United Western Bancorp, Inc. Reports 2010 First Quarter Results

United Western Bancorp, Inc. (NASDAQ: UWBK) (the "Company”), a Denver-based holding company whose principal subsidiary, United Western Bank® (the "Bank”), is a community bank focused on expansion across Colorado’s Front Range market and selected mountain communities, announced its 2010 first quarter results.

For the first quarter of 2010, the Company incurred a loss from continuing operations of $(25.0) million or $(.86) per share. The loss was attributable to four principal factors: (i) $14.2 million provision for credit losses; (ii) a net other-than-temporary impairment ("OTTI”) charge on non-agency mortgage backed securities of $5.3 million; (iii) a $9.3 million addition to the deferred tax valuation allowance against the Company’s gross deferred tax assets of $51.3 million; and (iv) during the first quarter, the Company held on average approximately $877 million of excess short term liquidity on its balance sheet, which resulted in an approximate 108 basis point reduction in net interest margin for the period. These results compare with a loss from continuing operations for the fourth quarter of 2009 of $(40.6) million, or $(1.40) per share, and income from continuing operations for the first quarter of 2009 of $3.5 million, or $.48 per diluted share.

Guy A. Gibson, Chairman of the Board, said: "The first quarter 2010 was difficult as we continued to work through credit issues impacting the real estate loan portfolio and our non-agency residential mortgage-backed securities ("RMBS”) portfolio. We continued to maintain excess liquidity on our balance sheet while at the same time we reduced our reliance on brokered deposits. We also reduced our exposure to construction and land loans by $61.8 million in the first quarter. At March 31, 2010, the Bank was well capitalized for core capital with a ratio of 6.62% and was adequately capitalized for risk based capital with a ratio of 9.18%. We have engaged a prominent investment banking firm to assist us in evaluating a variety of strategic alternatives, the goal of which is the strengthening of our capital position. In addition, we are in the process of implementing focused expense reductions.”

Mr. Gibson continued, "On May 3, 2010, we assisted Equity Trust Company, our largest depositor, in establishing a new deposit relationship for $350 million of its custodial deposits with a third party bank. Contemporaneously with this transfer of Equity Trust custodial deposits, we entered into an amendment to the Equity Trust subaccounting agreement that reduced the maximum amount of Equity Trust custodial deposits at the Bank from $1 billion to $700 million. The amendment further eliminated the Bank’s obligation to assure minimum subaccounting fees to Equity Trust as a result of this transfer to the third party bank. This will result in a material reduction in aggregate subaccounting fees and interest expense in 2010 and beyond. As consideration for Equity Trust entering into this modification to the subaccounting agreement by and between Equity Trust and the Bank, the Bank paid a fee of $1.2 million to Equity Trust. This fee and related expenses will be recovered within 2010 from reduced subaccounting fees and lower interest expense paid with respect to the Equity Trust custodial deposits.”

James R. Peoples, Interim Chief Executive Officer, United Western Bank, said: "Our priorities are to strengthen asset quality, capital and maintain appropriate liquidity. We are continuing to optimize our balance sheet for the future by reducing construction and development loans, emphasizing the origination of SBA loans, acquiring low risk GNMA securities, and transforming our deposit base to conform to regulatory requirements and our business plan. We expect further community bank loan migration and potential for further securities impairment expense to impact the results of operations for the near term.”

