | Income      Taxes |
|--------|--------|-------------------|

|   | · | Deferred      Tax Assets |
|--------|--------|--------------------------|

|   | · | Supplemental      Employee Compensation BenefitsAgreements |
|--------|--------|------------------------------------------------------------|

|                                            |   | Less      Than |   |   | One      To Three |   |   | Three      To Five |   |   | More      Than  |   |   | December      31, |   |   | December      31, |   |
|-------------------------------------------------|--------|----------------|--------|--------|-------------------|--------|--------|--------------------|--------|--------|-----------------|--------|--------|-------------------|--------|--------|-------------------|--------|
| (dollar      amounts in thousands)              |   | One      Year  |   |   | Years             |   |   | Years              |   |   | Five      Years |   |   | 2009              |   |   | 2008              |   |
| Long-term      debt and other borrowings        |   | $              | 65,000 |   |              | $      | -      |               |   | $      | -               |   |   | $                 | 13,403 |   |              | $      | 78,403 |   |   | $ | 122,403 |   |
| Operating      lease obligations                |   |           | 2,306  |   |              |   | 3,519  |               |   |   | 2,344           |   |   |              | 6,893  |   |              |   | 15,062 |   |   |   | 16,301 |   |
|                                            |   |           |   |   |              |   |   |               |   |   |            |   |   |              |   |   |              |   |   |   |   |   |   |   |
| Total      long-term debt and other obligations |   | $              | 67,306 |   |              | $      | 3,519  |               |   | $      | 2,344           |   |   | $                 | 20,296 |   |              | $      | 93,465 |   |   | $ | 138,704 |   |

----

----

----

|                               |   | Rate      Shock Scenarios |   |
|------------------------------------|--------|---------------------------|--------|
| (dollar      amounts in thousands) |   | -200bp                    |   |   | -100bp |   |   | Base |   |   | +100bp |   |   | +200bp |   |
| Net      interest income (NII)     |   | $                         | 43,264 |   |   | $ | 43,768 |   |   | $ | 44,075 |   |   | $ | 44,545 |   |   | $ | 45,272 |   |
|                               |   |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| $      Change from base            |   | $                         | (811   | ) |   | $ | (307 | ) |   | $ | - |   |   | $ | 470 |   |   | $ | 1,197 |   |
|                               |   |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| %      Change from base            |   |                      | -1.84  | % |   |   | -0.70 | % |   |   | 0.00 | % |   |   | 1.07 | % |   |   | 2.72 | % |

----

|                                    |   | Move      in Prime Rate (bps) |   |
|-----------------------------------------|--------|-------------------------------|--------|
| (dollar      amounts in thousands)      |   | +200                          |   |   | +250 |   |   | +300 |   |   | +350 |   |
| Variable      daily                     |   | $                             | 512    |   |   | $ | 18,737 |   |   | $ | 67,734 |   |   | $ | 137,701 |   |
| Variable      other than daily          |   |                          | 2,502  |   |   |   | 5,143 |   |   |   | 51,156 |   |   |   | 152,728 |   |
|                                    |   |                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cumulative      total variable at floor |   | $                             | 3,014  |   |   | $ | 23,880 |   |   | $ | 118,890 |   |   | $ | 290,429 |   |

----

| Management's      Assessment of Internal Control Over Financial Reporting                                       | 78     |
|-----------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                            |   |
| Report      of Independent Registered Public Accounting Firm                                                    | 79     |
|                                                                                                            |   |
| Consolidated      Financial Statements:                                                                         |   |
|                                                                                                            |   |
| Consolidated      Balance Sheets                                                                                |   |
| As      of December 31, 2009 and 2008                                                                           | 80     |
|                                                                                                            |   |
| Consolidated      Statements of Income                                                                          |   |
| For      the Years Ended December 31, 2009, 2008 and 2007                                                       | 81     |
|                                                                                                            |   |
| Consolidated      Statements of Stockholders' Equity                                                            |   |
| As      of December 31, 2009, 2008 and 2007                                                                     | 82     |
|                                                                                                            |   |
| Consolidated      Statements of Cash Flows                                                                      |   |
| For      the Years Ended December 31, 2009, 2008 and 2007                                                       | 83     |
|                                                                                                            |   |
| Notes      to Consolidated Financial Statements                                                                 | 85     |
|                                                                                                            |   |
| The      following un-audited supplementary financial data is included in this      Annual Report on Form 10-K: |   |
| Quarterly      Financial Information                                                                            | 127    |

----

| /s/    Lawrence      P. Ward  |   | /s/    Margaret      A. Torres                                |
|---------------------------------------------------|--------|-----------------------------------------------------------------------------------|
| Lawrence      P. WardChief      Executive Officer |   | Margaret      A. TorresExecutive      Vice President,Chief      Financial Officer |

----

| /s/Vavrinek, Trine, Day & Co.,      LLP |
|---------------------------------------------|

----

|                                                                                                                                                                                                             |   | December      31, |         |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------|--------------|
| (dollar      amounts in thousands)                                                                                                                                                                               |   | 2009              |         |   | 2008 |   |
|                                                                                                                                                                                                             |   |              |         |   |   |   |
| Assets                                                                                                                                                                                                           |   |              |         |   |   |   |
| Cash      and due from banks                                                                                                                                                                                     |   | $                 | 19,342       |   |   | $ | 17,921 |   |
| Interest      bearing due from Federal Reserve Bank                                                                                                                                                              |   |              | 17,046       |   |   |   | - |   |
| Federal      funds sold                                                                                                                                                                                          |   |              | 4,350        |   |   |   | 6,650 |   |
| Total      cash and cash equivalents                                                                                                                                                                             |   |              | 40,738       |   |   |   | 24,571 |   |
|                                                                                                                                                                                                             |   |              |         |   |   |   |   |   |
| Interest      bearing deposits with other banks                                                                                                                                                                  |   |              | 119          |   |   |   | 119 |   |
| Securities      available for sale                                                                                                                                                                               |   |              | 121,180      |   |   |   | 50,762 |   |
| Federal      Home Loan Bank stock, at cost                                                                                                                                                                       |   |              | 5,828        |   |   |   | 5,123 |   |
| Loans      held for sale                                                                                                                                                                                         |   |              | 9,487        |   |   |   | 7,939 |   |
| Loans,      net of deferred fees of $1,825 and $1,701 and allowance for loan      loss of $14,372 and $10,412 at December 31, 2009 and 2008,      respectively                                                   |   |              | 712,482      |   |   |   | 668,034 |   |
| Property,      premises and equipment, net                                                                                                                                                                       |   |              | 6,779        |   |   |   | 6,827 |   |
| Deferred      tax assets                                                                                                                                                                                         |   |              | 10,553       |   |   |   | 7,708 |   |
| Bank      owned life insurance                                                                                                                                                                                   |   |              | 12,549       |   |   |   | 10,737 |   |
| Goodwill                                                                                                                                                                                                         |   |              | 11,049       |   |   |   | 11,049 |   |
| Core      deposit intangible                                                                                                                                                                                     |   |              | 2,642        |   |   |   | 3,691 |   |
| Other      real estate owned                                                                                                                                                                                     |   |              | 946          |   |   |   | 1,337 |   |
| Other      assets                                                                                                                                                                                                |   |              | 10,825       |   |   |   | 7,691 |   |
|                                                                                                                                                                                                             |   |              |         |   |   |   |   |   |
| Total      assets                                                                                                                                                                                                |   | $                 | 945,177      |   |   | $ | 805,588 |   |
|                                                                                                                                                                                                             |   |              |         |   |   |   |   |   |
| Liabilities                                                                                                                                                                                                      |   |              |         |   |   |   |   |   |
| Deposits                                                                                                                                                                                                         |   |              |         |   |   |   |   |   |
| Demand,      non-interest bearing                                                                                                                                                                                |   | $                 | 174,635      |   |   | $ | 147,044 |   |
| Savings,      NOW and money market deposits                                                                                                                                                                      |   |              | 365,602      |   |   |   | 296,488 |   |
| Time      deposits of $100 or more                                                                                                                                                                               |   |              | 117,420      |   |   |   | 75,111 |   |
| Time      deposits under $100                                                                                                                                                                                    |   |              | 117,808      |   |   |   | 84,878 |   |
| Total      deposits                                                                                                                                                                                              |   |              | 775,465      |   |   |   | 603,521 |   |
|                                                                                                                                                                                                             |   |              |         |   |   |   |   |   |
| Short      term FHLB borrowing                                                                                                                                                                                   |   |              | 65,000       |   |   |   | 99,000 |   |
| Long      term FHLB borrowing                                                                                                                                                                                    |   |              | -            |   |   |   | 10,000 |   |
| Securities      sold under agreement to repurchase                                                                                                                                                               |   |              | -            |   |   |   | 2,796 |   |
| Junior      subordinated debentures                                                                                                                                                                              |   |              | 13,403       |   |   |   | 13,403 |   |
| Other      liabilities                                                                                                                                                                                           |   |              | 7,558        |   |   |   | 6,836 |   |
|                                                                                                                                                                                                             |   |              |         |   |   |   |   |   |
| Total      liabilities                                                                                                                                                                                           |   |              | 861,426      |   |   |   | 735,556 |   |
|                                                                                                                                                                                                             |   |              |         |   |   |   |   |   |
| Commitments      and contingencies (Notes 6 and 11)                                                                                                                                                              |   |              | -            |   |   |   | - |   |
|                                                                                                                                                                                                             |   |              |         |   |   |   |   |   |
| Stockholders'      Equity                                                                                                                                                                                        |   |              |         |   |   |   |   |   |
| Senior      preferred stock, no par value; $1,000 per share stated value 5,000,000      shares authorized, 21,000 and 0 issued and outstanding as of December 31,      2009 and December 31, 2008, respectively. |   |              | 19,431       |   |   |   | - |   |
| Common      stock, no par value; 20,000,000 shares authorized; issued and outstanding      7,771,952 and 7,753,078 as of December 31, 2009 and 2008,      respectively                                      |   |              |  48,747 |   |   |   |  48,649 |   |
| Additional      paid in capital                                                                                                                                                                                  |   |              | 3,242        |   |   |   | 1,055 |   |
| Retained      earnings                                                                                                                                                                                           |   |              | 13,407       |   |   |   | 21,420 |   |
| Accumulated      other comprehensive loss, net of tax benefit of $752 and $763 as of      December 31, 2009 and 2008, respectively                                                                               |   |              | (1,076       | ) |   |   | (1,092 | ) |
|                                                                                                                                                                                                             |   |              |         |   |   |   |   |   |
| Total      stockholders' equity                                                                                                                                                                                  |   |              | 83,751       |   |   |   | 70,032 |   |
|                                                                                                                                                                                                             |   |              |         |   |   |   |   |   |
| Total      liabilities and stockholders' equity                                                                                                                                                                  |   | $                 | 945,177      |   |   | $ | 805,588 |   |

----

|                                                                                   |   | For The Years Ended December 31, |    |
|----------------------------------------------------------------------------------------|--------|-----------------------------------------------------------|---------|
| (dollar amounts in thousands except per share data) |   | 2009                                                      |    |   | 2008 |   |   | 2007 |   |
|                                                                                   |   |                                                      |    |   |   |   |   |   |   |
| Interest      Income                                                                   |   |                                                      |    |   |   |   |   |   |   |
| Interest      and fees on loans                                                        |   | $                                                         | 45,530  |   |   | $ | 47,038 |   |   | $ | 42,425 |   |
| Interest      on investment securities                                                 |   |                                                      |    |   |   |   |   |   |   |   |   |   |
| Mortgage      backed securities                                                        |   |                                                      | 3,023   |   |   |   | 1,970 |   |   |   | 1,042 |   |
| Obligations      of state and political subdivisions                                   |   |                                                      | 896     |   |   |   | 741 |   |   |   | 710 |   |
| Interest      on time deposits with other banks                                        |   |                                                      | 3       |   |   |   | 8 |   |   |   | 8 |   |
| Interest      on federal funds sold                                                    |   |                                                      | 70      |   |   |   | 140 |   |   |   | 785 |   |
| Interest      on other securities                                                      |   |                                                      | 37      |   |   |   | 253 |   |   |   | 204 |   |
|                                                                                   |   |                                                      |    |   |   |   |   |   |   |   |   |   |
| Total      interest income                                                             |   |                                                      | 49,559  |   |   |   | 50,150 |   |   |   | 45,174 |   |
|                                                                                   |   |                                                      |    |   |   |   |   |   |   |   |   |   |
| Interest      Expense                                                                  |   |                                                      |    |   |   |   |   |   |   |   |   |   |
| Interest      on savings, NOW and money market deposits                                |   |                                                      | 3,815   |   |   |   | 4,375 |   |   |   | 4,911 |   |
| Interest      on time deposits in denominations of $100 or more                        |   |                                                      | 2,505   |   |   |   | 2,436 |   |   |   | 2,046 |   |
| Interest      on time deposits under $100                                              |   |                                                      | 2,564   |   |   |   | 2,892 |   |   |   | 4,914 |   |
| Other      borrowings                                                                  |   |                                                      | 1,165   |   |   |   | 2,861 |   |   |   | 2,880 |   |
|                                                                                   |   |                                                      |    |   |   |   |   |   |   |   |   |   |
| Total      interest expense                                                            |   |                                                      | 10,049  |   |   |   | 12,564 |   |   |   | 14,751 |   |
|                                                                                   |   |                                                      |    |   |   |   |   |   |   |   |   |   |
| Net      interest income before provision for possible loan losses                     |   |                                                      | 39,510  |   |   |   | 37,586 |   |   |   | 30,423 |   |
|                                                                                   |   |                                                      |    |   |   |   |   |   |   |   |   |   |
| Provision      for possible loan losses                                                |   |                                                      | 24,066  |   |   |   | 12,215 |   |   |   | 660 |   |
|                                                                                   |   |                                                      |    |   |   |   |   |   |   |   |   |   |
| Net      interest income after provision for possible loan losses                      |   |                                                      | 15,444  |   |   |   | 25,371 |   |   |   | 29,763 |   |
|                                                                                   |   |                                                      |    |   |   |   |   |   |   |   |   |   |
| Non      Interest Income                                                               |   |                                                      |    |   |   |   |   |   |   |   |   |   |
| Fees      and service charges                                                          |   |                                                      | 2,965   |   |   |   | 3,284 |   |   |   | 2,774 |   |
| Other      than temporary impairment (OTTI) losses on investment      securities:      |   |                                                      |    |   |   |   |   |   |   |   |   |   |
| Total      impairment loss on  investment securities                         |   |                                                      | (1,956  | ) |   |   | - |   |   |   | - |   |
| Non      credit related losses recongnized in other comprehensive      income          |   |                                                      | 1,584   |   |   |   | - |   |   |   | - |   |
|                                                                                   |   |                                                      |    |   |   |   |   |   |   |   |   |   |
| Net      impairment losses on investment securities                                    |   |                                                      | (372    | ) |   |   | - |   |   |   | - |   |
|                                                                                   |   |                                                      |    |   |   |   |   |   |   |   |   |   |
| Gain      on sale of investment securities                                             |   |                                                      | 333     |   |   |   | 37 |   |   |   | 6 |   |
| Gain      on sale of SBA loans                                                         |   |                                                      | 213     |   |   |   | - |   |   |   | 36 |   |
| Loss      on sale of OREO                                                              |   |                                                      | (280    | ) |   |   | - |   |   |   | - |   |
| Other                                                                                  |   |                                                      | 3,339   |   |   |   | 2,885 |   |   |   | 2,533 |   |
|                                                                                   |   |                                                      |    |   |   |   |   |   |   |   |   |   |
| Total      non interest income                                                         |   |                                                      | 6,198   |   |   |   | 6,206 |   |   |   | 5,349 |   |
|                                                                                   |   |                                                      |    |   |   |   |   |   |   |   |   |   |
| Non      Interest Expense                                                              |   |                                                      |    |   |   |   |   |   |   |   |   |   |
| Salaries      and employee benefits                                                    |   |                                                      | 15,502  |   |   |   | 15,561 |   |   |   | 13,501 |   |
| Equipment                                                                              |   |                                                      | 1,445   |   |   |   | 1,404 |   |   |   | 1,089 |   |
| Occupancy                                                                              |   |                                                      | 3,472   |   |   |   | 3,138 |   |   |   | 2,292 |   |
| Other                                                                                  |   |                                                      | 14,097  |   |   |   | 9,331 |   |   |   | 7,026 |   |
|                                                                                   |   |                                                      |    |   |   |   |   |   |   |   |   |   |
| Total      non interest expense                                                        |   |                                                      | 34,516  |   |   |   | 29,434 |   |   |   | 23,908 |   |
|                                                                                   |   |                                                      |    |   |   |   |   |   |   |   |   |   |
| (Loss)      / income before provision for income taxes                                 |   |                                                      | (12,874 | ) |   |   | 2,143 |   |   |   | 11,204 |   |
|                                                                                   |   |                                                      |    |   |   |   |   |   |   |   |   |   |
| (Benefit)      / provision for income taxes                                            |   |                                                      | (5,825  | ) |   |   | 497 |   |   |   | 4,287 |   |
|                                                                                   |   |                                                      |    |   |   |   |   |   |   |   |   |   |
| Net      (loss) / income                                                               |   |                                                      | (7,049  | ) |   |   | 1,646 |   |   |   | 6,917 |   |
|                                                                                   |   |                                                      |    |   |   |   |   |   |   |   |   |   |
| Dividends      and accretion on preferred stock                                        |   |                                                      | 964     |   |   |   | - |   |   |   | - |   |
|                                                                                   |   |                                                      |    |   |   |   |   |   |   |   |   |   |
| Net      (loss) / income available to common shareholders                              |   | $                                                         | (8,013  | ) |   | $ | 1,646 |   |   | $ | 6,917 |   |
|                                                                                   |   |                                                      |    |   |   |   |   |   |   |   |   |   |
| (Loss)      / Earnings Per Common Share                                                |   |                                                      |    |   |   |   |   |   |   |   |   |   |
| Basic                                                                                  |   | $                                                         | (1.04   | ) |   | $ | 0.22 |   |   | $ | 0.99 |   |
| Diluted                                                                                |   | $                                                         | (1.04   | ) |   | $ | 0.21 |   |   | $ | 0.96 |   |

