----

----

----

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

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

|                                                          |   |                                |
|---------------------------------------------------------------|--------|-------------------------------------|
| Kentucky                                                      |   | 61-1142247                          |
| (State or other jurisdiction ofincorporation or organization) |   | (I.R.S. EmployerIdentification No.) |
|                                                          |   |
| 2500 Eastpoint Parkway, Louisville, Kentucky                  |   | 40223                               |
| (Address of principal executive offices)                      |   | (Zip Code)                          |

----

| Large accelerated filer  o | Accelerated filer  o         |
|--------------------------------------|----------------------------------------|
| Non-accelerated filer  o   | Smaller reporting company  x |

----

----

| INDEX           |
|-----------------|
|            |   |   |
|            |   |   |
|            |                 | Page |
| PART I –  | FINANCIAL INFORMATION |   |
| ITEM 1.         | FINANCIAL STATEMENTS | 1 |
| ITEM 2.         | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL |   |
|            | CONDITION AND RESULTS OF OPERATIONS | 34 |
| ITEM 3.         | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK | 49 |
| ITEM 4.         | CONTROLS AND PROCEDURES | 49 |
|            |   |   |
| PART II – | OTHER INFORMATION |   |
| ITEM 1.         | LEGAL PROCEEDINGS | 51 |
| ITEM 1A.        | RISK FACTORS | 51 |
| ITEM 2.         | UNREGISTERED SALES ON EQUITY SECURITIES AND USE OF PROCEEDS | 51 |
| ITEM 3.         | DEFAULTS UPON SENIOR SECURITIES | 51 |
| ITEM 4.         | MINE SAFETY DISCLOSURES | 51 |
| ITEM 5.         | OTHER INFORMATION | 51 |
| ITEM 6.         | EXHIBITS | 51 |

----

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

----

|                                                                                                                                                                                 |   | June 30,2012 |      |   | December 31,2011 |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------|-----------|--------|------------------|--------|
| AssetsCash and due from financial institutions                                                                                                                                       |   | $            | 33,653    |   |             | $      | 104,680 |   |
| Federal funds sold                                                                                                                                                                   |   |         | 2,708     |   |             |   | 1,282 |   |
| Cash and cash equivalents                                                                                                                                                            |   |         | 36,361    |   |             |   | 105,962 |   |
| Securities available for sale                                                                                                                                                        |   |         | 194,091   |   |             |   | 158,833 |   |
| M ortgage loans held for sale                                                                                                                                                        |   |         | 383       |   |             |   | 694 |   |
| Loans, net of allowance of $51,594 and $52,579, respectively                                                                                                                         |   |         | 989,315   |   |             |   | 1,083,444 |   |
| Premises and equipment                                                                                                                                                               |   |         | 21,223    |   |             |   | 21,541 |   |
| Other real estate owned                                                                                                                                                              |   |         | 54,365    |   |             |   | 41,449 |   |
| Federal Home Loan Bank stock                                                                                                                                                         |   |         | 10,072    |   |             |   | 10,072 |   |
| Bank owned life insurance                                                                                                                                                            |   |         | 8,254     |   |             |   | 8,106 |   |
| Accrued interest receivable and other assets                                                                                                                                         |   |         | 20,788    |   |             |   | 25,323 |   |
| Total assets                                                                                                                                                                         |   | $            | 1,334,852 |   |             | $      | 1,455,424 |   |
| Liabilities and Stockholders’ EquityDepositsNon-interest bearing                                                                                                               |   | $            | 112,797   |   |             | $      | 111,118 |   |
| Interest bearing                                                                                                                                                                     |   |         | 1,091,925 |   |             |   | 1,212,645 |   |
| Total deposits                                                                                                                                                                       |   |         | 1,204,722 |   |             |   | 1,323,763 |   |
| Repurchase agreements                                                                                                                                                                |   |         | 2,501     |   |             |   | 1,738 |   |
| Federal Home Loan Bank advances                                                                                                                                                      |   |         | 6,398     |   |             |   | 7,116 |   |
| Accrued interest payable and other liabilities                                                                                                                                       |   |         | 7,526     |   |             |   | 7,628 |   |
| Subordinated capital note                                                                                                                                                            |   |         | 7,200     |   |             |   | 7,650 |   |
| Junior subordinated debentures                                                                                                                                                       |   |         | 25,000    |   |             |   | 25,000 |   |
| Total liabilities                                                                                                                                                                    |   |         | 1,253,347 |   |             |   | 1,372,895 |   |
| Stockholders’ equityPreferred stock, no par, 1,000,000 shares authorized,Series A – 35,000 issued and outstanding;Liquidation preference of $35 million at June 30, 2012 |   |         | 34,751    |   |             |   | 34,661 |   |
| Series C – 317,042 issued and outstanding;Liquidation preference of $3.6 million at June 30, 2012                                                                              |   |         | 3,283     |   |             |   | 3,283 |   |
| Common stock, no par, 86,000,000 shares authorized, 11,934,872and 11,824,472 shares issued and outstanding, respectively                                                             |   |         | 112,236   |   |             |   | 112,236 |   |
| Additional paid-in capital                                                                                                                                                           |   |         | 20,056    |   |             |   | 19,841 |   |
| Retained deficit                                                                                                                                                                     |   |         | (90,968   | )      |             |   | (91 ,656 | ) |
| Accumulated other comprehensive income                                                                                                                                               |   |         | 2,147     |   |             |   | 4,164 |   |
| Total stockholders' equity                                                                                                                                                           |   |         | 81 ,505   |   |             |   | 82,529 |   |
| Total liabilities and stockholders’ equity                                                                                                                                     |   | $            | 1,334,852 |   |             | $      | 1,455,424 |   |

----

|                                                    |   | Three Months EndedJune 30, |    |   | Six Months EndedJune 30, |   |
|---------------------------------------------------------|--------|----------------------------|---------|--------|--------------------------|--------|
|                                                    |   | 2012                       |    |   | 2011                     |   |   | 2012 |   |   | 2011 |   |
| Interest incomeLoans, including fees                    |   | $                          | 13,689  |   |                     | $      | 17,589 |   |   | $ | 28,201 |   |   | $ | 35,699 |   |
| Taxable securities                                      |   |                       | 797     |   |                     |   | 1,139 |   |   |   | 1,638 |   |   |   | 2,181 |   |
| Tax exempt securities                                   |   |                       | 196     |   |                     |   | 268 |   |   |   | 446 |   |   |   | 528 |   |
| Fed funds sold and other                                |   |                       | 130     |   |                     |   | 202 |   |   |   | 282 |   |   |   | 406 |   |
|                                                    |   |                       | 14,812  |   |                     |   | 19,198 |   |   |   | 30,567 |   |   |   | 38,814 |   |
| Interest expenseDeposits                                |   |                       | 3,726   |   |                     |   | 5,272 |   |   |   | 7,726 |   |   |   | 10,632 |   |
| Federal Home Loan Bank advances                         |   |                       | 54      |   |                     |   | 139 |   |   |   | 111 |   |   |   | 281 |   |
| Subordinated capital note                               |   |                       | 67      |   |                     |   | 71 |   |   |   | 138 |   |   |   | 144 |   |
| Junior subordinated debentures                          |   |                       | 168     |   |                     |   | 157 |   |   |   | 339 |   |   |   | 312 |   |
| Federal funds purchased and other                       |   |                       | 2       |   |                     |   | 118 |   |   |   | 4 |   |   |   | 236 |   |
|                                                    |   |                       | 4,017   |   |                     |   | 5,757 |   |   |   | 8,318 |   |   |   | 11,605 |   |
| Net interest income                                     |   |                       | 10,795  |   |                     |   | 13,441 |   |   |   | 22,249 |   |   |   | 27,209 |   |
| Provision for loan losses                               |   |                       | 4,000   |   |                     |   | 13,700 |   |   |   | 7,750 |   |   |   | 18,800 |   |
| Net interest income after provision for loan losses     |   |                       | 6,795   |   |                     |   | (259 | ) |   |   | 14,499 |   |   |   | 8,409 |   |
| Non-interest incomeService charges on deposit accounts  |   |                       | 556     |   |                     |   | 659 |   |   |   | 1,110 |   |   |   | 1,289 |   |
| Income from fiduciary activities                        |   |                       | 291     |   |                     |   | 246 |   |   |   | 542 |   |   |   | 501 |   |
| Secondary market brokerage fees                         |   |                       | 31      |   |                     |   | 76 |   |   |   | 48 |   |   |   | 152 |   |
| Title insurance commissions                             |   |                       | 11      |   |                     |   | 22 |   |   |   | 33 |   |   |   | 53 |   |
| Net gain on sales of loans originated for sale          |   |                       | 77      |   |                     |   | 320 |   |   |   | 122 |   |   |   | 541 |   |
| Net gain on sales of securities                         |   |                       | 1,511   |   |                     |   | 1,025 |   |   |   | 3,530 |   |   |   | 1,108 |   |
| Other                                                   |   |                       | 541     |   |                     |   | 517 |   |   |   | 1,078 |   |   |   | 1,008 |   |
|                                                    |   |                       | 3,018   |   |                     |   | 2,865 |   |   |   | 6,463 |   |   |   | 4,652 |   |
| Non-interest expenseSalaries and employee benefits      |   |                       | 3,982   |   |                     |   | 4,180 |   |   |   | 8,294 |   |   |   | 8,304 |   |
| Occupancy and equipment                                 |   |                       | 969     |   |                     |   | 981 |   |   |   | 1,855 |   |   |   | 1,953 |   |
| Goodwill impairment                                     |   |                       | — |   |                     |   | 23,794 |   |   |   | — |   |   |   | 23,794 |   |
| Other real estate owned expense                         |   |                       | 1,205   |   |                     |   | 22,109 |   |   |   | 2,462 |   |   |   | 23,476 |   |
| FDIC Insurance                                          |   |                       | 832     |   |                     |   | 855 |   |   |   | 1,705 |   |   |   | 1,710 |   |
| State franchise tax                                     |   |                       | 592     |   |                     |   | 582 |   |   |   | 1,184 |   |   |   | 1,164 |   |
| Loan collection expense                                 |   |                       | 586     |   |                     |   | 925 |   |   |   | 946 |   |   |   | 1,187 |   |
| Professional fees                                       |   |                       | 567     |   |                     |   | 354 |   |   |   | 923 |   |   |   | 634 |   |
| Comm unications                                         |   |                       | 168     |   |                     |   | 165 |   |   |   | 348 |   |   |   | 333 |   |
| Postage and delivery                                    |   |                       | 109     |   |                     |   | 128 |   |   |   | 231 |   |   |   | 251 |   |
| Advertising                                             |   |                       | 28      |   |                     |   | 87 |   |   |   | 61 |   |   |   | 189 |   |
| Other                                                   |   |                       | 624     |   |                     |   | 599 |   |   |   | 1,300 |   |   |   | 1,159 |   |
|                                                    |   |                       | 9,662   |   |                     |   | 54,759 |   |   |   | 19,309 |   |   |   | 64,154 |   |
| Income (loss) before income taxes                       |   |                       | 151     |   |                     |   | (52,153 | ) |   |   | 1,653 |   |   |   | (51,093 | ) |
| Income tax expense (benef it)                           |   |                       | — |   |                     |   | (12,164 | ) |   |   | — |   |   |   | (11,903 | ) |
| Net income (loss)                                       |   |                       | 151     |   |                     |   | (39,989 | ) |   |   | 1,653 |   |   |   | (39,190 | ) |
| Less:Dividends on preferred stock                       |   |                       | 438     |   |                     |   | 437 |   |   |   | 875 |   |   |   | 875 |   |
| Accretion on Series A preferred stock                   |   |                       | 45      |   |                     |   | 44 |   |   |   | 90 |   |   |   | 88 |   |
| Earnings (losses) allocated to participating securities |   |                       | (13     | )      |                     |   | (1,510 | ) |   |   | 27 |   |   |   | (1,552 | ) |
| Net income (loss) available to common shareholders      |   | $                          | (319    | )      |                     | $      | (38,960 | ) |   | $ | 661 |   |   | $ | (38,601 | ) |
| Basic earnings (loss) per common share                  |   | $                          | (0.03   | )      |                     | $      | (3.33 | ) |   | $ | 0.06 |   |   | $ | (3.30 | ) |
| Diluted earnings (loss) per common share                |   | $                          | (0.03   | )      |                     | $      | (3.33 | ) |   | $ | 0.06 |   |   | $ | (3.30 | ) |

----

|                                                                                                                                                                                |   | Three Months EndedJune 30, |         |    | Six Month EndedJune 30, |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------|--------------|---------|-------------------------|--------|
|                                                                                                                                                                                |   | 2012                       |         |    | 2011                    |   |   | 2012 |   |   | 2011 |   |
| Net income (loss)                                                                                                                                                                   |   | $                          | 151          |    |                    | $      | (39,989 | ) |   | $ | 1,653 |   |   | $ | (39,190 | ) |
|                                                                                                                                                                                |   |                       |         |    |                    |   |   |   |   |   |   |   |   |   |   |   |
| Other comprehensive income (loss), net of tax:Unrealized gain (loss) on securities:Unrealized gain (loss) arising in period(net of tax of $68, $980,$149, and $1,005, respectively) |   |                       | (127         | )       |                    |   | 1,819 |   |   |   | 278 |   |   |   | 1,865 |   |
| Reclassification of amount realized through sales(net of tax of $529, $359,$1,236 and $388, respectively)                                                                           |   |                       | (982         | )       |                    |   | (666 | ) |   |   | (2,295 | ) |   |   | (720 | ) |
| Net unrealized gain (loss) on securities                                                                                                                                            |   |                       |  (1,109 | )  |                    |   | 1,153 |   |   |   |  (2,017 | )  |   |   |  1,145 |   |
|                                                                                                                                                                                |   |                       |         |    |                    |   |   |   |   |   |   |   |   |   |   |
| Comprehensive income (loss)                                                                                                                                                         |   | $                          | (958         | )       |                    | $      | (38,836 | ) |   | $ | (364 | ) |   | $ | (38,045 | ) |

----

|                                                              |   | Shares |       |   | Amount            |   |    | Additional        |   |   |    |   |   | AccumulatedOther  |    |   |              |   |
|-------------------------------------------------------------------|--------|--------|------------|--------|-------------------|--------|---------|-------------------|--------|--------|---------|--------|--------|-------------------|---------|--------|-------------------|--------|
|                                                              |   | Common |       |   | Series APreferred |   |    | Series CPreferred |   |   | Common  |   |   | Series APreferred |    |   | Series CPreferred |   |   | Paid-InCapital |   |   | RetainedDeficit |   |   | ComprehensiveIncome |   |   | Total |   |
| Balances, January 1, 2012                                         |   |   | 11,824,472 |   |              |   | 35,000  |              |   |   | 317,042 |   |   | $                 | 112,236 |   |              | $      | 34,661 |   |   | $ | 3,283 |   |   | $ | 19,841 |   |   | $ | (91,656 | ) |   | $ | 4,164 |   |   | $ | 82,529 |   |
| Issuance of unvested stock                                        |   |   | 115,095    |   |              |   | – |              |   |   | – |   |   |              | – |   |              |   | – |   |   |   | – |   |   |   | – |   |   |   | – |   |   |   | – |   |   |   | – |   |
| Forfeited unvested stock                                          |   |   | (4,695     | )      |              |   | – |              |   |   | – |   |   |              | – |   |              |   | – |   |   |   | – |   |   |   | – |   |   |   | – |   |   |   | – |   |   |   | – |   |
| Stock-based compensation expense                                  |   |   | –    |   |              |   | – |              |   |   | – |   |   |              | – |   |              |   | – |   |   |   | – |   |   |   | 215 |   |   |   | – |   |   |   | – |   |   |   | 215 |   |
| Net income                                                        |   |   | –    |   |              |   | – |              |   |   | – |   |   |              | – |   |              |   | – |   |   |   | – |   |   |   | – |   |   |   | 1,653 |   |   |   | – |   |   |   | 1,653 |   |
| Net change in accumulated othercomprehensive income, net of taxes |   |   | –    |   |              |   | – |              |   |   | – |   |   |              | – |   |              |   | – |   |   |   | – |   |   |   | – |   |   |   | – |   |   |   | (2,017 | ) |   |   | (2,017 | ) |
| Dividends 5% on Series A preferred stock                          |   |   | –    |   |              |   | – |              |   |   | – |   |   |              | – |   |              |   | – |   |   |   | – |   |   |   | – |   |   |   | (875 | ) |   |   | – |   |   |   | (875 | ) |
| Accretion of Series A preferredstock discount                     |   |   | –    |   |              |   | – |              |   |   | – |   |   |              | – |   |              |   | 90 |   |   |   | – |   |   |   | – |   |   |   | (90 | ) |   |   | – |   |   |   | – |   |
|                                                              |   |   |       |   |              |   |    |              |   |   |    |   |   |              |    |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balances, June 30, 2012                                           |   |   | 11,934,872 |   |              |   | 35,000  |              |   |   | 317,042 |   |   | $                 | 112,236 |   |              | $      | 34,751 |   |   | $ | 3,283 |   |   | $ | 20,056 |   |   | $ | (90,968 | ) |   | $ | 2,147 |   |   | $ | 81,505 |   |