• Community bank loan average balances decreased $29.9 million in the first quarter of 2010 to $1.095 billion compared to $1.125 billion for the fourth quarter of 2009. The community bank loan yield decreased slightly to 5.23% during the first quarter, compared to 5.34% for the fourth quarter of 2009. The decline in yield on community bank loans was principally the result of an increase in average nonaccrual loans which were $45.1 million for the first quarter of 2010 compared to $32.6 million for the fourth quarter of 2009.
• The average balances of residential mortgage loans, mortgage backed securities, and purchased SBA loans and securities declined $59.2 million in the first quarter of 2010 to $734.4 million compared to $793.6 million in the fourth quarter of 2009. The yield on those assets declined 9 basis points to 4.21% in the first quarter of 2010 compared to 4.30% in the fourth quarter of 2009. In the year ago period, average residential mortgage loans, mortgage backed securities and purchased SBA loans assets were $996.7 million and they yielded 4.68%.
• Other interest earning assets average balances, which consist principally of Fed funds sold and balances due from the Federal Reserve Bank, increased $176.7 million from the fourth quarter of 2009. The additional liquidity was held to provide flexibility to transition the deposit base away from brokered deposits and maintain additional liquidity given current conditions. The average balance of other interest earning assets was $886.6 million for the first quarter of 2010, compared to $709.9 million for the fourth quarter of 2009. The yield of 28 basis points for the first quarter of 2010 was unchanged from the fourth quarter 2009.
• The Company’s cost of interest-bearing liabilities declined 21 basis points to 1.10% for the first quarter of 2010, compared with 1.31% for the fourth quarter of 2009. This decrease can be primarily attributed to the FHLBank debt exchange the Company executed on January 15, 2010 and corresponding $781,000 reduction on FHLBank borrowings interest expense. In the year ago period, the cost of interest-bearing liabilities was 1.56%.
• The Company expects net interest margin to improve prospectively based upon the following actions: (i) future reductions in our processing and trust deposit base in order to reduce excess liquidity; (ii) continued disciplined loan pricing; and (iii) the continuing impact of the reduction in the rates paid on $180 million of borrowings from FHLBank of Topeka.

• In the first quarter of 2010, provision for credit losses was $14.2 million, compared with $14.5 million for the fourth quarter of 2009 and $4.2 million for the first quarter of 2009. The first quarter of 2010 provision was a function of an increase in nonperforming loans and increases in the levels of reserves for certain loan types based on changes in the historical loss experience.
• Net charge-offs of community bank loans held for investment for the quarter ended March 31, 2010 were $6.8 million, compared to $6.9 million for the fourth quarter of 2009, and $280,000 for the first quarter of 2009. During the first quarter of 2010, there was one relationship in our construction and development ("C&D”) portfolio and one relationship in our SBA commercial real estate portfolio that combined to account for $4.5 million of the net charge-offs.
• Overall at March 31, 2010, our allowance for credit losses as a percent of loans held for investment increased to 3.65%, compared to 2.93% at December 31, 2009 and 1.64% at March 31, 2009.
• The allowance for loan losses attributed to community bank loans as a percent of community bank loans for the periods shown above was 4.12%, 3.29%, and 1.86%, respectively.

• Gain on sale of SBA originated loans held for sale decreased $30,000 to $596,000 in the first quarter of 2010 compared with $626,000 in the fourth quarter of 2009. The slight decrease in the first quarter of 2010 was the result of the Bank selling $7.1 million of SBA originated loans in the first quarter, compared to $8.3 million in the prior quarter. In addition, the new accounting guidance adopted in the first quarter of 2010 resulted in approximately $548,000 of unrecognized gains on the sale of $6.6 million of SBA originated loans. The Company expects these gains to be recognized in the second quarter of 2010. Gains on sale of loans may fluctuate significantly from quarter to quarter based on a variety of factors, such as the current interest rate environment, the supply and mix of loans available in the market, the particular loan portfolios the Company elects to sell, and market conditions.
• The Company incurred $5.3 million of OTTI charges on eight of its non-agency RMBS in the first quarter of 2010 due to continued deterioration in the underlying performance of the mortgage collateral of these securities. The non-agency RMBS continue to be substantially illiquid, and their evaluation for impairment and the determination of fair value remains highly complex and is dependent upon the assumptions applied. As part of the evaluation, the Company completes an analysis of estimated cash flows for these securities, which incorporates, but is not limited to, an estimate of the level of voluntary repayments, both known and projected defaults on the underlying mortgage collateral, and an estimate of loss severity. In addition, the OTTI for the first quarter was solely in securities that are support securities, or securities that are not the most senior securities in a structure. In the event securities demonstrate additional deterioration through an increase in defaults or loss severity that indicate the Company will not recover its anticipated cash flows or if the duration of relatively significant impairments in these securities does not reverse, the Company will incur additional other-than-temporary impairments, which may result in material charges to earnings in future periods.

