Unassociated Document

NEWS RELEASE

FOR IMMEDIATE RELEASE:	FOR MORE INFORMATION,
July 27, 2010	CONTACT:	David D. Brown
		(276) 326-9000

First Community Bancshares, Inc. Announces Second Quarter 2010 Results, Quarterly Dividend,

and Restatement of Allowance for Loan Losses for Prior Periods

Bluefield, Virginia – First Community Bancshares, Inc. (NASDAQ: FCBC) (www.fcbinc.com) (the “Company”) today reported net income for the quarter ended June 30, 2010, of $5.13 million, or $0.29 per diluted common share.

Commenting on second quarter results, Chief Executive Officer John M. Mendez stated, “We are pleased to see the continuation of solid earnings and credit measures through the second quarter of 2010. Compared to the same quarter in 2009, earnings available to common stockholders improved by 181% in the second quarter of 2010 and earnings per share increased by 107% in the second quarter of 2010 from $0.14 to $0.29 per common share. Core earnings also improved by 4% in the second quarter of 2010 compared to the same period on the prior year. Second quarter earnings closely parallel the first quarter of this year and appear to reflect stabilization of operations in the current economy and credit cycle.”

Mendez continued, “We are also encouraged by the continued strong performance of our loan portfolio in the face of a difficult credit environment, high unemployment and a sluggish economic recovery. For the second quarter of 2010, total delinquencies within our loan portfolio were 1.70% which is a substantial decrease from total delinquencies of 2.35% in the first quarter of this year and non-accrual loans were essentially unchanged compared to the first quarter of 2010. Although higher than historic levels through March 31, 2010, the most recent date for which data is available, our asset quality metrics compare favorably to our peers during this credit cycle.”

Additionally, the board of directors of the Company declared a quarterly cash dividend to common stockholders of ten cents ($0.10) per common share. The quarterly dividend is payable to common stockholders of record on August 13, 2010, and is expected to be paid on or about August 27, 2010. The current dividend reflects the Company’s practice of paying dividends based on a review of the results of the previous quarter.

As a result of a routine internal audit, the Company determined there was a computational error in the model that the Company uses to calculate the quantitative basis for its allowance for loan losses. In connection with its determination of the appropriate loan loss reserve at December 31, 2008, the Company made certain modifications to its loan loss reserve model with respect to a $130.76 million pool of loans. However, in calculating the loan loss reserves for this pool of loans, the historical quarterly net charge-off rates were not annualized as was the case with all other quarterly loss rates in the model. Based on the Company’s modeling using the corrected computations, the Company, in consultation with the audit committee of the Board of Directors, determined that the amount of the allowance for loan losses should be increased by an aggregate of $2.55 million for the period beginning December 31, 2008 and ending March 31, 2010.

The Company will be filing amendments to its Annual Reports on Form 10-K for the years ended December 31, 2009 and 2008, and its Quarterly Reports on Form 10-Q for the quarters ended March 31, 2009, June 30, 2009, September 30, 2009, and March 31, 2010, to correct for these computational errors and make other required disclosures. The financial tables included in this press release present the “As Reported” and “As Revised” amounts for the periods indicated to reflect the correction of these computational errors.

Second Quarter 2010 Highlights –

The ratio of non-performing assets to total assets was 110 basis points, an increase from 97 basis points in the first quarter of 2010.

Total loan delinquencies of 30 days or more, including non-accrual loans, as a percent of total loans were 1.70%, a decrease from 2.35% in the first quarter of 2010.

Net interest margin for the second quarter was 3.92%, up 30 basis points from the comparable quarter of 2009.

Net interest income increased $2.22 million, or 13.61%, from the second quarter of 2009.

Tangible book value per common share increased to $9.95, up $0.88 from the quarter ended December 31, 2009.

The Company remains “well-capitalized” with a total risk-based capital ratio of 13.6%, Tier 1 risk-based capital ratio of 12.3%, and a Tier 1 leverage ratio of 8.7% at June 30, 2010.

Net Interest Income

Tax-equivalent net interest margin for the second quarter of 2010 was 3.92%. Net interest income was $18.54 million for the second quarter of 2010, an increase of $2.22 million, or 13.61%, from the second quarter of 2009. Interest income was $26.16 million for the second quarter of 2010, a slight decrease of $34 thousand, or 0.13%, from the second quarter of 2009. The yield on loans decreased to 6.04% for the second quarter of 2010 from 6.19% in the same period in the prior year, while average loans increased $127.94 million to $1.40 billion for the second quarter 2010. The increase in the average loans is primarily due to the acquisition of TriStone Community Bank in July 2009. The Company continued to maintain a high level of liquidity with average cash balances of $72.78 million in the second quarter of 2010.