----

| PORTER BANCORP, INC.Unaudited Consolidated Statements of Cash FlowsFor Six Months Ended June 30, 2012 and 2011(dollars in thousands) |
|--------------------------------------------------------------------------------------------------------------------------------------|

|                                                                                                   |   | 2012   |     |   | 2011   |   |
|--------------------------------------------------------------------------------------------------------|--------|--------|----------|--------|--------|--------|
| Cash flows from operating activitiesNet income (loss)                                                  |   | $      | 1,653    |   |   | $      | (39,190 | ) |
| Adjustments to reconcile net income to net cash from operating activitiesDepreciation and amortization |   |   | 1,127    |   |   |   | 1,214 |   |
| Provision for loan losses                                                                              |   |   | 7,750    |   |   |   | 18,800 |   |
| Net amortization on securities                                                                         |   |   | 1,566    |   |   |   | 597 |   |
| Goodwill impairment charge                                                                             |   |   | —  |   |   |   | 23,794 |   |
| Stock-based compensation expense                                                                       |   |   | 215      |   |   |   | 234 |   |
| Deferred income taxes (benefit)                                                                        |   |   | —  |   |   |   | (7,915 | ) |
| Net gain on loans originated for sale                                                                  |   |   | (122     | )      |   |   | (541 | ) |
| Loans originated for sale                                                                              |   |   | (5,721   | )      |   |   | (17,609 | ) |
| Proceeds from sales of loans originated for sale                                                       |   |   | 6,133    |   |   |   | 17,798 |   |
| Net gain on sales of investment securities                                                             |   |   | (3,530   | )      |   |   | (1,108 | ) |
| Net loss on sales of other real estate owned                                                           |   |   | 948      |   |   |   | 6,876 |   |
| Net write-down of other real estate owned                                                              |   |   | 830      |   |   |   | 15,437 |   |
| Earnings on bank owned life insurance                                                                  |   |   | (148     | )      |   |   | (140 | ) |
| Net change in accrued interest receivable and other assets                                             |   |   | 4,282    |   |   |   | (3,339 | ) |
| Net change in accrued interest payable and other liabilities                                           |   |   | (977     | )      |   |   | (46 | ) |
| Net cash from operating activities                                                                     |   |   | 14,006   |   |   |   | 14,862 |   |
| Cash flows from investing activitiesPurchases of available-for-sale securities                         |   |   | (121,854 | )      |   |   | (108,647 | ) |
| Sales and calls of available-for-sale securities                                                       |   |   | 65,695   |   |   |   | 49,653 |   |
| Maturities and prepayments of available-for-sale securities                                            |   |   | 20,848   |   |   |   | 10,050 |   |
| Proceeds from sale of other real estate owned                                                          |   |   | 13,072   |   |   |   | 5,047 |   |
| Improvements to other real estate owned                                                                |   |   | (1       | )      |   |   | (1,420 | ) |
| Loan originations and payments, net                                                                    |   |   | 58,397   |   |   |   | 30,418 |   |
| Purchases of premises and equipment, net                                                               |   |   | (318     | )      |   |   | (89 | ) |
| Net cash from investing activities                                                                     |   |   | 35,839   |   |   |   | (14,988 | ) |
| Cash flows from financing activitiesNet change in deposits                                             |   |   | (119,041 | )      |   |   | (32,171 | ) |
| Net change in repurchase agreements                                                                    |   |   | 763      |   |   |   | (616 | ) |
| Repayment of Federal Home Loan Bank advances                                                           |   |   | (718     | )      |   |   | (1,085 | ) |
| Advances from Federal Home Loan Bank                                                                   |   |   | —  |   |   |   | 25,000 |   |
| Repayment of subordinated capital note                                                                 |   |   | (450     | )      |   |   | (225 | ) |
| Cash dividends paid on preferred stock                                                                 |   |   | —  |   |   |   | (882 | ) |
| Cash dividends paid on common stock                                                                    |   |   | —  |   |   |   | (237 | ) |
| Net cash from financing activities                                                                     |   |   | (119,446 | )      |   |   | (10,216 | ) |
| Net change in cash and cash equivalents                                                                |   |   | (69,601  | )      |   |   | (10,342 | ) |
| Beginning cash and cash equivalents                                                                    |   |   | 105,962  |   |   |   | 185,435 |   |
| Ending cash and cash equivalents                                                                       |   | $      | 36,361   |   |   | $      | 175,093 |   |
| Supplemental cash flow information:Interest paid                                                       |   | $      | 8,159    |   |   | $      | 11,602 |   |
| Income taxes paid                                                                                      |   |   | —  |   |   |   | 2,000 |   |
| Supplemental non-cash disclosure:Transfer from loans to other real estate                              |   | $      | 28,126   |   |   | $      | 15,261 |   |
| Financed sales of other real estate owned                                                              |   |   | 361      |   |   |   | 7,043 |   |

----

| ● | Continuing to operate the Company and Bank in a safe and sound manner.  This strategy will require us to continue to reduce the size of our balance sheet, reduce our lending concentrations, consider selling loans, and reduce other noninterest expense through the disposition of OREO. |
|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ● | Continuing with succession planning and add resources to management team.  On March 29, 2012, the Board of Directors announced that it had formed a search committee comprised of its five independent directors to identify and hire a President and CEO for PBI Bank. On July 19, 2012, we reported that the Company had successfully filled this key position. |
|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ● | Addressing other real estate owned. |
|---------|-------------------------------------|

----

| o       | In 2011, management determined, with the concurrence of the Board of Directors, that certain properties held in OREO were not likely to be successfully disposed of in an acceptable time-frame using routine marketing efforts. It became apparent due to weakness in the economy and softness in demand for housing that certain land development and residential condominium projects would require extended holding periods to sell the properties at recent appraised values. Accordingly, management determined to market these properties more aggressively to retail and bulk buyers. In June 2011, the Company sold, in a single transaction, 54 finished condominium property units from condominium developments held in our OREO portfolio with a carrying value of approximately $11.0 million, for $5.2 million, resulting in a pre-tax loss of $5.8 million. |
|---------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| o       | Although we were carrying our OREO at fair market value less estimated cost to sell, we subsequently adjusted our valuations for land development and residential development properties held in OREO similar to the properties we sold earlier in 2011. Our 2011 fair value adjustments totaled approximately $25.6 million to reflect our intent to market these properties more aggressively to retail and bulk buyers.  Additionally, we recorded approximately $9.3 million of fair value adjustments related to new appraisals received for properties in the portfolio during 2011. |
|---------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| o       | In summary, for the years ended December 31, 2011 and 2010 respectively, we recorded net construction and development OREO fair value adjustments and loss on sale of OREO totaling $38.7 million and $10.4 million. This represents approximately 89% and 71% of our total OREO fair value adjustments and loss on sale in 2011 and 2010, respectively. |
|---------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| o       | For the first six months of 2012, we recorded net construction and development OREO fair value adjustments and loss on sale of construction and development OREO of $280,000.  This represents approximately 16% of our total OREO fair value adjustments and loss on sale of OREO in the first six months of 2012. |
|---------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ● | We are committed to reducing loan concentrations and balance sheet risk. |
|---------|--------------------------------------------------------------------------|

| o       | We recorded net construction and development loan charge-offs totaling $1.3 million during the first six months of 2012.  This represented approximately 15% of our total net loan charge-offs for the first six months of 2012.  We recorded net construction and development loan charge-offs totaling $11.0 million and $11.4 million for the years ended December 31, 2011 and 2010, respectively.  This represented approximately 27% and 51% of our total net loan charge-offs in 2011 and 2010, respectively. |
|----------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| o       | Our Consent Order calls for us to reduce our construction and development loans to not more than 75% of total risk-based capital. We were in compliance at June 30, 2012 with construction and development loans representing 68% of total risk-based capital.  These loans totaled $81.8 million, or 68% of total risk-based capital, at June 30, 2012 and $101.5 million, or 85% of total risk-based capital, at December 31, 2011. |
|---------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| o       | Our Consent Order also requires us to reduce non-owner occupied commercial real estate loans, construction and development loans, and multifamily residential real estate loans as a group, to not more than 250% of total risk-based capital. We were not in compliance at June 30, 2012 with non-owner occupied commercial real estate loans, construction and development loans, and multifamily residential real estate loans as a group representing 313% of total risk-based capital.  These loans totaled $376.6 million, or 313% of total risk-based capital, at June 30, 2012 and $414.6 million, or 349% of total risk-based capital, at December 31, 2011. |
|---------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| o       | We are working to reduce these loans by curtailing new construction and development lending and new non-owner occupied commercial real estate lending.  We are also receiving principal reductions from amortizing credits and pay-downs from our customers who sell properties built for resale.  We have reduced the construction loan portfolio from $199.5 million at December 31, 2010 to $81.8 million at June 30, 2012.  Our non-owner occupied commercial real estate loans declined from $293.3 million at December 31, 2010 to $234.9 million at June 30, 2012. |
|---------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| ● | Raising capital by selling common stock through a public offering or private placement to existing and new investors. |
|---------|-----------------------------------------------------------------------------------------------------------------------|

| ● | Evaluating other strategic alternatives, such as the sale of assets or branches. |
|---------|----------------------------------------------------------------------------------|

|                                |   | AmortizedCost  |    |   | GrossUnrealizedGains |   |   | GrossUnrealizedLosses |   |   | FairValue |   |
|-------------------------------------|--------|----------------|---------|--------|----------------------|--------|--------|-----------------------|--------|--------|-----------|--------|
|                                |   | (in thousands) |    |
| June 30, 2012                       |   |           |    |   |                 |   |   |                  |   |   |      |   |
| U.S. Government and federal agency  |   | $              | 5,695   |   |                 | $      | 550    |                  |   | $      | —   |   |   | $ | 6,245 |   |
| Agency mortgage-backed: residential |   |           | 125,017 |   |                 |   | 1,342  |                  |   |   | (255      | )      |   |   | 126,104 |   |
| State and municipal                 |   |           | 49,791  |   |                 |   | 1,898  |                  |   |   | (233      | )      |   |   | 51,456 |   |
| Corporate bonds                     |   |           | 7,267   |   |                 |   | 545    |                  |   |   | (34       | )      |   |   | 7,778 |   |
| Other                               |   |           | 572     |   |                 |   | 34     |                  |   |   | —   |   |   |   | 606 |   |
| Total debt securities               |   |           | 188,342 |   |                 |   | 4,369  |                  |   |   | (522      | )      |   |   | 192,189 |   |
| Equity                              |   |           | 1,359   |   |                 |   | 543    |                  |   |   | —   |   |   |   | 1,902 |   |
| Total                               |   | $              | 189,701 |   |                 | $      | 4,912  |                  |   | $      | (522      | )      |   | $ | 194,091 |   |
| December 31, 2011                   |   |           |    |   |                 |   |   |                  |   |   |      |   |   |   |   |   |
| U.S. Government and federal agency  |   | $              | 10,494  |   |                 | $      | 1,149  |                  |   | $      | —   |   |   | $ | 11,643 |   |
| Agency mortgage-backed: residential |   |           | 97,286  |   |                 |   | 2,211  |                  |   |   | (22       | )      |   |   | 99,475 |   |
| State and municipal                 |   |           | 35,456  |   |                 |   | 2,610  |                  |   |   | (4        | )      |   |   | 38,062 |   |
| Corporate bonds                     |   |           | 7,259   |   |                 |   | 315    |                  |   |   | (242      | )      |   |   | 7,332 |   |
| Other                               |   |           | 572     |   |                 |   | 34     |                  |   |   | —   |   |   |   | 606 |   |
| Total debt securities               |   |           | 151,067 |   |                 |   | 6,319  |                  |   |   | (268      | )      |   |   | 157,118 |   |
| Equity                              |   |           | 1,359   |   |                 |   | 356    |                  |   |   | —   |   |   |   | 1,715 |   |
| Total                               |   | $              | 152,426 |   |                 | $      | 6,675  |                  |   | $      | (268      | )      |   | $ | 158,833 |   |

|         |   |   | Three Months EndedJune 30, |   |   |   | Six Months EndedJune 30, |   |
|--------------|--------|--------|----------------------------|--------|--------|--------|--------------------------|--------|
|         |   |   | 2012                       |   |   |   | 2011                     |   |   |   | 2012 |   |   |   | 2011 |   |
|         |   |   | (in thousands)             |   |
| Proceeds     |   | $      | 44,310                     |   |   | $      | 46,759                   |   |   | $ | 65,695 |   |   | $ | 49,653 |   |
| Gross gains  |   |   | 1,511                      |   |   |   | 1,025                    |   |   |   | 3,530 |   |   |   | 1,108 |   |
| Gross losses |   |   | —                    |   |   |   | —                  |   |   |   | — |   |   |   | — |   |

----

|                                      |   | June 30,2012   |    |
|-------------------------------------------|--------|----------------|---------|
|                                      |   | AmortizedCost  |    |   | FairValue |   |
|                                      |   | (in thousands) |    |
| MaturityAvailable-for-saleWithin one year |   | $              | 215     |   |   | $ | 217 |   |
| One to five years                         |   |           | 11,120  |   |   |   | 11,890 |   |
| Five to ten years                         |   |           | 42,183  |   |   |   | 43,863 |   |
| Beyond ten years                          |   |           | 9,807   |   |   |   | 10,115 |   |
| Agency mortgage-backed: residential       |   |           | 125,017 |   |   |   | 126,104 |   |
| Total                                     |   | $              | 188,342 |   |   | $ | 192,189 |   |

|                                |   | Less than 12 Months |    |   | 12 Months or More |   |    | Total     |   |
|-------------------------------------|--------|---------------------|---------|--------|-------------------|--------|---------|-----------|--------|
| Description of Securities           |   | FairValue           |    |   | UnrealizedLoss    |   |    | FairValue |   |   | UnrealizedLoss |   |   | FairValue |   |   | UnrealizedLoss |   |
|                                |   | (in thousands)      |    |
| June 30, 2012                       |   |                |    |   |              |   |    |      |   |   |   |   |   |   |   |   |   |   |
| State and municipal                 |   | $                   | 16,286  |   |              | $      | (233    | )         |   | $ | — |   |   | $ | — |   |   | $ | 16,286 |   |   | $ | (233 | ) |
| Agency mortgage-backed: residential |   |                | 40,037  |   |              |   | (255    | )         |   |   | — |   |   |   | — |   |   |   | 40,037 |   |   |   | (255 | ) |
| Corporate bonds                     |   |                | — |   |              |   | — |      |   |   | 989 |   |   |   | (34 | ) |   |   | 989 |   |   |   | (34 | ) |
| Equity                              |   |                | 2       |   |              |   | — |      |   |   | — |   |   |   | — |   |   |   | 2 |   |   |   | — |   |
| Total temporarily impaired          |   | $                   | 56,325  |   |              | $      | (488    | )         |   | $ | 989 |   |   | $ | (34 | ) |   | $ | 57,314 |   |   | $ | (522 | ) |
|                                |   |                |    |   |              |   |    |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                |   |                |    |   |              |   |    |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| December 31, 2011                   |   |                |    |   |              |   |    |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| State and municipal                 |   | $                   | 508     |   |              | $      | (4      | )         |   | $ | — |   |   | $ | — |   |   | $ | 508 |   |   | $ | (4 | ) |
| Agency mortgage-backed: residential |   |                | 2,159   |   |              |   | (22     | )         |   |   | — |   |   |   | — |   |   |   | 2,159 |   |   |   | (22 | ) |
| Corporate bonds                     |   |                | 2,805   |   |              |   | (242    | )         |   |   | — |   |   |   | — |   |   |   | 2,805 |   |   |   | (242 | ) |
| Total temporarily impaired          |   | $                   | 5,472   |   |              | $      | (268    | )         |   | $ | — |   |   | $ | — |   |   | $ | 5,472 |   |   | $ | (268 | ) |

----

|                                 |   | June 30,       |      |   | December 31, |   |
|--------------------------------------|--------|----------------|-----------|--------|--------------|--------|
|                                 |   | 2012           |      |   | 2011         |   |
|                                 |   | (in thousands) |      |
| Commercial                           |   | $              | 68,084    |   |         | $      | 71,216 |   |
| Commercial Real Estate:Construction  |   |           | 81,815    |   |         |   | 101,471 |   |
| Farmland                             |   |           | 85,634    |   |         |   | 90,958 |   |
| Other                                |   |           | 384,718   |   |         |   | 423,844 |   |
| Residential Real Estate:Multi-family |   |           | 59,867    |   |         |   | 60,410 |   |
| 1-4 Family                           |   |           | 310,626   |   |         |   | 337,350 |   |
| Consumer                             |   |           | 22,898    |   |         |   | 26,011 |   |
| Agriculture                          |   |           | 26,251    |   |         |   | 23,770 |   |
| Other                                |   |           | 1,016     |   |         |   | 993 |   |
| Subtotal                             |   |           | 1,040,909 |   |         |   | 1,136,023 |   |
| Less: Allowance for loan losses      |   |           | (51,594   | )      |         |   | (52,579 | ) |
| Loans, net                           |   | $              | 989,315   |   |         | $      | 1,083,444 |   |

|                      |   | Commercial     |   |   | CommercialReal Estate |   |   | ResidentialReal Estate |   |   | Consumer |   |   | Agriculture |   |          | Other  |   |    | Total   |   |
|---------------------------|--------|----------------|--------|--------|-----------------------|--------|--------|------------------------|--------|--------|----------|--------|--------|-------------|--------|---------------|--------|--------|---------|---------|--------|
|                      |   | (in thousands) |   |
| June 30, 2012:            |   |           |   |   |                  |   |   |                   |   |   |     |   |   |        |   |          |   |   |    |    |   |
| Beginning balance         |   | $              | 4,082  |   |                  | $      | 32,982 |                   |   | $      | 15,720   |   |   | $           | 812    |          |   | $      | 345     |    |   | $ | 12 |   |   | $ | 53,953 |   |
| Provision for loan losses |   |           | (78    | )      |                  |   | 1,003  |                   |   |   | 2,696    |   |   |        | 97     |          |   |   | 282     |    |   |   | – |   |   |   | 4,000 |   |
| Loans charged off         |   |           | (210   | )      |                  |   | (2,944 | )                      |   |   | (2,862   | )      |   |        | (135   | )   |   |   | (287    | )  |   |   | – |   |   |   | (6,438 | ) |
| Recoveries                |   |           | 17     |   |                  |   | 8      |                   |   |   | 33       |   |   |        | 18     |          |   |   | 3       |    |   |   | – |   |   |   | 79 |   |
| Ending balance            |   | $              | 3,811  |   |                  | $      | 31,049 |                   |   | $      | 15,587   |   |   | $           | 792    |          |   | $      | 343     |    |   | $ | 12 |   |   | $ | 51,594 |   |
|                      |   |           |   |   |                  |   |   |                   |   |   |     |   |   |        |   |          |   |   |    |    |   |   |   |   |   |   |   |   |
|                      |   |           |   |   |                  |   |   |                   |   |   |     |   |   |        |   |          |   |   |    |    |   |   |   |   |   |   |   |   |
| June 30, 2011:            |   |           |   |   |                  |   |   |                   |   |   |     |   |   |        |   |          |   |   |    |    |   |   |   |   |   |   |   |   |
| Beginning balance         |   | $              | 1,974  |   |                  | $      | 23,396 |                   |   | $      | 7,451    |   |   | $           | 631    |          |   | $      | 139     |    |   | $ | 8 |   |   | $ | 33,599 |   |
| Provision for loan losses |   |           | 2,538  |   |                  |   | 7,964  |                   |   |   | 3,089    |   |   |        | 96     |          |   |   | 12      |    |   |   | 1 |   |   |   | 13,700 |   |
| Loans charged off         |   |           | (1,856 | )      |                  |   | (5,353 | )                      |   |   | (1,259   | )      |   |        | (120   | )             |   |   | (8      | )  |   |   | – |   |   |   | (8,596 | ) |
| Recoveries                |   |           | 12     |   |                  |   | 14     |                   |   |   | (21      | )      |   |        | 9      |          |   |   | – |    |   |   | – |   |   |   | 14 |   |
| Ending balance            |   | $              | 2,668  |   |                  | $      | 26,021 |                   |   | $      | 9,260    |   |   | $           | 616    |          |   | $      | 143     |    |   | $ | 9 |   |   | $ | 38,717 |   |