• Compensation and employee benefits increased $388,000 to $6.0 million in the first quarter of 2010 compared with $5.6 million in the fourth quarter of 2009. The increase in the first quarter of 2010 compared to the fourth quarter of 2009 was primarily due to an increase in salaries and wages as we transitioned certain senior management positions during the quarter and added four personnel to our SBA division, an increase in payroll taxes, and in medical insurance costs. In comparison to the year ago period, compensation declined $254,000 due to lower costs associated with stock based compensation and lower employee benefits expense.
• Subsequent to the sale of certain assets of UW Trust Company at the end of June 2009, the Company has incurred subaccounting fees on the custodial deposits transferred to the buyer. The amount of the subaccounting fees increased $293,000 between the fourth quarter of 2009 and first quarter of 2010 principally as result of the $58.7 million increase in the average balance of these custodial deposits. Between the first quarter of 2010 and the first quarter of 2009, subaccounting fees increased principally as a result of the sale of certain assets of UW Trust.
• The fair value adjustment on loans held for sale decreased $49,000 between the fourth quarter of 2010 and the first quarter of 2009. During the first quarter of 2010, the charge of $562,000 reflected the additional discount on the pricing of certain interest only residential whole loans and a reduction in the pricing of the fair value of two multifamily loans.
• Other expense increased $1.9 million between the fourth quarter of 2009 and the first quarter of 2010. This increase was principally caused by the following: a $428,000 increase in FDIC deposit insurance premiums and $1.6 million in asset quality costs for loan collection and real estate owned. Other expense for the first quarter of 2010 increased $3.9 million compared to the first quarter of 2009 as a result of increases in deposit insurance expense, asset quality costs for loan collection and real estate owned, and other tax expense associated with sale of the UW Trust assets.

Income Taxes. For the quarter ended March 31, 2010, the Company’s effective tax rate was (0.1%). The Company’s tax rate was (18.8%) for the fourth quarter of 2009 and 30.6% for the first quarter of 2009. The effective income tax rate for the first quarter of 2010 was impacted by the current period loss from operations offset by an additional $9.3 million deferred tax valuation allowance recorded in the first quarter of 2010. Due to the losses incurred in the fourth quarter of 2009 and for the year then ended and in the first quarter of 2010, the Company was unable to conclude that it is more likely than not that it will generate sufficient taxable income in the foreseeable future to realize all of its deferred tax assets. At March 31, 2010 and December 31, 2009, gross deferred tax assets were $51.3 million and $45.9 million, respectively. At March 31, 2010 and December 31, 2009, the net deferred tax assets were $10.5 million and $14.2 million, respectively. The Company considered scheduled reversals of deferred tax liabilities, and various tax planning strategies in making this assessment. Tax planning strategies considered, which the Company believes would not substantially impact its business, included sale leaseback of facilities and the sale of certain lines of business or assets.

Balance Sheet. The Company’s assets were $2.61 billion at March 31, 2010, compared with $2.53 billion at December 31, 2009 and $2.28 billion at March 31, 2009, an increase of $83.6 million in the first quarter of 2010. Loan and security repayments together with deposit growth were principally invested in cash and due from banks.