----

|                                                                                                 |   |                 |   |   |              |   |   |    |   |   |          |   |   |       |   |   |          |   |   |          |   |   | Accumulated   |   |   |   |   |
|------------------------------------------------------------------------------------------------------|--------|----------------------|--------|--------|-------------------|--------|--------|---------|--------|--------|---------------|--------|--------|------------|--------|--------|---------------|--------|--------|---------------|--------|--------|---------------|--------|--------|--------|--------|
|                                                                                                 |   |                 |   |   |              |   |   |    |   |   |          |   |   | Additional |   |   |          |   |   |          |   |   | Other         |   |   | Total  |   |
|                                                                                                 |   | Preferred      Stock |   |   | Common      Stock |   |   | Paid-In |   |   | Comprehensive |   |   | Retained   |   |   | Comprehensive |   |   | Stockholders' |   |
| (dollar      amounts in thousands)                                                                   |   | Shares               |   |   | Amount            |   |   | Shares  |   |   | Amount        |   |   | Capital    |   |   | Income        |   |   | Earnings      |   |   | Income/(loss) |   |   | Equity |   |
|                                                                                                 |   |                 |   |   |              |   |   |    |   |   |          |   |   |       |   |   |          |   |   |          |   |   |          |   |   |   |   |
| Balance,      December 31, 2006                                                                      |   |                 | -      |   |              | $      | -      |    |   |   | 6,345,639     |   |   | $          | 29,247 |   |          | $      | 336    |          |   |   |          |   | $      | 19,809 |   |   | $ | 80 |   |   | $ | 49,472 |   |
|                                                                                                 |   |                 |   |   |              |   |   |    |   |   |          |   |   |       |   |   |          |   |   |          |   |   |          |   |   |   |   |   |   |   |   |   |   |   |   |
| Exercise      of stock options (including $446 tax benefit from exercise of stock      options)      |   |                 |   |   |              |   |   |    |   |   | 135,330       |   |   |       | 887    |   |          |   | (25    | )             |   |   |          |   |   |   |   |   |   |   |   |   |   | 862 |   |
| Cash      dividends paid during 2007                                                                 |   |                 |   |   |              |   |   |    |   |   |          |   |   |       |   |   |          |   |   |          |   |   |          |   |   | (2,128 | )      |   |   |   |   |   |   | (2,128 | ) |
| Share-based      compensation expense                                                                |   |                 |   |   |              |   |   |    |   |   |          |   |   |       |   |   |          |   | 361    |          |   |   |          |   |   |   |   |   |   |   |   |   |   | 361 |   |
| Issuance      of restricted share awards                                                             |   |                 |   |   |              |   |   |    |   |   | 1,500         |   |   |       |   |   |          |   |   |          |   |   |          |   |   |   |   |   |   |   |   |   |   |   |   |
| Retirement      of restricted share awards                                                           |   |                 |   |   |              |   |   |    |   |   | (1,250        | )      |   |       |   |   |          |   |   |          |   |   |          |   |   |   |   |   |   |   |   |   |   |   |   |
| Stock      repurchases                                                                               |   |                 |   |   |              |   |   |    |   |   | (13,500       | )      |   |       | (215   | )      |          |   |   |          |   |   |          |   |   |   |   |   |   |   |   |   |   | (215 | ) |
| Common      stock issued in connection with acquisition of Business First National      Bank         |   |                 |   |   |              |   |   |    |   |   | 850,213       |   |   |       | 14,077 |   |          |   |   |          |   |   |          |   |   |   |   |   |   |   |   |   |   | 14,077 |   |
| Comprehensive      income:                                                                           |   |                 |   |   |              |   |   |    |   |   |          |   |   |       |   |   |          |   |   |          |   |   |          |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      income                                                                                      |   |                 |   |   |              |   |   |    |   |   |          |   |   |       |   |   |          |   |   |          |   | $      | 6,917         |   |   |   | 6,917  |   |   |   |   |   |   |   | 6,917 |   |
| Unrealized      security holding gains (net of $76 tax)                                              |   |                 |   |   |              |   |   |    |   |   |          |   |   |       |   |   |          |   |   |          |   |   | 104           |   |   |   |   |   |   |   | 104 |   |   |   | 104 |   |
|                                                                                                 |   |                 |   |   |              |   |   |    |   |   |          |   |   |       |   |   |          |   |   |          |   |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total      comprehensive income                                                                      |   |                 |   |   |              |   |   |    |   |   |          |   |   |       |   |   |          |   |   |          |   | $      | 7,021         |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                 |   |                 |   |   |              |   |   |    |   |   |          |   |   |       |   |   |          |   |   |          |   |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance,      December 31, 2007                                                                      |   |                 | -      |   |              | $      | -      |    |   |   | 7,317,932     |   |   | $          | 43,996 |   |          | $      | 672    |          |   |   |          |   |   | $      | 24,598 |   |   | $ | 184 |   |   | $ | 69,450 |   |
|                                                                                                 |   |                 |   |   |              |   |   |    |   |   |          |   |   |       |   |   |          |   |   |          |   |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Exercise      of stock options (including $115 tax benefit from exercise of stock      options)      |   |                 |   |   |              |   |   |    |   |   | 74,706        |   |   |       | 420    |   |          |   |   |          |   |   |          |   |   |   |   |   |   |   |   |   |   |   | 420 |   |
| 5%      stock dividend distributed May 16, 2008                                                      |   |                 |   |   |              |   |   |    |   |   | 366,294       |   |   |       | 4,233  |   |          |   |   |          |   |   |          |   |   |   | (4,233 | ) |   |   |   |   |   |   | - |   |
| Cash      paid in lieu of fractional shares                                                          |   |                 |   |   |              |   |   |    |   |   |          |   |   |       |   |   |          |   |   |          |   |   |          |   |   |   | (5     | ) |   |   |   |   |   |   | (5 | ) |
| Cash      dividends paid during 2008                                                                 |   |                 |   |   |              |   |   |    |   |   |          |   |   |       |   |   |          |   |   |          |   |   |          |   |   |   | (586   | ) |   |   |   |   |   |   | (586 | ) |
| Share-based      compensation expense                                                                |   |                 |   |   |              |   |   |    |   |   |          |   |   |       |   |   |          |   | 383    |          |   |   |          |   |   |   |   |   |   |   |   |   |   |   | 383 |   |
| Issuance      of restricted share awards                                                             |   |                 |   |   |              |   |   |    |   |   | 1,050         |   |   |       |   |   |          |   |   |          |   |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Retirement      of restricted share awards                                                           |   |                 |   |   |              |   |   |    |   |   | (6,904        | )      |   |       |   |   |          |   |   |          |   |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Comprehensive      income:                                                                           |   |                 |   |   |              |   |   |    |   |   |          |   |   |       |   |   |          |   |   |          |   |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      income                                                                                      |   |                 |   |   |              |   |   |    |   |   |          |   |   |       |   |   |          |   |   |          |   | $      | 1,646         |   |   |   | 1,646  |   |   |   |   |   |   |   | 1,646 |   |
| Unrealized      security holding losses (net of $892 tax benefit)                                    |   |                 |   |   |              |   |   |    |   |   |          |   |   |       |   |   |          |   |   |          |   |   | (1,254        | )      |   |   |   |   |   |   | (1,254 | ) |   |   | (1,254 | ) |
| Realized      gains on sale of securities (net of $15 tax)                                           |   |                 |   |   |              |   |   |    |   |   |          |   |   |       |   |   |          |   |   |          |   |   | (22           | )      |   |   |   |   |   |   | (22 | ) |   |   | (22 | ) |
|                                                                                                 |   |                 |   |   |              |   |   |    |   |   |          |   |   |       |   |   |          |   |   |          |   |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total      comprehensive income                                                                      |   |                 |   |   |              |   |   |    |   |   |          |   |   |       |   |   |          |   |   |          |   | $      | 370           |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                 |   |                 |   |   |              |   |   |    |   |   |          |   |   |       |   |   |          |   |   |          |   |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance,      December 31, 2008                                                                      |   |                 | -      |   |              | $      | -      |    |   |   | 7,753,078     |   |   | $          | 48,649 |   |          | $      | 1,055  |          |   |   |          |   |   | $      | 21,420 |   |   | $ | (1,092 | ) |   | $ | 70,032 |   |
|                                                                                                 |   |                 |   |   |              |   |   |    |   |   |          |   |   |       |   |   |          |   |   |          |   |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance      of preferred stock and common stock warrant                                            |   |                 | 21,000 |   |              |   | 19,152 |    |   |   |          |   |   |       |   |   |          |   | 1,848  |          |   |   |          |   |   |   |   |   |   |   |   |   |   |   | 21,000 |   |
| Amortization      of discount on preferred stock                                                     |   |                 |   |   |              |   | 279    |    |   |   |          |   |   |       |   |   |          |   |   |          |   |   |          |   |   |   | (279   | ) |   |   |   |   |   |   | - |   |
| Dividends      paid on preferred stock                                                               |   |                 |   |   |              |   |   |    |   |   |          |   |   |       |   |   |          |   |   |          |   |   |          |   |   |   | (685   | ) |   |   |   |   |   |   | (685 | ) |
| Exercise      of stock options (including $9 excess tax benefit from exercise of stock      options) |   |                 |   |   |              |   |   |    |   |   | 24,121        |   |   |       | 98     |   |          |   |   |          |   |   |          |   |   |   |   |   |   |   |   |   |   |   | 98 |   |
| Share-based      compensation expense                                                                |   |                 |   |   |              |   |   |    |   |   |          |   |   |       |   |   |          |   | 339    |          |   |   |          |   |   |   |   |   |   |   |   |   |   |   | 339 |   |
| Retirement      of restricted share awards                                                           |   |                 |   |   |              |   |   |    |   |   | (5,247        | )      |   |       |   |   |          |   |   |          |   |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Comprehensive      income:                                                                           |   |                 |   |   |              |   |   |    |   |   |          |   |   |       |   |   |          |   |   |          |   |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      loss                                                                                        |   |                 |   |   |              |   |   |    |   |   |          |   |   |       |   |   |          |   |   |          |   | $      | (7,049        | )      |   |   | (7,049 | ) |   |   |   |   |   |   | (7,049 | ) |
| Unrealized      security holding (losses) on securities (net of $5 tax      benefit)                 |   |                 |   |   |              |   |   |    |   |   |          |   |   |       |   |   |          |   |   |          |   |   | (7            | )      |   |   |   |   |   |   | (7 | ) |   |   | (7 | ) |
| Reclassification      (gains) on sale of securities (net of $137 tax)                                |   |                 |   |   |              |   |   |    |   |   |          |   |   |       |   |   |          |   |   |          |   |   | (196          | )      |   |   |   |   |   |   | (196 | ) |   |   | (196 | ) |
| Add:      Reclassification OTTI recognized in income (net of $153 tax      benefit)                  |   |                 |   |   |              |   |   |    |   |   |          |   |   |       |   |   |          |   |   |          |   |   | 219           |   |   |   |   |   |   |   | 219 |   |   |   | 219 |   |
|                                                                                                 |   |                 |   |   |              |   |   |    |   |   |          |   |   |       |   |   |          |   |   |          |   |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total      comprehensive loss                                                                        |   |                 |   |   |              |   |   |    |   |   |          |   |   |       |   |   |          |   |   |          |   | $      | (7,033        | )      |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                 |   |                 |   |   |              |   |   |    |   |   |          |   |   |       |   |   |          |   |   |          |   |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance,      December 31, 2009                                                                      |   |                 | 21,000 |   |              | $      | 19,431 |    |   |   | 7,771,952     |   |   | $          | 48,747 |   |          | $      | 3,242  |          |   |   |          |   |   | $      | 13,407 |   |   | $ | (1,076 | ) |   | $ | 83,751 |   |

----

|                                                                                         |   | For The Years Ended December      31, |     |
|----------------------------------------------------------------------------------------------|--------|---------------------------------------|----------|
| (dollar amounts in    thousands)                                                             |   | 2009                                  |     |   | 2008 |   |   | 2007 |   |
|                                                                                         |   |                                  |     |   |   |   |   |   |   |
| Cash      flows from operating activities:                                                   |   |                                  |     |   |   |   |   |   |   |
| Net      (loss) / income                                                                     |   | $                                     | (7,049   | ) |   | $ | 1,646 |   |   | $ | 6,917 |   |
| Adjustments      to reconcile net income to net cash provided by operating      activities:  |   |                                  |     |   |   |   |   |   |   |   |   |   |
| Depreciation      and amortization                                                           |   |                                  | 1,165    |   |   |   | 1,092 |   |   |   | 984 |   |
| Provision      for possible loan losses                                                      |   |                                  | 24,066   |   |   |   | 12,215 |   |   |   | 660 |   |
| Amortization      of premiums / discounts on investment securities, net                      |   |                                  | 131      |   |   |   | (148 | ) |   |   | (78 | ) |
| Amortization      of intangible assets                                                       |   |                                  | 1,049    |   |   |   | 860 |   |   |   | 393 |   |
| Share-based      compensation expense                                                        |   |                                  | 339      |   |   |   | 383 |   |   |   | 361 |   |
| Federal      Home Loan Bank dividends received                                               |   |                                  | -        |   |   |   | (209 | ) |   |   | (145 | ) |
| Gain      on sale of available for sale securities                                           |   |                                  | (333     | ) |   |   | (37 | ) |   |   | (6 | ) |
| Securities      impairment loss recognized in earnings                                       |   |                                  | 372      |   |   |   | - |   |   |   | - |   |
| (Increase)      / decrease in loans held for sale                                            |   |                                  | (1,548   | ) |   |   | (7,037 | ) |   |   | 862 |   |
| Net      increase in bank owned life insurance                                               |   |                                  | (435     | ) |   |   | (414 | ) |   |   | (378 | ) |
| Increase      in deferred tax asset                                                          |   |                                  | (2,856   | ) |   |   | (1,526 | ) |   |   | (2,746 | ) |
| Loss      on sale and write-downs on other real estate owned                                 |   |                                  | 1,794    |   |   |   | - |   |   |   | - |   |
| Increase      in other assets                                                                |   |                                  | (12,331  | ) |   |   | (4,221 | ) |   |   | (183 | ) |
| Increase      / (decrease) in other liabilities                                              |   |                                  | 731      |   |   |   | (1,007 | ) |   |   | 697 |   |
| Excess      tax benefit related to share-based compensation expense                          |   |                                  | (9       | ) |   |   | (115 | ) |   |   | (446 | ) |
|                                                                                         |   |                                  |     |   |   |   |   |   |   |   |   |   |
| NET      CASH PROVIDED IN OPERATING ACTIVITIES                                               |   |                                  | 5,086    |   |   |   | 1,482 |   |   |   | 6,892 |   |
|                                                                                         |   |                                  |     |   |   |   |   |   |   |   |   |   |
| Cash      flows from investing activities:                                                   |   |                                  |     |   |   |   |   |   |   |   |   |   |
| Purchase      of securities, available for sale                                              |   |                                  | (99,400  | ) |   |   | (18,417 | ) |   |   | (1,103 | ) |
| Sale      of available for sale securities                                                   |   |                                  | 16,040   |   |   |   | 1,537 |   |   |   | - |   |
| Maturities      and call of available for sale securities                                    |   |                                  | 1,439    |   |   |   | 2,210 |   |   |   | 738 |   |
| Maturities      of time deposits with other banks                                            |   |                                  | -        |   |   |   | 211 |   |   |   | - |   |
| Proceeds      from principal reductions and maturities of available for sale      securities |   |                                  | 11,360   |   |   |   | 9,482 |   |   |   | 5,450 |   |
| Redemption      of Federal Reserve Bank stock                                                |   |                                  | -        |   |   |   | - |   |   |   | 361 |   |
| Purchase      of Federal Home Loan Bank stock                                                |   |                                  | (705     | ) |   |   | (1,869 | ) |   |   | - |   |
| Sale      of Federal Home Loan Bank stock                                                    |   |                                  | -        |   |   |   | - |   |   |   | 282 |   |
| Increase      in loans, net                                                                  |   |                                  | (68,612  | ) |   |   | (75,037 | ) |   |   | (46,217 | ) |
| Allowance      for loan and lease loss recoveries                                            |   |                                  | 98       |   |   |   | 130 |   |   |   | 270 |   |
| Purchase      of property, premises and equipment, net                                       |   |                                  | (1,129   | ) |   |   | (1,579 | ) |   |   | (723 | ) |
| Proceeds      from sale of property, premises and equipment                                  |   |                                  | -        |   |   |   | - |   |   |   | 12,810 |   |
| Purchase      of bank owned life insurance                                                   |   |                                  | (1,377   | ) |   |   | (400 | ) |   |   | (110 | ) |
| Proceeds      from sale of other real estate owned                                           |   |                                  | 7,806    |   |   |   | - |   |   |   | - |   |
| Increase      in cash from acquisition of Business First National Bank                       |   |                                  | -        |   |   |   | - |   |   |   | 12,467 |   |
|                                                                                         |   |                                  |     |   |   |   |   |   |   |   |   |   |
| NET      CASH USED IN INVESTING ACTIVITIES                                                   |   |                                  | (134,480 | ) |   |   | (83,732 | ) |   |   | (15,775 | ) |
|                                                                                         |   |                                  |     |   |   |   |   |   |   |   |   |   |
| Cash      flows from financing activities:                                                   |   |                                  |     |   |   |   |   |   |   |   |   |   |
| Increase      / (decrease) in deposits, net                                                  |   |                                  | 171,944  |   |   |   | (41,287 | ) |   |   | 90,868 |   |
| Proceeds      from Federal Home Loan Bank borrowing                                          |   |                                  | 75,000   |   |   |   | 380,000 |   |   |   | 40,000 |   |
| Repayments      of Federal Home Loan Bank borrowing                                          |   |                                  | (119,000 | ) |   |   | (279,000 | ) |   |   | (94,598 | ) |
| (Decrease)      / increase in repurchase agreements                                          |   |                                  | (2,796   | ) |   |   | 860 |   |   |   | 572 |   |
| Net      decrease in junior subordinated debentures                                          |   |                                  | -        |   |   |   | - |   |   |   | (3,093 | ) |
| Excess      tax benefit related to share-based compensation expense                          |   |                                  | 9        |   |   |   | 115 |   |   |   | 446 |   |
| Proceeds      from exercise of stock options                                                 |   |                                  | 89       |   |   |   | 305 |   |   |   | 416 |   |
| Cash      dividends paid                                                                     |   |                                  | (685     | ) |   |   | (586 | ) |   |   | (2,128 | ) |
| Cash      paid in lieu of fractional shares                                                  |   |                                  | -        |   |   |   | (5 | ) |   |   | - |   |
| Repurchase      of common stock                                                              |   |                                  | -        |   |   |   | - |   |   |   | (215 | ) |
| Proceeds      from issuance of preferred stock and common stock warrants,      net           |   |                                  | 21,000   |   |   |   | - |   |   |   | - |   |
| NET      CASH PROVIDED BY FINANCING ACTIVITIES                                               |   |                                  | 145,561  |   |   |   | 60,402 |   |   |   | 32,268 |   |
|                                                                                         |   |                                  |     |   |   |   |   |   |   |   |   |   |
| Net      increase / (decrease) in cash and cash equivalents                                  |   |                                  | 16,167   |   |   |   | (21,848 | ) |   |   | 23,385 |   |
|                                                                                         |   |                                  |     |   |   |   |   |   |   |   |   |   |
| Cash      and cash equivalents, beginning of year                                            |   |                                  | 24,571   |   |   |   | 46,419 |   |   |   | 23,034 |   |
|                                                                                         |   |                                  |     |   |   |   |   |   |   |   |   |   |
| Cash      and cash equivalents, end of year                                                  |   | $                                     | 40,738   |   |   | $ | 24,571 |   |   | $ | 46,419 |   |