----

|                      |   | Commercial     |   |   | CommercialReal Estate |   |   | ResidentialReal Estate |   |   | Consumer |   |   | Agriculture |   |          | Other  |   |    | Total   |   |
|---------------------------|--------|----------------|--------|--------|-----------------------|--------|--------|------------------------|--------|--------|----------|--------|--------|-------------|--------|---------------|--------|--------|---------|---------|--------|
|                      |   | (in thousands) |   |
| June 30, 2012:            |   |           |   |   |                  |   |   |                   |   |   |     |   |   |        |   |          |   |   |    |    |   |
| Beginning balance         |   | $              | 4,207  |   |                  | $      | 33,024 |                   |   | $      | 14,217   |   |   | $           | 792    |          |   | $      | 325     |    |   | $ | 14 |   |   | $ | 52,579 |   |
| Provision for loan losses |   |           | 11     |   |                  |   | 1,775  |                   |   |   | 5,202    |   |   |        | 321    |          |   |   | 443     |    |   |   | (2 | )   |   |   | 7,750 |   |
| Loans charged off         |   |           | (466   | )      |                  |   | (3,863 | )                      |   |   | (3,891   | )      |   |        | (372   | )   |   |   | (428    | )  |   |   | – |   |   |   | (9,020 | ) |
| Recoveries                |   |           | 59     |   |                  |   | 113    |                   |   |   | 59       |   |   |        | 51     |          |   |   | 3       |    |   |   | – |   |   |   | 285 |   |
| Ending balance            |   | $              | 3,811  |   |                  | $      | 31,049 |                   |   | $      | 15,587   |   |   | $           | 792    |          |   | $      | 343     |    |   | $ | 12 |   |   | $ | 51,594 |   |
|                      |   |           |   |   |                  |   |   |                   |   |   |     |   |   |        |   |          |   |   |    |    |   |   |   |   |   |   |   |   |
|                      |   |           |   |   |                  |   |   |                   |   |   |     |   |   |        |   |          |   |   |    |    |   |   |   |   |   |   |   |   |
| June 30, 2011:            |   |           |   |   |                  |   |   |                   |   |   |     |   |   |        |   |          |   |   |    |    |   |   |   |   |   |   |   |   |
| Beginning balance         |   | $              | 2,147  |   |                  | $      | 24,075 |                   |   | $      | 7,224    |   |   | $           | 701    |          |   | $      | 134     |    |   | $ | 4 |   |   | $ | 34,285 |   |
| Provision for loan losses |   |           | 2,432  |   |                  |   | 11,421 |                   |   |   | 4,707    |   |   |        | 218    |          |   |   | 17      |    |   |   | 5 |   |   |   | 18,800 |   |
| Loans charged off         |   |           | (1,935 | )      |                  |   | (9,494 | )                      |   |   | (2,693   | )      |   |        | (333   | )             |   |   | (8      | )       |   |   | – |   |   |   | (14,463 | ) |
| Recoveries                |   |           | 24     |   |                  |   | 19     |                   |   |   | 22       |   |   |        | 30     |          |   |   | – |    |   |   | – |   |   |   | 95 |   |
| Ending balance            |   | $              | 2,668  |   |                  | $      | 26,021 |                   |   | $      | 9,260    |   |   | $           | 616    |          |   | $      | 143     |    |   | $ | 9 |   |   | $ | 38,717 |   |

|                                            |   | Commercial     |    |   | CommercialReal Estate |   |    | ResidentialReal Estate |   |   | Consumer |   |   | Agriculture |    |   | Other  |   |    | Total  |   |
|-------------------------------------------------|--------|----------------|---------|--------|-----------------------|--------|---------|------------------------|--------|--------|----------|--------|--------|-------------|---------|--------|--------|--------|---------|--------|--------|
|                                            |   | (in thousands) |    |
| Allowance for loan losses:                      |   |           |    |   |                  |   |    |                   |   |   |     |   |   |        |    |   |   |   |    |   |   |
| Ending allowance balance attributable to loans: |   |           |    |   |                  |   |    |                   |   |   |     |   |   |        |    |   |   |   |    |   |   |
| Individually evaluated for impairment           |   | $              | — |   |                  | $      | 4,626   |                   |   | $      | 994      |   |   | $           | — |   |   | $      | — |   |   | $ | — |   |   | $ | 5,620 |   |
| Collectively evaluated for impairment           |   |           | 3,811   |   |                  |   | 26,423  |                   |   |   | 14,593   |   |   |        | 792     |   |   |   | 343     |   |   |   | 12 |   |   |   | 45,974 |   |
| Total ending allowance balance                  |   | $              | 3,811   |   |                  | $      | 31,049  |                   |   | $      | 15,587   |   |   | $           | 792     |   |   | $      | 343     |   |   | $ | 12 |   |   | $ | 51,594 |   |
|                                            |   |           |    |   |                  |   |    |                   |   |   |     |   |   |        |    |   |   |   |    |   |   |   |   |   |   |   |   |   |
|                                            |   |           |    |   |                  |   |    |                   |   |   |     |   |   |        |    |   |   |   |    |   |   |   |   |   |   |   |   |   |
| Loans:                                          |   |           |    |   |                  |   |    |                   |   |   |     |   |   |        |    |   |   |   |    |   |   |   |   |   |   |   |   |   |
| Loans individually evaluated for impairment     |   | $              | 6,779   |   |                  | $      | 115,045 |                   |   | $      | 52,376   |   |   | $           | 331     |   |   | $      | 586     |   |   | $ | 533 |   |   | $ | 175,650 |   |
| Loans collectively evaluated for impairment     |   |           | 61,305  |   |                  |   | 437,122 |                   |   |   | 318,117  |   |   |        | 22,567  |   |   |   | 25,665  |   |   |   | 483 |   |   |   | 865,259 |   |
| Total ending loans balance                      |   | $              | 68,084  |   |                  | $      | 552,167 |                   |   | $      | 370,493  |   |   | $           | 22,898  |   |   | $      | 26,251  |   |   | $ | 1,016 |   |   | $ | 1,040,909 |   |

----

|                                            |   | Commercial     |   |   | CommercialReal Estate |   |    | ResidentialReal Estate |   |   | Consumer |   |   | Agriculture |    |   | Other  |   |    | Total  |   |
|-------------------------------------------------|--------|----------------|--------|--------|-----------------------|--------|---------|------------------------|--------|--------|----------|--------|--------|-------------|---------|--------|--------|--------|---------|--------|--------|
|                                            |   | (in thousands) |   |
| Allowance for loan losses:                      |   |           |   |   |                  |   |    |                   |   |   |     |   |   |        |    |   |   |   |    |   |   |
| Ending allowance balance attributable to loans: |   |           |   |   |                  |   |    |                   |   |   |     |   |   |        |    |   |   |   |    |   |   |
| Individually evaluated for impairment           |   | $              | 237    |   |                  | $      | 5,281   |                   |   | $      | 1,055    |   |   | $           | — |   |   | $      | — |   |   | $ | — |   |   | $ | 6,573 |   |
| Collectively evaluated for impairment           |   |           | 3,970  |   |                  |   | 27,743  |                   |   |   | 13,162   |   |   |        | 792     |   |   |   | 325     |   |   |   | 14 |   |   |   |  46,006 |   |
| Total ending allowance balance                  |   | $              | 4,207  |   |                  | $      | 33,024  |                   |   | $      | 14,217   |   |   | $           | 792     |   |   | $      | 325     |   |   | $ | 14 |   |   | $ | 52,579 |   |
|                                            |   |           |   |   |                  |   |    |                   |   |   |     |   |   |        |    |   |   |   |    |   |   |   |   |   |   |   |   |   |
| Loans:                                          |   |           |   |   |                  |   |    |                   |   |   |     |   |   |        |    |   |   |   |    |   |   |   |   |   |   |   |   |   |
| Loans individually evaluated for impairment     |   | $              | 5,032  |   |                  | $      | 116,676 |                   |   | $      | 27,848   |   |   | $           | — |   |   | $      | 631     |   |   | $ | 540 |   |   | $ | 150,727 |   |
| Loans collectively evaluated for impairment     |   |           | 66,184 |   |                  |   | 499,598 |                   |   |   | 369,911  |   |   |        | 26,011  |   |   |   | 23,139  |   |   |   | 453 |   |   |   | 985,296 |   |
| Total ending loans balance                      |   | $              | 71,216 |   |                  | $      | 616,274 |                   |   | $      | 397,759  |   |   | $           | 26,011  |   |   | $      | 23,770  |   |   | $ | 993 |   |   | $ | 1,136,023 |   |

|                                |   |                     |    |   |                |   |    |                             |   |   | Three Months EndedJune 30, 2012 |   |   | Six Months EndedJune 30, 2012 |    |
|-------------------------------------|--------|--------------------------|---------|--------|---------------------|--------|---------|----------------------------------|--------|--------|---------------------------------|--------|--------|-------------------------------|---------|
|                                |   | Unpaid Principal Balance |    |   | Recorded Investment |   |    | AllowanceFor LoanLossesAllocated |   |   | Average Recorded Investment     |   |   | Interest Income Recognized    |    |   | Average Recorded Investment |   |   | Interest Income Recognized |   |   | CashBasisIncomeRecognized |   |
|                                |   | (in thousands)           |    |
| With No Related Allowance Recorded: |   |                     |    |   |                |   |    |                             |   |   |                            |   |   |                          |    |   |   |   |   |   |   |   |   |   |
| Commercial                          |   | $                        | 6,899   |   |                | $      | 6,779   |                             |   | $      | —                         |   |   | $                             | 7,004   |   |   | $ | 52 |   |   | $ | 6,346 |   |   | $ | 87 |   |   | $ | 19 |   |
| Commercial real estate:             |   |                     |    |   |                |   |    |                             |   |   |                            |   |   |                          |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Construction                        |   |                     | 8,882   |   |                |   | 8,580   |                             |   |   | —                         |   |   |                          | 8,633   |   |   |   | 59 |   |   |   | 8,998 |   |   |   | 122 |   |   |   | 2 |   |
| Farmland                            |   |                     | 6,477   |   |                |   | 6,477   |                             |   |   | —                         |   |   |                          | 6,039   |   |   |   | 10 |   |   |   | 5,408 |   |   |   | 24 |   |   |   | 7 |   |
| Other                               |   |                     | 35,192  |   |                |   | 34,460  |                             |   |   | —                         |   |   |                          | 30,299  |   |   |   | 124 |   |   |   | 28,408 |   |   |   | 370 |   |   |   | 3 |   |
| Residential real estate:            |   |                     |    |   |                |   |    |                             |   |   |                            |   |   |                          |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Multi-family                        |   |                     | 10,756  |   |                |   | 10,756  |                             |   |   | —                         |   |   |                          | 11,759  |   |   |   | 55 |   |   |   | 8,807 |   |   |   | 141 |   |   |   | — |   |
| 1-4 Family                          |   |                     | 32,029  |   |                |   | 31,412  |                             |   |   | —                         |   |   |                          | 31,487  |   |   |   | 206 |   |   |   | 24,586 |   |   |   | 379 |   |   |   | 27 |   |
| Consumer                            |   |                     | 338     |   |                |   | 331     |                             |   |   | —                         |   |   |                          | 365     |   |   |   | 2 |   |   |   | 243 |   |   |   | 3 |   |   |   | 1 |   |
| Agriculture                         |   |                     | 701     |   |                |   | 586     |                             |   |   | —                         |   |   |                          | 548     |   |   |   | — |   |   |   | 576 |   |   |   | — |   |   |   | — |   |
| Other                               |   |                     | 533     |   |                |   | 533     |                             |   |   | —                         |   |   |                          | 535     |   |   |   | 5 |   |   |   | 536 |   |   |   | 9 |   |   |   | — |   |
| With An Allowance Recorded:         |   |                     |    |   |                |   |    |                             |   |   |                            |   |   |                          |    |   |   |   |   |   |   |   |   |   |   |
| Commercial real estate:             |   |                     |    |   |                |   |    |                             |   |   |                            |   |   |                          |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Construction                        |   |                     | 14,561  |   |                |   | 11,812  |                             |   |   | 1,212                           |   |   |                          | 13,397  |   |   |   | 28 |   |   |   | 13,291 |   |   |   | 75 |   |   |   | — |   |
| Farmland                            |   |                     | 4,394   |   |                |   | 4,193   |                             |   |   | 831                             |   |   |                          | 4,188   |   |   |   | — |   |   |   | 4,770 |   |   |   | — |   |   |   | — |   |
| Other                               |   |                     | 52,387  |   |                |   | 49,523  |                             |   |   | 2,583                           |   |   |                          | 57,347  |   |   |   | 95 |   |   |   | 57,952 |   |   |   | 491 |   |   |   | 76 |   |
| Residential real estate:            |   |                     |    |   |                |   |    |                             |   |   |                            |   |   |                          |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Multi-family                        |   |                     | — |   |                |   | — |                             |   |   | —                         |   |   |                          | 706     |   |   |   | — |   |   |   | 942 |   |   |   | — |   |   |   | — |   |
| 1-4 Family                          |   |                     | 11,946  |   |                |   | 10,208  |                             |   |   | 994                             |   |   |                          | 11,698  |   |   |   | 25 |   |   |   | 12,048 |   |   |   | 50 |   |   |   | — |   |
| Consumer                            |   |                     | — |   |                |   | — |                             |   |   | —                         |   |   |                          | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |
| Agriculture                         |   |                     | — |   |                |   | — |                             |   |   | —                         |   |   |                          | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |
| Other                               |   |                     | — |   |                |   | — |                             |   |   | —                         |   |   |                          | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |
| Total                               |   | $                        | 185,095 |   |                | $      | 175,650 |                             |   | $      | 5,620                           |   |   | $                             | 184,005 |   |   | $ | 661 |   |   | $ | 172,911 |   |   | $ | 1,751 |   |   | $ | 135 |   |

----

|                                |   | UnpaidPrincipalBalance |    |   | RecordedInvestment |   |    | AllowanceFor LoanLossesAllocated |   |   | AverageRecordedInvestment |   |   | Interest Income Recognized |    |   | CashBasis Income Recognized |   |
|-------------------------------------|--------|------------------------|---------|--------|--------------------|--------|---------|----------------------------------|--------|--------|---------------------------|--------|--------|---------------------------------|---------|--------|----------------------------------|--------|
|                                |   | (in thousands)         |    |   |               |   |
| With No Related Allowance Recorded: |   |                   |    |   |               |   |    |                             |   |   |                      |   |   |                            |    |   |                             |   |
| Commercial                          |   | $                      | 3,997   |   |               | $      | 3,954   |                             |   | $      | —                   |   |   | $                               | 3,489   |   |                             | $      | 146 |   |   | $ | 48 |   |
| Commercial real estate:             |   |                   |    |   |               |   |    |                             |   |   |                      |   |   |                            |    |   |                             |   |   |   |   |   |   |   |
| Construction                        |   |                   | 8,381   |   |               |   | 8,288   |                             |   |   | —                   |   |   |                            | 9,635   |   |                             |   | 57 |   |   |   | 4 |   |
| Farmland                            |   |                   | 4,230   |   |               |   | 4,146   |                             |   |   | —                   |   |   |                            | 2,403   |   |                             |   | 36 |   |   |   | 36 |   |
| Other                               |   |                   | 26,590  |   |               |   | 26,068  |                             |   |   | —                   |   |   |                            | 19,606  |   |                             |   | 459 |   |   |   | 99 |   |
| Residential real estate:            |   |                   |    |   |               |   |    |                             |   |   |                      |   |   |                            |    |   |                             |   |   |   |   |   |   |   |
| Multi-family                        |   |                   | 2,904   |   |               |   | 2,904   |                             |   |   | —                   |   |   |                            | 1,029   |   |                             |   | 35 |   |   |   | — |   |
| 1-4 Family                          |   |                   | 10,883  |   |               |   | 10,784  |                             |   |   | —                   |   |   |                            | 6,805   |   |                             |   | 296 |   |   |   | 3 |   |
| Consumer                            |   |                   | — |   |               |   | — |                             |   |   | —                   |   |   |                            | — |   |                             |   | — |   |   |   | — |   |
| Agriculture                         |   |                   | 637     |   |               |   | 631     |                             |   |   | —                   |   |   |                            | 253     |   |                             |   | 5 |   |   |   | 5 |   |
| Other                               |   |                   | 540     |   |               |   | 540     |                             |   |   | —                   |   |   |                            | 108     |   |                             |   | — |   |   |   | — |   |
| With An Allowance Recorded:         |   |                   |    |   |               |   |    |                             |   |   |                      |   |   |                            |    |   |                             |   |   |   |   |   |   |   |
| Commercial                          |   |                   | 1,078   |   |               |   | 1,078   |                             |   |   | 237                       |   |   |                            | 1,125   |   |                             |   | 69 |   |   |   | 69 |   |
| Commercial real estate:             |   |                   |    |   |               |   |    |                             |   |   |                      |   |   |                            |    |   |                             |   |   |   |   |   |   |   |
| Construction                        |   |                   | 15,915  |   |               |   | 13,079  |                             |   |   | 1,941                     |   |   |                            | 4,039   |   |                             |   | 93 |   |   |   | — |   |
| Farmland                            |   |                   | 6,375   |   |               |   | 5,934   |                             |   |   | 532                       |   |   |                            | 6,302   |   |                             |   | 322 |   |   |   | — |   |
| Other                               |   |                   | 64,984  |   |               |   | 59,431  |                             |   |   | 2,808                     |   |   |                            | 29,091  |   |                             |   | 609 |   |   |   | 148 |   |
| Residential real estate:            |   |                   |    |   |               |   |    |                             |   |   |                      |   |   |                            |    |   |                             |   |   |   |   |   |   |   |
| Multi-family                        |   |                   | 1,891   |   |               |   | 1,412   |                             |   |   | 487                       |   |   |                            | 1,795   |   |                             |   | 115 |   |   |   | — |   |
| 1-4 Family                          |   |                   | 15,342  |   |               |   | 12,478  |                             |   |   | 568                       |   |   |                            | 9,651   |   |                             |   | 352 |   |   |   | — |   |
| Consumer                            |   |                   | — |   |               |   | — |                             |   |   | —                   |   |   |                            | — |   |                             |   | — |   |   |   | — |   |
| Agriculture                         |   |                   | — |   |               |   | — |                             |   |   | —                   |   |   |                            | — |   |                             |   | — |   |   |   | — |   |
| Other                               |   |                   | — |   |               |   | — |                             |   |   | —                   |   |   |                            | — |   |                             |   | — |   |   |   | — |   |
| Total                               |   | $                      | 163,747 |   |               | $      | 150,727 |                             |   | $      | 6,573                     |   |   | $                               | 95,331  |   |                             | $      | 2,594 |   |   | $ | 412 |   |

