($'s in thousands)	June 30,		December 31,
	2011		2010
Construction & Development	$	-	$	-
Commercial real estate		2,620		5,429
Commercial & Industrial		2,507		3,032
Agricultural & Farmland		87		-
Residential real estate		2,436		3,285
Home Equity		373		474
Consumer, net of deferred fees		50		64
Other		-		-
Total non-accrual loans	$	8,073	$	12,284

The following tables present the balance of the allowance for loan losses and the recorded investment in loans based on portfolio segment and impairment method for both the three and six months ended as of June 30, 2011and the year ended as of December 31, 2010.

For the Six Months Ended				Commercial
June 30, 2011	Commercial			RE &					Residential			Home Equity
($'s in thousands)	& Industrial			Construction			Agricultural		Real Estate			& Consumer			Other			Unallocated		Total
Beginning balance	$	1,723		$	3,774		$	16	$	643		$	401		$	128		$	30	$	6,715
Charge Offs		(596	)		(1,208	)		-		(166	)		(263	)		1			-		(2,232	)
Recoveries		414			16			2		114			18			(1	)		-		563
Provision		(19	)		862			9		303			271		$	(29	)		-		1,397
Ending Balance	$	1,522		$	3,444		$	27	$	894		$	427		$	99		$	30	$	6,444

Ending balance:
individually
evaluated for
impairment	$	700		$	813		$	-	$	226		$	-		$	-		$	-	$	1,739
Ending balance:
collectively
evaluated for
impairment	$	822		$	2,631		$	27	$	668		$	427		$	99		$	30	$	4,704
Loans:
Ending balance:
individually
evaluated for
impairment	$	2,426		$	3,187		$	-	$	1,216		$	389		$	-		$	-	$	7,218
Ending balance:
collectively
evaluated for
impairment	$	68,315		$	178,983		$	38,454	$	92,252		$	48,452		$	3,877		$	-	$	430,333

For the six months ended June 30, 2010, the beginning balance for the allowance for loan loss was $7.03 million. During the six month period of 2010, the Company incurred charge-offs of $8.16 million, received recoveries of $0.24 million, and had provision for loan loss of $7.9 million, for an ending balance of $7.00 million.

For the Three Months Ended				Commercial
June 30, 2011	Commercial			RE &					Residential			Home Equity
($'s in thousands)	& Industrial			Construction			Agricultural		Real Estate			& Consumer			Other			Unallocated		Total
Beginning balance	$	1,766		$	3,322		$	18	$	926		$	451		$	108		$	1	$	6,593
Charge Offs		(387	)		(1,108	)		-		(63	)		(63	)		28			-		(1,593	)
Recoveries		409			13			1		114			11			(3	)		-		545
Provision		(266	)		1,217			8		(83	)		28			(34	)		29		899
Ending Balance	$	1,522		$	3,444		$	27	$	894		$	427		$	99		$	30	$	6,444

Ending balance:
individually
evaluated for
impairment	$	700		$	813		$	-	$	226		$	-		$	-		$	-	$	1,739
Ending balance:
collectively
evaluated for
impairment	$	822		$	2,631		$	27	$	668		$	427		$	99		$	30	$	4,705
Loans:
Ending balance:
individually
evaluated for
impairment	$	2,426		$	3,187		$	-	$	1,216		$	389		$	-		$	-	$	7,218
Ending balance:
collectively
evaluated for
impairment	$	68,315		$	178,983		$	38,454	$	92,252		$	48,452		$	3,877		$	-	$	430,333

For the three months ended June 30, 2010, the beginning balance for the allowance for loan loss was $6.08 million. During the three month period of 2010, the Company incurred charge-offs of $5.68 million, received recoveries of $0.11 million, and had provision for loan loss of $6.50 million, for an ending balance of $7.00 million.

				Commercial
December 31, 2010	Commercial			RE &						Residential			Home Equity
($'s in thousands)	& Industrial			Construction			Agricultural			Real Estate			& Consumer			Other			Unallocated		Total
Beginning balance	$	2,604		$	3,210		$	92		$	715		$	255		$	154		$	-	$	7,030
Charge Offs		(4,739	)		(4,748	)		-			(1,210	)		(542	)		(95	)		-		(11,334	)
Recoveries		182			171			11			53			-			14			-		431
Provision		3,676			5,141			(87	)		1,085			688			55			30		10,588
Ending Balance	$	1,723		$	3,774		$	16		$	643		$	401		$	128		$	30	$	6,715

Ending balance:
individually
evaluated for
impairment	$	684		$	1,187		$	-		$	-		$	-		$	-		$	-	$	1,871
Ending balance:
collectively
evaluated for
impairment	$	1,039		$	2,587		$	16		$	643		$	401		$	128		$	30	$	4,844
Loans:
Ending balance:
individually
evaluated for
impairment	$	2,874		$	5,946		$	-		$	616		$	43		$	-		$	-	$	9,479
Ending balance:
collectively
evaluated for
impairment	$	66,636		$	162,739		$	40,829		$	95,641		$	49,291		$	2,929		$	-	$	418,065

Credit Risk Profile

The Company uses a nine tier risk rating system to grade its loans. The grade of a loan may change at any time during the life of the loan. The risk ratings are described as follows:

One (1) Superior - Risk is negligible. Loans are to well-seasoned borrowers, displaying sound financial condition, consistent superior earnings performance, strong capitalization, and access to a range of financing alternatives.