Second quarter 2010 interest expense was $7.61 million, a decrease of $2.26 million, or 22.85%, from the second quarter of 2009. Second quarter 2010 deposit costs decreased $1.97 million compared to the second quarter of 2009, which was primarily due to a decrease in the average rate paid on interest-bearing deposits of 65 basis points to 1.43% for the second quarter of 2010 compared to the same period in the prior year. Compared to the second quarter of 2009, interest costs on borrowings decreased $285 thousand to $2.51 million for the second quarter of 2010, while the average balance decreased $19.63 million for the comparable periods due to the redemption and restructuring of various wholesale borrowings. The cost of interest-bearing liabilities decreased 58 basis points during the second quarter of 2010 compared to the second quarter of 2009. Average interest-bearing liabilities increased $51.44 million, or 2.99% for the second quarter of 2010 compared with the second quarter of 2009, which included a decrease of $12.30 million in Federal Home Loan Bank (“FHLB”) borrowings.

Noninterest Income

During the second quarter of 2010, wealth management revenues decreased $121 thousand, or 10.68%, to $1.01 million from the second quarter of 2009, which was primarily due to the settlement of several large estates in the prior year. The Wealth Management Division reported $806 million in assets under management at June 30, 2010. Service charges on deposit accounts were $3.35 million for the second quarter of 2010, a decrease of $144 thousand, or 4.12%, from the second quarter of 2009. Insurance commissions were $1.39 million for the second quarter of 2010, a decrease of $250 thousand, or 15.25%.

Noninterest Expenses

Noninterest expenses for the second quarter of 2010 increased $557 thousand, or 3.47%, compared to the second quarter of 2009. The increase was primarily due to salaries and employee benefits which increased $1.08 million, or 14.61%, in the second quarter of 2010 compared to the same period in the prior year. The branches of TriStone Community Bank, which the company acquired in July 2009, accounted for an increase in salaries and employee benefits of $359 thousand during the comparable periods. Excluding these branches, the remainder of the Company presented an overall increase in salaries and benefits of $723 thousand in the second quarter of 2010 compared to the same period of the prior year. Federal Deposit Insurance Corporation (“FDIC”) deposit insurance premiums decreased $577 thousand, or 44.83% in the second quarter of 2010, compared to the second quarter of 2009 when the FDIC levied a special assessment. The efficiency ratio in the second quarter of 2010 was 58.26% compared to 58.15% in the second quarter of 2009.

Credit Quality

The Company’s loan quality measures at June 30, 2010, continue to compare favorably to the Company’s peer group of bank holding companies with total assets between $1 and $3 billion, as reported by the Federal Reserve. Total loan delinquencies of 30 days or more, including non-accrual loans, as a percent of total loans were 1.70% at June 30, 2010 a decrease from 2.35% at March 31, 2010, and 2.32% at December 31, 2009. The ratio of allowance for loan losses as a percent of loans held for investment was 1.79% at June 30, 2010, compared to 1.76% at March 31, 2010, and 1.74% at December 31, 2009.

Total non-performing assets, which include other real estate owned, were 1.10% of total assets at June 30, 2010, 0.97% at both March 31, 2010, and December 31, 2009. Non-performing loans as a percentage of loans held for investment remained stable at 1.26% for the periods ended June 30, 2010, March 31, 2010, and December 31, 2009.

Balance Sheet

Consolidated assets were $2.25 billion at June 30, 2010. At June 30, 2010, total stockholders’ equity was $267.93 million, resulting in a book value per common share outstanding of $15.05, compared to total stockholders’ equity of $252.27 million and a book value per common share of $14.20 at December 31, 2009. During the second quarter of 2010, the Company paid a $0.10 per share dividend on common shares. 2010 marks the Company’s 25th consecutive year of dividends to shareholders.

Non-GAAP Presentations

The Company prepares its financial statements under accounting principles generally accepted in the United States, or “GAAP”. However, this press release also refers to certain non-GAAP financial measures that we believe, when considered together with GAAP financial measures, provide investors with important information regarding our operational performance. An analysis of any non-GAAP financial measure should be used in conjunction with results presented in accordance with GAAP.