----

|                                                                                |   | For The Years Ended December 31, |   |
|-------------------------------------------------------------------------------------|--------|-----------------------------------------------------------|--------|
| (dollar amounts in    thousands)                                                    |   | 2009                                                      |   |   | 2008 |   |   | 2007 |   |
| Cash      Flow Information                                                          |   |                                                      |   |   |   |   |   |   |   |
| Interest      paid                                                                  |   | $                                                         | 10,147 |   |   | $ | 12,630 |   |   | $ | 14,848 |   |
| Income      taxes paid                                                              |   | $                                                         | 460    |   |   | $ | 3,915 |   |   | $ | 6,856 |   |
|                                                                                |   |                                                      |   |   |   |   |   |   |   |   |   |   |
| Non-Cash      Flow Information                                                      |   |                                                      |   |   |   |   |   |   |   |   |   |   |
| Change      in other valuation allowance for investment securities                  |   | $                                                         | 27     |   |   | $ | (2,167 | ) |   | $ | 180 |   |
| Loans      transferred to OREO or foreclosed collateral                             |   | $                                                         | 9,678  |   |   | $ | 1,401 |   |   | $ | - |   |
|                                                                                |   |                                                      |   |   |   |   |   |   |   |   |   |   |
| Net      change in assets and liabilities due to acquisition of Business      First |   |                                                      |   |   |   |   |   |   |   |   |   |   |
| Increase      in interest-bearing deposits with other financial    institutions     |   | $                                                         | -      |   |   | $ | - |   |   | $ | 12 |   |
| Increase      in investments                                                        |   | $                                                         | -      |   |   | $ | - |   |   | $ | 13,872 |   |
| Increase      in Federal Home Loan Bank stock                                       |   | $                                                         | -      |   |   | $ | - |   |   | $ | 1,193 |   |
| Increase      in property premises and equipment                                    |   | $                                                         | -      |   |   | $ | - |   |   | $ | 1,467 |   |
| Increase      in goodwill and other intangible assets                               |   | $                                                         | -      |   |   | $ | - |   |   | $ | 9,844 |   |
| Increase      in net loans                                                          |   | $                                                         | -      |   |   | $ | - |   |   | $ | 120,778 |   |
| Increase      in other assets                                                       |   | $                                                         | -      |   |   | $ | - |   |   | $ | 837 |   |
| Increase      in demand, money market, and savings accounts                         |   | $                                                         | -      |   |   | $ | - |   |   | $ | 99,074 |   |
| Increase      in time certificates of deposit                                       |   | $                                                         | -      |   |   | $ | - |   |   | $ | 34,345 |   |
| Increase      in other borrowings                                                   |   | $                                                         | -      |   |   | $ | - |   |   | $ | 12,598 |   |
| Increase      in other liabilities                                                  |   | $                                                         | -      |   |   | $ | - |   |   | $ | 376 |   |

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|                                                 |   |      |    |   | Gross      |   |   | Gross      |   |   |       |   |
|------------------------------------------------------|--------|-----------|---------|--------|------------|--------|--------|------------|--------|--------|------------|--------|
| (dollar      amounts in thousands)                   |   | Amortized |    |   | Unrealized |   |   | Unrealized |   |   |       |   |
| As of December 31, 2009                              |   | Cost      |    |   | Gains      |   |   | Losses     |   |   | Fair Value |   |
| Obligations      of U.S. government agencies         |   | $         | 108     |   |       | $      | -      |       |   | $      | (4         | )      |   | $ | 104 |   |
| Mortgage      backed securities                      |   |      |    |   |       |   |   |       |   |   |       |   |   |   |   |   |
| Agency                                               |   |      | 78,203  |   |       |   | 619    |       |   |   | (872       | )      |   |   | 77,950 |   |
| Non-agency                                           |   |      | 21,935  |   |       |   | 1,184  |       |   |   | (2,966     | )      |   |   | 20,153 |   |
| Obligations      of state and political subdivisions |   |      | 22,653  |   |       |   | 421    |       |   |   | (210       | )      |   |   | 22,864 |   |
| Other      securities                                |   |      | 109     |   |       |   | -      |       |   |   | -          |   |   |   | 109 |   |
|                                                 |   |      |    |   |       |   |   |       |   |   |       |   |   |   |   |   |
| Total                                                |   | $         | 123,008 |   |       | $      | 2,224  |       |   | $      | (4,052     | )      |   | $ | 121,180 |   |

| As of December 31, 2008                              |   |   |   |   |   |   |   |   |   |   |   |   |
|------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Obligations      of U.S. government agencies         |   | $      | 149    |   |   | $      | -      |   |   | $      | (1     | )      |   | $ | 148 |   |
| Mortgage      backed securities                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Agency                                               |   |   | 16,454 |   |   |   | 166    |   |   |   | (51    | )      |   |   | 16,569 |   |
| Non-agency                                           |   |   | 18,885 |   |   |   | -      |   |   |   | (2,051 | )      |   |   | 16,834 |   |
| Obligations      of state and political subdivisions |   |   | 17,020 |   |   |   | 373    |   |   |   | (291   | )      |   |   | 17,102 |   |
| Other      securities                                |   |   | 109    |   |   |   | -      |   |   |   | -      |   |   |   | 109 |   |
|                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                                                |   | $      | 52,617 |   |   | $      | 539    |   |   | $      | (2,394 | )      |   | $ | 50,762 |   |

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|                                                                         |   | Twelve month Ended December 31, 2009 |   |
|------------------------------------------------------------------------------|--------|---------------------------------------------------------------|--------|
|                                                                         |   |                                                          |   |   | OTTI Related |   |   |   |   |
|                                                                         |   | OTTI Related                                             |   |   | All Other |   |   | Total |   |
| (dollar amounts in thousands)                                 |   | to Credit Loss                                                |   |   | Factors |   |   | OTTI |   |
| Balance,      beginning of the period                                        |   | $                                                             | -      |   |   | $ | - |   |   | $ | - |   |
| Charges      on securities for which OTTI was not      previously recognized |   |                                                          | (372   | ) |   |   | (1,584 | ) |   |   | (1,956 | ) |
|                                                                         |   |                                                          |   |   |   |   |   |   |   |   |   |   |
| Balance, end of the period                                                   |   | $                                                             | (372   | ) |   | $ | (1,584 | ) |   | $ | (1,956 | ) |

|                                                 |   | Securities In A Loss Position For |   |   |                                 |   |   |   |   |
|------------------------------------------------------|--------|------------------------------------------------------------|--------|--------|--------------------------------------|--------|--------|--------|--------|
|                                                 |   | Less Than Twelve Months                     |   |   | Twelve Months or More |   |   | Total  |   |   |   |   |
| (dollar amounts in thousands)         |   | Fair                                                       |   |   | Unrealized                           |   |   | Fair   |   |   | Unrealized |   |   | Fair |   |   | Unrealized |   |
| As of December 31, 2009                              |   | Value                                                      |   |   | Loss                                 |   |   | Value  |   |   | Loss |   |   | Value |   |   | Loss |   |
| Obligations      of U.S. government agencies         |   | $                                                          | -      |   |                                 | $      | -      |   |   | $ | 104 |   |   | $ | (4 | ) |   | $ | 104 |   |   | $ | (4 | ) |
| Mortgage      backed securities                      |   |                                                       |   |   |                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Agency                                               |   |                                                       | 38,625 |   |                                 |   | (870   | )      |   |   | 357 |   |   |   | (2 | ) |   |   | 38,982 |   |   |   | (872 | ) |
| Non-agency                                           |   |                                                       | -      |   |                                 |   | -      |   |   |   | 11,618 |   |   |   | (2,966 | ) |   |   | 11,618 |   |   |   | (2,966 | ) |
| Obligations      of state and political subdivisions |   |                                                       | 6,012  |   |                                 |   | (210   | )      |   |   | - |   |   |   | - |   |   |   | 6,012 |   |   |   | (210 | ) |
|                                                 |   |                                                       |   |   |                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                                                |   | $                                                          | 44,637 |   |                                 | $      | (1,080 | )      |   | $ | 12,079 |   |   | $ | (2,972 | ) |   | $ | 56,716 |   |   | $ | (4,052 | ) |

| As of December 31, 2008                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Obligations      of U.S. government agencies         |   | $      | 94     |   |   | $      | -      |   |   | $      | 54     |   |   | $      | (1     | )      |   | $      | 148 |   |   | $ | (1 | ) |
| Mortgage      backed securities                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Agency                                               |   |   | 2,254  |   |   |   | (20    | )      |   |   | 2,382  |   |   |   | (31    | )      |   |   | 4,636 |   |   |   | (51 | ) |
| Non-agency                                           |   |   | 15,527 |   |   |   | (1,973 | )      |   |   | 1,308  |   |   |   | (78    | )      |   |   | 16,835 |   |   |   | (2,051 | ) |
| Obligations      of state and political subdivisions |   |   | 6,804  |   |   |   | (291   | )      |   |   | -      |   |   |   | -      |   |   |   | 6,804 |   |   |   | (291 | ) |
|                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                                                |   | $      | 24,679 |   |   | $      | (2,284 | )      |   | $      | 3,744  |   |   | $      | (110   | )      |   | $      | 28,423 |   |   | $ | (2,394 | ) |

|                                         |   | 2009      |    |   | 2008            |   |
|----------------------------------------------|--------|-----------|---------|--------|-----------------|--------|
|                                         |   | Amortized |    |   |            |   |   | Amortized |   |   |   |   |
| (dollar amounts in thousands) |   | Cost      |    |   | Fair Value |   |   | Cost |   |   | Fair Value |   |
| Due      one year or less                    |   | $         | 2,727   |   |            | $      | 2,752 |   |   | $ | 6,845 |   |   | $ | 6,865 |   |
| Due      after one year through five years   |   |      | 81,236  |   |            |   | 80,376 |   |   |   | 21,576 |   |   |   | 20,794 |   |
| Due      after five years through ten years  |   |      | 16,911  |   |            |   | 17,020 |   |   |   | 16,109 |   |   |   | 15,305 |   |
| Due      after ten years                     |   |      | 22,134  |   |            |   | 21,032 |   |   |   | 8,087 |   |   |   | 7,798 |   |
|                                         |   |      |    |   |            |   |   |   |   |   |   |   |   |   |   |   |
| Total                                        |   | $         | 123,008 |   |            | $      | 121,180 |   |   | $ | 52,617 |   |   | $ | 50,762 |   |

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|                                         |   | December 31, |    |
|----------------------------------------------|--------|-------------------|---------|
| (dollar amounts in thousands) |   | 2009              |    |   | 2008 |   |
| Real Estate Secured                |   |              |    |   |   |   |
| Multi-family      residential                |   | $                 | 20,631  |   |   | $ | 16,206 |   |
| Residential      1 to 4 family               |   |              | 25,483  |   |   |   | 23,910 |   |
| Home      equity lines of credit             |   |              | 29,780  |   |   |   | 26,409 |   |
| Commercial                                   |   |              | 337,940 |   |   |   | 285,631 |   |
| Farmland                                     |   |              | 13,079  |   |   |   | 10,723 |   |
| Commercial                                   |   |              |    |   |   |   |   |   |
| Commercial      and industrial               |   |              | 157,270 |   |   |   | 157,674 |   |
| Agriculture                                  |   |              | 17,698  |   |   |   | 13,744 |   |
| Other                                        |   |              | 238     |   |   |   | 620 |   |
| Construction                                 |   |              |    |   |   |   |   |   |
| Single      family residential               |   |              | 15,538  |   |   |   | 11,414 |   |
| Single      family residential - Spec.       |   |              | 3,400   |   |   |   | 15,395 |   |
| Tract                                        |   |              | 2,215   |   |   |   | 2,431 |   |
| Multi-family                                 |   |              | 2,300   |   |   |   | 5,808 |   |
| Hospitality                                  |   |              | 14,306  |   |   |   | 18,630 |   |
| Commercial                                   |   |              | 27,128  |   |   |   | 21,484 |   |
| Land                                         |   |              | 52,793  |   |   |   | 61,681 |   |
| Installment      loans to individuals        |   |              | 8,327   |   |   |   | 7,851 |   |
| All      other loans (including overdrafts)  |   |              | 553     |   |   |   | 536 |   |
|                                         |   |              |    |   |   |   |   |   |
| Total      loans, gross                      |   |              | 728,679 |   |   |   | 680,147 |   |
|                                         |   |              |    |   |   |   |   |   |
| Deferred      loan fees                      |   |              | 1,825   |   |   |   | 1,701 |   |
| Reserve      for possible loan losses        |   |              | 14,372  |   |   |   | 10,412 |   |
|                                         |   |              |    |   |   |   |   |   |
| Total      loans, net                        |   | $                 | 712,482 |   |   | $ | 668,034 |   |
|                                         |   |              |    |   |   |   |   |   |
| Loans      held for sale                     |   | $                 | 9,487   |   |   | $ | 7,939 |   |