Loan Portfolio

The table below shows loans held for investment:

• At March 31, 2010, community bank loans held for investment decreased $37.9 million compared to December 31, 2009. This consisted of a $59.8 million decline in construction loans as well as $2.0 million decline in land loans as the Bank has been focusing on reducing its C&D concentration. During the first quarter of 2010, construction was completed on approximately $47.8 million of the December 2009 balance of construction loans and transferred to other loan types primarily commercial real estate and residential. In addition, there were two C&D properties transferred to real estate owned for $2.1 million and charge-offs of $4.0 million on five C&D loans. Commercial real estate loans increased as a result of the transfer of completed construction projects and declined by payoffs and repayments. Community bank loans held for investment at March 31, 2010 decreased $44.3 million compared to the first quarter of 2009. Absent the $39.9 million note received in connection with the UW Trust asset sale, community bank loans decreased $84.1 million between March 31, 2010 and March 31, 2009, which is consistent with our balance sheet management plan implemented in 2008.
• The Bank reduced its exposure to construction loans by $115.6 million since their peak at June 30, 2009. As a percentage of the total held for investment loan portfolio, C&D loans decreased to 24.7% at March 31, 2010 compared to 29.0% at December 31, 2009 and 30.4% at September 30, 2009. Commitments to fund C&D loans declined to $13.2 million at March 31, 2010; such commitments were $23.6 million at December 31, 2009, $42.8 million at September 30, 2009 and $130.2 million at March 31, 2009.
• In the first quarter of 2010, residential and purchased SBA loans declined $6.3 million principally as a result of repayments.

Asset Quality

The following table sets forth the Company’s nonperforming assets from the held for investment portfolio as of the dates indicated:

• Total nonperforming assets were $78.4 million at March 31, 2010, representing a $20.9 million increase from the previous quarter. In the first quarter of 2010, there were three community bank relationships in the C&D portfolio that caused substantially all the increase in nonperforming loans; two of the loans were construction and one was a land loan. Each of these loans had a balance of approximately $5.5 million at March 31, 2010.
• Real estate owned shown in the table above represents real estate acquired from the held for investment portfolio. Such real estate is available for sale. Real estate owned increased $5.6 million during the first quarter of 2010, as the Bank foreclosed upon seven nonperforming loans.
• The Bank continues to manage these problem loans with actions that are appropriate for the overall credit relationship including conducting regular reviews of loans, obtaining current independent appraisals, and taking other actions to work with its customers to a satisfactory resolution.

The following table sets forth the Bank’s held for investment loans 30 days or more past due but not on nonaccrual for the periods shown:

• Loans past due one payment or more increased $28.0 million between March 31, 2010 and December 31, 2009 after declining $22.2 million between December 31, 2009 and September 30, 2009. The increase at March 31, 2010 relative to December 31, 2009 was due to difficulties encountered by certain borrowers. At March 31, 2010, there were seven loans over $1 million included in the 30 – 59 day past due category compared to two loans over $1 million at December 31, 2009. At March 31, 2010, there were six loans over $1 million included in the 60 – 89 day past due category compared to three loans at December 31, 2009. Of the two loans 30-59 days past due at December 31, 2009 one was moved to nonaccrual and one is now current. Of the three loans 60-89 days past due at December 31, 2009, one loan was sold with a partial charge off, one loan moved to nonaccrual and one loan is now 30-59 days past due.
• Loans over 90 days past due at March 31, 2010 include one loan for $4.6 million that is current with respect to payments; however, the loan is listed as past due as the note is matured and the primary guarantor filed bankruptcy. The Bank receives payments from the receiver.
• We anticipate that approximately 25% of the balance of loans 30 days past due or more may become nonaccrual in the future.

The table below shows the nonperforming loans that are held for sale which are subject to the fair value adjustment for loans held for sale:

• Nonperforming residential loans decreased $682,000 in the first quarter of 2010 as a result of $513,000 of residential charge-offs from the held for sale portfolio during the first quarter of 2010.