2.	Two (2) Excellent - Risk is minimal. Borrower is well capitalized, operates in a stable industry, financial ratios exceed peers, and financial trends are positive.

3.	Three (3) Good - Risk is modest. Borrower has good overall financial condition and adequate capitalization to withstand temporary setbacks. Financial trends are positive, and there is clear ability to service debt from the primary source.

4.	Four (4) Average - Risk is acceptable. Borrowers in this category may be characterized by acceptable asset quality, but may face a degree of uncertainty due to new business, untried market, high degree of leverage, expansion, management change, or industry conditions.

Four Monitored (4m) = Monitored Pass Credits - Risk is increasing. Borrowers in this category may be characterized by an increasing amount of risk due to one or more of the following characteristics listed below. Additionally, these borrowers require a higher than normal amount of monitoring by the relationship manager and bank management. Borrowers who are placed in this category may also demonstrate the potential for an upgrade in the next 12 months given improvement in one or more of the factors listed below:

§	Declining trends in the earnings and cash flow of the company is evident by moderate to severe losses although debt service coverage remains within policy limits.

§	Lines of credit that have been evergreen (75% of maximum availability) for more than two consecutive years.

§	Absence of relevant financial information or stale financial information provided.

§	Restructure or modification to the loan agreement for the purpose of additional funds to support ongoing operations of the company.

§	The borrower demonstrates a material weakness or declining trend in collateral support for the given loans.

Five (5) Special Mention - Defined as having potential weaknesses that deserve management's close attention. If uncorrected these potential weaknesses may, at some future date, result in the deterioration of the repayment prospects for the credit or the institution's credit position. Special mention credits are not considered as part of the classified extensions of credit category and do not expose State Bank to sufficient risk to warrant classification. Extensions of credit that might be detailed in this category include those in which:

§	The lending officer may be unable to properly supervise the credit because of an inadequate loan or credit agreement.

§	Questions exist regarding the condition of and/or control over collateral.

§	Economic or market conditions may unfavorably affect the obligor in the future.

§	A declining trend in the obligor's operations or an imbalanced position in the balance sheet exists, but not to the point that repayment is jeopardized.

§	Other deviations from prudent lending practices are present.

The special mention category should not be used to identify an extension of credit that has as its sole weakness credit-data or documentation exceptions not material to the repayment of the credit. It should also not be used to list extensions of credit that contain risks usually associated with that particular type of lending. Any extension of credit involves certain risks, regardless of the collateral or the borrower's capacity and willingness to repay the debt.

Six (6) Substandard - A "substandard" extension of credit is inadequately protected by the sound worth and paying capacity of the obligor or of the collateral pledged, if any. Extensions of credit so classified must have a well-defined weakness, or weaknesses, that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that State Bank will sustain some loss if the deficiencies are not corrected. Loss potential, while existing in the aggregate amount of substandard credits, does not have to exist in individual extensions of credit classified substandard.

Seven (7) Doubtful - Has all the weaknesses in one classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable. The possibility of loss is extremely high, but because of certain important and reasonably specific pending factors that may work to the advantage of and strengthen the credit, its classification as an estimated loss is deferred until its more exact status may be determined. Pending factors may include a proposed merger or acquisition, liquidation proceedings, capital injection, perfecting liens on additional collateral, or refinancing plans.

An entire credit is not classified as doubtful when collection of a specific portion appears highly probable. An example of proper use of the doubtful category is the case of a company being liquidated, with the trustee-in-bankruptcy indicating a minimum disbursement of forty percent (40%) and a maximum of sixty-five percent (65%) to unsecured creditors including State Bank. In this situation, estimates are based on liquidation-value appraisals with actual values yet to be realized. By definition, the only portion of the credit that is doubtful is the twenty-five percent (25%) difference between forty percent (40%) and sixty-five percent (65%). A proper classification of such a credit would show forty percent (40%) substandard, twenty-five percent (25%) doubtful, and thirty-five percent (35%) loss.

Eight (8) Loss - Considered uncollectible and of such little value that continuance as a Bank asset is not warranted. This classification does not mean that the credit has absolutely no recovery or salvage value, but rather that it is not practical or desirable to defer writing off this basically worthless asset, even though partial recovery may be affected in the future. Loans failing to meet the minimum conditions of the Doubtful classifications are charged off.