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|                                                   |   | December 31, |   |
|--------------------------------------------------------|--------|-------------------|--------|
| (dollar amounts in thousands)           |   | 2009              |   |   | 2008 |   |   | 2007 |   |
| Non-accruing      loans                                |   | $                 | 38,170 |   |   | $ | 18,327 |   |   | $ | 338 |   |
| Loans      90 days or more past due                    |   |              | 151    |   |   |   | 348 |   |   |   | - |   |
| Troubled      debt restructures                        |   |              | 9,703  |   |   |   | 52 |   |   |   | 99 |   |
|                                                   |   |              |   |   |   |   |   |   |   |   |   |   |
| Total      impaired loans                              |   | $                 | 48,024 |   |   | $ | 18,727 |   |   | $ | 437 |   |
|                                                   |   |              |   |   |   |   |   |   |   |   |   |   |
| Imparied      loans with a valuation allowance         |   | $                 | 6,155  |   |   | $ | 1,091 |   |   | $ | 62 |   |
| Valuation      allowance related to impaired loans     |   | $                 | 852    |   |   | $ | 206 |   |   | $ | 31 |   |
| Impaired      loans without a valuation allowance      |   | $                 | 41,869 |   |   | $ | 17,636 |   |   | $ | 375 |   |
|                                                   |   |              |   |   |   |   |   |   |   |   |   |   |
| Average      recorded investment in impaired loans     |   | $                 | 32,781 |   |   | $ | 14,114 |   |   | $ | 475 |   |
| Cash      receipts applied to reduce principal balance |   | $                 | 7,042  |   |   | $ | 1,638 |   |   | $ | 151 |   |

|                                         |   | For the years ended |   |
|----------------------------------------------|--------|------------------------------------|--------|
|                                         |   | December 31,                  |   |
| (dollar amounts in thousands) |   | 2009                               |   |   | 2008 |   |
| Beginning      balance                       |   | $                                  | 1,337  |   |   | $ | - |   |
| Additions                                    |   |                               | 9,595  |   |   |   | 1,337 |   |
| Dispositions                                 |   |                               | (8,521 | ) |   |   | - |   |
| Write-downs                                  |   |                               | (1,465 | ) |   |   | - |   |
|                                         |   |                               |   |   |   |   |   |   |
| Ending      balance                          |   | $                                  | 946    |   |   | $ | 1,337 |   |

----

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|                                             |   | For the years ended December 31, |   |
|--------------------------------------------------|--------|-----------------------------------------------------------|--------|
| (dollar amounts in thousands)     |   | 2009                                                      |   |   | 2008 |   |   | 2007 |   |
| Balance      at beginning of period              |   | $                                                         | 10,412 |   |   | $ | 6,143 |   |   | $ | 4,081 |   |
| Provision      expense                           |   |                                                      | 24,066 |   |   |   | 12,215 |   |   |   | 660 |   |
| Loans      charged-off                           |   |                                                      |   |   |   |   |   |   |   |   |   |   |
| Commercial      real estate                      |   |                                                      | 339    |   |   |   | 340 |   |   |   | - |   |
| Residential      1-4 family                      |   |                                                      | 558    |   |   |   | 555 |   |   |   | - |   |
| Commercial      and industrial                   |   |                                                      | 5,816  |   |   |   | 3,854 |   |   |   | 233 |   |
| Agriculture                                      |   |                                                      | 2,224  |   |   |   | - |   |   |   | - |   |
| Construction                                     |   |                                                      | 2,218  |   |   |   | 1,837 |   |   |   | 16 |   |
| Land                                             |   |                                                      | 8,886  |   |   |   | 1,434 |   |   |   | - |   |
| Other                                            |   |                                                      | 163    |   |   |   | 56 |   |   |   | - |   |
|                                             |   |                                                      |   |   |   |   |   |   |   |   |   |   |
| Total      charge-offs                           |   |                                                      | 20,204 |   |   |   | 8,076 |   |   |   | 249 |   |
|                                             |   |                                                      |   |   |   |   |   |   |   |   |   |   |
| Recoveries      of loans previously charged off  |   |                                                      | 98     |   |   |   | 130 |   |   |   | 270 |   |
|                                             |   |                                                      |   |   |   |   |   |   |   |   |   |   |
| Credit      from purchase of Business First Bank |   |                                                      | -      |   |   |   | - |   |   |   | 1,381 |   |
|                                             |   |                                                      |   |   |   |   |   |   |   |   |   |   |
| Balance      at end of period                    |   | $                                                         | 14,372 |   |   | $ | 10,412 |   |   | $ | 6,143 |   |

|                                                            |   | December 31, |   |
|-----------------------------------------------------------------|--------|-------------------|--------|
| (dollar amounts in thousands)                    |   | 2009              |   |   | 2008 |   |
| Land                                                            |   | $                 | 1,240  |   |   | $ | 1,242 |   |
| Furniture      and equipment                                    |   |              | 8,574  |   |   |   | 8,394 |   |
| Building      and improvements                                  |   |              | 6,789  |   |   |   | 5,941 |   |
| Construction      in progress                                   |   |              | 4      |   |   |   | 202 |   |
|                                                            |   |              |   |   |   |   |   |   |
| Total      cost                                                 |   |              | 16,607 |   |   |   | 15,779 |   |
|                                                            |   |              |   |   |   |   |   |   |
| Less:  accumulated      depreciation and amortization |   |              | 9,828  |   |   |   | 8,952 |   |
|                                                            |   |              |   |   |   |   |   |   |
| Total      property, premises and equipment                     |   | $                 | 6,779  |   |   | $ | 6,827 |   |

----

----

|                                         |   | Gross Carrying |   |   | Accumulated  |   |   | Net Carrying |   |
|----------------------------------------------|--------|---------------------|--------|--------|--------------|--------|--------|-------------------|--------|
| (dollar amounts in thousands) |   | Amount              |   |   | Amortization |   |   | Amount            |   |
| Core deposit intangible            |   | $                   | 6,320  |   |         | $      | (3,678 | )                 |   | $ | 2,642 |   |
|                                         |   |                |   |   |         |   |   |              |   |   |   |   |
|                                         |   | Beginning           |   |   | Estimated    |   |   | Ending            |   |
| Period                                       |   | Balance             |   |   | Amortization |   |   | Balance           |   |
| Year      2010                               |   | $                   | 2,642  |   |         | $      | (514   | )                 |   | $ | 2,128 |   |
| Year      2011                               |   | $                   | 2,128  |   |         | $      | (653   | )                 |   | $ | 1,475 |   |
| Year      2012                               |   | $                   | 1,475  |   |         | $      | (757   | )                 |   | $ | 718 |   |
| Year      2013                               |   | $                   | 718    |   |         | $      | (718   | )                 |   | $ | - |   |

|                                         |   | Amount Due |    |   |   |   |
|----------------------------------------------|--------|-----------------|---------|--------|--------|--------|
| (dollar amounts in thousands) |   | 2010            |    |   | 2011   |   |   | 2012 |   |   | 2013 |   |   | 2014 |   |   | Total |   |
| Time      certificates of deposit            |   | $               | 194,290 |   |   | $      | 39,141 |   |   | $ | 878 |   |   | $ | 95 |   |   | $ | 824 |   |   | $ | 235,228 |   |

----

----

| Amount   |   | Interest |   | Maturity       |
|----------|--------|----------|--------|----------------|
| Borrowed |   | Rate     |   | Variable/Fixed |     | Date |
| $        | 55,000 |     |   | 0.18           | % | Variable |   | Overnight |
|     | 10,000 |     |   | 2.89           | % | Fixed |   | 9/16/10 |
|     |   |     |   |           |   |   |   |
| $        | 65,000 |     |   | 0.60           | % |   |   |   |

----

----

|                                         |   | Amount   |   |   | Current |   | Issue  |   | Scheduled |   | Call   |   |           |
|----------------------------------------------|--------|----------|--------|--------|---------|--------|--------|--------|-----------|--------|--------|--------|----------------|
| (dollar amounts in thousands) |   | Borrowed |   |   | Rate    |   | Date   |   | Maturity  |   | Date   |   | Rate Type |
| Heritage      Oaks Capital Trust II          |   | $        | 8,248  |   |    |   | 2.01   | %      | 27-Oct-06 |   | Aug-37 |   | Nov-11         |   | Varibale      3-month LIBOR + 1.72% |
| Heritage      Oaks Capital Trust III         |   |     | 5,155  |   |    |   | 6.89   | %      | 20-Sep-07 |   | Sep-37 |   | Dec-12         |   | 5-year      Fixed SWAP + 2.00% |
|                                         |   |     |   |   |    |   |   |   |      |   |   |   |           |   |   |
| Total      Borrowings                        |   | $        | 13,403 |   |    |   | 3.89   | %      |      |   |   |   |           |   |   |

----

----

|                                                         |   | 2009   |   |   | 2008    |   |   | 2007   |   |
|--------------------------------------------------------------|--------|--------|--------|--------|---------|--------|--------|--------|--------|
| (dollar amounts in thousands)                 |   | Amount |   |   | Percent |   |   | Amount |   |   | Percent |   |   | Amount |   |   | Percent |   |
| (Benefit)      / tax provision at federal statutory tax rate |   | $      | (4,377 | )      |    |   | (34.0  | )      |   | $ | 728 |   |   |   | 34.0 |   |   | $ | 3,809 |   |   |   | 34.0 |   |
| State      income taxes, net of federal income tax benefit   |   |   | (942   | )      |    |   | (7.3   | )      |   |   | 134 |   |   |   | 6.3 |   |   |   | 777 |   |   |   | 6.9 |   |
| Bank      owned life insurance                               |   |   | (148   | )      |    |   | (1.1   | )      |   |   | (139 | ) |   |   | (6.5 | ) |   |   | (129 | ) |   |   | (1.2 | ) |
| Tax      exempt income, net of interest expense              |   |   | (383   | )      |    |   | (3.0   | )      |   |   | (282 | ) |   |   | (13.2 | ) |   |   | (217 | ) |   |   | (1.9 | ) |
| Other,      net                                              |   |   | 25     |   |    |   | 0.2    |   |   |   | 56 |   |   |   | 2.6 |   |   |   | 47 |   |   |   | 0.5 |   |
|                                                         |   |   |   |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total      income tax (benefit) / provision                  |   | $      | (5,825 | )      |    |   | (45.2  | )      |   | $ | 497 |   |   |   | 23.2 |   |   | $ | 4,287 |   |   |   | 38.3 |   |

|                                         |   | For The Years Ended December 31, |   |
|----------------------------------------------|--------|-----------------------------------------------------------|--------|
| (dollar amounts in thousands) |   | 2009                                                      |   |   | 2008 |   |   | 2007 |   |
| Federal      income tax:                     |   |                                                      |   |   |   |   |   |   |   |
| Current                                      |   | $                                                         | (2,951 | ) |   | $ | 1,192 |   |   | $ | 5,272 |   |
| Deferred                                     |   |                                                      | (1,446 | ) |   |   | (898 | ) |   |   | (2,162 | ) |
|                                         |   |                                                      |   |   |   |   |   |   |   |   |   |   |
| Total      federal taxes                     |   |                                                      | (4,397 | ) |   |   | 294 |   |   |   | 3,110 |   |
|                                         |   |                                                      |   |   |   |   |   |   |   |   |   |   |
| State      franchise tax:                    |   |                                                      |   |   |   |   |   |   |   |   |   |   |
| Current                                      |   |                                                      | (18    | ) |   |   | 831 |   |   |   | 1,968 |   |
| Deferred                                     |   |                                                      | (1,410 | ) |   |   | (628 | ) |   |   | (791 | ) |
|                                         |   |                                                      |   |   |   |   |   |   |   |   |   |   |
| Total      state franchise tax               |   |                                                      | (1,428 | ) |   |   | 203 |   |   |   | 1,177 |   |
|                                         |   |                                                      |   |   |   |   |   |   |   |   |   |   |
| Total      income tax (benefit) / provision  |   | $                                          | (5,825 | ) |   | $    | 497 |   |   | $    | 4,287 |   |

----

----

|                                            |   | December 31,                                 |   |
|-------------------------------------------------|--------|---------------------------------------------------|--------|
| (dollar amounts in thousands)    |   | 2009                                              |   |   | 2008 |   |
| Deferred      tax assets                        |   |                                              |   |   |   |   |
| Reserves      for loan losses                   |   | $                                                 | 6,444  |   |   | $ | 4,635 |   |
| Fixed      assets                               |   |                                              | 102    |   |   |   | 68 |   |
| Accruals                                        |   |                                              | 739    |   |   |   | 499 |   |
| Alternative      minimum tax credit             |   |                                              | 18     |   |   |   | - |   |
| Deferred      income                            |   |                                              | 2,440  |   |   |   | 2,680 |   |
| Deferred      compensation                      |   |                                              | 1,718  |   |   |   | 1,452 |   |
| Net      operating loss carryforward            |   |                                              | 949    |   |   |   | 279 |   |
| Investment      securities valuation            |   |                                              | 820    |   |   |   | 831 |   |
| Other      than temporary impairment            |   |                                              | 167    |   |   |   | - |   |
| Other      real estate owned                    |   |                                              | 78     |   |   |   | - |   |
| Charitable      contribution                    |   |                                              | 28     |   |   |   | - |   |
|                                            |   |                                              |   |   |   |   |   |   |
| Total      deferred tax assets                  |   |                                              | 13,503 |   |   |   | 10,444 |   |
|                                            |   |                                              |   |   |   |   |   |   |
| Deferred      tax liabilities                   |   |                                              |   |   |   |   |   |   |
| Fair      value adjustment for purchased assets |   |                                              | 864    |   |   |   | 1,170 |   |
| Deferred      costs, prepaids and FHLB advances |   |                                              | 908    |   |   |   | 1,121 |   |
| State      deferred tax                         |   |                                              | 1,178  |   |   |   | 445 |   |
|                                            |   |                                              |   |   |   |   |   |   |
| Total      deferred tax liabilities             |   |                                              | 2,950  |   |   |   | 2,736 |   |
|                                            |   |                                              |   |   |   |   |   |   |
| Net      deferred tax assets                    |   | $         | 10,553 |   |   | $         | 7,708 |   |

----

----

|                                                 |   | December 31,                                 |    |
|------------------------------------------------------|--------|---------------------------------------------------|---------|
| (dollar amounts in thousands)         |   | 2009                                              |    |   | 2008 |   |
| Commitments      to extend credit                    |   | $                                                 | 151,900 |   |   | $ | 210,058 |   |
| Standby      letters of credit                       |   |                                              | 17,678  |   |   |   | 18,451 |   |
|                                                 |   |                                              |    |   |   |   |   |   |
| Total      commitments and standby letters of credit |   | $         | 169,578 |   |   | $         | 228,509 |   |

|                                         |   | Due  |   |   | Due    |   |   | Due    |   |   | Due   |   |   | Due  |   |   | Due More          |   |   |   |   |
|----------------------------------------------|--------|------|--------|--------|--------|--------|--------|--------|--------|--------|-------|--------|--------|------|--------|--------|------------------------|--------|--------|--------|--------|
| (dollar amounts in thousands) |   | 2010 |   |   | 2011   |   |   | 2012   |   |   | 2013  |   |   | 2014 |   |   | Than 5 Years |   |   | Total  |   |
| Non-cancelable      operating leases         |   | $    | 2,306  |   |   | $      | 1,945  |   |   | $      | 1,574 |   |   | $    | 1,294  |   |                   | $      | 1,050  |   |   | $ | 6,893 |   |   | $ | 15,062 |   |