----

|                     |   | TDRsPerforming toModified Terms |    |   | TDRs NotPerforming toModified Terms |   |    | TotalTDRs |   |
|--------------------------|--------|---------------------------------|---------|--------|-------------------------------------|--------|---------|-----------|--------|
|                     |   | (in thousands)                  |    |
| June 30, 2012            |   |                            |    |   |                                |   |    |      |   |
| Commercial               |   |                            |    |   |                                |   |    |      |   |
| Rate reduction           |   | $                               | 1,217   |   |                                | $      | — |      |   | $ | 1,217 |   |
| Principal deferral       |   |                            | 891     |   |                                |   | — |      |   |   | 891 |   |
| Interest only payments   |   |                            | — |   |                                |   | 1,019   |      |   |   | 1,019 |   |
| Commercial Real Estate:  |   |                            |    |   |                                |   |    |      |   |   |   |   |
| Construction             |   |                            |    |   |                                |   |    |      |   |   |   |   |
| Rate reduction           |   |                            | 10,787  |   |                                |   | 3,600   |      |   |   | 14,387 |   |
| Interest only payments   |   |                            | 152     |   |                                |   | — |      |   |   | 152 |   |
| Farmland                 |   |                            |    |   |                                |   |    |      |   |   |   |   |
| Rate reduction           |   |                            | — |   |                                |   | 135     |      |   |   | 135 |   |
| Principal deferral       |   |                            | 738     |   |                                |   | 3,893   |      |   |   | 4,631 |   |
| Other                    |   |                            |    |   |                                |   |    |      |   |   |   |   |
| Rate reduction           |   |                            | 37,056  |   |                                |   | 21,452  |      |   |   | 58,508 |   |
| Principal deferral       |   |                            | 1,196   |   |                                |   | — |      |   |   | 1,196 |   |
| Interest only payments   |   |                            | 2,463   |   |                                |   | 2,174   |      |   |   | 4,637 |   |
| Residential Real Estate: |   |                            |    |   |                                |   |    |      |   |   |   |   |
| Multi-family             |   |                            |    |   |                                |   |    |      |   |   |   |   |
| Rate reduction           |   |                            | 8,672   |   |                                |   | — |      |   |   | 8,672 |   |
| Interest only payments   |   |                            | 656     |   |                                |   | — |      |   |   | 656 |   |
| 1-4 Family               |   |                            |    |   |                                |   |    |      |   |   |   |   |
| Rate reduction           |   |                            | 20,707  |   |                                |   | 4,676   |      |   |   | 25,383 |   |
| Principal deferral       |   |                            | — |   |                                |   | 799     |      |   |   | 799 |   |
| Other                    |   |                            |    |   |                                |   |    |      |   |   |   |   |
| Rate reduction           |   |                            | 533     |   |                                |   | — |      |   |   | 533 |   |
| Total TDRs               |   | $                               | 85,068  |   |                                | $      | 37,748  |      |   | $ | 122,816 |   |

----

|                     |   | TDRsPerforming toModified Terms |    |   | TDRs NotPerforming toModified Terms |   |    | TotalTDRs |   |
|--------------------------|--------|---------------------------------|---------|--------|-------------------------------------|--------|---------|-----------|--------|
|                     |   | (in thousands)                  |    |
| December 31, 2011        |   |                            |    |   |                                |   |    |      |   |
| Commercial               |   |                            |    |   |                                |   |    |      |   |
| Rate reduction           |   | $                               | 1,231   |   |                                | $      | — |      |   | $ | 1,231 |   |
| Principal deferral       |   |                            | 898     |   |                                |   | — |      |   |   | 898 |   |
| Commercial Real Estate:  |   |                            |    |   |                                |   |    |      |   |   |   |   |
| Construction             |   |                            |    |   |                                |   |    |      |   |   |   |   |
| Rate reduction           |   |                            | 11,155  |   |                                |   | 3,767   |      |   |   | 14,922 |   |
| Interest only payments   |   |                            | — |   |                                |   | 1,404   |      |   |   | 1,404 |   |
| Farmland                 |   |                            |    |   |                                |   |    |      |   |   |   |   |
| Rate reduction           |   |                            | 182     |   |                                |   | — |      |   |   | 182 |   |
| Principal deferral       |   |                            | 746     |   |                                |   | 5,101   |      |   |   | 5,847 |   |
| Other                    |   |                            |    |   |                                |   |    |      |   |   |   |   |
| Rate reduction           |   |                            | 42,946  |   |                                |   | 20,446  |      |   |   | 63,392 |   |
| Interest only payments   |   |                            | 1,288   |   |                                |   | — |      |   |   | 1,288 |   |
| Residential Real Estate: |   |                            |    |   |                                |   |    |      |   |   |   |   |
| Multi-family             |   |                            |    |   |                                |   |    |      |   |   |   |   |
| Rate reduction           |   |                            | 2,247   |   |                                |   | 1,413   |      |   |   | 3,660 |   |
| Interest only payments   |   |                            | 656     |   |                                |   | — |      |   |   | 656 |   |
| 1-4 Family               |   |                            |    |   |                                |   |    |      |   |   |   |   |
| Rate reduction           |   |                            | 12,255  |   |                                |   | 7,176   |      |   |   | 19,431 |   |
| Principal deferral       |   |                            | — |   |                                |   | 247     |      |   |   | 247 |   |
| Other                    |   |                            |    |   |                                |   |    |      |   |   |   |   |
| Rate reduction           |   |                            | 540     |   |                                |   | — |      |   |   | 540 |   |
| Total TDRs               |   | $                               | 74,144  |   |                                | $      | 39,554  |      |   | $ | 113,698 |   |

|                     |   | TDRsPerforming toModified Terms |    |   | TDRs NotPerforming toModified Terms |   |    | TotalTDRs |   |
|--------------------------|--------|---------------------------------|---------|--------|-------------------------------------|--------|---------|-----------|--------|
|                     |   | (in thousands)                  |    |
| June 30, 2012            |   |                            |    |   |                                |   |    |      |   |
| Commercial Real Estate:  |   |                            |    |   |                                |   |    |      |   |
| Construction             |   |                            |    |   |                                |   |    |      |   |
| Interest only payments   |   | $                               | 152     |   |                                | $      | — |      |   | $ | 152 |   |
| Other                    |   |                            |    |   |                                |   |    |      |   |   |   |   |
| Rate reduction           |   |                            | 8,152   |   |                                |   | — |      |   |   | 8,152 |   |
| Principal deferral       |   |                            | 1,196   |   |                                |   | — |      |   |   | 1,196 |   |
| Interest only payments   |   |                            | 2,462   |   |                                |   | — |      |   |   | 2,462 |   |
| Residential Real Estate: |   |                            |    |   |                                |   |    |      |   |   |   |   |
| 1-4 Family               |   |                            |    |   |                                |   |    |      |   |   |   |   |
| Rate reduction           |   |                            | 3,086   |   |                                |   | — |      |   |   | 3,086 |   |
| Principal deferral       |   |                            | — |   |                                |   | 573     |      |   |   | 573 |   |
| Total TDRs               |   | $                               | 15,048  |   |                                | $      | 573     |      |   | $ | 15,621 |   |

----

|                     |   | TDRsPerforming toModified Terms |    |   | TDRs NotPerforming toModified Terms |   |    | TotalTDRs |   |
|--------------------------|--------|---------------------------------|---------|--------|-------------------------------------|--------|---------|-----------|--------|
|                     |   | (in thousands)                  |    |
| June 30, 2012            |   |                            |    |   |                                |   |    |      |   |
| Commercial               |   |                            |    |   |                                |   |    |      |   |
| Interest only payments   |   | $                               | — |   |                                | $      | 1,019   |      |   | $ | 1,019 |   |
| Commercial Real Estate:  |   |                            |    |   |                                |   |    |      |   |   |   |   |
| Construction             |   |                            |    |   |                                |   |    |      |   |   |   |   |
| Interest only payments   |   |                            | 152     |   |                                |   | — |      |   |   | 152 |   |
| Other                    |   |                            |    |   |                                |   |    |      |   |   |   |   |
| Rate reduction           |   |                            | 11,302  |   |                                |   | — |      |   |   | 11,302 |   |
| Principal deferral       |   |                            | 1,196   |   |                                |   | — |      |   |   | 1,196 |   |
| Interest only payments   |   |                            | 2,462   |   |                                |   | 2,174   |      |   |   | 4,636 |   |
| Residential Real Estate: |   |                            |    |   |                                |   |    |      |   |   |   |   |
| Multi-family             |   |                            |    |   |                                |   |    |      |   |   |   |   |
| Rate reduction           |   |                            | 8,386   |   |                                |   | — |      |   |   | 8,386 |   |
| 1-4 Family               |   |                            |    |   |                                |   |    |      |   |   |   |   |
| Rate reduction           |   |                            | 8,470   |   |                                |   | — |      |   |   | 8,470 |   |
| Principal deferral       |   |                            | — |   |                                |   | 573     |      |   |   | 573 |   |
| Total TDRs               |   | $                               | 31,968  |   |                                | $      | 3,766   |      |   | $ | 35,734 |   |

----

|                     |   | Nonaccrual     |    |   | Loans PastDue 90 DaysAnd Over StillAccruing |   |
|--------------------------|--------|----------------|---------|--------|---------------------------------------------|--------|
|                     |   | June 30,2012   |    |   | December 31,2011                            |   |   | June 30,2012 |   |   | December 31,2011 |   |
|                     |   | (in thousands) |    |
|                     |   |           |    |   |                                        |   |   |   |   |   |   |   |
| Commercial               |   | $              | 2,663   |   |                                        | $      | 2,903 |   |   | $ | 48 |   |   | $ | 109 |   |
| Commercial Real Estate:  |   |           |    |   |                                        |   |   |   |   |   |   |   |   |   |   |   |
| Construction             |   |           | 9,454   |   |                                        |   | 13,564 |   |   |   | — |   |   |   | — |   |
| Farmland                 |   |           | 9,932   |   |                                        |   | 9,152 |   |   |   | — |   |   |   | 26 |   |
| Other                    |   |           | 36,409  |   |                                        |   | 35,154 |   |   |   | — |   |   |   | 918 |   |
| Residential Real Estate: |   |           |    |   |                                        |   |   |   |   |   |   |   |   |   |   |   |
| Multi-family             |   |           | 1,428   |   |                                        |   | 2,921 |   |   |   | — |   |   |   | — |   |
| 1-4 Family               |   |           | 20,913  |   |                                        |   | 27,375 |   |   |   | 39 |   |   |   | 265 |   |
| Consumer                 |   |           | 268     |   |                                        |   | 320 |   |   |   | 1 |   |   |   | — |   |
| Agriculture              |   |           | 586     |   |                                        |   | 631 |   |   |   | — |   |   |   | 32 |   |
| Other                    |   |           | — |   |                                        |   | — |   |   |   | — |   |   |   | — |   |
| Total                    |   | $              | 81,653  |   |                                        | $      | 92,020 |   |   | $ | 88 |   |   | $ | 1,350 |   |

|                     |   | 30 – 59DaysPast Due |    |   | 60 – 89DaysPast Due |   |    | 90 DaysAnd OverPast Due |   |   |   Nonaccrual |   |   | TotalPast DueAndNonaccrual |    |
|--------------------------|--------|---------------------------|---------|--------|---------------------------|--------|---------|-------------------------|--------|--------|------------------------|--------|--------|----------------------------|---------|
|                     |   | (in thousands)            |    |
| June 30, 2012            |   |                      |    |   |                      |   |    |                    |   |   |                   |   |   |                       |    |
| Commercial               |   | $                         | 97      |   |                      | $      | 545     |                    |   | $      | 48                     |   |   | $                          | 2,663   |   |   | $ | 3,353 |   |
| Commercial Real Estate:  |   |                      |    |   |                      |   |    |                    |   |   |                   |   |   |                       |    |   |   |   |   |   |
| Construction             |   |                      | 76      |   |                      |   | 176     |                    |   |   | —                |   |   |                       | 9,454   |   |   |   | 9,706 |   |
| Farmland                 |   |                      | 1,263   |   |                      |   | 1,068   |                    |   |   | —                |   |   |                       | 9,932   |   |   |   | 12,263 |   |
| Other                    |   |                      | 1,596   |   |                      |   | 44      |                    |   |   | —                |   |   |                       | 36,409  |   |   |   | 38,049 |   |
| Residential Real Estate: |   |                      |    |   |                      |   |    |                    |   |   |                   |   |   |                       |    |   |   |   |   |   |
| Multi-family             |   |                      | — |   |                      |   | 442     |                    |   |   | —                |   |   |                       | 1,428   |   |   |   | 1,870 |   |
| 1-4 Family               |   |                      | 3,227   |   |                      |   | 1,912   |                    |   |   | 39                     |   |   |                       | 20,913  |   |   |   | 26,091 |   |
| Consumer                 |   |                      | 369     |   |                      |   | 154     |                    |   |   | 1                      |   |   |                       | 268     |   |   |   | 792 |   |
| Agriculture              |   |                      | 75      |   |                      |   | 67      |                    |   |   | —                |   |   |                       | 586     |   |   |   | 728 |   |
| Other                    |   |                      | — |   |                      |   | — |                    |   |   | —                |   |   |                       | — |   |   |   | — |   |
| Total                    |   | $                         | 6,703   |   |                      | $      | 4,408   |                    |   | $      | 88                     |   |   | $                          | 81,653  |   |   | $ | 92,852 |   |

----

|                     |   | 30 – 59DaysPast Due |    |   | 60 – 89DaysPast Due |   |    | 90 DaysAnd OverPast Due |   |   |   Nonaccrual |   |   | TotalPast DueAndNonaccrual |    |
|--------------------------|--------|---------------------------|---------|--------|---------------------------|--------|---------|-------------------------|--------|--------|------------------------|--------|--------|----------------------------|---------|
|                     |   | (in thousands)            |    |
| December 31, 2011        |   |                      |    |   |                      |   |    |                    |   |   |                   |   |   |                       |    |
| Commercial               |   | $                         | 2,792   |   |                      | $      | 91      |                    |   | $      | 109                    |   |   | $                          | 2,903   |   |   | $ | 5,895 |   |
| Commercial Real Estate:  |   |                      |    |   |                      |   |    |                    |   |   |                   |   |   |                       |    |   |   |   |   |   |
| Construction             |   |                      | 20      |   |                      |   | — |                    |   |   | —                |   |   |                       | 13,564  |   |   |   | 13,584 |   |
| Farmland                 |   |                      | 1,353   |   |                      |   | 305     |                    |   |   | 26                     |   |   |                       | 9,152   |   |   |   | 10,836 |   |
| Other                    |   |                      | 4,555   |   |                      |   | 756     |                    |   |   | 918                    |   |   |                       | 35,154  |   |   |   | 41,383 |   |
| Residential Real Estate: |   |                      |    |   |                      |   |    |                    |   |   |                   |   |   |                       |    |   |   |   |   |   |
| Multi-family             |   |                      | 442     |   |                      |   | 135     |                    |   |   | —                |   |   |                       | 2,921   |   |   |   | 3,498 |   |
| 1-4 Family               |   |                      | 7,568   |   |                      |   | 2,511   |                    |   |   | 265                    |   |   |                       | 27,375  |   |   |   | 37,719 |   |
| Consumer                 |   |                      | 593     |   |                      |   | 149     |                    |   |   | —                |   |   |                       | 320     |   |   |   | 1,062 |   |
| Agriculture              |   |                      | 23      |   |                      |   | — |                    |   |   | 32                     |   |   |                       | 631     |   |   |   | 686 |   |
| Other                    |   |                      | — |   |                      |   | — |                    |   |   | —                |   |   |                       | — |   |   |   | — |   |
| Total                    |   | $                         | 17,346  |   |                      | $      | 3,947   |                    |   | $      | 1,350                  |   |   | $                          | 92,020  |   |   | $ | 114,663 |   |

----

|                     |   | Pass           |    |   | Watch  |   |    | SpecialMention |   |   | Substandard |   |   | Doubtful |    |   | Total  |   |
|--------------------------|--------|----------------|---------|--------|--------|--------|---------|----------------|--------|--------|-------------|--------|--------|----------|---------|--------|--------|--------|
|                     |   | (in thousands) |    |
| June 30, 2012            |   |           |    |   |   |   |    |           |   |   |        |   |   |     |    |   |   |   |
| Commercial               |   | $              | 46,405  |   |   | $      | 11,008  |           |   | $      | 3,620       |   |   | $        | 6,976   |   |   | $      | 75 |   |   | $ | 68,084 |   |
| Commercial Real Estate:  |   |           |    |   |   |   |    |           |   |   |        |   |   |     |    |   |   |   |   |   |   |   |   |   |
| Construction             |   |           | 32,185  |   |   |   | 15,750  |           |   |   | 11,177      |   |   |     | 22,703  |   |   |   | — |   |   |   | 81,815 |   |
| Farmland                 |   |           | 55,035  |   |   |   | 11,534  |           |   |   | 2,233       |   |   |     | 16,832  |   |   |   | — |   |   |   | 85,634 |   |
| Other                    |   |           | 166,343 |   |   |   | 72,802  |           |   |   | 48,629      |   |   |     | 96,310  |   |   |   | 634 |   |   |   | 384,718 |   |
| Residential Real Estate: |   |           |    |   |   |   |    |           |   |   |        |   |   |     |    |   |   |   |   |   |   |   |   |   |
| Multi-family             |   |           | 32,969  |   |   |   | 7,600   |           |   |   | 1,640       |   |   |     | 17,658  |   |   |   | — |   |   |   | 59,867 |   |
| 1-4 Family               |   |           | 198,371 |   |   |   | 43,058  |           |   |   | 6,243       |   |   |     | 62,795  |   |   |   | 159 |   |   |   | 310,626 |   |
| Consumer                 |   |           | 20,463  |   |   |   | 1,235   |           |   |   | 87          |   |   |     | 1,050   |   |   |   | 63 |   |   |   | 22,898 |   |
| Agriculture              |   |           | 23,128  |   |   |   | 1,122   |           |   |   | 1,277       |   |   |     | 724     |   |   |   | — |   |   |   | 26,251 |   |
| Other                    |   |           | 483     |   |   |   | 533     |           |   |   | —     |   |   |     | — |   |   |   | — |   |   |   | 1,016 |   |
| Total                    |   | $              | 575,382 |   |   | $      | 164,642 |           |   | $      | 74,906      |   |   | $        | 225,048 |   |   | $      | 931 |   |   | $ | 1,040,909 |   |

|                     |   | Pass           |    |   | Watch  |   |    | SpecialMention |   |   | Substandard |   |   | Doubtful |    |   | Total  |   |
|--------------------------|--------|----------------|---------|--------|--------|--------|---------|----------------|--------|--------|-------------|--------|--------|----------|---------|--------|--------|--------|
|                     |   | (in thousands) |    |
| December 31, 2011        |   |           |    |   |   |   |    |           |   |   |        |   |   |     |    |   |   |   |
| Commercial               |   | $              | 53,223  |   |   | $      | 9,357   |           |   | $      | 3,237       |   |   | $        | 5,300   |   |   | $      | 99 |   |   | $ | 71,216 |   |
| Commercial Real Estate:  |   |           |    |   |   |   |    |           |   |   |        |   |   |     |    |   |   |   |   |   |   |   |   |   |
| Construction             |   |           | 45,407  |   |   |   | 13,132  |           |   |   | 7,777       |   |   |     | 35,155  |   |   |   | — |   |   |   | 101,471 |   |
| Farmland                 |   |           | 69,881  |   |   |   | 4,955   |           |   |   | 2,688       |   |   |     | 13,236  |   |   |   | 199 |   |   |   | 90,959 |   |
| Other                    |   |           | 213,406 |   |   |   | 80,149  |           |   |   | 30,787      |   |   |     | 99,502  |   |   |   | — |   |   |   | 423,844 |   |
| Residential Real Estate: |   |           |    |   |   |   |    |           |   |   |        |   |   |     |    |   |   |   |   |   |   |   |   |   |
| Multi-family             |   |           | 37,807  |   |   |   | 4,619   |           |   |   | 2,100       |   |   |     | 15,884  |   |   |   | — |   |   |   | 60,410 |   |
| 1-4 Family               |   |           | 247,422 |   |   |   | 28,734  |           |   |   | 2,276       |   |   |     | 58,891  |   |   |   | 26 |   |   |   | 337,349 |   |
| Consumer                 |   |           | 23,721  |   |   |   | 1,418   |           |   |   | 43          |   |   |     | 762     |   |   |   | 67 |   |   |   | 26,011 |   |
| Agriculture              |   |           | 22,502  |   |   |   | 343     |           |   |   | 14          |   |   |     | 911     |   |   |   | — |   |   |   | 23,770 |   |
| Other                    |   |           | 453     |   |   |   | 540     |           |   |   | —     |   |   |     | — |   |   |   | — |   |   |   | 993 |   |
| Total                    |   | $              | 713,822 |   |   | $      | 143,247 |           |   | $      | 48,922      |   |   | $        | 229,641 |   |   | $      | 391 |   |   | $ | 1,136,023 |   |