Investment Securities

The tables below show the change in the book value of RMBS between December 31, 2009 and March 31, 2010 by their place in the credit support structure and the amount of risk based capital required to hold these securities at those periods:

• Of the $22.6 million change in book value excluding purchases and OTTI, $20.3 million was from cash repayments.
• As shown above the Company incurred $5.3 million net OTTI on eight private label mortgage-backed securities during the first quarter of 2010. At March 31, 2010, these securities have been written down to 29.2% of the remaining unpaid principal balance, which represents the Company’s best estimate of anticipated recovery. Of these eight securities with a book value of $27.2 million at March 31, 2010, each security supports a higher security in the structure (e.g., either support or subordinate). The credit fundamentals of these securities, including the low current credit coverage ratios, the collateral performance, and the default trends that continued to weaken in the first quarter of 2010 collectively, resulted in an OTTI conclusion for these securities as of March 31, 2010.
• During the first quarter of 2010, the Company purchased $64.7 million of Ginnie Mae securities. These securities will increase the Company’s yield as compared with balances left on deposit at the Federal Reserve Bank, yet also carry a zero percent risk weight for regulatory capital purposes.
• At March 31, 2010, risk based capital regulations required the Bank to allocate $74.6 million of capital to support the $264.1 million book value of its non-agency RMBS portfolio, of which $65.7 million of capital was allocated to $108.1 million of non-agency residential mortgage-backed securities subject to the direct credit substitute methodology, which are support and subordinate tranches in the structures.
• At March 31, 2010, the Company’s held to maturity residential mortgage-backed investment security portfolio had an amortized cost of $289.6 million and a fair value of $227.4 million. At March 31, 2010, the Company’s available for sale residential mortgage-backed investment security portfolio had a fair value of $90.6 million, or approximately $3.4 million below cost.
• A continued increase in the levels of delinquencies, foreclosures and incurred losses by the underlying collateral of the mortgage-backed securities owned by the Company may result in additional OTTI charges prospectively.

Deposits. Community bank deposits decreased $50.6 million, or 10.9%, to $414 million at March 31, 2010, versus $465 million at December 31, 2009. During the first quarter of 2010, community bank deposits decreased as a result of CDARS® deposits that matured, which were not renewed or rolled-over as a result of such deposits being deemed brokered and the Bank’s brokered deposit restriction, which is discussed below. In total, at March 31, 2010, deposits, including custodial escrow balances, increased $116 million to $2.14 billion, as compared with $2.025 billion at December 31, 2009. This increase was principally related to two new deposit relationships, a regional trust company with deposits of $147.2 million and an Internet-based certificate of deposit provider, with deposits of $92.4 million.

Capital. At March 31, 2010, the Company’s equity leverage ratio was 5.16% compared with 4.69% at March 31, 2009. At March 31, 2010, the Bank’s Tier-1 core capital, total risk-based and Tier-1 risk-based capital ratios were 6.62%, 9.18% and 7.91%, respectively.

The Company and the Bank each entered into separate informal Memorandums of Understanding ("Informal Agreements”) with the OTS in December 2009. The Informal Agreements are not "written agreements” for purposes of Section 8 of the Federal Deposit Insurance Act, as amended.

The Informal Agreement between the Bank and the OTS provides, among other things, that the Bank’s Board of Directors will (i) adopt a written Capital Plan for the Bank for the OTS Regional Director’s review and comment, and such plan shall address how the Bank will achieve and maintain by June 30, 2010 a Tier 1 core capital ratio of 8% and a total risk-based capital ratio of 12% (as of March 31, 2010, the Bank’s Tier 1 core capital and total risk-based capital ratios were 6.6% and 9.2% respectively); and (ii) approve a written Liquidity Contingency Plan to ensure the Bank maintains adequate short-term and long-term liquidity, with such plan to specifically address deposit concentrations and plans to reduce or manage such concentrations. The Company has received feedback on its Liquidity Contingency Plan from the OTS and is revising the Liquidity Contingency Plan to incorporate additional monitoring activities, modify reliance on certain contingent sources of funds and identify actions to be taken if certain custodial or trust deposit relationships were withdrawn. The Company is in the process of revising the Liquidity Contingency Plan and believes that it has and will have adequate liquidity to fund its operations both currently and prospectively.

The Informal Agreements remain effective until modified, suspended or terminated by the OTS Regional Director.