----

----

|                                         |   |    |   |   |                   |   |   |                         |   |   |                              |   |   | Capital Needed                   |   |
|----------------------------------------------|--------|---------|--------|--------|------------------------|--------|--------|------------------------------|--------|--------|-----------------------------------|--------|--------|---------------------------------------|--------|
|                                         |   |    |   |   |                   |   |   |                         |   |   |                              |   |   | To Be Well Capitalized |   |
|                                         |   |    |   |   |                   |   |   | Capital Needed For |   |   | Under Prompt Corrective |   |
|                                         |   | Actual  |   |   | Adequacy Purposes |   |   | Action Provisions       |   |
|                                         |   | Capital |   |   |                   |   |   | Capital                      |   |   |                              |   |   | Capital                               |   |   |   |   |
| (dollar amounts in thousands) |   | Amount  |   |   | Ratio                  |   |   | Amount                       |   |   | Ratio                             |   |   | Amount                                |   |   | Ratio |   |
| As      of December 31, 2009                 |   |    |   |   |                   |   |   |                         |   |   |                              |   |   |                                  |   |   |   |   |
| Total      capital to risk-weighted assets:  |   |    |   |   |                   |   |   |                         |   |   |                              |   |   |                                  |   |   |
| Company                                      |   | $       | 86,522 |   |                   |   | 10.85  | %                            |   | $      | 63,796                            |   |   |                                  | 8.0    | % |   |   | N/A |   |   |   | N/A |   |
| Heritage      Oaks Bank                      |   | $       | 81,450 |   |                   |   | 10.23  | %                            |   | $      | 63,690                            |   |   |                                  | 8.0    | % |   | $ | 79,612 |   |   |   | 10.0 | % |
|                                         |   |    |   |   |                   |   |   |                         |   |   |                              |   |   |                                  |   |   |   |   |   |   |   |   |   |   |
| Tier      I capital to risk-weighted assets: |   |    |   |   |                   |   |   |                         |   |   |                              |   |   |                                  |   |   |   |   |   |   |   |
| Company                                      |   | $       | 76,497 |   |                   |   | 9.59   | %                            |   | $      | 31,898                            |   |   |                                  | 4.0    | % |   |   | N/A |   |   |   | N/A |   |
| Heritage      Oaks Bank                      |   | $       | 71,441 |   |                   |   | 8.97   | %                            |   | $      | 31,845                            |   |   |                                  | 4.0    | % |   | $ | 47,767 |   |   |   | 6.0 | % |
|                                         |   |    |   |   |                   |   |   |                         |   |   |                              |   |   |                                  |   |   |   |   |   |   |   |   |   |   |
| Tier      I capital to average assets:       |   |    |   |   |                   |   |   |                         |   |   |                              |   |   |                                  |   |   |   |   |   |   |   |   |   |   |
| Company                                      |   | $       | 76,497 |   |                   |   | 8.24   | %                            |   | $      | 37,141                            |   |   |                                  | 4.0    | % |   |   | N/A |   |   |   | N/A |   |
| Heritage      Oaks Bank                      |   | $       | 71,441 |   |                   |   | 7.74   | %                            |   | $      | 36,940                            |   |   |                                  | 4.0    | % |   | $ | 46,176 |   |   |   | 5.0 | % |
|                                         |   |    |   |   |                   |   |   |                         |   |   |                              |   |   |                                  |   |   |   |   |   |   |   |   |   |   |
| As      of December 31, 2008                 |   |    |   |   |                   |   |   |                         |   |   |                              |   |   |                                  |   |   |   |   |   |   |   |   |   |   |
| Total      capital to risk-weighted assets:  |   |    |   |   |                   |   |   |                         |   |   |                              |   |   |                                  |   |   |   |   |   |   |   |
| Company                                      |   | $       | 78,660 |   |                   |   | 10.62  | %                            |   | $      | 59,251                            |   |   |                                  | 8.0    | % |   |   | N/A |   |   |   | N/A |   |
| Heritage      Oaks Bank                      |   | $       | 76,628 |   |                   |   | 10.36  | %                            |   | $      | 59,192                            |   |   |                                  | 8.0    | % |   | $ | 73,990 |   |   |   | 10.0 | % |
|                                         |   |    |   |   |                   |   |   |                         |   |   |                              |   |   |                                  |   |   |   |   |   |   |   |   |   |   |
| Tier      I capital to risk-weighted assets: |   |    |   |   |                   |   |   |                         |   |   |                              |   |   |                                  |   |   |   |   |   |   |   |
| Company                                      |   | $       | 69,385 |   |                   |   | 9.37   | %                            |   | $      | 29,625                            |   |   |                                  | 4.0    | % |   |   | N/A |   |   |   | N/A |   |
| Heritage      Oaks Bank                      |   | $       | 67,362 |   |                   |   | 9.10   | %                            |   | $      | 29,596                            |   |   |                                  | 4.0    | % |   | $ | 44,394 |   |   |   | 6.0 | % |
|                                         |   |    |   |   |                   |   |   |                         |   |   |                              |   |   |                                  |   |   |   |   |   |   |   |   |   |   |
| Tier      I capital to average assets:       |   |    |   |   |                   |   |   |                         |   |   |                              |   |   |                                  |   |   |   |   |   |   |   |   |   |   |
| Company                                      |   | $       | 69,385 |   |                   |   | 8.90   | %                            |   | $      | 31,186                            |   |   |                                  | 4.0    | % |   |   | N/A |   |   |   | N/A |   |
| Heritage      Oaks Bank                      |   | $       | 67,362 |   |                   |   | 8.66   | %                            |   | $      | 31,115                            |   |   |                                  | 4.0    | % |   | $ | 38,893 |   |   |   | 5.0 | % |

----

----

----

----

|                           |   |                                                                                                   |   |   | Average Grant        |   |
|--------------------------------|--------|--------------------------------------------------------------------------------------------------------|--------|--------|---------------------------|--------|
|                           |   | Shares                                                                                                 |   |   | Date Fair Value |   |
| Balance      December 31, 2006 |   |                                                                                                   | 69,353 |   |                      | $      | 18.10 |   |
|                           |   |                                                                                                   |   |   |                      |   |   |   |
| Granted                        |   |                                                                                                   | 1,575  |   |                      | $      | 16.36 |   |
| Vested                         |   |                                                                                                   | -      |   |                      | $      | - |   |
| Forfeited/expired              |   |                                                                                                   | (1,313 | )      |                      | $      | 18.29 |   |
|                           |   |                                                                                                   |   |   |                      |   |   |   |
| Balance      December 31, 2007 |   |                                                                                                   | 69,615 |   |                      | $      | 18.05 |   |
|                           |   |                                                                                                   |   |   |                      |   |   |   |
| Granted                        |   |                                                                                                   | 1,050  |   |                      |   | 12.14 |   |
| Vested                         |   |                                                                                                   | -      |   |                      |   | - |   |
| Forfeited/expired              |   |                                                                                                   | (6,904 | )      |                      |   | 18.24 |   |
|                           |   |                                                                                                   |   |   |                      |   |   |   |
| Balance      December 31, 2008 |   |                                                                                                   | 63,761 |   |                      | $      | 17.93 |   |
|                           |   |                                                                                                   |   |   |                      |   |   |   |
| Granted                        |   |                                                                                                   | -      |   |                      | $      | - |   |
| Vested                         |   |                                                                                                   | -      |   |                      |   | - |   |
| Forfeited/expired              |   |                                                                                                   | (5,247 | )      |                      |   | 17.69 |   |
|                           |   |                                                                                                   |   |   |                      |   |   |   |
| Balance      December 31, 2009 |   |                   | 58,514 |   |                      | $      | 17.96 |   |

----

----

|                              |   |                                                         |     |   | Average  |                                                          |   |        |   |   | Options            |   |   | Average         |    |
|-----------------------------------|--------|--------------------------------------------------------------|----------|--------|----------|---------------------------------------------------------------|--------|-------------|--------|--------|--------------------|--------|--------|-----------------|---------|
|                              |   |                                                         |     |   | Exercise |                                                          |   | Options     |   |   | Available for |   |   | Fair Value |    |
|                              |   | Shares                                                       |     |   | Price    |                                                          |   | Exercisable |   |   | Grant              |   |   | Options Granted |    |
| Balance      at December 31, 2006 |   |                                                         | 457,364  |   |     | $                                                             | 5.16   |        |   |   | 390,249            |   |   |            | 596,939 |   |   | $ | 2.57 |   |
|                              |   |                                                         |     |   |     |                                                          |   |        |   |   |               |   |   |            |    |   |   |   |   |   |
| Granted                           |   |                                                         | 147,886  |   |     | $                                                             | 13.03  |        |   |   |               |   |   |            |    |   |   |   |   |   |
| Exercised                         |   |                                                         | (142,090 | )      |     | $                                                             | 2.93   |        |   |   |               |   |   |            |    |   |   |   |   |   |
|                              |   |                                                         |     |   |     |                                                          |   |        |   |   |               |   |   |            |    |   |   |   |   |   |
| Balance      at December 31, 2007 |   |                                                         | 463,160  |   |     | $                                                             | 8.36   |        |   |   | 379,848            |   |   |            | 454,472 |   |   | $ | 4.19 |   |
|                              |   |                                                         |     |   |     |                                                          |   |        |   |   |               |   |   |            |    |   |   |   |   |   |
| Granted                           |   |                                                         | 29,150   |   |     | $                                                             | 10.97  |        |   |   |               |   |   |            |    |   |   |   |   |   |
| Forfeited                         |   |                                                         | (7,910   | )      |     | $                                                             | 8.20   |        |   |   |               |   |   |            |    |   |   |   |   |   |
| Expired                           |   |                                                         | (2       | )      |     | $                                                             | 4.42   |        |   |   |               |   |   |            |    |   |   |   |   |   |
| Exercised                         |   |                                                         | (75,568  | )      |     | $                                                             | 4.05   |        |   |   |               |   |   |            |    |   |   |   |   |   |
|                              |   |                                                         |     |   |     |                                                          |   |        |   |   |               |   |   |            |    |   |   |   |   |   |
| Balance      at December 31, 2008 |   |                                                         | 408,830  |   |     | $                                                             | 9.34   |        |   |   | 331,742            |   |   |            | 516,294 |   |   | $ | 4.64 |   |
|                              |   |                                                         |     |   |     |                                                          |   |        |   |   |               |   |   |            |    |   |   |   |   |   |
| Granted                           |   |                                                         | 58,590   |   |     | $                                                             | 5.31   |        |   |   |               |   |   |            |    |   |   |   |   |   |
| Forfeited                         |   |                                                         | (2,561   | )      |     | $                                                             | 3.73   |        |   |   |               |   |   |            |    |   |   |   |   |   |
| Exercised                         |   |                                                         | (24,121  | )      |     | $                                                             | 3.73   |        |   |   |               |   |   |            |    |   |   |   |   |   |
|                              |   |                                                         |     |   |     |                                                          |   |        |   |   |               |   |   |            |    |   |   |   |   |   |
| Balance      at December 31, 2009 |   |            | 440,738  |   |     | $           | 9.15   |        |   |   | 346,333            |   |   |            | 462,584 |   |   | $ | 4.57 |   |

----

----

|                                         |   | For The Years Ended December 31, |      |
|----------------------------------------------|--------|-----------------------------------------------------------|-----------|
| (dollar amounts in thousands) |   | 2009                                                      |      |   | 2008 |   |   | 2007 |   |
| Share-based      compensation expense:       |   |                                                      |      |   |   |   |   |   |   |
| Stock      option expense                    |   | $                                                         | 177       |   |   | $ | 202 |   |   | $ | 114 |   |
| Restricted      stock expense                |   |                                                      | 162       |   |   |   | 181 |   |   |   | 247 |   |
|                                         |   |                                                      |      |   |   |   |   |   |   |   |   |   |
| Total      share-based expense               |   | $                                                         | 339       |   |   | $ | 383 |   |   | $ | 361 |   |
|                                         |   |                                                      |      |   |   |   |   |   |   |   |   |   |
| Total      share-based expense, net of tax   |   |                                                      | 210       |   |   |   | 256 |   |   | $ | 246 |   |
|                                         |   |                                                      |      |   |   |   |   |   |   |   |   |   |
| Diluted      shares outstanding              |   |                                                      | 7,697,234 |   |   |   | 7,753,013 |   |   |   | 7,228,804 |   |
| Impact      on diluted earnings per share    |   | $                                                         | -         |   |   | $ | 0.033 |   |   | $ | 0.034 |   |
|                                         |   |                                                      |      |   |   |   |   |   |   |   |   |   |
| Unrecognized      compensation expense:      |   |                                                      |      |   |   |   |   |   |   |   |   |   |
| Stock      option expense                    |   | $                                                         | 247       |   |   | $ | 277 |   |   | $ | 364 |   |
| Restricted      stock expense                |   |                                                      | 239       |   |   |   | 493 |   |   |   | 787 |   |
|                                         |   |                                                      |      |   |   |   |   |   |   |   |   |   |
| Total      unrecognized expense              |   | $                                                         | 486       |   |   | $ | 770 |   |   | $ | 1,151 |   |
|                                         |   |                                                      |      |   |   |   |   |   |   |   |   |   |
| Total      unrecognized expense, net of tax  |   | $                                                         | 324       |   |   | $ | 469 |   |   | $ | 719 |   |

|                                        |   | 2009   |   |   | 2008   |   |   | 2007   |   |
|---------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Expected      volatility                    |   |   | 36.57  | %      |   |   | 35.50  | %      |   |   | 34.32 | % |
| Expected      term (years)                  |   |   | 10     |   |   |   | 10     |   |   |   | 10 |   |
| Dividend      yield                         |   |   | 0.00   | %      |   |   | 2.40   | %      |   |   | 2.00 | % |
| Risk      free rate                         |   |   | 3.18   | %      |   |   | 3.53   | %      |   |   | 4.36 | % |
|                                        |   |   |   |   |   |   |   |   |   |   |   |   |
| Weighted-average      grant date fair value |   | $      | 2.78   |   |   | $      | 3.88   |   |   | $ | 6.00 |   |

----

----

|                                         |   | For The Years Ended December 31, |    |
|----------------------------------------------|--------|-----------------------------------------------------------|---------|
| (dollar amounts in thousands) |   | 2009                                                      |    |   | 2008 |   |
| Outstanding      balance, beginning of year  |   | $                                                         | 28,460  |   |   | $ | 18,308 |   |
| Additional      loans made                   |   |                                                      | 8,624   |   |   |   | 15,994 |   |
| Repayments                                   |   |                                                      | (12,767 | ) |   |   | (5,842 | ) |
|                                         |   |                                                      |    |   |   |   |   |   |
| Outstanding      balance, end of year        |   | $                                          | 24,317  |   |   | $    | 28,460 |   |

----

----

|                                                                                                |   | 2009     |    |   | 2008                   |   |
|-----------------------------------------------------------------------------------------------------|--------|----------|---------|--------|------------------------|--------|
|                                                                                                |   | Carrying |    |   |                   |   |   | Carrying |   |   |   |   |
| (dollar amounts in thousands)                                                        |   | Amount   |    |   | Fair Value        |   |   | Amount |   |   | Fair Value |   |
| Assets                                                                                              |   |     |    |   |                   |   |   |   |   |   |   |   |
| Cash      and cash equivalents                                                                      |   | $        | 40,738  |   |                   | $      | 40,738 |   |   | $ | 24,571 |   |   | $ | 24,571 |   |
| Interest-bearing      deposits                                                                      |   |     | 119     |   |                   |   | 119 |   |   |   | 119 |   |   |   | 119 |   |
| Investments      and mortgage-backed securities                                                     |   |     | 121,180 |   |                   |   | 121,180 |   |   |   | 50,762 |   |   |   | 50,762 |   |
| Federal      Home Loan Bank stock                                                                   |   |     | 5,828   |   |                   |   | 5,828 |   |   |   | 5,123 |   |   |   | 5,123 |   |
| Loans      receivable, net of deferred fees and costs                                               |   |     | 726,854 |   |                   |   | 731,045 |   |   |   | 678,446 |   |   |   | 692,767 |   |
| Loans      held for sale                                                                            |   |     | 9,487   |   |                   |   | 9,487 |   |   |   | 7,939 |   |   |   | 7,939 |   |
| Bank      owned life insurance                                                                      |   |     | 12,549  |   |                   |   | 12,549 |   |   |   | 10,737 |   |   |   | 10,737 |   |
| Accrued      interest receivable                                                                    |   |     | 3,639   |   |                   |   | 3,639 |   |   |   | 3,053 |   |   |   | 3,053 |   |
|                                                                                                |   |     |    |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| Liabilities                                                                                         |   |     |    |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| Non      interest-bearing deposits                                                                  |   |     | 174,635 |   |                   |   | 174,635 |   |   |   | 147,044 |   |   |   | 147,044 |   |
| Interest-bearing      deposits                                                                      |   |     | 600,830 |   |                   |   | 596,782 |   |   |   | 456,477 |   |   |   | 457,760 |   |
| Federal      Home Loan Bank advances                                                                |   |     | 65,000  |   |                   |   | 65,180 |   |   |   | 109,000 |   |   |   | 109,373 |   |
| Securities      sold under repurchase agreements                                                    |   |     | -       |   |                   |   | - |   |   |   | 2,796 |   |   |   | 2,796 |   |
| Junior      subordinated debentures                                                                 |   |     | 13,403  |   |                   |   | 12,390 |   |   |   | 13,403 |   |   |   | 13,352 |   |
| Accrued      interest payable                                                                       |   |     | 590     |   |                   |   | 590 |   |   |   | 688 |   |   |   | 688 |   |
|                                                                                                |   |     |    |   |                   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                |   | Notional |    |   | Cost to Cede |   |   | Notional |   |   | Cost to Cede |   |
|                                                                                           |   | Amount   |    |   | or Assume         |   |   | Amount |   |   | or Assume |   |
| Off-balance      sheet instruments, commitments to extend credit and standby letters of      credit |   | $        | 169,578 |   |                   | $      | 1,696 |   |   | $ | 228,509 |   |   | $ | 2,285 |   |