----

|                     |   | June 30,2012   |   |   | December 31,2011 |   |
|--------------------------|--------|----------------|--------|--------|------------------|--------|
|                     |   | (in thousands) |   |
| Commercial Real Estate:  |   |           |   |   |             |   |
| Construction             |   | $              | 27,760 |   |             | $      | 32,538 |   |
| Farmland                 |   |           | 285    |   |             |   | 744 |   |
| Other                    |   |           | 18,741 |   |             |   | 6,620 |   |
| Residential Real Estate: |   |           |   |   |             |   |   |   |
| 1-4 Family               |   |           | 9,303  |   |             |   | 3,214 |   |
|                     |   |           | 56,089 |   |             |   | 43,116 |   |
| Valuation allowance      |   |           | (1,724 | )      |             |   | (1,667 | ) |
|                     |   | $              | 54,365 |   |             | $      | 41,449 |   |

|                               |   |   | For the Three Months EndedJune 30, |   |   |   | For the SixMonths EndedJune 30, |   |
|------------------------------------|--------|--------|-----------------------------------------|--------|--------|--------|---------------------------------|--------|
|                               |   |   | 2012                                    |   |   |   | 2011                            |   |   |   | 2012 |   |   |   | 2011 |   |
|                               |   |   | (in thousands)                          |   |
| OREO Valuation Allowance Activity: |   |   |                                    |   |   |   |                            |   |   |   |   |   |   |   |   |   |
| Beginning balance                  |   | $      | 1,682                                   |   |   | $      | 700                             |   |   | $ | 1,667 |   |   | $ | 700 |   |
| Provision to allowance             |   |   | 350                                     |   |   |   | 14,951                          |   |   |   | 830 |   |   |   | 15,437 |   |
| Write-downs                        |   |   | (308                                    | )      |   |   | (5,008                          | )      |   |   | (773 | ) |   |   | (5,494 | ) |
| Ending balance                     |   | $      | 1,724                                   |   |   | $      | 10,643                          |   |   | $ | 1,724 |   |   | $ | 10,643 |   |

|                             |   | 2012           |    |   | 2011   |   |
|----------------------------------|--------|----------------|---------|--------|--------|--------|
|                             |   | (in thousands) |    |
| OREO Activity                    |   |           |    |   |   |   |
| OREO as of January 1             |   | $              | 41,449  |   |   | $      | 67,635 |   |
| Real estate acquired             |   |           | 28,126  |   |   |   | 15,261 |   |
| Valuation adjustments            |   |           | (830    | )      |   |   | (15,437 | ) |
| Improvements                     |   |           | 1       |   |   |   | 1,420 |   |
| Loss on sale                     |   |           | (948    | )      |   |   | (6,876 | ) |
| Proceeds from sale of properties |   |           | (13,433 | )      |   |   | (12,090 | ) |
| OREO as of June 30               |   | $              | 54,365  |   |   | $      | 49,913 |   |

|                                                                          |   | Three Months Ended |   |   | Six Months Ended   |   |
|-------------------------------------------------------------------------------|--------|--------------------|--------|--------|--------------------|--------|
|                                                                          |   | June 30,2012       |   |   | June 30, 2011 |   |   | June 30, 2012 |   |   | June 30, 2011 |   |
|                                                                          |   | (in thousands)     |   |
| Net loss on sales                                                             |   | $                  | 546    |   |               | $      | 6,485 |   |   | $ | 948 |   |   | $ | 6,876 |   |
| Provision to allowance                                                        |   |               | 350    |   |               |   | 14,951 |   |   |   | 830 |   |   |   | 15,437 |   |
| Operating expense                                                             |   |               | 309    |   |               |   | 673 |   |   |   | 684 |   |   |   | 1,163 |   |
|             Total |   | $                  | 1,205  |   |               | $      | 22,109 |   |   | $ | 2,462 |   |   | $ | 23,476 |   |

----

|                                                                                                                                     |   |   | June 30,2012   |   |   |   | December 31, 2011 |   |
|------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|----------------|--------|--------|--------|------------------------|--------|
|                                                                                                                                     |   |   | (in thousands) |   |
| Monthly amortizing advances with fixed rates from 0.00% to 5.25% and maturities ranging from 2012 through 2033, averaging 3.27% for 2012 |   | $      | 6,398          |   |   | $      | 7,116                  |   |

----

----

|                                |   |                 |    |   | Fair Value Measurements at June 30, 2012 Using                     |   |
|-------------------------------------|--------|----------------------|---------|--------|--------------------------------------------------------------------|--------|
|                                |   |                 |    |   | (in thousands)                                                     |   |
| Description                         |   |   CarryingValue |    |   |   Quoted Prices InActive Markets forIdentical Assets(Level 1) |   |   |   Significant OtherObservable Inputs(Level 2) |   |   |   SignificantUnobservableInputs(Level 3) |   |
| Available-for-sale securities  |   |                 |    |   |                                                               |   |   |   |   |   |   |   |   |   |   |   |
| U.S. Government andfederal agency   |   | $                    | 6,245   |   |                                                               | $      | — |   |   | $ | 6,245 |   |   | $ | — |   |
| Agency mortgage-backed:residential  |   |                 | 126,104 |   |                                                               |   | — |   |   |   | 126,104 |   |   |   | — |   |
| State and municipal                 |   |                 | 51,456  |   |                                                               |   | — |   |   |   | 51,456 |   |   |   | — |   |
| Corporate bonds                     |   |                 | 7,778   |   |                                                               |   |   |   |   |   | 7,778 |   |   |   | — |   |
| Other debt securities               |   |                 | 606     |   |                                                               |   |   |   |   |   |   |   |   |   | 606 |   |
| Equity securities                   |   |                 | 1,902   |   |                                                               |   | 1,902 |   |   |   |   |   |   |   | — |   |
| Total                               |   | $                    | 194,091 |   |                                                               | $      | 1,902 |   |   | $ | 191,583 |   |   | $ | 606 |   |

|                                              |   | State and MunicipalSecurities |    |   | Other DebtSecurities |   |
|---------------------------------------------------|--------|-------------------------------|---------|--------|----------------------|--------|
|                                              |   | 2012                          |    |   | 2011                 |   |   | 2012 |   |   | 2011 |   |
|                                              |   | (in thousands)                |    |
| Balances of recurring Level 3 assets at January 1 |   | $                             | 1,173   |   |                 | $      | — |   |   | $ | 606 |   |   | $ | 572 |   |
| Total gains for the period:                       |   |                          |    |   |                 |   |   |   |   |   |   |   |   |   |   |   |
| Included in other comprehensive income            |   |                          | — |   |                 |   | — |   |   |   | — |   |   |   | 22 |   |
| Sales                                             |   |                          | (1,173  | )      |                 |   | — |   |   |   | — |   |   |   | — |   |
| Balance of recurring Level 3 assets at June 30    |   | $                             | — |   |                 | $      | — |   |   | $ | 606 |   |   | $ | 594 |   |

----

|                          |   |          |   |   | Fair Value Measurements at June 30, 2012 Using              |   |
|-------------------------------|--------|---------------|--------|--------|-------------------------------------------------------------|--------|
|                          |   |          |   |   | (in thousands)                                              |   |
|   Description            |   | CarryingValue |   |   | Quoted Prices InActive Markets forIdentical Assets(Level 1) |   |   | Significant OtherObservable Inputs(Level 2) |   |   | SignificantUnobservableInputs(Level 3) |   |
|                          |   |          |   |   |                                                        |   |   |   |   |   |   |   |
| Impaired loans:               |   |          |   |   |                                                        |   |   |   |   |   |   |   |
| Commercial                    |   | $             | 3,027  |   |                                                        | $      | — |   |   | $ | — |   |   | $ | 3,027 |   |
| Commercial real estate:       |   |          |   |   |                                                        |   |   |   |   |   |   |   |   |   |   |   |
| Construction                  |   |          | 10,600 |   |                                                        |   | — |   |   |   | — |   |   |   | 10,600 |   |
| Farmland                      |   |          | 3,362  |   |                                                        |   | — |   |   |   | — |   |   |   | 3,362 |   |
| Other                         |   |          | 46,940 |   |                                                        |   | — |   |   |   | — |   |   |   | 46,940 |   |
| Residential Real Estate       |   |          |   |   |                                                        |   |   |   |   |   |   |   |   |   |   |   |
| 1-4 Family                    |   |          | 9,214  |   |                                                        |   | — |   |   |   | — |   |   |   | 9,214 |   |
| Other real estate owned, net: |   |          |   |   |                                                        |   |   |   |   |   |   |   |   |   |   |   |
| Commercial real estate:       |   |          |   |   |                                                        |   |   |   |   |   |   |   |   |   |   |   |
| Construction                  |   |          | 26,907 |   |                                                        |   | — |   |   |   | — |   |   |   | 26,907 |   |
| Farmland                      |   |          | 276    |   |                                                        |   | — |   |   |   | — |   |   |   | 276 |   |
| Other                         |   |          | 18,165 |   |                                                        |   | — |   |   |   | — |   |   |   | 18,165 |   |
| Residential real estate:      |   |          |   |   |                                                        |   |   |   |   |   |   |   |   |   |   |   |
| Multi-family                  |   |          | 34     |   |                                                        |   | — |   |   |   | — |   |   |   | 34 |   |
| 1-4 Family                    |   |          | 8,983  |   |                                                        |   | — |   |   |   | — |   |   |   | 8,983 |   |

----

|                                                                                      |   | Fair Value     |   |   | ValuationTechnique(s) |                                       | Unobservable Input(s) |                                                                          | Range (WeightedAverage) |
|-------------------------------------------------------------------------------------------|--------|----------------|--------|--------|-----------------------|--------------------------------------------|-----------------------|-------------------------------------------------------------------------------|-------------------------|
|                                                                                      |   | (in thousands) |   |   |                  |                                       |                  |                                                                          |                    |   |
|                                                                                      |   |           |   |   |                  |                                       |                  |                                                                          |                    |   |
| Impaired loans –   Commercial                                        |   | $              | 3,027  |   |                  | Income approach                            |                  | Capitalization rate                                                           |                    |   | 14% - 37% (26%) |
|                                                                                      |   |           |   |   |                  |                                       |                  |                                                                          |                    |   |   |   |
| Impaired loans –   Commercial real   estate           |   | $              | 60,902 |   |                  | Sales comparison   approach |                  | Adjustment for differences  between the comparable  sales |                    |   | 0% - 62% (17%) |
|                                                                                      |   |           |   |   |                  |                                       |                  |                                                                          |                    |   |   |   |
| Impaired loans –   Residential real   estate          |   | $              | 9,214  |   |                  | Sales comparison   approach |                  | Adjustment for differences  between the comparable  sales |                    |   | 3% - 38% (19%) |
|                                                                                      |   |           |   |   |                  |                                       |                  |                                                                          |                    |   |   |   |
| Other real estate owned –   Commercial real   estate  |   | $              | 45,348 |   |                  | Sales comparison   approach |                  | Adjustment for differences  between the comparable  sales |                    |   | 3% - 38% (18%) |
|                                                                                      |   |           |   |   |                  |   Income approach                     |                  |   Discount or capitalization rate                                        |                    |   | 9% - 16% (11%) |
|                                                                                      |   |           |   |   |                  |                                       |                  |   Accelerated sales strategy                                             |                    |   | 33% - 50% (45%) |
|                                                                                      |   |           |   |   |                  |                                       |                  |                                                                          |                    |   |   |   |
| Other real estate owned –   Residential real   estate |   | $              | 9,017  |   |                  | Sales comparison   approach |                  | Adjustment for differences  between the comparable  sales |                    |   | 0% - 32% (9%) |

|                              |   |                 | Fair Value Measurements at December 31, 2011 Using |   |
|-----------------------------------|--------|----------------------|----------------------------------------------------|--------|
|                              |   |                 |   (in thousands)                              |   |
| Description                       |   |   CarryingValue |                                               |   | Quoted Prices InActive Markets forIdentical Assets(Level 1) |   |   |   Significant OtherObservable Inputs(Level 2) |   |   | SignificantUnobservableInputs(Level 3) |   |
| Available-for-sale securities     |   |                 |                                               |   |   |   |   |   |   |   |   |   |
| U.S. Government andfederal agency |   | $                    | 11,643                                             |   |   | $ | — |   |   | $ | 11,643 |   |   | $ | — |   |
| Agency mortgage-backed            |   |                 | 99,475                                             |   |   |   | — |   |   |   | 99,475 |   |   |   | — |   |
| State and municipal               |   |                 | 38,062                                             |   |   |   | — |   |   |   | 36,889 |   |   |   | 1,173 |   |
| Corporate bonds                   |   |                 | 7,332                                              |   |   |   | — |   |   |   | 7,332 |   |   |   | — |   |
| Other debt securities             |   |                 | 606                                                |   |   |   | — |   |   |   | — |   |   |   | 606 |   |
| Equity securities                 |   |                 | 1,715                                              |   |   |   | 1,715 |   |   |   | — |   |   |   | — |   |
| Total                             |   | $                    | 158,833                                            |   |   | $ | 1,715 |   |   | $ | 155,339 |   |   | $ | 1,779 |   |

----

|                          |   |          |   |   | Fair Value Measurements at December 31, 2011 Using          |   |
|-------------------------------|--------|---------------|--------|--------|-------------------------------------------------------------|--------|
|                          |   |          |   |   | (in thousands)                                              |   |
|   Description            |   | CarryingValue |   |   | Quoted Prices InActive Markets forIdentical Assets(Level 1) |   |   | Significant OtherObservable Inputs(Level 2) |   |   | SignificantUnobservableInputs(Level 3) |   |
|                          |   |          |   |   |                                                        |   |   |   |   |   |   |   |
| Impaired loans:               |   |          |   |   |                                                        |   |   |   |   |   |   |   |
| Commercial                    |   | $             | 841    |   |                                                        | $      | — |   |   | $ | — |   |   | $ | 841 |   |
| Commercial real estate:       |   |          |   |   |                                                        |   |   |   |   |   |   |   |   |   |   |   |
| Construction                  |   |          | 11,138 |   |                                                        |   | — |   |   |   | — |   |   |   | 11,138 |   |
| Farmland                      |   |          | 5,402  |   |                                                        |   | — |   |   |   | — |   |   |   | 5,402 |   |
| Other                         |   |          | 56,623 |   |                                                        |   | — |   |   |   | — |   |   |   | 56,623 |   |
| Residential real estate:      |   |          |   |   |                                                        |   |   |   |   |   |   |   |   |   |   |   |
| Multi-family                  |   |          | 925    |   |                                                        |   | — |   |   |   | — |   |   |   | 925 |   |
| 1-4 Family                    |   |          | 11,910 |   |                                                        |   | — |   |   |   | — |   |   |   | 11,190 |   |
| Other real estate owned, net: |   |          |   |   |                                                        |   |   |   |   |   |   |   |   |   |   |   |
| Commercial real estate:       |   |          |   |   |                                                        |   |   |   |   |   |   |   |   |   |   |   |
| Construction                  |   |          | 31,280 |   |                                                        |   | — |   |   |   | — |   |   |   | 31,280 |   |
| Farmland                      |   |          | 715    |   |                                                        |   | — |   |   |   | — |   |   |   | 715 |   |
| Other                         |   |          | 6,364  |   |                                                        |   | — |   |   |   | — |   |   |   | 6,364 |   |
| Residential real estate:      |   |          |   |   |                                                        |   |   |   |   |   |   |   |   |   |   |   |
| 1-4 Family                    |   |          | 3,090  |   |                                                        |   | — |   |   |   | — |   |   |   | 3,090 |   |

|                                           |   |           |      |   | Fair Value Measurements at June 30, 2012 Using |   |
|------------------------------------------------|--------|----------------|-----------|--------|------------------------------------------------|--------|
|                                           |   | CarryingAmount |      |   | Level 1                                        |   |   | Level 2 |   |   | Level 3 |   |   | Total |   |
|                                           |   | (in thousands) |      |
| Financial assets                               |   |           |      |   |                                           |   |   |   |   |   |   |   |   |   |   |
| Cash and cash equivalents                      |   | $              | 36,361    |   |                                           | $      | 31,724 |   |   | $ | 4,637 |   |   | $ | — |   |   | $ | 36,361 |   |
| Securities available for sale                  |   |           | 194,091   |   |                                           |   | 1,902 |   |   |   | 191,583 |   |   |   | 606 |   |   |   | 194,091 |   |
| Federal Home Loan Bank stock                   |   |           | 10,072    |   |                                           |   | N/A |   |   |   | N/A |   |   |   | N/A |   |   |   | N/A |   |
| Mortgage loans held for sale                   |   |           | 383       |   |                                           |   | — |   |   |   | 383 |   |   |   | — |   |   |   | 383 |   |
| Loans, net                                     |   |           | 989,315   |   |                                           |   | — |   |   |   | — |   |   |   | 992,105 |   |   |   | 992,105 |   |
| Accrued interest receivable                    |   |           | 5,573     |   |                                           |   | — |   |   |   | 1,179 |   |   |   | 4,394 |   |   |   | 5,573 |   |
| Financial liabilities                          |   |           |      |   |                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Deposits                                       |   | $              | 1,204,722 |   |                                           | $      | 112,797 |   |   | $ | 1,098,688 |   |   | $ | — |   |   | $ | 1,211,485 |   |
| Securities sold under agreements to repurchase |   |           | 2,501     |   |                                           |   | — |   |   |   | 2,501 |   |   |   | — |   |   |   | 2,501 |   |
| Federal Home Loan Bank advances                |   |           | 6,398     |   |                                           |   | — |   |   |   | 6,402 |   |   |   | — |   |   |   | 6,402 |   |
| Subordinated capital notes                     |   |           | 7,200     |   |                                           |   | — |   |   |   | — |   |   |   | 6,713 |   |   |   | 6,713 |   |
| Junior subordinated debentures                 |   |           | 25,000    |   |                                           |   | — |   |   |   | — |   |   |   | 19,628 |   |   |   | 19,628 |   |
| Accrued interest payable                       |   |           | 1,890     |   |                                           |   | — |   |   |   | 1,352 |   |   |   | 538 |   |   |   | 1,890 |   |