Core earnings is a non-GAAP financial measure that reflects net income excluding non-recurring income and expense items, taxes, loan loss provisions, losses on other real estate owned, as well as gains, losses, and impairment losses on securities from net income. These excluded items are difficult to predict and we believe that core earnings provides the Company and investors with a valuable tool to evaluate the company’s financial results.

The adjusted efficiency ratio is a non-GAAP financial measure that is computed by dividing core non-interest expense by the sum of net interest income on a tax equivalent basis and core non-interest income. We believe that this measure provides investors with important information about our operating efficiency. Comparison of out adjusted efficiency ratio with those of other companies may not be possible because other companies may calculate the adjusted efficiency ratio differently.

About First Community Bancshares, Inc.

First Community Bancshares, Inc., headquartered in Bluefield, Virginia, is a $2.25 billion financial holding company and is the parent company of First Community Bank, N. A. First Community Bank, N. A. operates through fifty-six locations in the five states of Virginia, West Virginia, North Carolina, South Carolina, and Tennessee. First Community Bank, N. A. offers wealth management services through its Trust & Financial Services Division and Investment Planning Consultants, Inc., a registered investment advisory firm which offers wealth management and investment advice. The Company’s Wealth Management Division managed assets with a market value of $806 million at June 30, 2010. The Company is also the parent company of GreenPoint Insurance Group, Inc., a full-service insurance agency headquartered in High Point, North Carolina, that operates eleven offices. The Company’s common stock is traded on the NASDAQ Global Select Market under the symbol, “FCBC”. Additional investor information can be found on the Internet at www.fcbinc.com.

This news release may include forward-looking statements. These forward-looking statements are based on current expectations that involve risks, uncertainties and assumptions. Should one or more of these risks or uncertainties materialize or should underlying assumptions prove incorrect, actual results may differ materially. These risks include: changes in business or other market conditions; the timely development, production and acceptance of new products and services; the challenge of managing asset/liability levels; the management of credit risk and interest rate risk; the difficulty of keeping expense growth at modest levels while increasing revenues; and other risks detailed from time to time in the Company’s Securities and Exchange Commission reports, including but not limited to the Annual Report on Form 10-K for the most recent year ended. Pursuant to the Private Securities Litigation Reform Act of 1995, the Company does not undertake to update forward-looking statements contained within this news release.

First Community Bancshares, Inc.

Condensed Consolidated Statements of Income

(Unaudited)	Three Months Ended						Six Months Ended June 30,
(In Thousands, Except Share and Per Share Data)	June 30,									2009
	2010			2009			2010			As Reported			As Revised
Interest Income
Interest and fees on loans held for investment	$	20,997		$	19,571		$	42,351		$	39,555		$	39,555
Interest on securities – taxable		3,730			5,177			7,516			10,341			10,341
Interest on securities – nontaxable		1,394			1,402			2,820			3,078			3,078
Interest on federal funds sold and deposits		34			39			80			78			78
Total interest income		26,155			26,189			52,767			53,052			53,052
Interest Expense
Interest on deposits		5,106			7,076			10,608			14,643			14,643
Interest on borrowings		2,507			2,792			4,998			5,655			5,655
Total interest expense		7,613			9,868			15,606			20,298			20,298
Net interest income		18,542			16,321			37,161			32,754			32,754
Provision for loan losses		3,596			2,552			7,261			4,639			4,700
Net interest income after provision for loan losses		14,946			13,769			29,900			28,115			28,054
Noninterest Income
Wealth management income		1,012			1,133			1,897			2,117			2,117
Service charges on deposit accounts		3,347			3,491			6,339			6,648			6,648
Other service charges and fees		1,250			1,133			2,531			2,311			2,311
Insurance commissions		1,389			1,639			3,590			3,956			3,956
Net impairment losses recognized in earnings		(185	)		(3,776	)		(185	)		(3,985	)		(3,985	)
Security gains		1,201			1,653			1,451			2,064			2,064
Other operating income		890			247			1,859			826			826
Total noninterest income		8,904			5,520			17,482			13,937			13,937
Noninterest Expense
Salaries and employee benefits		8,487			7,405			16,456			15,271			15,271
Occupancy expense of bank premises		1,570			1,333			3,279			2,936			2,936
Furniture and equipment expense		918			892			1,822			1,830			1,830
Amortization of intangible assets		253			244			509			489			489
FHLB debt prepayment fees		-			88			-			88			88
FDIC premiums and assessments		710			1,287			1,411			1,475			1,475
Merger-related expenses		-			74			-			75			75
Other operating expense		4,660			4,718			9,193			9,064			9,064
Total noninterest expense		16,598			16,041			32,670			31,228			31,228
Income before income taxes		7,252			3,248			14,712			10,824			10,763
Income tax expense		2,121			843			4,303			3,189			3,166
Net income		5,131			2,405			10,409			7,635			7,597
Dividends on preferred stock		-			578			-			1,149			1,149
Net income available to common shareholders	$	5,131		$	1,827		$	10,409		$	6,486		$	6,448
Per Share
Basic earnings per common share	$	0.29		$	0.14		$	0.59		$	0.53		$	0.53
Diluted earnings per common share	$	0.29		$	0.14		$	0.59		$	0.53		$	0.53
Weighted average shares outstanding:
Basic		17,787,325			12,696,202			17,776,500			12,135,103			12,135,103
Diluted		17,805,393			12,741,080			17,792,535			12,181,843			12,181,843
For the period:
Return on average assets		0.91	%		0.34	%		0.93	%		0.60	%		0.60	%
Return on average common equity		7.68	%		3.82	%		7.97	%		7.07	%		7.03	%
Cash dividends per common share	$	0.10		$	0.20		$	0.20		$	0.20		$	0.20

