The provision for loan losses totaled $1.8 million for the fourth quarter of 2010, compared to $15.7 million for the same period a year ago. The amount of the provision recorded in the fourth quarter of 2010 reflects the increase in classified loans resulting from a third party review of our loan portfolio and an increase in delinquencies and non-performing loans from September 30, 2010. The provision for loan losses of $15.7 million for the fourth quarter of 2009 was reflective of deteriorating asset quality, higher net loan charge-offs and the results of a regulatory examination in the early part of 2010.

Non-interest income for the quarter ended December 31, 2010 totaled $1.0 million compared to $895 thousand for the fourth quarter of 2009. The increase from the fourth quarter of 2009 was primarily due to higher net gains on sales of loans.

Non-interest expense for the fourth quarter ended December 31, 2010 totaled $3.5 million, compared to $2.9 million for the fourth quarter of 2009. The increase was mostly due to a higher provision for losses on real estate owned (“REO”). Also contributing to higher non-interest expense in the 2010 fourth quarter were higher consulting fees related to the independent third party review of our loan portfolio, higher premiums for FDIC insurance, and higher appraisal expenses related to delinquent loans and REO.

Balance Sheet Summary

Total assets were $483.9 million at December 31, 2010, which represented a decrease of $37.1 million, or 7%, from December 31, 2009. During 2010, cash and cash equivalents increased by $14.5 million, net loans (including loans held for sale) decreased by $41.6 million, securities decreased by $8.0 million and REO increased by $1.0 million.

Loan originations, including purchases, for the year ended December 31, 2010 totaled $17.5 million compared to $154.7 million for the year ended December 31, 2009. Loan repayments, including loan sales, totaled $39.3 million for the year ended December 31, 2010, compared to $37.8 million for the comparable period in 2009. Loans transferred to REO during 2010 totaled $5.0 million, compared to $2.1 million during 2009. In addition, during 2010 we transferred $24.0 million of loans to loans receivable held for sale, compared to $-0- during 2009.

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