On March 4, 2010, the OTS provided additional supervisory limitations on the Bank including the following: (i) the Bank may not increase its total assets during any quarter in excess of an amount equal to net interest credited on deposit liabilities without prior written notice of non-objection from the OTS; and (ii) the OTS has directed the Bank not to rollover or renew existing brokered deposits, or accept new brokered deposits without the prior written non-objection from the OTS. The Bank reduced total assets from March 4, 2010, the date of notification, to March 31, 2010 by approximately $405 million. The Bank has not rolled over or renewed any brokered deposits since March 4, 2010.

As a result of the Informal Agreements and the additional supervisory limitations, the Company is looking to further increase its capital position by focusing on expense reductions, optimizing the balance sheet for both loans and deposits and risk weighting of assets, as well as evaluating opportunities for margin improvement and improving the overall earnings power of the Company. This may not be sufficient to meet the requirements of the Informal Agreements, so the Company has engaged an investment banker to evaluate various strategic alternatives for the Company to accelerate its compliance with terms of the Informal Agreement.

While management believes that they are instituting the appropriate plans to meet the requirements of the Informal Agreements, as well as the additional supervisory limitations, there is no certainty that the Company can successfully execute on all of the above and meet the capital requirements of the OTS by June 30, 2010. If the Company is unable to comply with the Informal Agreements or additional supervisory limitations the OTS could take additional actions, including issuing an enforcement action.

Subsequent Events. On April 5, 2010, the Company elected to defer regularly scheduled interest payments on all of the Company's outstanding junior subordinated debentures, totaling approximately $30 million, relating to its trust preferred securities under Matrix Bancorp Capital Trust II, VI and VIII (the "Securities") for a period of 20 consecutive quarters on each Security (the "Deferral Period"). The terms of the Securities and the indenture documents allow the Company to defer payments of interest for the Deferral Period without default or penalty. During the Deferral Period, the Company will continue to recognize interest expense associated with the Securities. Upon the expiration of the Deferral Period, all accrued and unpaid interest will be due and payable. During the Deferral Period, the Company is prevented from paying cash dividends to shareholders or repurchasing stock.

On April 21, 2010, the Company entered into a Forbearance Agreement with JPMorgan Chase Bank N.A. ("JPMorgan”) effective April 1, 2010. The Company defaulted under the credit agreement with JPMorgan with respect to the entering into the Informal Agreements by the Company and the Bank, by the level of the Bank’s capital ratios, the ratio of non-performing assets, the non-payment of $1.25 million that was due on March 31, 2010, and the non-payment of $109,000 of accrued interest due at March 31, 2010. On April 19, 2010, the Company paid the $109,000 of accrued interest due at March 31, 2010. JPMorgan has agreed to forbear from exercising its rights and remedies under the credit agreements related to the defaults noted above until May 15, 2010 or the occurrence of a default other than as discussed above. The Company is negotiating with JPMorgan to extend the Forbearance Agreement beyond May 15, 2010 and seek a long-term solution to the repayment of this debt.

On May 3, 2010, we assisted Equity Trust Company, our largest depositor, in establishing a new deposit relationship for $350 million of its custodial deposits with a third party bank. Contemporaneously with this transfer of Equity Trust custodial deposits, we entered into an amendment to the Equity Trust subaccounting agreement that reduced the maximum amount of Equity Trust custodial deposits at the Bank from $1 billion to $700 million. The amendment further eliminated the Bank’s obligation to assure minimum subaccounting fees to Equity Trust as a result of this transfer to the third party bank. This will result in a material reduction in aggregate subaccounting fees and interest expense in 2010 and beyond. As consideration for Equity Trust entering into this modification to the subaccounting agreement by and between Equity Trust and the Bank, the Bank paid a fee of $1.2 million to Equity Trust. This fee and related expenses will be recovered within 2010 from reduced subaccounting fees and lower interest expense paid with respect to the Equity Trust custodial deposits.