The “As Reported” columns reflect the amounts previously reported by the Company and the “As Revised” columns reflect the revised amounts based on the corrections made for the computational errors described in the text of this press release.

First Community Bancshares, Inc.

Condensed Quarterly Statements of Income (Loss)

	As of and for the Quarter Ended
(Unaudited)	June 30,			March 31,		December 31, 2009
(In Thousands, Except Share and Per Share Data)	2010			2010		As Reported			As Revised
Interest Income
Interest and fees on loans held for investment	$	20,997		$	21,354	$	22,085		$	22,085
Interest on securities – taxable		3,730			3,786		4,190			4,190
Interest on securities – nontaxable		1,394			1,426		1,445			1,445
Interest on federal funds sold and deposits		34			46		32			32
Total interest income		26,155			26,612		27,752			27,752
Interest Expense
Interest on deposits		5,106			5,502		6,155			6,155
Interest on borrowings		2,507			2,491		2,635			2,635
Total interest expense		7,613			7,993		8,790			8,790
Net interest income		18,542			18,619		18,962			18,962
Provision for loan losses		3,596			3,665		6,996			7,282
Net interest income after provision for loan losses		14,946			14,954		11,966			11,680
Noninterest Income
Wealth management income		1,012			885		1,059			1,059
Service charges on deposit accounts		3,347			2,992		3,585			3,585
Other service charges and fees		1,250			1,281		1,248			1,248
Insurance commissions		1,389			2,201		1,465			1,465
Net impairment losses recognized in earnings		(185	)		-		(44,067	)		(44,067	)
Securities gains (losses)		1,201			250		(14,603	)		(14,603	)
Acquisition gain		-			-		-			-
Other operating income		890			969		983			983
Total noninterest income		8,904			8,578		(50,330	)		(50,330	)
Noninterest Expense
Salaries and employee benefits		8,487			7,969		8,254			8,254
Occupancy expense of bank premises		1,570			1,709		1,687			1,687
Furniture and equipment expense		918			904		988			988
Amortization of intangible assets		253			256		277			277
FHLB debt prepayment fees		-			-		-			-
FDIC premiums and assessments		710			701		1,474			1,474
Merger-related expenses		-			-		146			146
Other operating expense		4,660			4,533		4,802			4,802
Total noninterest expense		16,598			16,072		17,628			17,628
Income (loss) before income taxes		7,252			7,460		(55,992	)		(56,278	)
Income tax expense (benefit)		2,121			2,182		(21,430	)		(21,537	)
Net income (loss)		5,131			5,278		(34,562	)		(34,741	)
Preferred dividends		-			-		-			-
Net income (loss) available to common shareholders	$	5,131		$	5,278	$	(34,562	)	$	(34,741	)
Per Share
Basic EPS	$	0.29		$	0.30	$	(1.95	)	$	(1.96	)
Diluted EPS	$	0.29		$	0.30	$	(1.95	)	$	(1.96	)
Cash dividends per common share	$	0.10		$	0.10	$	-		$	-
Weighted average shares outstanding:
Basic		17,787,325			17,765,556		17,687,413			17,687,413
Diluted		17,805,393			17,784,449		17,687,413			17,687,413

First Community Bancshares, Inc.