----

|                                           |   | Fair Value Measurements atDecember 31, 2011 |      |
|------------------------------------------------|--------|---------------------------------------------|-----------|
|                                           |   | CarryingAmount                              |      |   | FairValue |   |
|                                           |   |                                        |      |   |   |   |
| Financial assets                               |   |                                        |      |   |   |   |
| Cash and cash equivalents                      |   | $                                           | 105,962   |   |   | $ | 105,962 |   |
| Securities available for sale                  |   |                                        | 158,833   |   |   |   | 158,833 |   |
| Federal Home Loan Bank stock                   |   |                                        | 10,072    |   |   |   | N/A |   |
| Mortgage loans held for sale                   |   |                                        | 694       |   |   |   | 694 |   |
| Loans, net                                     |   |                                        | 1,083,444 |   |   |   | 1,093,456 |   |
| Accrued interest receivable                    |   |                                        | 6,682     |   |   |   | 6,682 |   |
| Financial liabilities                          |   |                                        |      |   |   |   |   |   |
| Deposits                                       |   | $                                           | 1,323,763 |   |   | $ | 1,332,133 |   |
| Securities sold under agreements to repurchase |   |                                        | 1,738     |   |   |   | 1,738 |   |
| Federal Home Loan Bank advances                |   |                                        | 7,116     |   |   |   | 7,015 |   |
| Subordinated capital notes                     |   |                                        | 7,650     |   |   |   | 7,110 |   |
| Junior subordinated debentures                 |   |                                        | 25,000    |   |   |   | 19,765 |   |
| Accrued interest payable                       |   |                                        | 1,732     |   |   |   | 1,732 |   |

----

|                                                 |   | June 30,       |    |   | December 31, |   |
|------------------------------------------------------|--------|----------------|---------|--------|--------------|--------|
|                                                 |   | 2012           |    |   | 2011         |   |
|                                                 |   | (in thousands) |    |
| Deferred tax assets:                                 |   |           |    |   |         |   |
| Allowance for loan losses                            |   | $              | 18,058  |   |         | $      | 18,403 |   |
| Other real estate owned write-down                   |   |           | 8,984   |   |         |   | 12,905 |   |
| Net operating loss carry-forward                     |   |           | 6,285   |   |         |   | 2,470 |   |
| New market tax credit carry-forward                  |   |           | 243     |   |         |   | 208 |   |
| Alternative minimum tax credit carry-forward         |   |           | 692     |   |         |   | 685 |   |
| Net assets from acquisitions                         |   |           | 568     |   |         |   | 543 |   |
| Other than temporary impairment on securities        |   |           | 374     |   |         |   | 374 |   |
| Amortization of non-compete agreements               |   |           | 23      |   |         |   | 27 |   |
| Other                                                |   |           | 669     |   |         |   | 827 |   |
|                                                 |   |           | 35,896  |   |         |   | 36,442 |   |
| Deferred tax liabilities:                            |   |           |    |   |         |   |   |   |
| Fixed assets                                         |   |           | 399     |   |         |   | 445 |   |
| Net unrealized gain on securities available for sale |   |           | 1,537   |   |         |   | 2,242 |   |
| FHLB stock dividends                                 |   |           | 1,276   |   |         |   | 1,276 |   |
| Originated mortgage servicing rights                 |   |           | 97      |   |         |   | 103 |   |
| Other                                                |   |           | 613     |   |         |   | 659 |   |
|                                                 |   |           | 3,922   |   |         |   | 4,725 |   |
| Net deferred tax assets before valuation allowance   |   |           | 31,974  |   |         |   | 31,717 |   |
| Valuation allowance                                  |   |           | (31,974 | )      |         |   | (31,717 | ) |
| Net deferred tax asset                               |   | $              | — |   |         | $      | — |   |

----

|                   |   | Six Months EndedJune 30, 2012 |    |   | Twelve Months EndedDecember 31, 2011 |   |
|------------------------|--------|-------------------------------|---------|--------|--------------------------------------|--------|
|                   |   | Shares                        |    |   | WeightedAverageGrant Price           |   |   | Shares |   |   | WeightedAverageGrant Price |   |
| Outstanding, beginning |   |                          | 100,226 |   |                                 | $      | 13.21 |   |   |   | 157,697 |   |   | $ | 13.43 |   |
| Granted                |   |                          | 115,095 |   |                                 |   | 1.67 |   |   |   | 2,800 |   |   |   | 5.36 |   |
| Vested                 |   |                          | (28,249 | )      |                                 |   | 12.91 |   |   |   | (35,836 | )    |   |   | 13.00 |   |
| Forfeited              |   |                          | (4,695  | )      |                                 |   | 15.71 |   |   |   |  (24,435 | )   |   |   | 14.04 |   |
| Outstanding, ending    |   |                          | 182,377 |   |                                 | $      | 5.91 |   |   |   | 100,226 |   |   | $ | 13.21 |   |

----

|                   |   | Six Months EndedJune 30, 2012 |    |   | Twelve Months EndedDecember 31, 2011 |   |
|------------------------|--------|-------------------------------|---------|--------|--------------------------------------|--------|
|                   |   | Options                       |    |   | WeightedAverageExercise Price        |   |   | Options |   |   | WeightedAverageExercise Price |   |
| Outstanding, beginning |   |                          | 29,530  |   |                                 | $      | 19.88 |   |   |   | 86,469 |   |   | $ | 20.72 |   |
| Forfeited              |   |                          | — |   |                                 |   | — |   |   |   | (9,557 | ) |   |   | 19.49 |   |
| Expired                |   |                          | (29,530 | )      |                                 | $      | 19.88 |   |   |   | (47,382 | ) |   |   | 21.49 |   |
| Outstanding, ending    |   |                          | — |   |                                 |   | — |   |   |   | 29,530 |   |   | $ | 19.88 |   |

| July 2012 – December 2012 |   | $      | 241 |   |
|---------------------------------|--------|--------|-----|--------|
| 2013                            |   |   | 400 |   |
| 2014                            |   |   | 290 |   |
| 2015                            |   |   | 135 |   |
| 2016 & thereafter           |   |   | 32  |   |

|                                                                       |   |   | Three Months Ended June 30,                |   |   |   | Six Months EndedJune 30, |   |
|----------------------------------------------------------------------------|--------|--------|-------------------------------------------------|--------|--------|--------|--------------------------|--------|
|                                                                       |   |   | 2012                                            |   |   |   | 2011                     |   |   |   | 2012 |   |   |   | 2011 |   |
|                                                                       |   |   | (in thousands, except share and per share data) |   |
|                                                                       |   |   |                                            |   |   |   |                     |   |   |   |   |   |   |   |   |   |
| Net income (loss)                                                          |   | $      | 151                                             |   |   | $      | (39,989                  | )      |   | $ | 1,653 |   |   | $ | (39,190 | ) |
| Less:Preferred stock dividends                                             |   |   | 438                                             |   |   |   | 437                      |   |   |   | 875 |   |   |   | 875 |   |
| Accretion of Series A preferred stock discount                             |   |   | 45                                              |   |   |   | 44                       |   |   |   | 90 |   |   |   | 88 |   |
| Earnings (loss) allocated to unvested shares                               |   |   | (4                                              | )      |   |   | (403                     | )      |   |   | 8 |   |   |   | (454 | ) |
| Earnings (loss) allocated to Series C preferred                            |   |   | (9                                              | )      |   |   | (1,107                   | )      |   |   | 19 |   |   |   | (1,098 | ) |
| Net income (loss) allocated to commonshareholders, basic and diluted       |   | $      | (319                                            | )      |   | $      | (38,960                  | )      |   | $ | 661 |   |   | $ | (38,601 | ) |
| Basic                                                                      |   |   |                                            |   |   |   |                     |   |   |   |   |   |   |   |   |   |
| Weighted average common shares includingunvested common shares outstanding |   |   | 12,195,232                                      |   |   |   | 12,172,864               |   |   |   | 12,175,850 |   |   |   | 12,175,852 |   |
| Less: Weighted average unvestedcommon shares                               |   |   | 129,182                                         |   |   |   | 121,314                  |   |   |   | 141,301 |   |   |   | 137,712 |   |
| Less: Weighted average Series C preferred                                  |   |   | 332,894                                         |   |   |   | 332,894                  |   |   |   | 332,894 |   |   |   | 332,893 |   |
| Weighted average common shares outstanding                                 |   |   | 11,733,156                                      |   |   |   | 11,718,656               |   |   |   | 11,701,655 |   |   |   | 11,705,247 |   |
|                                                                       |   |   |                                            |   |   |   |                     |   |   |   |   |   |   |   |   |
| Basic earnings (loss) per common share                                     |   | $      | (0.03                                           | )      |   | $      | (3.33                    | )      |   | $ | 0.06 |   |   | $ | (3.30 | ) |

| Diluted                                                                                  |   |          |       |   |          |   |       |          |   |   |          |   |
|------------------------------------------------------------------------------------------|--------|---------------|------------|--------|---------------|--------|------------|---------------|--------|--------|---------------|--------|
| Add: Dilutive effects of assumed exercisesof common and Preferred Series Cstock warrants |   |  — |       |   |  — |   |       |  — |   |   |  — |   |
| Weighted average common shares andpotential common shares                                |   |          | 11,733,156 |   |          |   | 11,718,656 |          |   |   | 11,701,655    |   |   |   | 11,705,247 |   |
| Diluted earnings (loss) per common share                                                 |   | $             | (0.03      | )      |          | $      | (3.33      | )             |   | $      | 0.06          |   |   | $ | (3.30 | ) |

----

|                     |   |                |   |   |                     |   |   |                                     |   |   | June 30, 2012 |   |   | December 31, 2011 |   |
|--------------------------|--------|---------------------|--------|--------|--------------------------|--------|--------|------------------------------------------|--------|--------|---------------|--------|--------|-------------------|--------|
|                     |   | Regulatory Minimums |   |   | Well-CapitalizedMinimums |   |   | Minimum CapitalRatios UnderConsent Order |   |   | PorterBancorp |   |   | PBIBank           |   |   | PorterBancorp |   |   | PBIBank |   |
|                     |   |                |   |   |                     |   |   |                                     |   |   |          |   |   |              |   |   |   |   |   |   |   |
| Tier 1 Capital           |   |                | 4.0    | %      |                     |   | 6.0    | %                                        |   |   | N/A           |   |   |              | 9.95   | % |   |   | 9.72 | % |   |   | 9.23 | % |   |   | 8.86 | % |
| Total risk-based capital |   |                | 8.0    |   |                     |   | 10.0   |                                     |   |   | 12.0          | %      |   |              | 11.94  |   |   |   | 11.71 |   |   |   | 11.22 |   |   |   | 10.86 |   |
| Tier 1 leverage ratio    |   |                | 4.0    |   |                     |   | 5.0    |                                     |   |   | 9.0           |   |   |              | 7.56   |   |   |   | 7.38 |   |   |   | 6.53 |   |   |   | 6.23 |   |

----

----

Item 2. Management’s Discussion and Analysis of Financial Condition

and Results of Operations

| ● | Net interest margin decreased 10 basis points to 3.40% in the first six months of 2012 compared with 3.50% in the first six months of 2011. The decrease in margin between periods was primarily due to lower interest earning assets coupled with lower rates on those assets and elevated non-accrual loan levels. Average loans decreased 14.1% to $1.1 billion in the first six months of 2012 compared with $1.3 billion in the first six months of 2011.  Net loans decreased 18.3% to $989 million at June 30 2012, compared with $1.21 billion at June 30, 2011. |
|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ● | We continue to execute on our strategy to reduce our commercial real estate and construction and development loans. Construction and development loans totaled $81.8 million, or 68% of total risk-based capital, at June 30, 2012 compared to $101.5 million, or 85% of total risk-based capital, at December 31, 2011.  Non-owner occupied commercial real estate loans, construction and development loans, and multifamily residential real estate loans as a group totaled $376.6 million, or 313% of total risk-based capital, at June 30, 2012 and $414.6 million, or 349% of total risk-based capital, at December 31, 2011. |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| ● | Loan proceeds received from the reduction of our commercial real estate and construction and development loans were used primarily to redeem maturing certificates of deposit during the quarter. Deposits decreased 16.1% to $1.20 billion compared with $1.44 billion at June 30, 2011. Certificate of deposit balances declined $114.8 million during the first six months of 2012 to $909.5 million at June 30, 2012, from $1.02 billion at December 31, 2011. Demand deposits increased 1.5% during the first six months of 2012 compared with the fourth quarter of 2011, and increased 9.7% compared with the first six months of 2011. |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| ● | Non-performing loans decreased $11.6 million during the first six months of 2012 to $81.7 million at June 30, 2012, compared with $93.4 million at December 31, 2011. The decrease was primarily in the commercial and residential real estate segments of our portfolio.                                                                                                                                                                                                                                                                                                                                                                      |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| ● | Loans past due 30-59 days decreased from $17.3 million at December 31, 2011 to $6.7 million at June 30, 2012.  Loans past due 60-89 days increased from $3.9 million at December 31, 2011 to $4.4 million at June 30, 2012.  The net decrease in loan past dues 30-89 days was primarily in the 1-4 family residential real estate, commercial real estate, and commercial segments of the portfolio.                                                                                                                                                                                                                      |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| ● | Foreclosed properties at June 30, 2012 increased to $54.4 million compared with $35.6 million at March 31, 2012, and $49.9 million at June 30, 2011.  The Company acquired $23.9 million of OREO and sold $4.8 million of OREO during the second quarter of 2012. Our ratio of non-performing assets to total assets increased to 10.2% at June 30, 2012, compared with 6.65% at June 30, 2011.                                                                                                                                                                                                                            |

| ● | Continuing to operate the Company and Bank in a safe and sound manner.  This strategy will require us to continue to reduce the size of our balance sheet, reduce our lending concentrations, consider selling loans, and reduce other noninterest expense through the disposition of OREO.                                                                  |   |
|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|    |                                                                                                                                                                                                                                                                                                                                                                   |   |
| ● | Continuing with succession planning and add resources to management team.  On March 29, 2012, the Board of Directors announced that it had formed a search committee comprised of its five independent directors to identify and hire a President and CEO for PBI Bank. On July 19, 2012, we reported that the Company had successfully filled this key position. |   |

----

| ● | Addressing other real estate owned.                                       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|---------|--------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|    | o                                                                              | In 2011, management determined, with the concurrence of the Board of Directors, that certain properties held in OREO were not likely to be successfully disposed of in an acceptable time-frame using routine marketing efforts. It became apparent due to weakness in the economy and softness in demand for housing that certain land development and residential condominium projects would require extended holding periods to sell the properties at recent appraised values.  Accordingly, management determined to market these properties more aggressively to retail and bulk buyers. In June 2011, the Company sold, in a single transaction, 54 finished condominium property units from condominium developments held in our OREO portfolio with a carrying value of approximately $11.0 million, for $5.2 million, resulting in a pre-tax loss of $5.8 million. |
|    | o                                                                              | Although we were carrying our OREO at fair market value less estimated cost to sell, we subsequently adjusted our valuations for land development and residential development properties held in OREO similar to the properties we sold earlier in 2011. Our 2011 fair value adjustments totaled approximately $25.6 million to reflect our intent to market these properties more aggressively to retail and bulk buyers.  Additionally, we recorded approximately $9.3 million of fair value adjustments related to new appraisals received for properties in the portfolio during 2011.                                                                                                                                                                                                                                                                                        |
|    | o                                                                              | In summary, for the years ended December 31, 2011 and 2010 respectively, we recorded net construction and development OREO fair value adjustments and loss on sale of OREO totaling $38.7 million and $10.4 million. This represents approximately 89% and 71% of our total OREO fair value adjustments and loss on sale in 2011 and 2010, respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|    | o                                                                              | For the first six months of 2012, we recorded net construction and development OREO fair value adjustments and loss on sale of construction and development OREO of $280,000.  This represents approximately 16% of our total OREO fair value adjustments and loss on sale of OREO in the first six months of 2012.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|    |                                                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| ● | We are committed to reducing loan concentrations and balance sheet risk.  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|    | o                                                                              | We recorded net construction and development loan charge-offs totaling $1.3 million during the first six months of 2012.  This represented approximately 15% of our total net loan charge-offs for the first six months of 2012.  We recorded net construction and development loan charge-offs totaling $11.0 million and $11.4 million in for the years ended December 31, 2011 and 2010, respectively.  This represented approximately 27% and 51% of our total net loan charge-offs in 2011 and 2010, respectively.                                                                                                                                                                                                                                                                                                                                       |   |
|    |                                                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |
|    | o                                                                              | Our Consent Order calls for us to reduce our construction and development loans to not more than 75% of total risk-based capital. We were in compliance at June 30, 2012 with construction and development loans representing 68% of total risk-based capital.  These loans totaled $81.8 million, or 68% of total risk-based capital, at June 30, 2012 and $101.5 million, or 85% of total risk-based capital, at December 31, 2011.                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |
|    |                                                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |
|    | o                                                                              | Our Consent Order also requires us to reduce non-owner occupied commercial real estate loans, construction and development loans, and multifamily residential real estate loans as a group, to not more than 250% of total risk-based capital. We were not in compliance at June 30, 2012 with non-owner occupied commercial real estate loans, construction and development loans, and multifamily residential real estate loans as a group representing 313% of total risk-based capital.  These loans totaled $376.6 million, or 313% of total risk-based capital, at June 30, 2012 and $414.6 million, or 349% of total risk-based capital, at December 31, 2011.                                                                                                                                                                                                             |   |