Conference Call

Any investor or interested individual can listen to the teleconference, which is scheduled to begin at 9:00 AM MDT (11:00 AM EDT) on Wednesday, May 5, 2010. To participate in the teleconference, please call toll-free 1-877-941-8609 (or 1-480-629-9786 for international callers) approximately 10 minutes prior to the start time. You may also listen to the teleconference live on the Company’s website, www.uwbancorp.com, and accessing the Investor Relations tab, or by accessing http://www.talkpoint.com/viewer/starthere.asp?Pres=130816. The teleconference may include forward-looking statements.

For those unable to attend, an archive of the conference call will be hosted on our website.

About United Western Bancorp, Inc.

Denver-based United Western Bancorp, Inc. is focused on developing its community-based banking network through its subsidiary, United Western Bank, by strategically positioning branches across Colorado’s Front Range market and certain mountain communities. In addition to community-based banking, United Western Bancorp, Inc. and its subsidiaries offer deposit services to processing and trust customers and custodial, administrative, and escrow services through its wholly owned subsidiary, UW Trust Company. For more information, please visit our web site at www.uwbancorp.com.

Forward-Looking Statements

This press release contains certain statements that may be deemed to be "forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 that are subject to significant risks and uncertainties. Forward-looking statements include information concerning our liquidity, exposure to C&D loans, management of nonperforming loans, additional capital raising efforts, and community bank implementation and business strategy. These statements often include terminology such as "may,” "will,” "expect,” "anticipate,” "predict,” "believe,” "plan,” "estimate,” "continue,” "could,” "should,” "would,” "intend,” "projects,” or the negative thereof or other variations thereon or comparable terminology and similar expressions. As you consider forward-looking statements, you should understand that these statements are not guarantees of performance or results. They involve risks, uncertainties and assumptions that could cause actual results to differ materially from those in the forward-looking statements. These factors include, but are not limited to: the successful implementation of our community banking strategies; the ability to secure, timing of, and any conditions imposed thereon of any, regulatory approvals or consents for new branches or other contemplated actions; the availability of suitable and desirable locations for additional branches; the continuing strength of our existing business, which may be affected by various factors, including but not limited to interest rate fluctuations, level of delinquencies, defaults and prepayments, increased competitive challenges, and expanding product and pricing pressures among financial institutions; changes in financial market conditions, either internationally, nationally or locally in areas in which we conduct our operations, including without limitation, reduced rates of business formation and growth, commercial and residential real estate development, real estate prices and other recent problems in the commercial and residential real estate markets; demand for loan products and financial services; unprecedented fluctuations in markets for equity, fixed-income, commercial paper and other securities, including availability, market liquidity levels, and pricing; increases in the levels of losses, customer bankruptcies, claims and assessments; the extreme levels of volatility and limited credit currently being experienced in the financial markets; changes in political and economic conditions, including the economic effects of terrorist attacks against the United States and related events; legal and regulatory developments, such as changes in fiscal, monetary, regulatory, trade and tax policies and laws, including policies of the U.S. Department of Treasury and the Federal Reserve Board; our participation, or lack thereof, in governmental programs implemented under the Emergency Economic Stabilization Act (the "EESA”), including without limitation the Troubled Asset Relief Program ("TARP”), and the Capital Purchase Program (the "CPP”), and the impact of such programs and related regulations on our business and on international, national, and local economic and financial markets and conditions.

Additional information concerning these and other factors that may cause actual results to differ materially from those anticipated in forward-looking statements is contained in the "Risk Factors” section included the Annual Report on Form 10-K filed on March 15, 2010, and in the Company’s other periodic reports and filings with the Commission. The Company cautions investors not to place undue reliance on the forward-looking statements contained in this press release.

Any forward-looking statements made by the Company speak only as of the date on which the statements are made and are based on information known to us at that time. The Company does not intend to update or revise the forward-looking statements made in this press release after the date on which they are made to reflect subsequent events or circumstances, except as required by law.