UR TV CAST

The allowancerepresents 149.54% of non-performing loans at March 31, 2009. The growth of the loan portfolio,particularly in the C&I segment, was the primary reason for the increase in theprovision for loan losses over the fourth quarter of 2008 and the first quarterof 2009. The first quarter provision for loanlosses was $760,000 compared to $600,000 for the same period in 2008 and $1.5million during the fourth quarter of 2008. Non-performing assetstotaled $9.6 million at March 31, 2009 compared to $7.1 million at December 31,2008. Included in the first quarter non-performing assets total are four loanstotaling $3.1 million that have been restructured and are in full compliancewith their modified terms and conditions.

The Company`s asset quality metrics increased modestly with non-performingassets increasing to 55 basis points, up from 41 basis points at December 31,2008, but down from 61 basis points at March 31, 2008. Overall, the loan portfolio increased more than$28 million during the quarter to $1,147.5 million. “While net loan growth of 2.5% was less than the rate of expansion weexperienced during the fourth quarter of 2008, our pipeline remains strong andwe believe that loan growth will be sustainable during the remainder of 2009,”noted Bottomley. These increases were partially offset by a $12.1 million decreasein construction loan balances.

The Company hadan increase in commercial real estate loans of $32.1 million and in C&I loans of$5.5 million. Deposit balancesincreased by $88.9 million, or 8.0%, for the first quarter of 2009 Totalborrowing decreased $73.9 million during the period. The Company experienced growth in commercial real estate and commercial andindustrial (“C&I”) loan balances in the first quarter of 2009. The Company alsoexperienced a dramatic increase in deposits during the quarter. The combinationof investment cash flows and deposit originations allowed management to pay downa sizeable portion of the Company`s overnight borrowing. The first quarter cash flow from investment calls and amortizationfrom the Company`s mortgage-backed securities portfolio were sufficient to fundthe Company`s loan origination activities during the quarter. The Company deployed ashort-term leverage during the fourth quarter of 2008 that involved matchingextremely low-cost overnight borrowing against purchases of callable agencysecurities.

Net loansincreased by $28.1 million, or 2.5% during the quarter and securities decreased$32.3 million, or 6.6%. The change in the Company`s mix of business was thecombination of cash flow from the Company`s investment portfolio and the creditopportunities that continue to present themselves. Balance Sheet SummaryThe Company`s total assets increased by $10.2 million, or 0.6%, from $1,727.8million at December 31, 2008 to $1,738.0 million at March 31, 2009. These decreases were partiallyoffset by increases in salaries and employee benefits of $484,000 and occupancyexpense of $194,000.

Non-interest expense decreased by$543,000 for the first quarter when compared to the quarter ended December 31,2008. This was due to decreases in other real estate owned and other operatingexpenses of $794,000 and $354,000, respectively. The Company experienced adecrease in other real estate owned expense of $669,000 and an increase in otheroperating expenses of $556,000 compared to the same quarter in 2008. Increasesin general and administrative expenses, most notably in the areas of depositinsurance, legal, marketing, and investor relations were the primary reasons forthe increases between the comparable periods. As noted above this decrease relates totwo non-recurring charges associated with the conversion to a public stockholding company during the first quarter of 2008. Other operating expense decreased by $9.9 million for the first quarter of 2009as compared to the same period in 2008. Identifying potential sourcesof stable and reliable non-interest income remains a management goal in 2009.