----

|    |                                                                                                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |
|---------|-----------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|    | o                                                                                                                     | We are working to reduce these loans by curtailing new construction and development lending and new non-owner occupied commercial real estate lending.  We are also receiving principal reductions from amortizing credits and pay-downs from our customers who sell properties built for resale.  We have reduced the construction loan portfolio from $199.5 million at December 31, 2010 to $81.8 million at June 30, 2012.  Our non-owner occupied commercial real estate loans declined from $293.3 million at December 31, 2010 to $234.9 million at June 30, 2012. |   |
|    |                                                                                                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| ● | Raising capital by selling common stock through a public offering or private placement to existing and new investors. |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|    |                                                                                                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| ● | Evaluating other strategic alternatives, such as the sale of assets or branches.                                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |

|                           |   | For the Three Months   |    |   | Change from  |   |
|--------------------------------|--------|------------------------|---------|--------|--------------|--------|
|                           |   | Ended June 30,         |    |   | Prior Period |   |
|                           |   | 2012                   |    |   | 2011         |   |   | Amount |   |   | Percent |   |
|                           |   | (dollars in thousands) |    |
|                           |   |                   |    |   |         |   |   |   |   |   |   |   |
| Gross interest income          |   | $                      | 14,812  |   |         | $      | 19,198 |   |   | $ | (4,386 | ) |   |   | (22.8 | )%  |
| Gross interest expense         |   |                   | 4,017   |   |         |   | 5,757 |   |   |   | (1,740 | ) |   |   | (30.2 | )  |
| Net interest income            |   |                   | 10,795  |   |         |   | 13,441 |   |   |   | (2,646 | ) |   |   | (19.7 | ) |
| Provision for loan losses      |   |                   | 4,000   |   |         |   | 13,700 |   |   |   | (9,700 | ) |   |   | (70.8 | ) |
| Non-interest income            |   |                   | 3,018   |   |         |   | 2,865 |   |   |   | 153 |   |   |   | 5.3 |   |
| Non-interest expense           |   |                   | 9,662   |   |         |   | 54,759 |   |   |   | (45,097 | ) |   |   | (82.4 | ) |
| Net income (loss) before taxes |   |                   | 151     |   |         |   | (52,153 | ) |   |   | 52,304 |   |   |   | (100.3 | ) |
| Income tax expense (benefit)   |   |                   | — |   |         |   | (12,164 | ) |   |   | 12,164 |   |   |   | (100.0 | ) |
| Net income (loss)              |   |                   | 151     |   |         |   | (39,989 | ) |   |   | 40,140 |   |   |   | (100.4 | ) |

----

|                           |   | For the Six Months     |    |   | Change from  |   |
|--------------------------------|--------|------------------------|---------|--------|--------------|--------|
|                           |   | Ended June 30,         |    |   | Prior Period |   |
|                           |   | 2012                   |    |   | 2011         |   |   | Amount |   |   | Percent |   |
|                           |   | (dollars in thousands) |    |
|                           |   |                   |    |   |         |   |   |   |   |   |   |   |
| Gross interest income          |   | $                      | 30,567  |   |         | $      | 38,814 |   |   | $ | (8,247 | ) |   |   | (21.2 | )% |
| Gross interest expense         |   |                   | 8,318   |   |         |   | 11,605 |   |   |   | (3,287 | ) |   |   | (28.3 | ) |
| Net interest income            |   |                   | 22,249  |   |         |   | 27,209 |   |   |   | (4,960 | ) |   |   | (18.2 | ) |
| Provision for credit losses    |   |                   | 7,750   |   |         |   | 18,800 |   |   |   | (11,050 | ) |   |   | (58.8 | ) |
| Non-interest income            |   |                   | 6,463   |   |         |   | 4,652 |   |   |   | 1,811 |   |   |   | 38.9 |   |
| Non-interest expense           |   |                   | 19,309  |   |         |   | 64,154 |   |   |   | (44,845 | ) |   |   | (69.9 | ) |
| Net income (loss) before taxes |   |                   | 1,653   |   |         |   | (51,093 | ) |   |   | 52,746 |   |   |   | (103.2 | ) |
| Income tax expense (benefit)   |   |                   | — |   |         |   | (11,903 | ) |   |   | 11,903 |   |   |   | (100.0 | ) |
| Net income (loss)              |   |                   | 1,653   |   |         |   | (39,190 | ) |   |   | 40,843 |   |   |   | (104.2 | ) |

----

|                                                               |   | Three Months Ended June 30,      |      |
|--------------------------------------------------------------------|--------|----------------------------------|-----------|
|                                                               |   | 2012                             |      |   | 2011 |   |
|                                                               |   | AverageBalance                   |      |   | InterestEarned/Paid |   |   | AverageYield/Cost |   |   | AverageBalance |   |   | InterestEarned/Paid |   |   | AverageYield/Cost |   |
|                                                               |   | (dollars in thousands) |      |
| ASSETS                                                             |   |                             |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-earning assets:                                           |   |                             |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     Loan receivables (1)(2)                         |   | $                                | 1,078,497 |   |   | $ | 13,689 |   |   |   | 5.10 | % |   | $ | 1,268,196 |   |   | $ | 17,589 |   |   |   | 5.56 | % |
|     Securities                                      |   |                             |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Taxable                                                            |   |                             | 149,482   |   |   |   | 783 |   |   |   | 2.11 |   |   |   | 120,738 |   |   |   | 1,126 |   |   |   | 3.74 |   |
| Tax-exempt (3)                                                     |   |                             | 22,977    |   |   |   | 196 |   |   |   | 5.28 |   |   |   | 27,722 |   |   |   | 268 |   |   |   | 5.97 |   |
|     FHLB stock                                      |   |                             | 10,072    |   |   |   | 107 |   |   |   | 4.27 |   |   |   | 10,072 |   |   |   | 112 |   |   |   | 4.46 |   |
|     Other equity securities                         |   |                             | 1,359     |   |   |   | 14 |   |   |   | 4.14 |   |   |   | 1,400 |   |   |   | 13 |   |   |   | 3.72 |   |
|     Federal funds sold and other                    |   |                             | 45,133    |   |   |   | 23 |   |   |   | 0.20 |   |   |   | 152,057 |   |   |   | 90 |   |   |   | 0.24 |   |
|                                                               |   |                             |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total interest-earning assets                                      |   |                             | 1,307,520 |   |   |   | 14,812 |   |   |   | 4.59 | % |   |   | 1,580,185 |   |   |   | 19,198 |   |   |   | 4.91 | % |
|                                                               |   |                             |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Less: Allowance for loan losses                                    |   |                             | (53,546   | ) |   |   |   |   |   |   |   |   |   |   | (34,287 | ) |   |   |   |   |   |   |   |   |
| Non-interest earning assets                                        |   |                             | 109,366   |   |   |   |   |   |   |   |   |   |   |   | 162,655 |   |   |   |   |   |   |   |   |   |
|                                                               |   |                             |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total assets                                                       |   | $                                | 1,363,340 |   |   |   |   |   |   |   |   |   |   | $ | 1,708,553 |   |   |   |   |   |   |   |   |   |
|                                                               |   |                             |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| LIABILITIES AND STOCKHOLDERS’ EQUITY                         |   |                             |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-bearing liabilities:                                      |   |                             |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     Certificates of deposit and other time deposits |   | $                                | 930,012   |   |   | $ | 3,517 |   |   |   | 1.52 | % |   | $ | 1,159,610 |   |   | $ | 4,802 |   |   |   | 1.66 | % |
|     NOW and money market deposits                   |   |                             | 149,174   |   |   |   | 169 |   |   |   | 0.46 |   |   |   | 172,300 |   |   |   | 408 |   |   |   | 0.95 |   |
|     Savings accounts                                |   |                             | 39,181    |   |   |   | 40 |   |   |   | 0.41 |   |   |   | 37,338 |   |   |   | 62 |   |   |   | 0.67 |   |
|     Repurchase agreements                           |   |                             | 2,121     |   |   |   | 2 |   |   |   | 0.38 |   |   |   | 11,169 |   |   |   | 118 |   |   |   | 4.24 |   |
|     FHLB advances                                   |   |                             | 6,538     |   |   |   | 54 |   |   |   | 3.32 |   |   |   | 18,015 |   |   |   | 139 |   |   |   | 3.09 |   |
|     Junior subordinated debentures                  |   |                             | 32,421    |   |   |   | 235 |   |   |   | 2.92 |   |   |   | 33,325 |   |   |   | 228 |   |   |   | 2.74 |   |
|                                                               |   |                             |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total interest-bearing liabilities                                 |   |                             | 1,159,447 |   |   |   | 4,017 |   |   |   | 1.39 | % |   |   | 1,431,757 |   |   |   | 5,757 |   |   |   | 1.61 | % |
|                                                               |   |                             |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Non-interest-bearing liabilities:                                  |   |                             |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     Non-interest-bearing deposits                   |   |                             | 112,914   |   |   |   |   |   |   |   |   |   |   |   | 104,211 |   |   |   |   |   |   |   |   |   |
|     Other liabilities                               |   |                             | 6,992     |   |   |   |   |   |   |   |   |   |   |   | 5,983 |   |   |   |   |   |   |   |   |   |
|                                                               |   |                             |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total liabilities                                                  |   |                             | 1,279,353 |   |   |   |   |   |   |   |   |   |   |   | 1,541,951 |   |   |   |   |   |   |   |   |   |
| Stockholders’ equity                                         |   |                             | 83,987    |   |   |   |   |   |   |   |   |   |   |   | 166,602 |   |   |   |   |   |   |   |   |   |
|                                                               |   |                             |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total liabilities and stockholders’ equity                   |   | $                                | 1,363,340 |   |   |   |   |   |   |   |   |   |   | $ | 1,708,553 |   |   |   |   |   |   |   |   |   |
|                                                               |   |                             |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net interest income                                                |   |                             |      |   |   | $ | 10,795 |   |   |   |   |   |   |   |   |   |   | $ | 13,441 |   |   |   |   |   |
|                                                               |   |                             |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net interest spread                                                |   |                             |      |   |   |   |   |   |   |   | 3.20 | % |   |   |   |   |   |   |   |   |   |   | 3.30 | % |
|                                                               |   |                             |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net interest margin                                                |   |                             |      |   |   |   |   |   |   |   | 3.35 | % |   |   |   |   |   |   |   |   |   |   | 3.45 | % |
|                                                               |   |                             |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

| (1) | Includes loan fees in both interest income and the calculation of yield on loans. |
|-----|-----------------------------------------------------------------------------------|

| (2) | Calculations include non-accruing loans in average loan amounts outstanding. |
|-----|------------------------------------------------------------------------------|

| (3) | Taxable equivalent yields are calculated assuming a 35% federal income tax rate. |
|-----|----------------------------------------------------------------------------------|

----

|                                             |   | Six Months Ended June 30,        |      |
|--------------------------------------------------|--------|----------------------------------|-----------|
|                                             |   | 2012                             |      |   | 2011 |   |
|                                             |   | AverageBalance                   |      |   | InterestEarned/Paid |   |   | AverageYield/Cost |   |   | AverageBalance |   |   | InterestEarned/Paid |   |   | AverageYield/Cost |   |
|                                             |   | (dollars in thousands) |      |
| ASSETS                                           |   |                             |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-earning assets:                         |   |                             |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loan receivables (1)(2)                          |   | $                                | 1,098,839 |   |   | $ | 28,201 |   |   |   | 5.16 | % |   | $ | 1,279,461 |   |   | $ | 35,699 |   |   |   | 5.63 | % |
| Securities                                       |   |                             |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Taxable                                          |   |                             | 137,492   |   |   |   | 1,609 |   |   |   | 2.35 |   |   |   | 116,340 |   |   |   | 2,155 |   |   |   | 3.74 |   |
| Tax-exempt (3)                                   |   |                             | 25,040    |   |   |   | 446 |   |   |   | 5.51 |   |   |   | 27,373 |   |   |   | 528 |   |   |   | 5.98 |   |
| FHLB stock                                       |   |                             | 10,072    |   |   |   | 221 |   |   |   | 4.41 |   |   |   | 10,072 |   |   |   | 226 |   |   |   | 4.52 |   |
| Other equity securities                          |   |                             | 1,359     |   |   |   | 29 |   |   |   | 4.29 |   |   |   | 1,400 |   |   |   | 26 |   |   |   | 3.75 |   |
| Federal funds sold and other                     |   |                             | 56,397    |   |   |   | 61 |   |   |   | 0.22 |   |   |   | 151,196 |   |   |   | 180 |   |   |   | 0.24 |   |
|                                             |   |                             |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total interest-earning assets                    |   |                             | 1,329,199 |   |   |   | 30,567 |   |   |   | 4.66 | % |   |   | 1,585,842 |   |   |   | 38,814 |   |   |   | 4.97 | % |
|                                             |   |                             |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Less: Allowance for loan losses                  |   |                             | (53,220   | ) |   |   |   |   |   |   |   |   |   |   | (34,260 | ) |   |   |   |   |   |   |   |   |
| Non-interest earning assets                      |   |                             | 111,994   |   |   |   |   |   |   |   |   |   |   |   | 171,739 |   |   |   |   |   |   |   |   |   |
|                                             |   |                             |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total assets                                     |   | $                                | 1,387,973 |   |   |   |   |   |   |   |   |   |   | $ | 1,723,321 |   |   |   |   |   |   |   |   |   |
|                                             |   |                             |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| LIABILITIES AND STOCKHOLDERS’ EQUITY       |   |                             |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-bearing liabilities:                    |   |                             |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Certificates of deposit and other time deposits  |   | $                                | 953,230   |   |   | $ | 7,289 |   |   |   | 1.54 | % |   | $ | 1,163,201 |   |   | $ | 9,677 |   |   |   | 1.68 | % |
| NOW and money market deposits                    |   |                             | 151,136   |   |   |   | 355 |   |   |   | 0.47 |   |   |   | 172,189 |   |   |   | 832 |   |   |   | 0.97 |   |
| Savings accounts                                 |   |                             | 38,133    |   |   |   | 82 |   |   |   | 0.43 |   |   |   | 36,766 |   |   |   | 123 |   |   |   | 0.67 |   |
| Repurchase agreements                            |   |                             | 1,897     |   |   |   | 4 |   |   |   | 0.42 |   |   |   | 11,257 |   |   |   | 236 |   |   |   | 4.23 |   |
| FHLB advances                                    |   |                             | 6,722     |   |   |   | 111 |   |   |   | 3.32 |   |   |   | 16,379 |   |   |   | 281 |   |   |   | 3.46 |   |
| Junior subordinated debentures                   |   |                             | 32,533    |   |   |   | 477 |   |   |   | 2.95 |   |   |   | 33,437 |   |   |   | 456 |   |   |   | 2.75 |   |
|                                             |   |                             |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total interest-bearing liabilities               |   |                             | 1,183,651 |   |   |   | 8,318 |   |   |   | 1.41 | % |   |   | 1,433,229 |   |   |   | 11,605 |   |   |   | 1.63 | % |
|                                             |   |                             |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Non-interest-bearing liabilities:                |   |                             |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Non-interest-bearing deposits                    |   |                             | 112,785   |   |   |   |   |   |   |   |   |   |   |   | 105,148 |   |   |   |   |   |   |   |   |   |
| Other liabilities                                |   |                             | 7,214     |   |   |   |   |   |   |   |   |   |   |   | 6,417 |   |   |   |   |   |   |   |   |   |
|                                             |   |                             |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total liabilities                                |   |                             | 1,303,650 |   |   |   |   |   |   |   |   |   |   |   | 1,544,794 |   |   |   |   |   |   |   |   |   |
| Stockholders’ equity                       |   |                             | 84,323    |   |   |   |   |   |   |   |   |   |   |   | 178,527 |   |   |   |   |   |   |   |   |   |
|                                             |   |                             |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total liabilities and stockholders’ equity |   | $                                | 1,387,973 |   |   |   |   |   |   |   |   |   |   | $ | 1,723,321 |   |   |   |   |   |   |   |   |   |
|                                             |   |                             |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net interest income                              |   |                             |      |   |   | $ | 22,249 |   |   |   |   |   |   |   |   |   |   | $ | 27,209 |   |   |   |   |   |
|                                             |   |                             |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net interest spread                              |   |                             |      |   |   |   |   |   |   |   | 3.25 | % |   |   |   |   |   |   |   |   |   |   | 3.34 | % |
|                                             |   |                             |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net interest margin                              |   |                             |      |   |   |   |   |   |   |   | 3.40 | % |   |   |   |   |   |   |   |   |   |   | 3.50 | % |
|                                             |   |                             |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

| (1) | Includes loan fees in both interest income and the calculation of yield on loans. |
|-----|-----------------------------------------------------------------------------------|

| (2) | Calculations include non-accruing loans in average loan amounts outstanding. |
|-----|------------------------------------------------------------------------------|

| (3) | Taxable equivalent yields are calculated assuming a 35% federal income tax rate. |
|-----|----------------------------------------------------------------------------------|