Reconciliation of GAAP Net Income to Core Earnings

	Three Months Ended						Six Months Ended June 30,
(Unaudited)	June 30,									2009
(In Thousands, Except Per Share Data)	2010			2009			2010			As Reported			As Revised

Net income, GAAP	$	5,131		$	2,405		$	10,409		$	7,635		$	7,597
Non-GAAP adjustments:
Security gains		(1,201	)		(1,653	)		(1,451	)		(2,064	)		(2,064	)
Merger-related expenses		-			74			-			75			75
FHLB debt prepayment fees		-			88			-			88			88
Other-than-temporary security impairments		185			3,776			185			3,985			3,985
FDIC special assessments		-			988			-			988			988
Other non-core, non-recurring items		738			508			1,673			808			808
Total adjustments to core earnings		(278	)		3,781			407			3,880			3,880
Tax effect		(104	)		1,408			153			1,513			1,513
Core earnings, non-GAAP	$	4,957		$	4,778		$	10,663		$	10,002		$	9,964

Core return on average assets		0.88	%		0.88	%		0.95	%		0.93	%		0.92	%
Core return on average equity		7.42	%		8.22	%		8.16	%		8.91	%		8.87	%
Core diluted earnings per share	$	0.28		$	0.37		$	0.60		$	0.82		$	0.82

Efficiency Ratio Calculation

	Three Months Ended						Six Months Ended
(Unaudited)	June 30,						June 30,
(In Thousands)	2010			2009			2010			2009

Noninterest expenses, GAAP	$	16,598		$	16,041		$	32,670		$	31,228
Non-GAAP adjustments:
Merger-related expenses		-			(74	)		-			(75	)
FHLB debt prepayment fees		-			(88	)		-			(88	)
Other non-core, non-recurring items		(738	)		(1,496	)		(1,673	)		(1,796	)
Adjusted noninterest expenses		15,860			14,383			30,997			29,269

Net interest income, GAAP		18,542			16,321			37,161			32,754
Noninterest income, GAAP		8,904			5,520			17,482			13,937
Non-GAAP adjustments:
Tax-equivalency adjustment		791			772			1,603			1,688
Security gains		(1,201	)		(1,653	)		(1,451	)		(2,064	)
Other-than-temporary security impairments		185			3,776			185			3,985
Adjusted net interest and noninterest income		27,221			24,736			54,980			50,300

Efficiency Ratio		58.26	%		58.15	%		56.38	%		58.19	%

First Community Bancshares, Inc.

Quarterly Balance Sheets

	For the Quarter Ended
(Unaudited)	June 30,			March 31, 2010						December 31, 2009
(Dollars In Thousands)	2010			As Reported			As Revised			As Reported			As Revised

Cash and due from banks	$	50,922		$	74,962		$	74,962		$	97,641		$	97,641
Interest-bearing deposits with banks		25,609			12,744			12,744			3,700			3,700
Securities available-for-sale		502,866			524,297			524,297			486,057			486,057
Securities held-to-maturity		6,468			7,155			7,155			7,454			7,454
Loans held for sale		2,141			1,494			1,494			11,576			11,576
Loans held for investment, net of unearned income		1,399,885			1,390,874			1,390,874			1,393,931			1,393,931
Less allowance for loan losses		25,011			21,956			24,508			21,725			24,277
Net loans		1,377,015			1,370,412			1,367,860			1,383,782			1,381,230
Premises and equipment		56,407			56,772			56,772			56,946			56,946
Other real estate owned		7,108			4,740			4,740			4,578			4,578
Interest receivable		7,859			8,630			8,630			8,610			8,610
Intangible assets		90,757			90,805			90,805			91,061			91,061
Other assets		121,835			130,017			130,974			135,049			136,006
Total Assets	$	2,246,846		$	2,280,534		$	2,278,939		$	2,274,878		$	2,273,283
Deposits:
Demand	$	205,731		$	205,810		$	205,810		$	208,244		$	208,244
Interest-bearing demand		244,889			246,513			246,513			231,907			231,907
Savings		404,820			427,883			427,883			381,381			381,381
Time		757,979			775,405			775,405			824,428			824,428
Total Deposits		1,613,419			1,655,611			1,655,611			1,645,960			1,645,960
Interest, taxes and other liabilities		21,865			21,912			21,912			22,498			22,498
Securities sold under agreements to repurchase		147,772			144,381			144,381			153,634			153,634
FHLB and other indebtedness		195,865			195,873			195,873			198,924			198,924
Total Liabilities		1,978,921			2,017,777			2,017,777			2,021,016			2,021,016