The following tables present the credit risk profile of the Company’s loan portfolio based on rating category as of June 30, 2011 and December 31, 2010 (dollars in thousands).

June 30, 2011		Commercial		Comm. RE		Agricultural		Residential		Home Equity
Loan Grade		& Industrial		& Construction		& Farmland		Real Estate		& Consumer		Other		Total
	1-2	$	643	$	429	$	173	$	1,636	$	116	$	3	$	3,000
	3		23,024		62,874		14,037		73,144		45,454		1,381		219,914
	4		42,441		106,691		24,101		13,068		2,629		2,493		191,423
Total Pass			66,108		169,994		38,311		87,848		48,199		3,877		414,337

Special Mention			479		6,234		5		1,092		289		-		8,099
Substandard			1,907		3,333		51		1,584		130		-		7,005
Doubtful			2,247		2,609		87		2,944		223		-		8,110
Loss			-		-		-		-		-		-		-
Total		$	70,741	$	182,170	$	38,454	$	93,468	$	48,841	$	3,877	$	437,551

December 31, 2010		Commercial		Comm. RE		Agricultural		Residential		Home Equity
Loan Grade		& Industrial		& Construction		& Farmland		Real Estate		& Consumer		Other		Total
	1-2	$	863	$	690	$	180	$	1,837	$	107	$	-	$	3,677
	3		24,020		61,050		15,968		75,405		46,019		1,221		223,683
	4		38,195		91,755		24,186		11,527		2,299		1,708		169,670
Total Pass			63,078		153,495		40,334		88,769		48,425		2,929		397,030

Special Mention			1,021		7,141		6		2,568		204		-		10,940
Substandard			2,739		3,076		489		2,797		411		-		9,512
Doubtful			2,672		4,973		-		2,123		294		-		10,062
Loss			-		-		-		-		-		-		-
Total		$	69,510	$	168,685	$	40,829	$	96,257	$	49,334	$	2,929	$	427,544

The following tables present the Company’s loan portfolio aging analysis as of June 30, 2011 and December 31, 2010 (dollars in thousands).

	30-59 Days		60-89 Days		Greater Than		Total Past				Total Loans
June 30, 2011	Past Due		Past Due		90 Days		Due		Current		Receivable
Commercial & Industrial	$	50	$	-	$	2,426	$	2,476	$	68,265	$	70,741
Commercial RE & Construction		-		-		3,061		3,061		179,109		182,170
Agricultural & Farmland		72		-		87		159		38,295		38,454
Residential Real Estate		827		29		836		1,692		91,776		93,468
Home Equity & Consumer		172		219		399		790		48,051		48,841
Other		-		-		-		-		3,877		3,877
Loans		1,121		248		6,809		8,178		429,373		437,551
Loans held for Sale		-		-		-		-		7,211		7,211

Total	$	1,121	$	248	$	6,809	$	8,178	$	436,583	$	444,761

	30-59 Days		60-89 Days		Greater Than		Total Past				Total Loans
December 31, 2010	Past Due		Past Due		90 Days		Due		Current		Receivable

Commercial & Industrial	$	242	$	73	$	2,744	$	3,059	$	66,451	$	69,510
Commercial RE & Construction		148		10		5,617		5,775		162,910		168,685
Agricultural & Farmland		-		88		-		88		40,741		40,829
Residential Real Estate		427		372		1,584		2,383		93,874		96,257
Home Equity & Consumer		255		25		547		827		48,507		49,334
Other		-		-		-		-		2,929		2,929
Loans		1,072		568		10,492		12,132		415,412		427,544
Loans held for Sale		-		-		-		-		9,055		9,055

Total	$	1,072	$	568	$	10,492	$	12,132	$	424,466	$	436,598

There were no loans greater than 90 days past due still accruing interest at June 30, 2011 and December 31, 2010.

The following tables present impaired loan activity for the three and six months ended June 30, 2011 and for the year ended December 31, 2010.

Six Months Ended			Unpaid
June 30, 2011	Recorded		Principal		Related
($'s in thousands)	Investment		Balance		Allowance
With no related allowance recorded:
Commercial & Industrial	$	189	$	539	$	-
Commercial Real Estate		627		1,544		-
Agricultural & Farmland		-		-		-
Residential Real Estate		483		492		-
Home Equity & Consumer		43		43		-
All Impaired Loans < $100,000		1,016		1,016		-
With a specific allowance recorded:
Commercial & Industrial		2,237		4,074		730
Commercial Real Estate		2,560		3,328		779
Agricultural & Farmland		-		-		-
Residential Real Estate		733		938		80
Home Equity & Consumer		346		354		151
All Impaired Loans < $100,000		-		-		-
Totals:
Commercial & Industrial	$	2,426	$	4,613	$	730
Commercial Real Estate	$	3,187	$	4,872	$	779
Agricultural & Farmland	$	-	$	-	$	-
Residential Real Estate	$	1,216	$	1,430	$	80
Home Equity & Consumer	$	389	$	397	$	151
All Impaired Loans < $100,000		1,016		1,016		-