----

----

----

----

----

----

|                                                 |   | Fair Value Measurements Using |   |   |                   |   |
|------------------------------------------------------|--------|----------------------------------------------|--------|--------|------------------------|--------|
|                                                 |   | Quoted Prices in                   |   |   | Significant Other |   |   | Significant |   |   |   |   |
|                                                 |   | Active Markets for                 |   |   | Observable             |   |   | Unobservable |   |   |   |   |
| (dollar amounts in thousands)         |   | Identical Assets                        |   |   | Inputs                 |   |   | Inputs |   |   | Assets At |   |
| As of December 31, 2009          |   | (Level 1)                               |   |   | (Level 2)         |   |   | (Level 3) |   |   | Fair Value |   |
| Assets                                               |   |                                         |   |   |                   |   |   |   |   |   |   |   |
| Obligations      of U.S. government agencies         |   | $                                            | -      |   |                   | $      | 104 |   |   | $ | - |   |   | $ | 104 |   |
| Mortgage      backed securities:                     |   |                                         |   |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| Agency                                               |   |                                         | -      |   |                   |   | 77,950 |   |   |   | - |   |   |   | 77,950 |   |
| Non-agency                                           |   |                                         | -      |   |                   |   | 20,153 |   |   |   | - |   |   |   | 20,153 |   |
| Obligations      of state and political subdivisions |   |                                         | -      |   |                   |   | 22,127 |   |   |   | 737 |   |   |   | 22,864 |   |
| Other      securities                                |   |                                         | -      |   |                   |   | 109 |   |   |   | - |   |   |   | 109 |   |
|                                                 |   |                                         |   |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| Total      assets measured on a recurring basis      |   | $                                            | -      |   |                   | $      | 120,443 |   |   | $ | 737 |   |   | $ | 121,180 |   |
|                                                 |   |                                         |   |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| As      of December 31, 2008                         |   |                                         |   |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| Assets                                               |   |                                         |   |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| Obligations      of U.S. government agencies         |   | $                                            | -      |   |                   | $      | 148 |   |   | $ | - |   |   | $ | 148 |   |
| Mortgage      backed securities:                     |   |                                         |   |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| Agency                                               |   |                                         | -      |   |                   |   | 16,569 |   |   |   | - |   |   |   | 16,569 |   |
| Non-agency                                           |   |                                         | -      |   |                   |   | 16,834 |   |   |   | - |   |   |   | 16,834 |   |
| Obligations      of state and political subdivisions |   |                                         | -      |   |                   |   | 16,328 |   |   |   | 774 |   |   |   | 17,102 |   |
| Other      securities                                |   |                                         | -      |   |                   |   | 109 |   |   |   | - |   |   |   | 109 |   |
|                                                 |   |                                         |   |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| Total      assets measured on a recurring basis      |   | $                                            | -      |   |                   | $      | 49,988 |   |   | $ | 774 |   |   | $ | 50,762 |   |

|                                                   |   | Obligations of state        |   |
|--------------------------------------------------------|--------|---------------------------------------|--------|
|                                                   |   | and political subdivisions  |   |
| (dollar      amounts in thousands)                     |   | 2009                                  |   |   | 2008 |   |
|                                                   |   |                                  |   |   |   |   |
| Beginning      balance                                 |   | $                                     | 774    |   |   | $ | 712 |   |
| Total      gains or losses (realized / unrealized)(1): |   |                                  |   |   |   |   |   |   |
| Included      in earnings                              |   |                                  | -      |   |   |   | - |   |
| Included      in other comprehensive income            |   |                                  | (37    | ) |   |   | 62 |   |
| Purchases                                              |   |                                  | -      |   |   |   | - |   |
| Transfers      in and/or out of Level 3                |   |                                  | -      |   |   |   | - |   |
| Non-trading      activity                              |   |                                  | -      |   |   |   | - |   |
|                                                   |   |                                  |   |   |   |   |   |   |
| Ending      balance                                    |   | $       | 737    |   |   | $       | 774 |   |

----

----

|                                                |   | Fair Value Measurements Using |   |   |                   |   |
|-----------------------------------------------------|--------|----------------------------------------------|--------|--------|------------------------|--------|
|                                                |   | Quoted Prices in                   |   |   | Significant Other |   |   | Significant |   |   |   |   |
|                                                |   | Active Markets for                 |   |   | Observable             |   |   | Unobservable |   |   |   |   |
| (dollar amounts in thousands)        |   | Identical Assets                        |   |   | Inputs                 |   |   | Inputs |   |   | Assets At |   |
| As of December 31, 2009         |   | (Level 1)                               |   |   | (Level 2)         |   |   | (Level 3) |   |   | Fair Value |   |
| Assets                                              |   |                                         |   |   |                   |   |   |   |   |   |   |   |
| Impaired      loans                                 |   | $                                            | -      |   |                   | $      | 47,172 |   |   | $ | - |   |   | $ | 21,042 |   |
| Loans      held for sale                            |   |                                         | -      |   |                   |   | 9,487 |   |   |   | - |   |   |   | 9,487 |   |
| Other      real estate owned                        |   |                                         | -      |   |                   |   | 946 |   |   |   | - |   |   |   | 946 |   |
| Goodwill                                            |   |                                         | -      |   |                   |   | - |   |   |   | 11,049 |   |   |   | 11,049 |   |
|                                                |   |                                         |   |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| Total      assets measured on a non-recurring basis |   | $                                            | -      |   |                   | $      | 31,475 |   |   | $ | 11,049 |   |   | $ | 42,524 |   |
|                                                |   |                                         |   |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| As      of December 31, 2008                        |   |                                         |   |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| Assets                                              |   |                                         |   |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| Impaired      loans                                 |   | $                                            | -      |   |                   | $      | 18,121 |   |   | $ | - |   |   | $ | 18,121 |   |
| Loans      held for sale                            |   |                                         | -      |   |                   |   | 7,939 |   |   |   | - |   |   |   | 7,939 |   |
| Other      real estate owned                        |   |                                         | -      |   |                   |   | 1,337 |   |   |   | - |   |   |   | 1,337 |   |
| Goodwill                                            |   |                                         | -      |   |                   |   | - |   |   |   | 11,049 |   |   |   | 11,049 |   |
|                                                |   |                                         |   |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| Total      assets measured on a non-recurring basis |   | $                                            | -      |   |                   | $      | 27,397 |   |   | $ | 11,049 |   |   | $ | 38,446 |   |

|                                                                                   |   | For The Years Ended December 31, |   |
|----------------------------------------------------------------------------------------|--------|-----------------------------------------------------------|--------|
|                                                                                   |   | 2009                                                      |   |   | 2008 |   |   | 2007 |   |
|                                                                                   |   | Net                                                       |   |   |   |   |   | Net |   |   |   |   |   | Net |   |   |   |   |
| (dollar amounts in thousands except per share data) |   | Income                                                    |   |   | Shares |   |   | Income |   |   | Shares |   |   | Income |   |   | Shares |   |
| Net      (loss) / income                                                               |   | $                                                         | (7,049 | ) |   |   |   |   | $ | 1,646 |   |   |   |   |   | $ | 6,917 |   |   |   |   |
| Dividends      and accretion on preferred stock                                        |   |                                                      | (964   | ) |   |   |   |   |   | - |   |   |   |   |   |   | - |   |   |   |   |
|                                                                                   |   |                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      (loss) / income available to common shareholders                              |   | $                                                         | (8,013 | ) |   |   |   |   | $ | 1,646 |   |   |   |   |   | $ | 6,917 |   |   |   |   |
|                                                                                   |   |                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Weighted      average shares outstanding                                               |   |                                                      |   |   |   |   | 7,697,234 |   |   |   |   |   |   |   | 7,641,726 |   |   |   |   |   |   |   | 6,984,174 |   |
|                                                                                   |   |                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Basic      (loss) / earnings per common share                                          |   | $                                                         | (1.04  | ) |   |   |   |   |   | $ | 0.22 |   |   |   |   |   |   | $ | 0.99 |   |   |   |   |   |
|                                                                                   |   |                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Dilutive      effect of share-based compensation awards                                |   |                                                      |   |   |   |   | - |   |   |   |   |   |   |   | 111,287 |   |   |   |   |   |   |   | 244,630 |   |
| Dilutive      effect of common stock warrant                                           |   |                                                      |   |   |   |   | - |   |   |   |   |   |   |   | - |   |   |   |   |   |   |   | - |   |
|                                                                                   |   |                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Weighted      average diluted shares outstanding                                       |   |                                                      |   |   |   |   | 7,697,234 |   |   |   |   |   |   |   | 7,753,013 |   |   |   |   |   |   |   | 7,228,804 |   |
|                                                                                   |   |                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Diluted      (loss) / earnings per common share                                        |   | $                                                         | (1.04  | ) |   |   |   |   |   | $ | 0.21 |   |   |   |   |   |   | $ | 0.96 |   |   |   |   |   |

----

----

|                                             |   | For The Years Ended December 31, |   |
|--------------------------------------------------|--------|-----------------------------------------------------------|--------|
| (dollar amounts in thousands)     |   | 2009                                                      |   |   | 2008 |   |   | 2007 |   |
| ATM/Debit      card transaction/interchange fees |   | $                                                         | 976    |   |   | $ | 843 |   |   | $ | 765 |   |
| Bankcard      merchant fees                      |   |                                                      | 180    |   |   |   | 231 |   |   |   | 224 |   |
| Mortgage      origination fees                   |   |                                                      | 1,253  |   |   |   | 568 |   |   |   | 461 |   |
| Earnings      on bank owned life insurance       |   |                                                      | 504    |   |   |   | 474 |   |   |   | 433 |   |
| Other                                            |   |                                                      | 426    |   |   |   | 769 |   |   |   | 650 |   |
|                                             |   |                                                      |   |   |   |   |   |   |   |   |   |   |
| Total      other income                          |   | $                                                         | 3,339  |   |   | $ | 2,885 |   |   | $ | 2,533 |   |

|                                         |   | For The Years Ended December 31, |   |
|----------------------------------------------|--------|-----------------------------------------------------------|--------|
| (dollar amounts in thousands) |   | 2009                                                      |   |   | 2008 |   |   | 2007 |   |
| Promotional                                  |   | $                                                         | 644    |   |   | $ | 823 |   |   | $ | 718 |   |
| Data      processing                         |   |                                                      | 2,743  |   |   |   | 2,704 |   |   |   | 2,267 |   |
| Stationery      and supplies                 |   |                                                      | 431    |   |   |   | 428 |   |   |   | 350 |   |
| Regulatory      fees                         |   |                                                      | 1,984  |   |   |   | 475 |   |   |   | 146 |   |
| Audit      and tax costs                     |   |                                                      | 625    |   |   |   | 464 |   |   |   | 517 |   |
| Amortization      of core deposit intangible |   |                                                      | 1,049  |   |   |   | 861 |   |   |   | 393 |   |
| Director      fees                           |   |                                                      | 355    |   |   |   | 318 |   |   |   | 289 |   |
| Communications                               |   |                                                      | 275    |   |   |   | 324 |   |   |   | 286 |   |
| Loan      department costs                   |   |                                                      | 2,803  |   |   |   | 258 |   |   |   | 129 |   |
| Other                                        |   |                                                      | 3,188  |   |   |   | 2,676 |   |   |   | 1,931 |   |
|                                         |   |                                                      |   |   |   |   |   |   |   |   |   |   |
| Total      other expenses                    |   | $                                                         | 14,097 |   |   | $ | 9,331 |   |   | $ | 7,026 |   |

----

----

|                            |   | Dividend                  |   |                                                              |     |                                                                                             |     |                                                                                        |     |
|---------------------------------|--------|---------------------------|--------|-------------------------------------------------------------------|----------|--------------------------------------------------------------------------------------------------|----------|---------------------------------------------------------------------------------------------|----------|
|                            |   | Amount                    |   |     Declaration      |     |        Record         |     |        Payable        |     |
| Dividend Type              |   | Per Share            |   | Date                                                              |     | Date                                                                                             |     | Date                                                                                        |     |
| Regular      quarterly dividend |   | $     | 0.08   |                                                              | 01/24/08 |                                                                                             | 02/01/08 |                                                                                        | 02/15/08 |   |

----

----

|   | · | The      requirement to obtain consent from the U.S. Treasury for any proposed      increases in common stock dividends prior to the third anniversary date of      the preferred equity issuance. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | The      Senior Preferred Stock cannot be redeemed for three years unless the      Company obtains proceeds to replace the Senior Preferred Stock through a      qualified equity offering. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | The      U.S. Treasury must consent to any buy back of our common      stock. |
|--------|--------|-------------------------------------------------------------------------------|

|   | · | Issued      an aggregate of 56,160 shares of Series B Preferred Stock with a      liquidation preference of $1,000 pershare. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------|

|   | · | Issued      1,189,538 shares of Series C Preferred Stock at a price of $3.25 per      share |
|--------|--------|---------------------------------------------------------------------------------------------|

|   | · | Proceeds      from the offering totaled approximately $60.0 million, assuming the      successful closing of the escrow for the second closing mentioned      above. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Series      B Preferred Stock will convert to 17,280,000 shares of common stock at a      conversion price of $3.25 per share upon receipt of shareholder approvals      (as defined in the Company’s March 10, 2010 8-K filing with the      SEC).  Each share of Series B Preferred Stock provides for      cumulative dividends as follows: (i) 10% for a period of six months      following the issuance, (ii) 15% for the next six months, and (iii) 20%      thereafter.  If shareholder approvals are received within the      first six month period, no dividends will be owed or paid on the Series B      Preferred Stock, |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

|   | · | Series      C Preferred Stock is a non-voting class of stock substantially similar in      priority to the common stock of the Company, except for a liquidation      preference over the Company’s common stock.  Upon receipt of      shareholder approvals (as defined in the Company’s March 10, 2010 8-K      filing with the SEC), the Series C Preferred Stock will convert to shares      of common stock on a one share for one share  basis. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | The      Series B Preferred Stock and Series C Preferred Stock will not be      redeemable by either the Company or by the holders.  Holders of      the Series B Preferred Stock and Series C Preferred Stock will not receive      any voting rights, including the right to elect any directors, other than      the customary limited voting rights with respect to matters significantly      and adversely affecting the rights and privileges of the applicable series      of Preferred Stock. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                                  |   | December 31, 2009 |    |
|-----------------------------------------------------------------------|--------|-----------------------------|---------|
| (dollar amounts in thousands)                          |   | Actual                      |    |   | SubsequentEvent |   |   | Proforma |   |
| Assets                                                                |   |                        |    |   |   |   |   |   |   |
| Cash      and cash equivalents                                        |   | $                           | 40,738  |   |   | $ | 52,292 | (1) |   | $ | 93,030 |   |
| Investments                                                           |   |                        | 127,127 |   |   |   | - |   |   |   | 127,127 |   |
| Net      loans and loans held for sale                                |   |                        | 721,969 |   |   |   | - |   |   |   | 721,969 |   |
| Other      assets                                                     |   |                        | 55,343  |   |   |   | - |   |   |   | 55,343 |   |
|                                                                  |   |                        |    |   |   |   |   |   |   |   |   |   |
| Total      assets                                                     |   | $                           | 945,177 |   |   | $ | 52,292 |   |   | $ | 997,469 |   |
|                                                                  |   |                        |    |   |   |   |   |   |   |   |   |   |
| Liabilities                                                           |   |                        |    |   |   |   |   |   |   |   |   |   |
| Deposits                                                              |   | $                           | 775,465 |   |   | $ | - |   |   | $ | 775,465 |   |
| Borrowed      funds                                                   |   |                        | 78,403  |   |   |   | - |   |   |   | 78,403 |   |
| Other      liabilities                                                |   |                        | 7,558   |   |   |   | - |   |   |   | 7,558 |   |
|                                                                  |   |                        |    |   |   |   |   |   |   |   |   |   |
| Total      liabilities                                                |   | $                           | 861,426 |   |   | $ | - |   |   | $ | 861,426 |   |
|                                                                  |   |                        |    |   |   |   |   |   |   |   |   |   |
| Series      A Senior preferred stock, $1,000 per share stated value   |   | $                           | 19,431  |   |   | $ | - |   |   | $ | 19,431 |   |
| Series      B preferred stock, $1,000 per share stated value          |   |                        | -       |   |   |   | 48,426 | (2) |   |   | 48,426 |   |
| Series      C preferred stock, $3.25 per share stated value           |   |                        | -       |   |   |   | 3,866 | (3) |   |   | 3,866 |   |
| Common      stock, no par value                                       |   |                        | 48,747  |   |   |   | - |   |   |   | 48,747 |   |
| Additional      paid in capital                                       |   |                        | 3,242   |   |   |   | - |   |   |   | 3,242 |   |
| Retained      earnings                                                |   |                        | 13,407  |   |   |   | - |   |   |   | 13,407 |   |
| Accumulated      other comprehensive loss, net of tax benefit of $752 |   |                        | (1,076  | ) |   |   | - |   |   |   | (1,076 | ) |
|                                                                  |   |                        |    |   |   |   |   |   |   |   |   |   |
| Total      stockholders' equity                                       |   | $                           | 83,751  |   |   | $ | 52,292 |   |   | $ | 136,043 |   |
|                                                                  |   |                        |    |   |   |   |   |   |   |   |   |   |
| Total      liabilities and stockholders' equity                       |   | $                           | 945,177 |   |   | $ | 52,292 |   |   | $ | 997,469 |   |

| (1) | Represents      increase in cash and equivalents from proceeds of private      placement. |
|-----|-------------------------------------------------------------------------------------------|

| (2) | Total      proceeds from sale of Series B preferred stock of $52.1 million less $3.7      million in placement agent fees and other expenses related to the      offering. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3) | Total      proceeds from sale of Series C preferredstock. |
|-----|-----------------------------------------------------------|