Preferred stock, net of discount		-			-			-			-			-
Common stock		18,083			18,083			18,083			18,083			18,083
Additional paid-in capital		190,259			190,650			190,650			190,967			190,967
Retained earnings		73,613			71,857			70,262			68,355			66,760
Treasury stock, at cost		(8,583	)		(9,342	)		(9,342	)		(9,891	)		(9,891	)
Accumulated other comprehensive loss		(5,447	)		(8,491	)		(8,491	)		(13,652	)		(13,652	)
Total Stockholders' Equity		267,925			262,757			261,162			253,862			252,267
Total Liabilities and
Stockholders' Equity	$	2,246,846		$	2,280,534		$	2,278,939		$	2,274,878		$	2,273,283

Actual shares outstanding at period end		17,807,155			17,782,791			17,782,791			17,765,164			17,765,164
Book value per common share at period end	$	15.05		$	14.78		$	14.69		$	14.29		$	14.20
Tangible book value per common share at period end (1)	$	9.95		$	9.67		$	9.58		$	9.16		$	9.07

(1)	Tangible book value per common share is defined as stockholders' equity less goodwill and other intangibles divided by common shares outstanding.

First Community Bancshares, Inc.

Selected Financial Information

	As of and for the Quarter Ended
(Unaudited)	June 30,			March 31, 2010						December 31, 2009
(Dollars in Thousands)	2010			As Reported			As Revised			As Reported			As Revised
Summary of Loan Loss Experience
Allowance for loan losses:
Beginning balance	$	24,508		$	21,725		$	24,277		$	17,444		$	19,710
Balance acquired		-			-			-			-			-
Provision for loan losses		3,596			3,665			3,665			6,996			7,282
Charge-offs		(3,373	)		(3,732	)		(3,732	)		(2,954	)		(2,954	)
Recoveries		280			298			298			239			239
Net charge-offs		(3,093	)		(3,434	)		(3,434	)		(2,715	)		(2,715	)
Ending balance	$	25,011		$	21,956		$	24,508		$	21,725		$	24,277

Summary of Asset Quality
Non-accrual loans	$	17,668		$	17,477		$	17,477		$	17,527		$	17,527
Loans 90 days or more past due and still accruing		-			-			-			-			-
Total non-performing loans		17,668			17,477			17,477			17,527			17,527

Other real estate owned		7,108			4,740			4,740			4,578			4,578
Total non-performing assets	$	24,776		$	22,217		$	22,217		$	22,105		$	22,105

Restructured loans performing in accordance with terms	$	2,763		$	3,091		$	3,091		$	3,565		$	3,565

Asset Quality Ratios
Non-performing loans as a percentage of loans held for investment		1.26	%		1.26	%		1.26	%		1.26	%		1.26	%
Non-performing assets as a percentage of total assets		1.10	%		0.97	%		0.97	%		0.97	%		0.97	%
Annualized net charge-offs as a percentage of average loans held for investment		0.89	%		1.00	%		1.00	%		0.77	%		0.77	%
Allowance for loan losses as a percentage of loans held for investment		1.79	%		1.58	%		1.76	%		1.56	%		1.74	%
Ratio of allowance for loan losses to non-performing loans		1.42			1.26			1.40			1.24			1.39

First Community Bancshares, Inc.