	Six Months Ended					Three Months Ended
	Average		Interest			Average		Interest
June 30, 2011	Recorded		Income			Recorded		Income
($'s in thousands)	Investment		Recognized			Investment		Recognized
With no related allowance recorded:
Commercial & Industrial	$	210	$	-		$	210	$	-
Commercial RE & Construction		993		-			961		-
Agricultural & Farmland		-		-			-		-
Residential Real Estate		532		14			531		6
Home Equity & Consumer		43		-			43		-
All Impaired Loans < $100,000		1,016		-			1,016		-
With a specific allowance recorded:
Commercial & Industrial		2,663		(2	)		2,664		2
Commercial RE & Construction		3,188		2			3,192		12
Agricultural & Farmland		-		-			-		-
Residential Real Estate		1,189		18			1,188		9
Home Equity & Consumer		133		4			131		2
All Impaired Loans < $100,000		-		-			-		-
Totals:
Commercial & Industrial	$	2,873	$	(2	)	$	2,874	$	2
Commercial RE & Construction	$	4,181	$	2		$	4,153	$	12
Agricultural & Farmland	$	-	$	-		$	-	$	-
Residential Real Estate	$	1,721	$	32		$	1,719	$	15
Home Equity & Consumer	$	176	$	4		$	174	$	2
All Impaired Loans < $100,000	$	1,016	$	-		$	1,016	$	-

			Unpaid				Average		Interest
December 31, 2010	Recorded		Principal		Related		Recorded		Income
($'s in thousands)	Investment		Balance		Allowance		Investment		Recognized
With no related allowance recorded:
Commercial & Industrial	$	436	$	786	$	-	$	2,075	$	4
Commercial RE & Construction		2,744		4,040		-		4,195		52
Agricultural & Farmland		-		-		-		-		10
Residential Real Estate		616		741		-		1,045		2
Home Equity & Consumer		43		43		-		72		-
All Impaired Loans < $100,000		1,062		1,062		-		1,062		-
With a specific allowance recorded:
Commercial & Industrial		2,438		3,938		684		2,147		(48	)
Commercial RE & Construction		3,202		3,202		1,187		3,147		44
Agricultural & Farmland		-		-		-		-		-
Residential Real Estate		-		-		-		-		-
Home Equity & Consumer		-		-		-		-		-
All Impaired Loans < $100,000		-		-		-		-		-
Totals:
Commercial & Industrial	$	2,874	$	4,724	$	684	$	4,222	$	(44	)
Commercial RE & Construction	$	5,946	$	7,242	$	1,187	$	7,342	$	96
Agricultural & Farmland	$	-	$	-	$	-	$	-	$	10
Residential Real Estate	$	616	$	741	$	-	$	1,045	$	2
Home Equity & Consumer	$	43	$	43	$	-	$	72	$	-
All Impaired Loans < $100,000	$	1,062	$	1,062	$	-	$	1,062	$	-

A loan is considered impaired, in accordance with the impairment accounting guidance (ASC 310-10-35-16), when based on current information and events, it is probable State Bank will be unable to collect all amounts due from the borrower in accordance with the contractual terms of the loan. Impaired loans include non-performing loans but also include loans modified and reclassified as troubled debt restructurings where concessions have been granted to borrowers experiencing financial difficulties. These concessions could include a reduction in the interest rate on the loan, payment extensions, forgiveness of principal, forbearance or other actions intended to maximize collection.

The following table details all loans that have been modified from their original terms and are designated as Troubled Debt Restructurings. These loans are considered impaired.

Impaired Troubled Debt Restructurings	June 30,		Dec. 31,		June 30,
($ in thousands)	2011		2010		2010
Commercial & Industrial		1,908		1,907		2,827
Commercial Real Estate		138		190		1,850
Agricultural & Farmland		-		-		-
Residential Real Estate		236		399		211
Home Equity & Consumer		-		-		23
Other		-		-		-
Total		2,282		2,496		4,911

The following table details all loans that have been modified from their original terms and are restructured. These loans are not considered impaired and are performing according to their modified terms.

Performing Restructured Loans
($ in thousands)	June 30, 2011		Dec. 31, 2010		June 30, 2010
Commercial & Industrial		-		-		-
Commercial Real Estate		547		581		592
Agricultural & Farmland		5		6		7
Residential Real Estate		683		452		697
Home Equity & Consumer		50		68		48
Other		-		-		-
Total		1,285		1,107		1,344