----

----

|                                                  |   |                     |   |   | December      31, 2009 |   |
|-------------------------------------------------------|--------|--------------------------|--------|--------|------------------------|--------|
|                                                  |   | Regulatory      Standard |   |   | Actual                 |   |   | Pro      forma |   |
|                                                  |   | Adequately               |   |   | Well                   |   |   | Heritage      Oaks |   |   | Heritage      Oaks |   |
| Ratio                                                 |   | Capitalized              |   |   | Capitalized            |   |   | Bancorp |   |   | Bank |   |   | Bancorp |   |   | Bank |   |
| Leverage      ratio                                   |   |                     | 4.00   | %      |                   |   | 5.00 | % |   |   | 8.24 | % |   |   | 7.74 | % |   |   | 13.87 | % |   |   | 12.93 | % |
| Tier      I capital to risk weighted assets           |   |                     | 4.00   | %      |                   |   | 6.00 | % |   |   | 9.59 | % |   |   | 8.97 | % |   |   | 16.15 | % |   |   | 15.00 | % |
| Total      risk based capital to risk weighted assets |   |                     | 8.00   | %      |                   |   | 10.00 | % |   |   | 10.85 | % |   |   | 10.23 | % |   |   | 17.41 | % |   |   | 16.26 | % |

|   | · | Among      the corrective actions required are for the Bank to develop and adopt a      plan to maintain the minimum capital requirements for a “well-capitalized”      bank, and to reach and maintain a Tier 1 leverage ratio of at least 10%      and a total risked based capital ratio of 11.5% at the Bank level      beginning 90 days from the issuance of the  Order. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

|   | · | Pursuant      to the Order, the Bank must retain qualified management, must notify the      FDIC and the DFI in writing when it proposes to add any individual to its      Board of Directors or to employ any new senior executive officer, and must      conduct an independent study of management and personnel structure of the      Bank. A consultant has been retained to complete the required management      study, and the Bank intends to comply with the Order’s timelines for      completion of such study and implementation by the Board of a plan to      address the findings of such study.  As part of the capital      raise, the Company and Bank have agreed to seek regulatory approval to add      as a director of both the Bank and Company one of the principals of the      investor in the transaction that proposes to own approximately 14.4% of      the outstanding voting shares of the Company.  Appropriate      applications for such approval were submitted on March 26,      2010.  The addition of a director to the Company’s Board of      Directors will require an amendment to the Company’s bylaws to increase      the range of the size of the board.  Such an amendment will      require the approval of the Company’s shareholders, and it is expected      that such amendment will be submitted to the shareholders for approval at      the Company’s next annual meeting of  shareholders. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Under      the Order the Bank’s Board of Directors must also increase its      participation in the affairs of the Bank, assuming full responsibility for      the approval of sound policies and objectives and for the supervision of      all the Bank’s activities. The Board of Directors believes it has always      provided appropriate oversight of the Bank, but has recently taken steps      to reevaluate such oversight and enhance where appropriate the frequency      and duration and the scope and depth of matters covered at its Board      meetings in response to the current economic environment and concerns      raised in the ROE. In direct response to the ROE, a new joint regulatory      compliance committee was formed at both the Bank and Company levels to      oversee the Bank’s and Company’s response to all regulatory matters,      including the Order and the Written Agreement, discussed      below.  Detailed tracking of the Order’s requirements, and the      Bank’s progress in responding thereto, is reviewed and reported at all      such committee meetings, with regular reports then being provided by the      committee to the full Board.  Further, and prior to the issuance      of the Order, the Board directed its Chairman, Michael Morris, to      significantly increase his direct oversight of Management and involvement      in Bank and Company affairs to ensure an appropriate response at both the      Bank and Company to the concerns raised in the recent examination of the      Bank. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | The      Order further requires the Bank to increase its Allowance for Loan Losses      (“ALLL”), as of the date of the ROE, by $3.5 million and to review and      revise its ALLL methodology.  The Bank subsequently made      provisions of approximately $19.3 million in the third and fourth quarters      of 2009.  The Bank is currently in the process of revising its      policy for determining the adequacy of the ALLL to include an assessment      of market conditions and other qualitative factors. The Bank’s policy      otherwise continues to provide for a comprehensive determination of the      adequacy of its ALLL which is to be reviewed promptly and regularly at      least once each calendar quarter and be properly reported, and any      deficiency in the allowance must be remedied in the calendar quarter it is      discovered, by a charge to current operating  earnings. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | With      respect to classified assets as of the date of the ROE, the Order also      requires the Bank to charge-off or collect all assets classified as “Loss”      and one-half of the assets classified as “Doubtful,” and within 180 days      of the Order to reduce its level of assets classified as “Substandard” to      no more than the greater of $50.0 million or 50% of Tier 1 capital plus      the ALLL.  As of December 31, 2009, the Bank met the requirement      to charge-off or collect all assets classified as “Loss” and one-half of      the assets classified as “Doubtful” as of the date of the      ROE.  In addition, as of December 31, 2009, and through the date      of this report, the requirement to reduce assets classified as      “Substandard” as of the date of the ROE has not been met. However, upon      contribution by the Company of a portion of the proceeds from the recent      capital raise to the Bank, the reduction in the percentage of      “Substandard” assets will be substantially met. The Bank has also      developed and implemented a process for the review and approval of all      applicable asset disposition plans. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | The      Order requires that the Bank develop or revise, adopt and implement a      plan, which must be approved by the FDIC and DFI, to reduce the amount of      Commercial Real Estate loans extended, particularly focusing on reducing      loans for construction and land development.  In addition, the      Bank is to develop a plan for reducing the number of “watch list” credits      to an acceptable level, and develop or revise its written lending and      collection policies to provide more effective guidance and control over      the Bank’s lending function.  The Bank is currently in the      process of developing a plan to comply with this provision of the      Order. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | The      Order restricts the Bank from taking certain actions without the prior      written consent of the FDIC and the DFI, including paying cash dividends,      and from extending additional credit to certain types of borrowers. The      Bank has not paid cash dividends since the first quarter of 2008. In      addition, the Bank has put processes and controls in place to ensure      extensions of credit, directly or indirectly, are not granted to those who      are related to borrowers of loans charged-off or classified as “Loss”,      “Substandard” or “Doubtful” in the ROE. The Bank has also acknowledged      that neither the loan committee nor the Board of Directors will approve      any extension to a borrower classified “Substandard” or “Doubtful” in the      ROE without first collecting all past due interest in  cash. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

|   | · | The      Order further requires the Bank to develop or revise, adopt and implement      a revised liquidity policy, and to adopt a contingency funding plan to      adequately address contingency funding sources and appropriately reduce      contingency funding reliance on off-balance sheet sources.  The      Bank is currently in the process of revising its current liquidity policy      and has since developed a contingency funding  plan. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | The      Order also requires that the Bank prepare and submit a revised business      plan, that is to include a comprehensive budget, and a 3 year strategic      plan, and to further revise its investment policy.  The Bank has      since prepared a comprehensive budget and revised the investment policy      and is in the process of developing a revised business plan and 3 year      strategic plan. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

|                                            |   | December 31, |   |
|-------------------------------------------------|--------|-------------------|--------|
| (dollar amounts in thousands)    |   | 2009              |   |   | 2008 |   |
|                                            |   |              |   |   |   |   |
| Assets                                          |   |              |   |   |   |   |
| Cash                                            |   | $                 | 382    |   |   | $ | 538 |   |
| Federal      funds sold                         |   |              | 4,350  |   |   |   | 1,250 |   |
| Total      cash and cash equivalents            |   |              | 4,732  |   |   |   | 1,788 |   |
| Prepaid      and other assets                   |   |              | 428    |   |   |   | 457 |   |
| Investment      in subsidiaries                 |   |              | 92,085 |   |   |   | 81,413 |   |
|                                            |   |              |   |   |   |   |   |   |
| Total      assets                               |   | $                 | 97,245 |   |   | $ | 83,658 |   |
|                                            |   |              |   |   |   |   |   |   |
| Liabilities                                     |   |              |   |   |   |   |   |   |
| Junior      subordinated debentures             |   | $                 | 13,403 |   |   | $ | 13,403 |   |
| Other      liabilities                          |   |              | 91     |   |   |   | 223 |   |
|                                            |   |              |   |   |   |   |   |   |
| Total      liabilities                          |   |              | 13,494 |   |   |   | 13,626 |   |
|                                            |   |              |   |   |   |   |   |   |
| Stockholders'      Equity                       |   |              |   |   |   |   |   |   |
| Preferred      Stock                            |   | $                 | 19,431 |   |   | $ | - |   |
| Common      stock                               |   |              | 48,747 |   |   |   | 48,649 |   |
| Additional      paid in capital                 |   |              | 3,242  |   |   |   | 1,055 |   |
| Retained      earnings                          |   |              | 13,407 |   |   |   | 21,420 |   |
| Accumulated      other comprehensive income     |   |              | (1,076 | ) |   |   | (1,092 | ) |
|                                            |   |              |   |   |   |   |   |   |
| Total      stockholders' equity                 |   |              | 83,751 |   |   |   | 70,032 |   |
|                                            |   |              |   |   |   |   |   |   |
| Total      liabilities and stockholders' equity |   | $                 | 97,245 |   |   | $ | 83,658 |   |

----

----

|                                                       |   | For The Years Ended |   |
|------------------------------------------------------------|--------|------------------------------------|--------|
|                                                       |   | December 31,                  |   |
| (dollar amounts in thousands)               |   | 2009                               |   |   | 2008 |   |   | 2007 |   |
|                                                       |   |                               |   |   |   |   |   |   |   |
| Income                                                     |   |                               |   |   |   |   |   |   |   |
| Equity      in undisbursed (loss) / income of subsidiaries |   | $                                  | (6,532 | ) |   | $ | 2,230 |   |   | $ | 7,512 |   |
| Interest                                                   |   |                               | 29     |   |   |   | 72 |   |   |   | 77 |   |
|                                                       |   |                               |   |   |   |   |   |   |   |   |   |   |
| Total      income                                          |   |                               | (6,503 | ) |   |   | 2,302 |   |   |   | 7,589 |   |
|                                                       |   |                               |   |   |   |   |   |   |   |   |   |   |
| Expense                                                    |   |                               |   |   |   |   |   |   |   |   |   |   |
| Salary                                                     |   |                               | 150    |   |   |   | 127 |   |   |   | 31 |   |
| Equipment                                                  |   |                               | (57    | ) |   |   | (57 | ) |   |   | (57 | ) |
| Other      professional fees and outside services          |   |                               | 239    |   |   |   | 236 |   |   |   | 199 |   |
| Interest                                                   |   |                               | 574    |   |   |   | 755 |   |   |   | 921 |   |
|                                                       |   |                               |   |   |   |   |   |   |   |   |   |   |
| Total      expense                                         |   |                               | 906    |   |   |   | 1,061 |   |   |   | 1,094 |   |
|                                                       |   |                               |   |   |   |   |   |   |   |   |   |   |
| Total      operating (loss) / income                       |   |                               | (7,409 | ) |   |   | 1,241 |   |   |   | 6,495 |   |
| Income      tax benefit                                    |   |                               | (360   | ) |   |   | (405 | ) |   |   | (422 | ) |
|                                                       |   |                               |   |   |   |   |   |   |   |   |   |   |
| Net      (loss) / income                                   |   | $                                  | (7,049 | ) |   | $ | 1,646 |   |   | $ | 6,917 |   |

----

----

|                                                                       |   | For The Years Ended |    |
|----------------------------------------------------------------------------|--------|------------------------------------|---------|
|                                                                       |   | December 31,                  |    |
| (dollar amounts in thousands)                               |   | 2009                               |    |   | 2008 |   |   | 2007 |   |
|                                                                       |   |                               |    |   |   |   |   |   |   |
| Cash      flows from operating activities:                                 |   |                               |    |   |   |   |   |   |   |
| Net      (loss) / income                                                   |   | $                                  | (7,049  | ) |   | $ | 1,646 |   |   | $ | 6,917 |   |
| Adjustments      to reconcile net income to net cash provided by/(used in) |   |                               |    |   |   |   |   |   |   |   |   |   |
| operating      activities:                                                 |   |                               |    |   |   |   |   |   |   |   |   |   |
| Decrease      in other assets                                              |   |                               | 29      |   |   |   | 36 |   |   |   | 227 |   |
| Decrease      in other liabilities                                         |   |                               | (131    | ) |   |   | (86 | ) |   |   | (150 | ) |
| Share-based      compensation expense                                      |   |                               | 150     |   |   |   | 127 |   |   |   | 31 |   |
| Undistributed      loss /(income) of subsidiaries                          |   |                               | 6,532   |   |   |   | (2,230 | ) |   |   | (7,512 | ) |
|                                                                       |   |                               |    |   |   |   |   |   |   |   |   |   |
| Net      cash used in operating activities                                 |   |                               | (469    | ) |   |   | (507 | ) |   |   | (487 | ) |
|                                                                       |   |                               |    |   |   |   |   |   |   |   |   |   |
| Cash      flows from investing activities:                                 |   |                               |    |   |   |   |   |   |   |   |   |   |
| Contribution      to subsidiary                                            |   |                               | (17,000 | ) |   |   | (1,750 | ) |   |   | - |   |
|                                                                       |   |                               |    |   |   |   |   |   |   |   |   |   |
| Net      cash used in investing activities                                 |   |                               | (17,000 | ) |   |   | (1,750 | ) |   |   | - |   |
|                                                                       |   |                               |    |   |   |   |   |   |   |   |   |   |
| Cash      flows from financing activities:                                 |   |                               |    |   |   |   |   |   |   |   |   |   |
| Cash      dividends received                                               |   |                               | -       |   |   |   | - |   |   |   | 2,000 |   |
| Cash      paid in lieu of fractional shares                                |   |                               | -       |   |   |   | (5 | ) |   |   | - |   |
| Cash      dividends paid                                                   |   |                               | (685    | ) |   |   | (586 | ) |   |   | (2,128 | ) |
| Decrease      in junior subordinated debentures                            |   |                               | -       |   |   |   | - |   |   |   | (3,093 | ) |
| Stock      repurchased                                                     |   |                               | -       |   |   |   | - |   |   |   | (215 | ) |
| Proceeds      from issuance of preferred stock                             |   |                               | 19,151  |   |   |   | - |   |   |   | - |   |
| Proceeds      from issuance of common stock warrants                       |   |                               | 1,849   |   |   |   | - |   |   |   | - |   |
| Proceeds      from the exercise of options                                 |   |                               | 98      |   |   |   | 421 |   |   |   | 862 |   |
|                                                                       |   |                               |    |   |   |   |   |   |   |   |   |   |
| Net      cash provided/ (used in) by financing activities                  |   |                               | 20,413  |   |   |   | (170 | ) |   |   | (2,574 | ) |
|                                                                       |   |                               |    |   |   |   |   |   |   |   |   |   |
| Net      increase / (decrease) in cash and cash equivalents                |   |                               | 2,944   |   |   |   | (2,427 | ) |   |   | (3,061 | ) |
|                                                                       |   |                               |    |   |   |   |   |   |   |   |   |   |
| Cash      and cash equivalents, beginning of year                          |   |                               | 1,788   |   |   |   | 4,215 |   |   |   | 7,276 |   |
|                                                                       |   |                               |    |   |   |   |   |   |   |   |   |   |
| Cash      and cash equivalents, end of year                                |   | $                                  | 4,732   |   |   | $ | 1,788 |   |   | $ | 4,215 |   |

----

|                                                                                    |   | For The Quarters Ended, |   |
|-----------------------------------------------------------------------------------------|--------|----------------------------------------|--------|
|                                                                                    |   | Q4                                     |   |   | Q3 |   |   | Q2 |   |   | Q1 |   |   | Q4 |   |   | Q3 |   |   | Q2 |   |   | Q1 |   |
| (dollar      amounts in thousands, except per share data) |   | 2009                                   |   |   | 2009 |   |   | 2009 |   |   | 2009 |   |   | 2008 |   |   | 2008 |   |   | 2008 |   |   | 2008 |   |
|                                                                                    |   |                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest      income                                                                    |   | $                                      | 13,534 |   |   | $ | 11,860 |   |   | $ | 12,269 |   |   | $ | 11,896 |   |   | $ | 12,223 |   |   | $ | 12,536 |   |   | $ | 12,574 |   |   | $ | 12,817 |   |
| Net      interest income                                                                |   |                                   | 10,836 |   |   |   | 9,265 |   |   |   | 9,842 |   |   |   | 9,567 |   |   |   | 9,352 |   |   |   | 9,525 |   |   |   | 9,589 |   |   |   | 9,120 |   |
| Provision      for credit losses                                                        |   |                                   | 9,500  |   |   |   | 9,756 |   |   |   | 2,700 |   |   |   | 2,110 |   |   |   | 6,000 |   |   |   | 3,200 |   |   |   | 2,775 |   |   |   | 240 |   |
| Non      interest income                                                                |   |                                   | 1,445  |   |   |   | 1,593 |   |   |   | 1,500 |   |   |   | 1,660 |   |   |   | 1,498 |   |   |   | 1,513 |   |   |   | 1,756 |   |   |   | 1,439 |   |
| Non      interest expense                                                               |   |                                   | 8,826  |   |   |   | 10,251 |   |   |   | 8,014 |   |   |   | 7,425 |   |   |   | 7,208 |   |   |   | 7,108 |   |   |   | 7,498 |   |   |   | 7,620 |   |
| Income      before provision for income taxes                                           |   |                                   | (6,045 | ) |   |   | (9,149 | ) |   |   | 628 |   |   |   | 1,692 |   |   |   | (2,358 | ) |   |   | 730 |   |   |   | 1,072 |   |   |   | 2,699 |   |
|                                                                                    |   |                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      (loss) / income                                                                |   |                                   | (3,416 | ) |   |   | (5,242 | ) |   |   | 507 |   |   |   | 1,102 |   |   |   | (1,254 | ) |   |   | 534 |   |   |   | 691 |   |   |   | 1,675 |   |
|                                                                                    |   |                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Dividends      and accretion on preferred stock                                         |   |                                   | 351    |   |   |   | 352 |   |   |   | 250 |   |   |   | 11 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
|                                                                                    |   |                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      (loss) / income available to common shareholders                               |   | $                                      | (3,767 | ) |   | $ | (5,594 | ) |   | $ | 257 |   |   | $ | 1,091 |   |   | $ | (1,254 | ) |   | $ | 534 |   |   | $ | 691 |   |   | $ | 1,675 |   |
|                                                                                    |   |                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (Loss)      / earnings per common share                                                 |   |                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Basic                                                                                   |   | $                                      | (0.48  | ) |   | $ | (0.73 | ) |   | $ | 0.03 |   |   | $ | 0.14 |   |   | $ | (0.16 | ) |   | $ | 0.07 |   |   | $ | 0.09 |   |   | $ | 0.22 |   |
| Diluted                                                                                 |   | $                                      | (0.48  | ) |   | $ | (0.73 | ) |   | $ | 0.03 |   |   | $ | 0.14 |   |   | $ | (0.16 | ) |   | $ | 0.07 |   |   | $ | 0.09 |   |   | $ | 0.21 |   |