Non-accrual Loan Detail

	As of June 30, 2010
					Non-accrual
(Unaudited)	Loans		Non-accrual		Loans to Loans
(Dollars in Thousands)	Outstanding		Loans		Outstanding
Commercial
Commercial & industrial	$	109,344	$	654		0.60	%
Agriculture		1,354		-		0.00	%
Total commercial		110,698		654		0.59	%

Commercial real estate
Construction, land development & vacant land		114,207		1,876		1.64	%
Non-owner occupied		196,896		3,111		1.58	%
Owner occupied		155,946		2,571		1.65	%
Farmland		39,053		7		0.02	%
Total commercial real estate		506,102		7,565		1.49	%

Consumer		62,659		96		0.15	%

Residential real estate
Residential		536,540		6,788		1.27	%
Multi-family		70,850		1,317		1.86	%
Home equity lines		113,036		1,248		1.10	%
Total residential		720,426		9,353		1.30	%

Total loans	$	1,399,885	$	17,668		1.26	%

	Three Months Ended June 30,
	2010							2009
					Yield/							Yield/
(Unaudited)	Average		Interest		Rate			Average		Interest		Rate
(Dollars in Thousands)	Balance		(1)		(1)			Balance		(1)		(1)
Earning assets
Loans held for investment (2)	$	1,397,528	$	21,039		6.04	%	$	1,269,584	$	19,589		6.19	%
Securities available-for-sale		498,880		5,728		4.61	%		557,110		7,169		5.16	%
Securities held-to-maturity		6,928		145		8.39	%		7,824		164		8.41	%
Interest-bearing deposits with banks		72,782		34		0.19	%		57,885		39		0.27	%
Total earning assets		1,976,118		26,946		5.47	%		1,892,403		26,961		5.71	%
Other assets		283,068							288,376
Total	$	2,259,186						$	2,180,779
Interest-bearing liabilities
Interest-bearing demand deposits	$	248,512	$	250		0.40	%	$	197,710	$	81		0.16	%
Savings deposits		421,669		781		0.74	%		317,700		540		0.68	%
Time deposits		762,858		4,075		2.14	%		846,560		6,455		3.06	%
Retail repurchase agreements		94,197		252		1.07	%		101,525		333		1.32	%
Wholesale repurchase agreements		50,000		468		3.75	%		50,000		465		3.73	%
FHLB borrowings & other long-term debt		195,804		1,787		3.66	%		208,102		1,994		3.84	%
Total interest-bearing liabilities		1,773,040		7,613		1.72	%		1,721,597		9,868		2.30	%
Noninterest-bearing demand deposits		207,393							201,670
Other liabilities		10,940							24,419
Stockholders' equity		267,813							233,093
Total	$	2,259,186						$	2,180,779
Net interest income, tax-equivalent			$	19,333						$	17,093
Net interest rate spread (3)						3.75	%						3.41	%
Net interest margin (4)						3.92	%						3.62	%

	Six Months Ended June 30,
	2010							2009
					Yield/							Yield/
(Unaudited)	Average		Interest		Rate			Average		Interest		Rate
(Dollars in Thousands)	Balance		(1)		(1)			Balance		(1)		(1)
Earning assets
Loans held for investment (2)	$	1,396,603	$	42,436		6.13	%	$	1,280,394	$	39,585		6.23	%
Securities available-for-sale		490,062		11,561		4.76	%		535,326		14,741		5.55	%
Securities held-to-maturity		7,033		293		8.40	%		8,147		336		8.32	%
Interest-bearing deposits with banks		74,675		80		0.22	%		65,713		78		0.24	%
Total earning assets		1,968,373		54,370		5.57	%		1,889,580		54,740		5.84	%
Other assets		283,958							289,273
Total	$	2,252,331						$	2,178,853
Interest-bearing liabilities
Interest-bearing demand deposits	$	242,531	$	450		0.37	%	$	193,983	$	160		0.17	%
Savings deposits		417,377		1,612		0.78	%		315,146		1,196		0.77	%
Time deposits		777,268		8,546		2.22	%		852,258		13,287		3.14	%
Retail repurchase agreements		93,093		528		1.14	%		103,984		723		1.40	%
Wholesale repurchase agreements		50,000		931		3.75	%		50,000		975		3.93	%
FHLB borrowings & other long-term debt		197,266		3,539		3.62	%		211,511		3,957		3.77	%
Total interest-bearing liabilities		1,777,535		15,606		1.77	%		1,726,882		20,298		2.37	%
Noninterest-bearing demand deposits		203,252							200,497
Other liabilities		8,097							25,064
Stockholders' equity		263,447							226,410
Total	$	2,252,331						$	2,178,853
Net interest income, tax-equivalent			$	38,764						$	34,442
Net interest rate spread (3)						3.80	%						3.47	%
Net interest margin (4)						3.97	%						3.68	%