----

|                                                        |   | Three Months Ended June 30,2012 vs. 2011 |   |   | Six Months Ended June 30,2012 vs. 2011 |   |
|-------------------------------------------------------------|--------|-----------------------------------------------|--------|--------|----------------------------------------|--------|
|                                                        |   | Increase (decrease)due to change in           |   |   | NetChange                              |   |   | Increase (decrease)due to change in |   |   | NetChange |   |
|                                                        |   | Rate                                          |   |   | Volume                                 |   |   | Rate |   |   | Volume |   |
|                                                        |   | (in thousands)                           |   |
| Interest-earning assets:                                    |   |                                          |   |   |                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                        |   |                                          |   |   |                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Loan receivables                                     |   | $                                             | (1,411 | )      |                                   | $      | (2,489 | ) |   | $ | (3,900 | ) |   | $ | (2,716 | ) |   | $ | (4,782 | ) |   | $ | (7,498 | ) |
|   Securities                                           |   |                                          | (614   | )      |                                   |   | 199 |   |   |   | (415 | ) |   |   | (946 | ) |   |   | 318 |   |   |   | (628 | ) |
|   FHLB stock                                           |   |                                          | (5     | )      |                                   |   | — |   |   |   | (5 | ) |   |   | (5 | ) |   |   | — |   |   |   | (5 | ) |
|   Other equity securities                              |   |                                          | 1      |   |                                   |   | — |   |   |   | 1 |   |   |   | 4 |   |   |   | (1 | ) |   |   | 3 |   |
|   Federal funds sold and other                         |   |                                          | (11    | )      |                                   |   | (56 | ) |   |   | (67 | ) |   |   | (15 | ) |   |   | (104 | ) |   |   | (119 | ) |
|                                                        |   |                                          |   |   |                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total  decrease in interest income                |   |                                          | (2,040 | )      |                                   |   | (2,346 | ) |   |   | (4,386 | ) |   |   | (3,678 | ) |   |   | (4,569 | ) |   |   | (8,247 | ) |
|                                                        |   |                                          |   |   |                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-bearing liabilities:                               |   |                                          |   |   |                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                        |   |                                          |   |   |                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Certificates of deposit and other time deposits |   |                                          | (392   | )      |                                   |   | (893 | ) |   |   | (1,285 | ) |   |   | (738 | ) |   |   | (1,650 | ) |   |   | (2,388 | ) |
|   NOW and money market accounts                        |   |                                          | (190   | )      |                                   |   | (49 | ) |   |   | (239 | ) |   |   | (385 | ) |   |   | (92 | ) |   |   | (477 | ) |
|   Savings accounts                                     |   |                                          | (25    | )      |                                   |   | 3 |   |   |   | (22 | ) |   |   | (46 | ) |   |   | 5 |   |   |   | (41 | ) |
|   Federal funds purchased and repurchased agreements   |   |                                          | (61    | )      |                                   |   | (55 | ) |   |   | (116 | ) |   |   | (121 | ) |   |   | (111 | ) |   |   | (232 | ) |
|   FHLB advances                                        |   |                                          | 9      |   |                                   |   | (94 | ) |   |   | (85 | ) |   |   | (11 | ) |   |   | (159 | ) |   |   | (170 | ) |
|   Junior subordinated debentures                       |   |                                          | 13     |   |                                   |   | (6 | ) |   |   | 7 |   |   |   | 33 |   |   |   | (12 | ) |   |   | 21 |   |
|                                                        |   |                                          |   |   |                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total decrease in interest expense                          |   |                                          | (646   | )      |                                   |   | (1,094 | ) |   |   | (1,740 | ) |   |   | (1,268 | ) |   |   | (2,019 | ) |   |   | (3,287 | ) |
|                                                        |   |                                          |   |   |                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Increase (decrease) in net interest income                  |   | $                                             | (1,394 | )      |                                   | $      | (1,252 | ) |   | $ | (2,646 | ) |   | $ | (2,410 | ) |   | $ | (2,550 | ) |   | $ | (4,960 | ) |
|                                                        |   |                                          |   |   |                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

|                                         |   | Three Months Ended |   |   | Six Months Ended |   |
|----------------------------------------------|--------|--------------------|--------|--------|------------------|--------|
|                                         |   | June 30,           |   |   | June 30,         |   |
|                                         |   | 2012               |   |   | 2011             |   |   | 2012 |   |   | 2011 |   |
|                                         |   | (in thousands)     |   |
| Service charges on deposit accounts          |   | $                  | 556    |   |             | $      | 659 |   |   | $ | 1,110 |   |   | $ | 1,289 |   |
| Income from fiduciary activities             |   |               | 291    |   |             |   | 246 |   |   |   | 542 |   |   |   | 501 |   |
| Secondary market brokerage fees              |   |               | 31     |   |             |   | 76 |   |   |   | 48 |   |   |   | 152 |   |
| Title insurance commissions                  |   |               | 11     |   |             |   | 22 |   |   |   | 33 |   |   |   | 53 |   |
| Gains on sales of loans originated for sale  |   |               | 77     |   |             |   | 320 |   |   |   | 122 |   |   |   | 541 |   |
| Gains on sales of investment securities, net |   |               | 1,511  |   |             |   | 1,025 |   |   |   | 3,530 |   |   |   | 1,108 |   |
| Other                                        |   |               | 541    |   |             |   | 517 |   |   |   | 1,078 |   |   |   | 1,008 |   |
| Total non-interest income                    |   | $                  | 3,018  |   |             | $      | 2,865 |   |   | $ | 6,463 |   |   | $ | 4,652 |   |

----

|                            |   | Three Months Ended |           |   | Six Months Ended |   |
|---------------------------------|--------|--------------------|----------------|--------|------------------|--------|
|                            |   | June 30,           |           |   | June 30,         |   |
|                            |   | 2011               |           |   | 2011             |   |   | 2011 |   |   | 2011 |   |
|                            |   |               | (in thousands) |   |
| Salary and employee benefits    |   | $                  | 3,982          |   |             | $      | 4,180 |   |   | $ | 8,294 |   |   | $ | 8,304 |   |
| Occupancy and equipment         |   |               | 969            |   |             |   | 981 |   |   |   | 1,855 |   |   |   | 1,953 |   |
| Goodwill impairment charge      |   |               | —        |   |             |   | 23,794 |   |   |   | — |   |   |   | 23,794 |   |
| Other real estate owned expense |   |               | 1,205          |   |             |   | 22,109 |   |   |   | 2,462 |   |   |   | 23,476 |   |
| FDIC insurance                  |   |               | 832            |   |             |   | 855 |   |   |   | 1,705 |   |   |   | 1,710 |   |
| State franchise tax             |   |               | 592            |   |             |   | 582 |   |   |   | 1,184 |   |   |   | 1,164 |   |
| Loan collection expense         |   |               | 586            |   |             |   | 925 |   |   |   | 946 |   |   |   | 1,187 |   |
| Professional fees               |   |               | 567            |   |             |   | 354 |   |   |   | 923 |   |   |   | 634 |   |
| Communications                  |   |               | 168            |   |             |   | 165 |   |   |   | 348 |   |   |   | 333 |   |
| Postage and delivery            |   |               | 109            |   |             |   | 128 |   |   |   | 231 |   |   |   | 251 |   |
| Office supplies                 |   |               | 68             |   |             |   | 69 |   |   |   | 178 |   |   |   | 180 |   |
| Advertising                     |   |               | 28             |   |             |   | 87 |   |   |   | 61 |   |   |   | 189 |   |
| Other                           |   |               | 556            |   |             |   | 530 |   |   |   | 1,122 |   |   |   | 979 |   |
| Total non-interest expense      |   | $                  | 9,662          |   |             | $      | 54,759 |   |   | $ | 19,309 |   |   | $ | 64,154 |   |

|                                                    |   | Three Months Ended     |    |   | Six Months Ended |   |
|---------------------------------------------------------|--------|------------------------|---------|--------|------------------|--------|
|                                                    |   | June 30,               |    |   | June 30,         |   |
|                                                    |   | 2012                   |    |   | 2011             |   |   | 2012 |   |   | 2011 |   |
|                                                    |   | (dollars in thousands) |    |
|                                                    |   |                   |    |   |             |   |   |   |   |   |   |   |
| Federal statutory rate times financial statement income |   | $                      | 53      |   |             | $      | (18,254 | ) |   | $ | 579 |   |   | $ | (17,883 | ) |
| Effect of:                                              |   |                   |    |   |             |   |   |   |   |   |   |   |   |   |   |   |
| Net operating loss carry-forward                        |   |                   | 35      |   |             |   | — |   |   |   | (384 | ) |   |   | — |   |
| Tax-exempt income                                       |   |                   | (70     | )      |             |   | (94 | ) |   |   | (159 | ) |   |   | (185 | ) |
| Goodwill impairment charge                              |   |                   | — |   |             |   | 6,169 |   |   |   | — |   |   |   | 6,169 |   |
| Non-taxable life insurance income                       |   |                   | (26     | )      |             |   | (25 | ) |   |   | (52 | ) |   |   | (49 | ) |
| Vesting of restricted stock                             |   |                   | — |   |             |   | 26 |   |   |   | — |   |   |   | 26 |   |
| Federal tax credits                                     |   |                   | — |   |             |   | (12 | ) |   |   | — |   |   |   | (23 | ) |
| Other, net                                              |   |                   | 8       |   |             |   | 26 |   |   |   | 16 |   |   |   | 42 |   |
| Total                                                   |   | $                      | — |   |             | $      | (12,164 | ) |   | $ | — |   |   | $ | (11,903 | ) |

----

|                                  | As of June 30, |      |    | As of December 31,     |   |
|---------------------------------------|----------------|-----------|---------|------------------------|--------|
|                                  | 2012           |      |    | 2011                   |   |
|                                  | Amount         |      | Percent |                   |   | Amount |   | Percent |   |
|                                  |           |      |    | (dollars in thousands) |   |   |   |
|                                  |           |      |    |                   |   |   |   |   |   |   |   |
| Commercial                            | $              | 68,084    |    | 6.54                   | %      |   | $ | 71,216 |   | 6.27 | % |
| Commercial Real Estate                |           |      |    |                   |   |   |   |   |   |   |   |
|      Construction |           | 81,815    |    | 7.86                   |   |   |   | 101,471 |   | 8.93 |   |
|      Farmland     |           | 85,634    |    | 8.23                   |   |   |   | 90,958 |   | 8.01 |   |
|      Other        |           | 384,718   |    | 36.96                  |   |   |   | 423,844 |   | 37.31 |   |
| Residential Real Estate               |           |      |    |                   |   |   |   |   |   |   |   |
|      Multi-family |           | 59,867    |    | 5.75                   |   |   |   | 60,410 |   | 5.31 |   |
|      1-4 Family   |           | 310,626   |    | 29.84                  |   |   |   | 337,350 |   | 29.70 |   |
| Consumer                              |           | 22,898    |    | 2.20                   |   |   |   | 26,011 |   | 2.29 |   |
| Agriculture                           |           | 26,251    |    | 2.52                   |   |   |   | 23,770 |   | 2.09 |   |
| Other                                 |           | 1,016     |    | 0.10                   |   |   |   | 993 |   | 0.09 |   |
|      Total loans  | $              | 1,040,909 |    | 100.00                 | %      |   | $ | 1,136,023 |   | 100.00 | % |

----

|                                                       |   | June 30,               |    |   | December 31, |   |
|------------------------------------------------------------|--------|------------------------|---------|--------|--------------|--------|
|                                                       |   | 2012                   |    |   | 2011         |   |
|                                                       |   | (dollars in thousands) |    |
|                                                       |   |                   |    |   |         |   |
| Loans past due 90 days or more still on accrual            |   | $                      | 88      |   |         | $      | 1,350 |   |
| Non-accrual loans                                          |   |                   | 81,653  |   |         |   | 92,020 |   |
| Total non-performing loans                                 |   |                   | 81,741  |   |         |   | 93,370 |   |
| Real estate acquired through foreclosure                   |   |                   | 54,365  |   |         |   | 41,449 |   |
| Other repossessed assets                                   |   |                   | 5       |   |         |   | 5 |   |
| Total non-performing assets                                |   | $                      | 136,111 |   |         | $      | 134,824 |   |
|                                                       |   |                   |    |   |         |   |   |   |
| Non-performing loans to total loans                        |   |                   | 7.85    | %      |         |   | 8.22 | % |
| Non-performing assets to total assets                      |   |                   | 10.20   | %      |         |   | 9.26 | % |
| Allowance for non-performing loans                         |   | $                      | 11,784  |   |         | $      | 11,382 |   |
| Allowance for non-performing loans to non-performing loans |   |                   | 14.42   | %      |         |   | 12.20 | % |

----

----

|                                              |   |                   |   |
|---------------------------------------------------|--------|------------------------|--------|
|                                              |   |                   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                              |   |                   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                              |   | Three Months Ended     |   |   | Six Months Ended |   |   | Year Ended |   |
|                                              |   | June 30,               |   |   | June 30, |   |   | December 31, |   |
|                                              |   | 2012                   |   |   | 2011 |   |   | 2012 |   |   | 2011 |   |   | 2011 |   |
|                                              |   | (dollars in thousands) |   |
|                                              |   |                   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance at beginning of period                    |   | $                      | 53,953 |   |   | $ | 33,599 |   |   | $ | 52,579 |   |   | $ | 34,285 |   |   | $ | 34,285 |   |
| Provision for loan losses                         |   |                   | 4,000  |   |   |   | 13,700 |   |   |   | 7,750 |   |   |   | 18,800 |   |   |   | 62,600 |   |
| Recoveries                                        |   |                   | 79     |   |   |   | 14 |   |   |   | 285 |   |   |   | 95 |   |   |   | 340 |   |
| Charge-offs                                       |   |                   | (6,438 | ) |   |   | (8,596 | ) |   |   | (9,020 | ) |   |   | (14,463 | ) |   |   | (44,646 | ) |
| Balance at end of period                          |   | $                      | 51,594 |   |   | $ | 38,717 |   |   | $ | 51,594 |   |   | $ | 38,717 |   |   | $ | 52,579 |   |
|                                              |   |                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Allowance for loan losses to period-end loans     |   |                   | 4.96   | % |   |   | 3.10 | % |   |   | 4.96 | % |   |   | 3.10 | % |   |   | 4.63 | % |
| Net charge-offs to average loans                  |   |                   | 0.59   | % |   |   | 0.68 | % |   |   | 0.79 | % |   |   | 1.12 | % |   |   | 3.56 | % |
| Allowance for loan losses to non-performing loans |   |                   | 63.12  | % |   |   | 62.98 | % |   |   | 63.12 | % |   |   | 62.98 | % |   |   | 56.31 | % |

----

|                    |   | For the Six Months |      |   | For the Year           |   |
|-------------------------|--------|--------------------|-----------|--------|------------------------|--------|
|                    |   | Ended June 30,     |      |   | Ended December 31,     |   |
|                    |   | 2012               |      |   | 2011                   |   |
|                    |   | Average            |      |   | Average                |   |   | Average |   |   | Average |   |
|                    |   | Balance            |      |   | Rate                   |   |   | Balance |   |   | Rate |   |
|                    |   |               |      |   | (dollars in thousands) |   |   |   |   |
| Demand                  |   | $                  | 112,785   |   |                   |   | – |   |   | $ | 106,769 |   |   |   |   |
| Interest checking       |   |               | 87,082    |   |                   |   | 0.44 | % |   |   | 89,103 |   |   |   | 0.74 | % |
| Money market            |   |               | 64,054    |   |                   |   | 0.52 |   |   |   | 81,925 |   |   |   | 0.96 |   |
| Savings                 |   |               | 38,133    |   |                   |   | 0.43 |   |   |   | 36,511 |   |   |   | 0.62 |   |
| Certificates of deposit |   |               | 953,230   |   |                   |   | 1.54 |   |   |   | 1,120,154 |   |   |   | 1.65 |   |
| Total deposits          |   | $                  | 1,255,284 |   |                   |   | 1.24 | % |   | $ | 1,434,462 |   |   |   | 1.40 | % |

|               |   | For the Six Months |    |   | For the Year           |   |
|--------------------|--------|--------------------|---------|--------|------------------------|--------|
|               |   | Ended June 30,     |    |   | Ended December 31,     |   |
|               |   | 2012               |    |   | 2011                   |   |
|               |   | Average            |    |   | Average                |   |   | Average |   |   | Average |   |
|               |   | Balance            |    |   | Rate                   |   |   | Balance |   |   | Rate |   |
|               |   |               |    |   | (dollars in thousands) |   |   |   |   |
| Less than $100,000 |   | $                  | 496,953 |   |                   |   | 1.44 | % |   | $ | 569,667 |   |   |   | 1.59 | % |
| $100,000 or more   |   |               | 456,277 |   |                   |   | 1.65 | % |   |   | 550,487 |   |   |   | 1.71 | % |
| Total              |   | $                  | 953,230 |   |                   |   | 1.54 | % |   | $ | 1,120,154 |   |   |   | 1.65 | % |

|                             |   | As of          |    |   | As of        |   |
|----------------------------------|--------|----------------|---------|--------|--------------|--------|
|                             |   | June 30,       |    |   | December 31, |   |
| Maturity Period                  |   | 2012           |    |   | 2011         |   |
|                             |   | (in thousands) |    |
| Three months or less             |   | $              | 51,690  |   |         | $      | 77,118 |   |
| Three months through six months  |   |           | 94,861  |   |         |   | 65,359 |   |
| Six months through twelve months |   |           | 123,792 |   |         |   | 167,811 |   |
| Over twelve months               |   |           | 160,479 |   |         |   | 183,056 |   |
| Total                            |   | $              | 430,822 |   |         | $      | 493,344 |   |

----

| Three months or less             |   | $      | 2,083   |   |
|----------------------------------|--------|--------|---------|--------|
| Three months through six months  |   |   | 89,073  |   |
| Six months through twelve months |   |   | 15,000  |   |
|                             |   |   |    |   |
| Total                            |   | $      | 106,156 |   |
|                             |   |   |    |   |

----

Item 3. Quantitative and Qualitative Disclosures about Market Risk

|               |   | Change in Future       |   |
|--------------------|--------|------------------------|--------|
|               |   | Net Interest Income    |   |
|               |   | Dollar Change          |   |   | Percentage Change |   |
|               |   | (dollars in thousands) |   |
| + 200 basis points |   | $                      | 4,294  |   |   |   | 8.72 | % |
| + 100 basis points |   |                   | 2,158  |   |   |   | 4.38 |   |

Item 4. Controls and Procedures

----

|   | ● | Completion of additional independent internal and external loan reviews of the portfolio to ensure accurate grading from March 2012 through June 2012. |
|--------|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ● | Review of the portfolio by assigned loan officer for proper grading. |
|--------|---------|----------------------------------------------------------------------|

|   | ● | Analytical review of the portfolio by management based upon payment performance. |
|--------|---------|----------------------------------------------------------------------------------|

|   | ● | Implementation of a centralized loan administration and analysis team within the credit department to ensure more timely and regular review of grading, performance metrics, financial information, and collateral. |
|--------|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

PART II – OTHER INFORMATION

Item 1. Legal Proceedings

Item 1A. Risk Factors

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Item 3. Default Upon Senior Securities

Item 4. Mine Safety Disclosures

Item 5. Other Information

Item 6. Exhibits

| Exhibit Number | Description of Exhibit                                                                                                                                                                                                                                                                                                                                                                                                                              |
|----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|           |                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| 31.1           | Certification of Principal Executive Officer, pursuant to Rule 13a – 14(a).                                                                                                                                                                                                                                                                                                                                                                   |
|           |                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| 31.2           | Certification of Principal Financial Officer, pursuant to Rule 13a – 14(a).                                                                                                                                                                                                                                                                                                                                                                   |
|           |                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| 32.1           | Certification of Principal Executive Officer, pursuant to 18 U.S.C Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                                                              |
|           |                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| 32.2           | Certification of Principal Financial Officer, pursuant to 18 U.S.C Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                                                              |
|           |                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| 101*           | The following financial statements from the Company’s Quarterly Report on Form 10Q for the quarter ended June, 2012, formatted in XBRL: (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Operations, (iii) Consolidated Statements of Comprehensive Income, (iv) Consolidated Statement of Changes in Stockholders’ Equity, (v) Consolidated Statements of Cash Flows, (vi) Notes to Consolidated Financial Statements. |
|           |                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|           | * To be filed by amendment within 30 days pursuant to Rule 405(a)(2)(ii) of Regulation S-T.                                                                                                                                                                                                                                                                                                                                                         |

----

|           | PORTER BANCORP, INC. |
|----------------|----------------------|
|           | (Registrant)         |
|           |                 |   |   |
| August 1, 2012 |                 | By: | /s/ Maria L. Bouvette                         |
|           |                 |   | Maria L. Bouvette |
|           |                 |   | Chairman & Chief Executive Officer |
|           |                 |   |   |
| August 1, 2012 |                 | By: | /s/ Phillip W. Barnhouse                    |
|           |                 |   | Phillip W. Barnhouse |
|           |                 |   | Chief Financial Officer and Chief Accounting Officer |