----

----

----

| /s/ Lawrence P. Ward                       |   | /s/ Margaret A. Torres                                 |
|--------------------------------------------|--------|--------------------------------------------------------|
| Lawrence      P. Ward                      |   | Margaret      A. Torres                                |
| President      and Chief Executive Officer |   | Executive      Vice President, Chief Financial Officer |
| Dated:  March      31, 2010      |   | and      Principal Accounting Officer                  |
|                                       |   | Dated:  March      31, 2010                  |

| /s/ Michael Morris          |   | Chairman      of the Board of Directors      |   | March      31, 2010 |
|-----------------------------|--------|----------------------------------------------|--------|---------------------|
| Michael      Morris         |   |                                         |   |                |
|                        |   |                                         |   |                |
| /s/ Donald H. Campbell      |   | Vice      Chairman of the Board of Directors |   | March      31, 2010 |
| Donald      H. Campbell     |   |                                         |   |                |
|                        |   |                                         |   |                |
| /s/ Michael Behrman         |   | Director                                     |   | March      31, 2010 |
| Michael      Behrman        |   |                                         |   |                |
|                        |   |                                         |   |                |
| /s/ Kenneth Dewar           |   | Director                                     |   | March      31, 2010 |
| Kenneth      Dewar          |   |                                         |   |                |
|                        |   |                                         |   |                |
| /s/ Mark C. Fugate          |   | Director                                     |   | March      31, 2010 |
| Mark      C. Fugate         |   |                                         |   |                |
|                        |   |                                         |   |                |
| /s/ Dolores T. Lacey        |   | Director                                     |   | March      31, 2010 |
| Dolores      T. Lacey       |   |                                         |   |                |
|                        |   |                                         |   |                |
| /s/ Merle F. Miller         |   | Director                                     |   | March      31, 2010 |
| Merle      F. Miller        |   |                                         |   |                |
|                        |   |                                         |   |                |
| /s/ Daniel J. O’Hare  |   | Director                                     |   | March      31, 2010 |
| Daniel      J. O’Hare |   |                                         |   |                |
|                        |   |                                         |   |                |
| /s/ Michael E. Pfau         |   | Director                                     |   | March      31, 2010 |
| Michael      E. Pfau        |   |                                         |   |                |
|                        |   |                                         |   |                |
| /s/ Alex Simas              |   | Director                                     |   | March      31, 2010 |
| Alex      Simas             |   |                                         |   |                |
|                        |   |                                         |   |                |
| /s/ Lawrence P. Ward        |   | Director                                     |   | March      31, 2010 |
| Lawrence      P. Ward       |   |                                         |   |                |

----

| (3.1a)       |   | Articles      of Incorporation incorporated by reference from Exhibit 3.1a to      Registration Statement on Form S-4 No. 33-77504 filed with the SEC on      April, 1994.                                                                                                                                               |
|--------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|         |   |                                                                                                                                                                                                                                                                                                                     |
| (3.1b)       |   | Amendment      to the Articles of Incorporation filed with the Secretary of State on      October 16, 1997 filed with the SEC in the Company’s 10-KSB for the year      ending December 31, 1997.                                                                                                                  |
|         |   |                                                                                                                                                                                                                                                                                                                     |
| (3.1c)  |   | Certificate      of Amendment of Articles of Incorporation of Heritage Oaks Bancorp, filed      with the SEC on Form 8-K on March 5, 2009.                                                                                                                                                                     |
|         |   |                                                                                                                                                                                                                                                                                                                     |
| (3.1d)  |   | Certificate      of Amendment of Bylaws of Heritage Oaks Bancorp, filed with the SEC on      Form 8-K on April 23, 2009.                                                                                                                                                                                            |
|         |   |                                                                                                                                                                                                                                                                                                                     |
| (3.2)        |   | The      Company Bylaws as amended November 16, 2000 filed with the SEC in the      Company’s 10-KSB for the year ended December 31, 2000.                                                                                                                                                                         |
|         |   |                                                                                                                                                                                                                                                                                                                     |
| (4.1)        |   | Specimen      form of The Company stock certificate incorporated by reference from      Exhibit 4.1 to Registration Statement on Form S-4 No. 33-77504 filed with      the SEC on April 8, 1994.                                                                                                                         |
|         |   |                                                                                                                                                                                                                                                                                                                     |
| (4.2)   |   | Certificate      of Determination of  Series B Mandatorily Convertible Adjustable      Rate Cumulative Perpetual Preferred Stock, filed with the SEC on Form 8-K      on March 15, 2010.                                                                                                                       |
|         |   |                                                                                                                                                                                                                                                                                                                     |
| (4.3)   |   | Certificate of      Determination of Series C Convertible Perpetual Preferred Stock, filed      with the SEC on Form 8-K on March 15,  2010.                                                                                                                                                         |
|         |   |                                                                                                                                                                                                                                                                                                                     |
| (4.4)   |   | Certificate      of Determination of Fixed Rate Cumulative Perpetual Preferred Stock,      Series A of Heritage Oaks Bancorp, filed with the SEC on Form 8-K on March      23, 2009.                                                                                                                                |
|         |   |                                                                                                                                                                                                                                                                                                                     |
| (4.5)   |   | Specimen      form of certificate of Fixed Rate Cumulative Perpetual Preferred      Stock, Series A of Heritage Oaks Bancorp, filed with the SEC on Form 8-K      on March 23, 2009.                                                                                                                                |
|         |   |                                                                                                                                                                                                                                                                                                                     |
| (4.6)   |   | Form      of Warrant to Purchase Common Stock of Heritage Oaks Bancorp,      filed with the SEC on Form 8-K on March 23,    2009.                                                                                                                                                                    |
|         |   |                                                                                                                                                                                                                                                                                                                     |
| (10.1)       |   | 1990      Stock Option Plan incorporated by reference from Exhibit 10.2 to      Registration Statement on Form S-4 No. 33-77504, filed with the SEC on      April 8, 1994.                                                                                                                                               |
|         |   |                                                                                                                                                                                                                                                                                                                     |
| (10.2)       |   | Form      of Stock Option Agreement incorporated by reference from Exhibit 4.2 to      Registration Statement on Form S-4 No. 33-77504, filed with the SEC on      April 8, 1994.                                                                                                                                        |
|         |   |                                                                                                                                                                                                                                                                                                                     |
| (10.5)       |   | The      Company 1995 Bonus Plan, filed with the SEC in the Company’s 10K Report      for the year ended December 31, 1994.                                                                                                                                                                                        |
|         |   |                                                                                                                                                                                                                                                                                                                     |
| (10.6)       |   | Salary      Continuation Agreement with Lawrence P. Ward, filed with the SEC in the      Company’s 10-QSB Report for the quarter ended March 31,    2001.                                                                                                                                                          |
|         |   |                                                                                                                                                                                                                                                                                                                     |
| (10.7)       |   | Salary      Continuation Agreement with Gwen R. Pelfrey, filed with the SEC in the      Company’s 10K Report for the year ended December 31,  1994.                                                                                                                                                                |
|         |   |                                                                                                                                                                                                                                                                                                                     |
| (10.11)      |   | 1997      Stock Option Plan incorporated by reference from Exhibit 4a to      Registration Statement on Form S-8 No.333-31105 filed with the SEC on July      11, 1997 as amended, incorporated by reference, from Registration      Statement on Form S-8, File No. 333-83235 filed with the SEC on July 20,      1999. |
|         |   |                                                                                                                                                                                                                                                                                                                     |
| (10.12)      |   | Form      of Stock Option Agreement incorporated by reference from Exhibit 4b to      Registration Statement on Form S-8 No. 333-31105 filed with the SEC on      July 11, 1997.                                                                                                                                         |
|         |   |                                                                                                                                                                                                                                                                                                                     |
| (10.15)      |   | Master      data processing agreement with Mid West Payment Systems, Inc. commencing      October 1, 1998 filed with the SEC in the Company’s 10-KSB for the year      ended December 31, 1998.                                                                                                                    |
|         |   |                                                                                                                                                                                                                                                                                                                     |
| (10.16)      |   | Salary      Continuation Agreement with Margaret A. Torres, filed with the SEC in the      Company’s 10KSB Report for the year ended December 31,    1999.                                                                                                                                                         |
|         |   |                                                                                                                                                                                                                                                                                                                     |
| (10.17)      |   | Salary      Continuation Agreement with Paul Tognazzini, filed with the SEC in the      Company’s 10-KSB Report for the year ended December 31,    2001.                                                                                                                                                           |
|         |   |                                                                                                                                                                                                                                                                                                                     |
| (10.19)      |   | Service      Bureau Processing Agreement entered into between Alltel Information      Services, Inc. and Heritage Oaks Bank, dated August 1, 1999. Filed with      the SEC in the Company’s 10-KSB reported for the year ended December 31,      1999.                                                             |

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| (10.22) |   | Executive      Salary Continuation Agreement dated February 1, 2002 between Heritage Oaks      Bank and  Margaret A. Torres, filed with the SEC in the      Company’s 10-QSB reported for March 31, 2002.          |
|---------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|    |   |                                                                                                                                                                                                                               |
| (10.23) |   | Executive      Salary Continuation Agreement dated February  1, 2002 between      Heritage Oaks Bank and Paul Tognazzini, filed with the SEC in the      Company’s 10-QSB reported for March 31, 2002.             |
|    |   |                                                                                                                                                                                                                               |
| (10.24) |   | Executive      Salary Continuation Agreement dated February 1, 2002 between Heritage Oaks      Bank and Gwen R. Pelfrey, filed with the SEC in the Company’s 10-QSB      reported for March 31, 2002.                        |
|    |   |                                                                                                                                                                                                                               |
| (10.25) |   | Executive      Salary Continuation Agreement dated February 1, 2002 between Heritage Oaks      Bank and Gloria Brady, filed with the SEC in the Company’s 10-QSB reported      for March 31, 2002.                           |
|    |   |                                                                                                                                                                                                                               |
| (10.26) |   | Executive      Salary Continuation Agreement dated February 1, 2002 between Heritage Oaks      Bank and Joe Carnevali, filed with the SEC in the Company’s 10-QSB      reported for March 31, 2002.                          |
|    |   |                                                                                                                                                                                                                               |
| (10.27) |   | Executive      Salary Continuation Agreement dated February 1, 2002 between Heritage Oaks      Bank and Donna Breuer, filed with the SEC in the Company’s 10-QSB reported      for March 31, 2002.                           |
|    |   |                                                                                                                                                                                                                               |
| (10.28) |   | Executive      Salary Continuation Agreement dated February 1, 2002 between Heritage Oaks      Bank and Chris Sands, filed with the SEC in the Company’s 10-QSB reported      for March 31, 2002.                            |
|    |   |                                                                                                                                                                                                                               |
| (10.29) |   | Money      Access Services Processing Agreement for ATM processing, signed on October      3, 2002, filed with the SEC in the Company’s 10-QSB reported for September      30, 2002.                                         |
|    |   |                                                                                                                                                                                                                               |
| (10.30) |   | The      Company Employee Stock Ownership Plan, Summary Plan Description, filed      with the SEC in the Company’s 10-KSB reported for December 31,      2002.                                                               |
|    |   |                                                                                                                                                                                                                               |
| (10.31) |   | The      Company Employee Stock Ownership Plan, Summary of Material Modifications      to the Summary Plan Description dated July 2002, filed with the SEC in the      Company’s 10-KSB reported for December 31, 2002.      |
|    |   |                                                                                                                                                                                                                               |
| (10.32) |   | A      Construction Agreement dated February 12, 2003 between Heritage Oaks Bank      and HBE Financial Facilities, a Division of HBE Corporation, filed with      the SEC in the Company’s 10-QSB for March 31, 2003.       |
|    |   |                                                                                                                                                                                                                               |
| (10.33) |   | Executive      Salary Continuation Agreement dated July 1, 2003 between Heritage Oaks      Bank and Mark Stasinis, filed with the SEC in the Company’s 10-QSB      reported for June 30, 2003.                               |
|    |   |                                                                                                                                                                                                                               |
| (10.34) |   | Executive      Salary Continuation Agreement dated July 1, 2003 between Heritage Oaks      Bank and Kelley Stolz, filed with the SEC in the Company’s 10-QSB reported      for June 30, 2003.                                |
|    |   |                                                                                                                                                                                                                               |
| (10.35) |   | Executive      Salary Continuation Agreement dated July 1, 2003 between Heritage Oaks      Bank and Paul Deline, filed with the SEC in the Company’s 10-QSB reported      for June 30, 2003.                                 |
|    |   |                                                                                                                                                                                                                               |
| (10.36) |   | Executive      Salary Continuation Agreement dated July 1, 2003 between Heritage Oaks      Bank and Mitch Massey, filed with the SEC in the Company’s 10-QSB reported      for June 30, 2003.                                |
|    |   |                                                                                                                                                                                                                               |
| (10.38) |   | Promissory      Note executed on October 3, 2003 for $3.5 million with Pacific Coast      Bankers Bank, filed with the SEC in the Company’s 10-QSB reported for      September 30, 2003.                                     |
|    |   |                                                                                                                                                                                                                               |
| (10.39) |   | Employment      Agreement with Lawrence P. Ward, President and Chief Executive Officer of      Heritage Oaks Bank, dated February 1, 2004 and filed with the SEC in the      Company’s 10-KSB reported for December 31,2003. |

----

| (10.41)       |   | Fifth      Amendment to Service Bureau Processing Agreement dated June 19, 2004      between Fidelity Information Services, Inc. and Heritage Oaks Bank, filed      with the SEC in the Company’s 10QSB for June 30, 2004. |
|---------------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|          |   |                                                                                                                                                                                                                             |
| (10.43)       |   | Form      of Change in Control Agreements.                                                                                                                                                                                       |
|          |   |                                                                                                                                                                                                                             |
| (10.44)       |   | Consent      Order between Heritage Oaks Bank and the Federal Deposit Insurance      Corporation, filed with the SEC on Form 8-K on March 10,    2010.                                                                           |
|          |   |                                                                                                                                                                                                                             |
| (10.45)       |   | Consent      Order between Heritage Oaks Bank and the California Department of      Financial Institutions, filed with the SEC on Form 8-K on March 10,      2010.                                                               |
|          |   |                                                                                                                                                                                                                             |
| (10.46)       |   | Securities      Purchase Agreement, filed with the SEC on Form 8-K on March 10,      2010.                                                                                                                                       |
|          |   |                                                                                                                                                                                                                             |
| (10.47)       |   | Registration      Rights Agreement, filed with the SEC on Form 8-K on March 10,      2010.                                                                                                                                       |
|          |   |                                                                                                                                                                                                                             |
| (10.48)       |   | Written      Agreement by and between Heritage Oaks Bancorp and Federal Reserve Bank of      San Francisco, filed with the SEC on March 8, 2010.                                                                                 |
|          |   |                                                                                                                                                                                                                             |
| (10.49)  |   | Securities      Purchase Agreement, filed with the SEC on Form 8-K on March 23,      2009.                                                                                                                             |
|          |   |                                                                                                                                                                                                                             |
| (14)          |   | Code      of Ethics, filed with the SEC in the Company’s 10-KSB for the year ended      December 31, 2003.                                                                                                                 |
|          |   |                                                                                                                                                                                                                             |
| (21)          |   | Subsidiaries      of the Company. Heritage Oaks Bank is the only financial subsidiaries of      the Company.                                                                                                                     |
|          |   |                                                                                                                                                                                                                             |
| (23)          |   | Consent      of Independent Registered Accounting Firm**                                                                                                                                                                         |
|          |   |                                                                                                                                                                                                                             |
| (31.1)        |   | Certification      of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley      Act of 2002**                                                                                                                   |
|          |   |                                                                                                                                                                                                                             |
| (31.2)        |   | Certification      of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley      Act of 2002**                                                                                                                   |
|          |   |                                                                                                                                                                                                                             |
| (32.1)        |   |  Certification      of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley      Act of 2002**                                                                                                             |
|          |   |                                                                                                                                                                                                                             |
| (32.2)        |   | Certification      of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley      Act of 2002**                                                                                                                   |
|          |   |                                                                                                                                                                                                                             |
| (99.1)        |   | Certification      of Principal Executive Officer pursuant to 31 CFR §  30.15**                                                                                                                                             |
|          |   |                                                                                                                                                                                                                             |
| (99.2)        |   | Certification      of Principal Financial Officer pursuant to 31 CFR §  30.15**                                                                                                                                             |

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